Chair Gregory Russ visiting a NYCHA complex (photo: @NYCHA)
“These first few months of our work have revealed NYCHA as an organization fraught with serious problems in structure, culture, and direction, and perhaps even worse,” wrote Bart Schwartz, the new federal monitor of the city’s public housing authority, in his first progress report, released July 22.
Three weeks later, this past Monday, Gregory Russ arrived in Manhattan for his first day of work as NYCHA’s new Chair and CEO, with an enormous task in front of him.
NYCHA’s short- and long-term futures have been complicated for some time. It’s the largest public housing authority in the country, with more than 400,000 residents, struggles to break even with annual operating expenses, is tens of billions of dollars behind in infrastructure spending for a state of good repair, and plagued by lead paint, mold, broken heating systems and elevators, and other calamities.
Until Russ, NYCHA hadn’t had a permanent leader in 16 months, during which time Schwartz was named federal monitor through a January 31 agreement among Mayor Bill de Blasio, federal housing Secretary Ben Carson, federal prosecutors, and a judge.
While de Blasio has taken more ownership of and put more resources into NYCHA than his recent predecessors, crises at the sprawling, 316-development, 176,000-unit public housing authority have spiraled. Federal and state help has been limited, and, in combination with what the city is doing, is nowhere near meeting the need.
Recognition has set in more recently that drastic measures are needed, though it is unclear where all of the more than $30 billion estimated need to get NYCHA apartments and complexes into a state of good repair will come from.
Russ takes over as the latest in several major changes and announcements toward a better future for NYCHA and its residents, but also amid a great deal of uncertainty and a constant drumbeat of headlines about waste, mismanagement, inefficiency, and need. His hiring comes after a lead paint scandal broke and multiple announcements by the de Blasio administration and NYCHA about plans to deal with it; the release of the “NYCHA 2.0” plan by de Blasio that calls for fairly aggressive steps like “infill” private housing development to raise needed capital revenue for the crumbling housing authority; the near-receivership deal with the Department of Housing and Urban Developmentin New York; and Schwartz’s appointment.
Russ, formerly head of the public housing authorities in several cities, including most recently Minneapolis, is now undertaking what is likely his biggest professional challenge.
“It’s probably one of the most difficult jobs in public administration in New York City and maybe even the country,” said Nicholas Dagen Bloom, professor of Urban Policy and Planning at Hunter College and a NYCHA scholar.
The goals, mandates, and timelines already in place as Russ begins his work form a somewhat confusing mix, all layered on top of the desperate need, with many thousands of tenants living in squalor and far too many units on the verge of being uninhabitable.
The combination of reforms the city has made with NYCHA over the last several years; NYCHA 2.0; other promises by the mayor and his appointees; federal requirements; and Schwartz’s recently-begun work form the basis of what Russ has to work with.
In an online message posted on NYCHA’s website, Russ promised “real and substantial changes” in order to turn the page at the housing authority.
“My mission is simple: fix residents’ homes today and make NYCHA stronger for the coming generations,” Russ wrote. “One of my top priorities is to meet with NYCHA residents and staff across the city to hear about how we can best work together to make progress,” he wrote.
As Russ starts his tenure, he and Schwartz appear to be conducting similar fact-finding and get-to-know-you endeavors, with questions looming about how well they will work together, along with HUD officials and others, to bring relief to NYCHA tenants and repair the nation’s largest public housing stock for adequate and comfortable future use by hundreds of thousands of New Yorkers.
The HUD Agreement
Federal Monitor Bart Schwartz, a former federal prosecutor and currently chair of investigations firm Guidepost Solutions, was named monitor on March 1. He will be overseeing NYCHA’s progress towards deadlines laid out in an agreement with HUD, federal prosecutors for the Southern District of New York, NYCHA, and the de Blasio administration announced January 31.
Schwartz, whose still-unknown budget (reportedly he submitted an initial $20 million bill) will be paid by the city, is required to release essentially a public progress report on NYCHA’s compliance with the agreement each quarter, the first of which was released July 22. That report, which laid out the extent to which NYCHA is following the agreement particularly with regard to lead, mold, and elevator inspections, is highly critical of NYCHA, pointing to limits of its progress, describing “cascading putrid liquid” in one development, insufficient plans, and “daunting” deadlines.
“He is there to hold us to account,” then-NYCHA Interim Chair Kathryn Garcia said in a May 7 City Council hearing. The implementation of a federal monitor was widely welcomed by critics of NYCHA. Russ will have to establish a positive working relationship with the the monitor, a position which will be filled for at least five years and currently held by Schwartz.
Garcia and Schwartz butted heads over the progress of arguably the biggest focus of NYCHA, SDNY, and HUD’s agreement: the testing for and abatement of lead in NYCHA’s public housing stock.
In a pointed memo, Schwartz criticized Garcia’s testimony to the City Council’s Committee on Public Housing in the May 7 hearing, saying it “omitted material details about lead paint issues that are required to be addressed now and in the future by the NYCHA, and thereby may have resulted in a misleading impression being given to City Council members and the public about how these issues are being addressed.”
Per the agreement, NYCHA is required to test for lead paint in all NYCHA units built before 1978 (the year lead paint was made illegal) and all units NYCHA believes are occupied or routinely visited by children under six years old, who are the most vulnerable to lead paint poisoning and its effects on development. NYCHA plans to test 135,000 units with x-ray technology called XRF testing by the end of 2020.
During a press conference announcing the testing on the day it began, April 15, de Blasio said, “for the first time ever, we’re going into 135,000 NYCHA apartments to eradicate lead exposure. This aggressive new testing plan will help make New York the healthiest and fairest big city in America.”
It appears the authority is already behind.
The $88 million initiative is supposed to inspect 5,000 to 7,000 units a month. In total in the first three months of the initiative -- per data released August 8th -- only 9,475 units were tested, which is 7% of the total goal. At that rate, at the end of 2020 NYCHA will have tested roughly 47,000 apartments, 35% of the goal.
Of the 4,645 test results received from those inspections, 3,494 came back positive.
According to Schwartz’s report, “we note that our interviews have indicated that NYCHA lacks a comprehensive strategic policy to address the many issues surrounding lead-based paint.”
Longer-term, NYCHA is required to abate all lead-based paint in 50% of apartment units that contain it and remove all lead paint in 20 years.
NYCHA is required per the agreement to release action plans for how to deal with lead, mold, heat and hot water, elevators, and pests and waste. The action plan for lead didn’t cut it, according to Schwartz: “NYCHA’s Certification and Corrective Action Plan is a frank admission of an unacceptable level of deficiencies, from the quality of the interim controls to the number of units that have not been cleared.”
Garcia, in a return memo to Monitor Schwartz, acknowledged the ambition of the deadlines and said full compliance should not be expected immediately.
The agreement also lays out ambitious deadlines for addressing heating improvements, mold removal, elevator outages, and rat and roach reduction.
Compliance with elevator deadlines -- by January 2022, 70% of buildings with more than one elevator can have at most one instance per year where both elevators are out of service -- doesn’t seem likely. “Even with a sufficient increase in funding,” according to Schwartz, “NYCHA cannot simply engage in a capital program of installing a large number of elevators in a short amount of time because there is currently no plan in place to address the global challenges of the elevator portfolio.”
By January 2021, 95% of the times residents submit a verified mold complaint, NYCHA must remove all visible mold in the unit within five business days.
By October 2024, no more than 15% of occupied units can have internal temperatures that fall below the legal limit-- during the day between October 1st and May 31st if outside temperature drops below 55 degrees, internal temperature must be at least 68 degrees Fahrenheit and at least 62 degrees Fahrenheit throughout the night. NYCHA per the agreement will replace or address 500 boilers by 2026.
The rat and roach deadlines, like lead testing, have already proven controversial. The New York Daily News spoke with experts who said the pest control requirements -- NYCHA has three years to reduce the rat population by 50%, mouse population by 40%, and roach population by 40% -- are “nearly impossible to meet without an unlimited budget given the size of NYCHA…and the scope of New York City’s entrenched pest problems.”
During a March 11 oversight hearing, Garcia acknowledged pests are one area where the authority might need more time to develop a plan to meet the deadlines.
Possibly sensing the difficulties of the ambitious deadline, NYCHA announced in July a doubling the number of developments under de Blasio’s 2017 “Neighborhood Rat Reduction” initiative to decrease the rat population in the city. However, Schwartz doesn’t see this as the best tact, calling it “too narrowly implemented.”
“Certain NYCHA developments visited by the Monitor Team that are not located within one of the Mayor’s rat reduction zones have horrific pest infestation conditions (including rats). It is inadequate for NYCHA to largely bootstrap its rat reduction efforts to the Mayor’s rat reduction program. NYCHA’s rat reduction efforts must be more expansive across its entire portfolio in order to eradicate this problem.”
At this point in the Agreement, NYCHA is required to inspect the grounds and common areas every day for each of its buildings for trash and pests.
“Culture of Disengagement and Dysfunction”
Scrutiny of Russ has already begun, especially after the city missed two deadlines before naming him leader of the entity tasked with providing good housing and other services to an estimated 500,000 people in NYCHA public housing. Russ will reportedly earn a salary of just over $400,000, making him the highest paid city official in New York, and plans to regularly return to Minneapolis, where his family is remaining full-time, at least initially.
Along with the salary and travel, the choice of Russ was questioned given that in Minneapolis he managed a little more than 6,000 public housing units, compared to NYCHA’s roughly 175,000 units. However, the list of people with experience managing even close to the size of NYCHA’s portfolio is quite small.
As he attempts to save public housing in New York City, in part by meeting federal deadlines, Russ will have to significantly change NYCHA’s leadership and overall management culture, which have been heavily criticized for some time, especially over the last few years.
In a recent op-ed in Gotham Gazette, former commissioner of the city Department of Investigation Mark Peters and former first deputy commissioner of DOI Lesley Brovner wrote that the investigations into NYCHA that they oversaw revealed a “systemic culture of failing to take responsibility.”
Schwartz, in his initial report, wrote in regard to regional asset managers that NYCHA employs a strategy of “[moving] people around so that no one knows the history of the development in which they land and no one takes responsibility as they are new to the site.”
NYCHA’s leadership structure might be changing: Schwartz was required by the agreement to hire an outside consulting firm (he hired KPMG) to construct an organizational plan to “examine NYCHA’s systems, policies, procedures, and management and personnel structures, and make recommendations to the City, NYCHA, and the Monitor to improve the areas examined.”
The agreement required NYCHA to establish a Compliance Department, an Environmental Health and Safety Department, and a Quality Assurance Unit by mid-February. All three departments were created on time, but there were issues, according to Schwartz. The monitor is “concerned…about the effectiveness of these departments,” and even rejected two proposed heads, as they lacked “requisite qualifications and experience.”
In his online opening message, Russ said, “I’d like to remind staff that they should cooperate with the monitor’s team as we work together to achieve our shared goals. Because the wellbeing of our residents and employees is our primary focus, I’d also like to make clear that improper practices or conduct will not be tolerated at the Authority.”
Few if any of the requirements in the HUD deal or any of the many essential renovations at NYCHA complexes and apartments will be completed without significant financial investment. As of 2017, NYCHA projected that $32 billion is needed to properly fund the capital needs of its housing stock. Incoming Chair Russ has said it’s probably up to $45 billion now, but in his initial open letter to NYCHA employees, Russ wrote $32 billion.
“Without dramatic action, up to 90 percent of NYCHA’s 176,000 units of public housing could deteriorate to the point at which they are no longer cost-effective to repair by 2027,” according to Sean Campion, a researcher at the nonprofit Citizens Budget Commission (CBC), in testimony to the City Council’s Committee on Public Housing on November 15 of last year.
According to a CBC report, the average cost to repair a single NYCHA apartment is $181,000. If NYCHA apartments were to deteriorate at the same rate they have been, by 2027 90% of the authority’s housing stock could be designated as “very high cost” to repair, around $250,000- $300,000 each; and 8,000 units could need repairs exceeding the cost to replace the unit outright with brand new construction.
Running simultaneously with the changes spelled out by HUD, NYCHA will continue the roll out and implementation of NYCHA 2.0, first released by de Blasio and NYCHA officials in December, and its aggressive plan to resolve $24 billion in capital needs over 10 years.
NYCHA 2.0 accelerates the goals and initiatives of de Blasio’s previous plan, Next Generation NYCHA, raising questions about why the mayor and NYCHA leaders did not pursue a more assertive plan from the get-go when de Blasio took over City Hall and NYCHA in 2014. Next Generation NYCHA was released in May 2015.
The new plan has three tranches: One, converting public housing (Section 9 housing) into public-private partnerships (Section 8 housing) using the federal Rental Assistance Demonstration (RAD) process, which allows for private management of NYCHA complexes and an influx of revenue to the authority for leasing such rights; Two, a significant “infill” program to allow leasing of NYCHA space for private housing development, some of which will be market-rate and some “affordable” rentals; And three, selling NYCHA air rights.
Using the PACT program -- the city name for RAD conversions -- NYCHA will essentially lease buildings and developments to private companies who will manage public housing, investing in the housing projects, collecting rent, and running the facilities. NYCHA plans to use this process for 62,000 units which would address around $12.8 billion in capital needs over 10 years, according to the plan. The agreement with HUD states HUD’s support for continuing the RAD program but not necessarily expanding it (HUD must approve all RAD conversions).
When asked about the biggest unknown for NYCHA, Professor Bloom said it is continuing these conversions at an increasing scale. A major upside of the RAD conversions is it transfers the responsibility and cost of the upkeep of the units to private companies (which are often free of the cumbersome labor union work rules that NYCHA leadership and others have found frustrating). The money NYCHA receives from the conversions goes directly towards repairs and renovations in the converted developments.
Chair Russ is a big proponent of RAD. In Minneapolis, he put every single public housing unit through RAD conversions and would surely welcome an even more ambitious goal than 62,000 RAD units in the city.
There have been nine PACT/RAD conversions, two of them recently announced in Brooklyn and Manhattan. Plus, the largest single-site RAD conversion, totalling $560 million in renovations (partly paid by FEMA funds for Superstorm Sandy recovery), at Ocean Side Apartments in Rockaway, Queens was unveiled in June.
According to Bloom, PACT conversions can be lucrative for private companies as well as NYCHA: “There’s some real upside to taking on a NYCHA project that most people don’t realize,” Bloom said. “Many have significant capital investment over the years, more than people realize, they’re solid buildings…they’re fully-tenanted, they come with Section 8 investment, which is a federal guarantee, they’re not required to pay normal city property taxes, they can borrow or develop vehicles to renovate the projects, and they’re also in pretty good locations.”
The second piece of NYCHA 2.0 is even more controversial than PACT/RAD conversions, which are themselves criticized by some as “privatization” of public housing.
Using infill development, what is considered “underutilized” land, often parking lots, in the often sprawling public housing projects, is leased to private developers to build housing. The housing that will come to given NYCHA complexes will vary in terms of the balance of market-rate and “affordable” units (typically the more market-rate the more revenue for NYCHA), with proceeds of the lease agreements going to NYCHA and investments in the developments home to the new infill housing.
In NYCHA 2.0, the city estimates $2 billion in revenue for NYCHA from infill development in around five initial developments. But, it is unclear if the city can meet the pace it expects given how controversial infill can be -- private developers were recently forced to restart the community engagement process of planned infill development at Holmes Towers on the Upper East Side. The proposal would have built a 50-story building on the site of a playground, with half the units market-rate rentals, more than some residents and local officials like Manhattan Borough President Gale Brewer and City Council Member Ben Kallos would have preferred.
“To get the type of money to basically build a new development that includes an affordable component and has the market-rate to fully renovate the nearby development,” says Bloom, “it has to be more market-rate. The residents and advocates don’t want that. That’s the challenge.”
When asked about infill development on the Max & Murphy show on WBAI radio, outgoing Chair Garcia said in late May, “we want to maximize the money that we can get in order to do what is a pretty massive capital need. That being said, I can completely understand why residents might be anxious.”
“We really don’t have a lot of other options in terms of the incredible need,” she continued, “and I think this is a way to take funding or value from campuses and do two things: make sure residents do well, and increase the supply of housing and affordable housing in the city which of course is always in dire need.”
If residents decide to back an infill development in their own backyard, 100% of the revenue from the project goes directly to that development. However, the more money for repairs means more market-rate apartments, which can be unpopular with residents who fear broader gentrification of their neighborhoods.
According to an October 2018 CBC report, “developers would pay 50 percent less for a project with a 20 percent affordability set aside and 86 percent less for a project with a 50 percent affordable set aside.”
“Stricter requirements to produce greater amounts of affordable housing make the land less valuable to developers, and hence, generate less revenue for NYCHA,” the report states.
Infill development can lead to innovative architecture, as development plans must navigate what can be tricky underutilized lots of land. The Department of Housing Preservation and Development (HPD) and the American Institute of Architects New York launched an international competition to find architects to embrace the unique challenge of infill development. HPD may designate some or all of the five finalists, announced in May, to further develop their proposals into affordable housing projects.
The final part of the city’s 2.0 plan to fund NYCHA capital needs is selling air rights. NYCHA estimates it has 80 million square feet of unused air rights, some of which it will utilize to generate $1 billion in capital repair needs. During a December press conference announcing NYCHA 2.0, then-Deputy Mayor of Housing and Economic Development Alicia Glen said the city is “conducting a more thorough analysis as to where there are available air rights and sites that can receive them.”
Campion, of Citizens Budget Commission, also recommends that the city should integrate NYCHA into its affordable housing plans, which could shift more money to NYCHA units by making it a more central part of the city’s larger affordable housing landscape and planning.
In a recent statement to Gotham Gazette, a spokesperson for NYCHA said, “NYCHA will continue to utilize all NYCHA 2.0 tools in order to secure the funding it needs to improve the quality of residents’ homes and preserve public housing for generations.”
There are several reasons why it’s so important to address NYCHA’s many needs and improve the standard of living across NYCHA developments, while recognizing the important roles NYCHA and its residents play in larger city society, according to the Regional Plan Association. NYCHA residents are vital to the New York City workforce: there are 30,000 NYCHA residents who work in the healthcare industry alone, RPA recently noted. Also, NYCHA provides almost half of all New York City senior centers, over 100 childcare facilities, and many parks and open recreational areas.
While NYCHA 2.0 sets ambitious targets for revenue toward the more than $30 billion in need, more is clearly needed, and major questions remain with regard to executing that plan, as well as other operational goals, management changes, and compliance with federal mandates. NYCHA needs to embark on major elements of 2.0 like infill development while also making basic repairs to individual apartments, replacing boilers and roofs, and much more.
Other outstanding questions include the levels of state and federal funding that NYCHA will receive. The federal government funds two-thirds of NYCHA’s annual operating budget according to Garcia, but that funding is tenuous. Meanwhile, chronic underfunding by the federal government has led to the seemingly insurmountable capital need, according to Professor Bloom.
Controversially, HUD promised no new funds in the agreement, which de Blasio defended by indicating that he had saved the city from entering receivership and pointing to the hostile general outlook from the Trump administration toward public housing. Outgoing interim NYCHA Chair Stanley Brezenoff criticized the deal -- and refused to sign it -- because it included no new federal financial support for NYCHA.
“You can’t starve the system then complain about signs of malnutrition,” said City Council Member Mark Treyger of Brooklyn in the March 11 oversight hearing, in regard to HUD’s funding to NYCHA.
Amid a reelection campaign, Governor Andrew Cuomo last year made a strong show of support for NYCHA, after mostly ignoring it previously. He saw to $250 million additional funds allocated toward NYCHA in 2018, beyond an already committed $300 million to the housing authority. He’s been highly critical of the ongoing lead paint saga, calling NYCHA “fundamentally dysfunctional.”
“This is supposed to be the progressive capital of the nation, New York City. Everybody likes to talk about how progressive they are, how liberal they are, well we’re saying walk the walk don’t talk the talk,” said Cuomo, a former HUD secretary, in a July 2018 press conference. “If you actually care then you step up and you do the right thing by NYCHA after so many years of neglect.”
Cuomo has withheld $450 million of committed state investment, saying he does not trust the money would be spent properly, though it is set to be spent through the state Dormitory Authority working with NYCHA.
“Delivering money to NYCHA is like throwing it out the window,” Cuomo said in April 2018, when he threatened to appoint a state monitor for NYCHA, later opting not to based on federal involvement.
THE CITY reported in April that Cuomo was on the verge of releasing the money for elevator and boiler repairs, but he still does not appear to have done so. The de Blasio administration has agreed to put $2.2 billion in capital expenses towards NYCHA.
Federal, state, and city officials and activists have criticized de Blasio for the multitude of problems that have occurred under his administration, despite the attention and funding he’s provided NYCHA. Some say he waited too long to begin utilizing RAD conversions, and others have questioned his oversight duties in regards to the lead paint scandal, among other problems like heat and hot water outages.
Both de Blasio and Cuomo agree that more federal money is needed, yet the recent HUD agreement provides no new federal financial commitment.
“We need to make sure we are advocating for additional state funds and additional federal funds,” Garcia said in the Council hearing, a sentiment de Blasio has echoed many times.
“The last 10 years have definitely been much more volatile” for NYCHA, Bloom said. “What’s the difference? The difference is money. When, after 2000, when NYCHA’s financial situation vis-à-vis the federal funds declined, and the city cut its funding, NYCHA became more volatile. The other fact is, they’ve also entered into a cycle where some of their buildings are old…[R]ight when you need the money most is when you’re not getting it because of cuts in federal support.”