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NYCHA Chair Outlines Some Movement Up Steep Hill

Shola Olatoye

NYCHA Chair Shola Olatoye (photo: Buck Ennis)

The head of the New York City Housing Authority (NYCHA), landlord to more than 400,000 New Yorkers and leader of more than 11,000 employees serving about 178,000 apartments in nearly 2,600 buildings, believes that the future of public housing in the city must be driven by the same type of innovation embodied in its early years.

“Certainly, we must do the basics better,” said Shola Olatoye, NYCHA CEO and Chair, at a breakfast hosted by Crain’s New York Business at the New York Athletic Club on Thursday morning. “But frankly that won’t be enough. We have to innovate.”

In prepared remarks, Olatoye traced the past, present, and future of NYCHA, from its inception in 1934 as a “grand and sweeping experiment” to its current financial and structural woes and the vision laid out in the city’s strategic ten-year plan, NextGeneration NYCHA. Frankly assessing “crummy” conditions and little historical reason for optimism among NYCHA tenants, Olatoye outlined the city’s accomplishments in the year since the NextGeneration plan was announced, acknowledged the challenges that lay ahead in revamping an outdated operational model, enhancing programming, and tapping new pipelines of funding.

NYCHA has about $17 billion in capital needs to address long-developing problems with its buildings and properties. Olatoye was proud to announce, though, that the authority has a balanced operational budget two years running.

“I am fundamentally a hopeful person,” she said. “It will be messy and sometimes unnecessarily complicated. It demands that all levels of government support it, not simply attack it. It must aggressively court private investment and individual donors, not simply for capital sources but for new sources of support, partnership and innovation.”

Olatoye stressed that NYCHA in its current state is, for the most part, a far cry from its early years. The system that once built high-quality housing with strong political and public support, provided a range of community and social services, utilized bold urban design and strived for racial integration, no longer exists, she said. Sources of funding, especially federal and state, have dried up and the demographic profile of NYCHA residents has changed.

One compounding problem, she told the audience of about 150, is that “While the funding and population we serve has changed dramatically, NYCHA’s operating model has largely remained frozen in time.” Key elements of NextGeneration NYCHA outline the way forward, Olatoye said.

She listed the initiatives of the new strategic plan -- decentralizing management of developments, retraining property offices, transitioning to digital technology, integrating services with other city agencies, raising private funds for capital needs, among others. She announced that by the end of the month, the city would seek bids from developers to build housing in Boerum Hill and the Upper East Side that will be 50 percent affordable and 50 percent market rate - part of the city’s controversial plan to add new housing stock on NYCHA properties that will bring in revenue and create more affordable housing.

Olatoye also said the city was preparing to submit the country’s largest application to the federal Department of Housing and Urban Development (HUD) to preserve 15,000 affordable housing units and implement more than $3 billion in capital repairs at NYCHA developments.

The biggest challenge is NYCHA’s ability to preserve quality affordable public housing with limited funding. In a question and answer session after Olatoye’s 15-minute speech moderated by Erik Engquist, assistant managing editor of Crain’s, and Ben Max, executive editor of Gotham Gazette, the NYCHA CEO detailed major avenues of the strategic plan. These include building 10,000 units over the next ten years that are 100 percent affordable (three projects are already under way), meaning that rents will fall under certain limits and raising between $300-600 million over the course of the plan through the NextGeneration Neighborhoods program, which is often referred to as “infill.”

The agency’s funding challenges are part of virtually every operational and programmatic issue in its purview. While Olatoye pointed out that Mayor Bill de Blasio has invested more than $570 million into NYCHA for operating expenses and capital needs, the agency suffers from continued disinvestment by state and federal authorities.

Federal funding of $300 million each year is insufficient to meet capital needs, she said, and the state’s commitment of $100 million in capital funds last year came for the first time since 1998 - but, the state funds are still in limbo and will be funneled through state authorities rather than directly allocated to NYCHA. Olatoye declined to speculate as to why the state has not moved forward to use the funding to address problems at NYCHA it was dedicated for.

As part of NYCHA’s operational overhaul, Olatoye said the agency was moving towards a model with community partners to provide services in areas of education, employment, and mental health, and to connect residents to city resources like cultural institutions. “We’re reorienting the way we do that,” she said, contrasting the model with the original developments with all-encompassing services. She said that a variety of programs have been in place to help NYCHA residents, especially youth, experience different parts of the city, but that those are being rethought and new partners are being sought.

A running theme of Olatoye’s appearance was that NYCHA is looking for investment on a variety of fronts - from real estate developers, community-based organizations, and others who are willing to aid in NYCHA’s attempted renaissance. [Hear Olatoye's full remarks and the Q&A through the audio embedded below this article]

Olatoye also announced a pilot program starting in July at 12 developments that would gauge the viability of providing near round-the-clock management and repair service rather than the current 8 a.m. to 4 p.m. model. In relaying the current, antiquated hours to the audience, Olatoye explained that NYCHA is working with the main labor union involved to expand hours so that residents can have repairs done in the evenings.

While she seeks to turn a massive ship around, Olatoye is landlord to an aging NYCHA population that is also poorer than it used to be, with many working-age residents not in the workforce for a variety of reasons, some of which include health challenges. NYCHA is also currently dealing with an inquiry from federal authorities around its lead abatement procedures in developments and possible underreporting of hazardous conditions.

With the implementation of the NextGeneration plan, Olatoye envisions a reinvention and reinvigoration of NYCHA. By 2025, she said, NYCHA will be financially stable, generating recurring revenues and maintaining strong reserves. Its capital needs will fall from $17 billion to $10 billion and it be an “attractive investment” for municipal bond holders who will help it move further toward zero. Residents would wait no longer than 72 hours for basic repairs and will be able to “once again say they live in safe and clean housing.”

Below: 1) a conversation between Ben Max and Jarrett Murphy about NYCHA and 2) the full Crain's breakfast event:

Listen to Gotham Gazette's Ben Max & City Limits' Jarrett Murphy discuss NYCHA and Chair Olatoye's latest comments:

Listen to the full Crain's New York Business breakfast with Chair Olatoye, including her remarks and the Q&A session that followed:

by Samar Khurshid, senior reporter, Gotham Gazette

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With Few Reservations, Council Finalizes New $82 Billion City Budget

Council Mayor budget

The Mayor & the City Council (photo: William Alatriste)

The City Council chambers at City Hall were filled with grief on Tuesday. Before the Council would conduct its business for the day -- approving an $82.1 billion budget for the city’s 2017 fiscal year -- members first paid their respects to the 49 people killed by a terrorist who shot patrons at a gay nightclub in Orlando on Sunday. One by one, Council members read out the names of victims and placed small electric candles on the dais at the front of the chamber. Almost every Council member expressed solidarity with the LGBT community by placing a small rainbow flag on their desks.

The somber mood soon turned celebratory, though, with the earliest adoption of the city’s budget in 15 years. Following months of hearings and negotiations, after funding for a number of Council priorities was added to the mayor’s final proposal, and amid concerns of a widely expected economic slowdown and potentially insufficient savings, the Council approved a plan that increases city spending by about $3.6 billion over last year’s adopted budget. The new fiscal year begins July 1.

“With this budget agreement, once again this City Council has proven itself to be a champion for all New Yorkers in all five boroughs,” said Council Speaker Melissa Mark-Viverito, at Tuesday’s vote. “This is a budget for everyone. We’re investing in jobs. We’re investing in youth. Above all else, we’re investing in New Yorkers and we’re investing in our future.”

The final budget is $100 million lower than the mayor’s executive budget (but almost the exact amount of the preliminary budget proposed by Mayor Bill de Blasio in January). It makes targeted additional investments in the city’s youth, seniors, immigrants, cultural institutions, public safety, healthcare, social services, and education, among other areas. However, there are some concerns from within and outside the Council that the city budget is growing too quickly and that there is not enough being put aside in reserves, though rainy day funds are at their highest levels ever.

“Today’s Council vote marks the earliest adoption since 2001,” said de Blasio in a statement, “and further highlights the good work that can be done when the Administration and City Council come together. The adopted budget is responsible, progressive, and honest.”

At the insistence of the Council, the budget was geared to creating larger savings and setting aside more reserve funds. The Citywide Savings Plan of $2.7 billion over the next two years is the largest it has been in five years. The city reserves stand at $3.9 billion, with $250 million added to the Retiree Health Benefits Trust fund before the final budget agreement.

Nevertheless, multiple Council members who voted to approve the budget and one who didn’t expressed reservations, mostly with the increase in spending and what they viewed as an inadequate level of reserves. Budget watchdogs and fiscal monitors have praised the city’s budgeting and fiscal health, but concerns about an eventual economic slowdown remain. Comptroller Scott Stringer has also stressed that the city needs to reach higher reserve levels, between 12 and 18 percent of expenses. Currently, the city stands at just over 10 percent.

At the vote, Council Member Dan Garodnick warned that the massive increase in spending and the ballooning of the city’s workforce would mean trouble in the future. Citing a possible budget deficit of $3.8 billion in fiscal 2019, he said, “As a city we must take steps now in good times to prepare for the inevitable bad times ahead. Progressive, honest and responsible budgeting protects people not only when revenues are strong but when they are weak. We should better protect ourselves from having to lay people off and cutting core services when that happens.” Council Members Corey Johnson and Ben Kallos expressed similar concerns.

Council Member Rosie Mendez was the only member to vote against the budget, which passed 48-1 in the 51-seat Council. Mendez cited spending increases, a rushed process, and issues with funding that was supposed to go to her district in the current budget.

A number of Council members voted to affirm the new spending plan and explained the specific area or areas of funding they were most happy with. Council Member Margaret Chin, chair of the Committee on Aging, was particularly proud of the budget’s increased funding for seniors. But, she said, “we still have a way to go before the Department for the Aging’s core funding fully reflects the needs of all seniors.” She pointed out that the Council will contribute a large chunk, $21 million, to DFTA’s $330 million budget in the coming fiscal year.

Chin’s sentiment was echoed in a statement by two of the largest senior advocacy groups in the city, AARP NY and LiveOn NY, which criticized the budget for cutting senior homecare services by $2.2 million and other changes. “Today’s enacted budget agreement is short-sighted and clearly insufficient to ensure a livable city for New Yorkers of all ages,” said Beth Finkel, state director, AARP, in the statement. LiveOn NY’s director of public policy, Bobbie Sackman added, “The inability and unwillingness of the de Blasio administration and City Council to reach an agreement to fully fund these programs creates a hardship and a dangerous reality for seniors who so desperately need and rely on support.”

Throughout the budget process, Council Member Helen Rosenthal, chair of the contracts committee, has been calling for increased funding for human services nonprofits that contract with the city but struggle to meet costs of salaries, administration, equipment, rent, and maintenance. While voting for the budget on Tuesday, Rosenthal again decried that this funding hadn’t been included and said the city’s commitment to these providers, who operate shelters, food pantries, adult literacy programs, and more, “could be better.” Without the government’s help, she said, “we’re setting these providers up to fail.”

Another major item that remains somewhat unresolved is the administration’s plan for the city’s municipal hospital system, New York City Health + Hospitals. Speaker Mark-Viverito said at the “budget handshake” announcement with the mayor last week that the plan was still under discussion. At the budget vote, Council Member Ritchie Torres criticized the administration for acting too late. While supporting the city’s infusion of about $2 billion into the ailing system, he insisted that the problems in the system were foreseeable and a plan should have been in place three years ago. “The city’s late and lackadaisical approach hardly inspires confidence about the future of Health + Hospitals,” Torres said. “I am concerned and low-income New Yorkers should be as well.”

The budget vote came quick on the heels of the Council’s Monday release of the “Schedule C,” a document listing the Council’s adjustments to the budget, terms and conditions set on spending, and $59 million in discretionary grants or member items sponsored by individual Council members and the Speaker. The discretionary funding supports programs at nonprofits throughout Council districts “in order to meet local needs and fill gaps in City agency services,” according to the document. Each Council member received $400,000 in base funding, with additional pots of $25,000, $50,000, $75,000 and $100,000 depending on poverty levels in their districts. The Council again identified five areas for discretionary funding -- spending on the aging, youth, anti-poverty programs, local initiatives, and borough-wide needs. Each year, Council members are able to submit their plans for allocating these funds to their chosen organizations and initiatives.

A separate “Speaker’s Initiative” for citywide needs, totaling $3.39 million, is also included under the funding.

by Samar Khurshid, senior reporter, Gotham Gazette

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Nonprofit Funding Boost, Pre-K Pay Parity Left Out of City Budget

de blasio council budget question

Mayor & Council members announce budget deal (photo: Ed Reed, Mayor's Office)

In the weeks leading up to Wednesday’s budget agreement between Mayor Bill de Blasio and the City Council, a number of Council members decried what they said was underfunding of top Council priorities including summer youth employment, cultural institutions, libraries, senior services, and more. Consequently, the mayor conceded to most of those funding requests in the final deal.

Most, but not all. Two major issues -- additional funding for human services nonprofits contracted by the city and funding to ensure pay parity for pre-kindergarten providers -- were absent from the deal, leaving Council members, advocates, and those at relevant organizations reeling.

“I’m extremely disappointed,” said Council Member Helen Rosenthal of the lack of additional nonprofit funding. “We ask these providers to do serious work for 2.5 million New Yorkers. When we underfund them, we’re shortchanging New Yorkers.”

The city contracts with nonprofits to provide a range of services including after-school programs, mental health services, food pantries, and senior care. Nonprofit providers have been warning of a crisis in the sector if the government does not step in to increase funding - they say that the city is not paying them for the full costs of their services. In January this year, Mayor Bill de Blasio took one big step in announcing a $15 an hour minimum wage for employees of nonprofits contracted by the city, but the contracts that the city awards must reflect these added compensation costs, along with rising rent and other operational fees, those who run these organizations say.

Rosenthal, who chairs the Council’s committee on contracts, has been stressing the issue throughout the budget season. Last month, she led 46 other Council members in signing a letter to the mayor pushing him to baseline the additional funding, which would amount to about $25 million or a 2.5 percent increase. This funding would go to Other Than Personal Services (OTPS) costs, such as rent, supplies, maintenance and technology. If the city doesn’t help nonprofits cover those costs, Rosenthal said, “We’re going to have fewer staff and dirtier conditions."

Nonprofit closures, the worst case scenario, are also not that unlikely. About 18 percent of the city’s roughly 3,700 nonprofits faced insolvency in 2013 and 27 percent operated on a deficit in 2014, according to a report by the Human Services Council (HSC), a coalition of nonprofit providers.

“The human services sector is in crisis that has a lot to do with government underfunding of contracts,” said Allison Sesso, executive director of HSC. “We’re relying on these nonprofits to address some of the city’s most pressing issues like homelessness. How can they help struggling families if they’re struggling themselves?” Sesso said the city missed an opportunity to “turn the tide in the right direction,” but she was hopeful that efforts by advocates would yield results in the November modification to the budget.

Mayoral spokesperson Freddi Goldstein confirmed in an email that the funding was not included but said that “the administration is committed to the city’s nonprofit sector and the New Yorkers it serves, including many of our most vulnerable. That is why we have made unprecedented investments in human services, including securing our contractors on the road to $15 an hour. We are always looking for ways to strengthen nonprofits and will continue to do so moving forward.”

Another significant funding demand the administration did not meet in the budget is ensuring pay parity for pre-kindergarten providers, a long-running gripe for employees of Community Based Organizations (CBOs) who administer the city’s universal pre-kindergarten mandate but whose employees receive lower pay and benefits than Department of Education employees doing the same work. A number of elected officials have supported the cause, including multiple City Council members and Public Advocate Letitia James. A spokesperson for the Council Speaker’s office said though the funding wasn’t in the budget for both pre-k pay parity and nonprofits, conversations on both issues are ongoing.

“If they want community-based programs to survive then they need to put the money forward,” said Andrea Anthony, executive director of the Day Care Council of New York, which represents nonprofits that provide childcare services at city-funded centers. “You can’t have the DOE competing with small nonprofits for the same pot of professionals and children.”

Currently, the Day Care Council is engaged in union contract negotiations with the Council of School Supervisors and Administrators (CSA), which is one reason the administration stated it hadn’t included funding for pay parity in the budget. “The City is engaged in those discussions and supportive of the negotiations underway – but it’s a collective bargaining process between the providers and the unions,” said Goldstein, the mayoral spokesperson, by email.

Several Council members who have been vocal on the issue did not comment for this article. Council Member Rosenthal said she wasn’t familiar with progress on the contract negotiations. A spokesperson for Council Member Stephen Levin said they were waiting for final budget documents to be posted and Council Member Elizabeth Crowley was unavailable for comment.

Anthony of the Day Care Council said union negotiations over salary and benefits would likely be concluded within a month and the union has been supportive of reaching parity levels for pre-k teachers. “They understand that without certified teachers, these organizations cannot function,” she said.

CSA Director of Communications Clem Richardson said the union wasn’t averse to raises for teachers but that their primary concern was the directors at CBOs who often make less than pre-kindergarten teachers. “We believe everyone who takes care of children deserve a living wage in this very expensive city that we live in,” he said in a phone interview. He said there had been no progress at a negotiation meeting on Monday but another meeting was scheduled for later this month. He was also optimistic that the final 2017 budget would include funding to accommodate these raises. The City Council is set to vote the budget through on Tuesday, though there is always the November budget modification. The fiscal year begins July 1.

Richardson’s optimism was echoed by Stephanie Gendell, associate executive director of the Citizens Committee for Children, an advocacy group. “We remain hopeful as labor negotiations continue,” she said, “that the city will come to an agreement that includes salary parity for the early childhood education workforce.”

by Samar Khurshid, senior reporter, Gotham Gazette

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