Deplorable housing conditions in some developments and ongoing allegations of mismanagement have put the New York City Housing Authority (NYCHA) at the center of activity to address the agency’s myriad issues. Members of Congress representing New York City wrote to HUD Secretary Ben Carson on December 11 expressing their “adamant opposition” to HUD’s apparent consideration of placing NYCHA into administrative receivership. Advocates too are opposed to the imposition of a HUD receiver. Previously, on November 14, a federal judge rejected a proposed Consent Decree negotiated among the U.S. Attorney’s Office representing HUD, NYCHA, and the City of New York that would utilize a court-appointed monitor rather than a HUD receiver. The judge concluded that the proposed Consent Decree “would bring about an unwarranted judicial usurpation of responsibilities that Congress has expressly entrusted to HUD.” Advocates hope that a new Consent Decree can be drafted that utilizes a monitor but also addresses the concerns expressed by the judge. Meanwhile, to begin addressing conditions at NYCHA buildings, Mayor Bill de Blasio announced on December 12 a comprehensive plan, “NYCHA 2.0,” to preserve the city’s public housing. HUD Secretary Ben Carson sent a letter to NYCHA on December 14 stating that if the U.S. Attorney’s Office and NYCHA did not produce a plan of action acceptable to HUD by January 31, 2019, HUD would declare NYCHA in substantial default.
The Congressional Delegation Letter
The New York City congressional delegation’s letter sent on December 11 to Secretary Carson stated that HUD officials have publicly expressed the opinion that placing NYCHA into administrative receivership would be the best course of action for dealing with the many problems residents have endured. The congressional delegation is “adamantly” opposed to an administrative receivership.
The delegation’s letter expressed “frustration with NYCHA’s current conditions and mismanagement that has plagued the Agency for years.” The letter states: “Residents suffer from a consistent lack of hot water, insufficient heat during winter months, broken elevators, and a widespread and reoccurring mold problem.” The letter also cites the prior management’s false certifications pertaining to lead-based paint inspections.
While acknowledging that “a full-scale review of NYCHA’s operations, personnel, and management structure is needed,” the delegation states they “believe allowing tenants and their elected representatives a voice in the process of that review is a better course of action than an administrative receivership.”
The letter refers to prior administrative receiverships conducted by HUD that have had a mixed track record. Many administrative takeovers have been fraught with demolition, sale of public assets, resident displacement, and on-going health and safety concerns even after completion of the receivership.
Judge Rejects Proposed Consent Decree
On June 11, 2018 the U.S. Department of Justice announced that the U.S Attorney for the Southern District of New York, HUD, and the Environmental Protection Agency (EPA) filed a complaint against NYCHA while proposing a settlement agreement in the form of a Consent Decree with NYCHA and the City of New York. The complaint alleged that for years NYCHA failed to comply with key HUD and EPA lead-paint safety regulations by failing to inspect apartments for lead paint hazards and to remediate peeling lead paint, among other issues.
The proposed Consent Decree would have imposed a federal monitor to be appointed by the Court. It would also have committed the City of New York to provide an additional $1 billion in capital funds to NYCHA over the next four years, an amount over and above what the City had already budgeted, plus at least an additional $200 million in capital funds each subsequent year until the conditions identified in the Complaint were addressed. In addition, the proposed Consent Decree would have required NYCHA to comply immediately with HUD’s and EPA’s lead-safe work practices rules and to provide notice to residents in an apartment where NYCHA has identified lead paint.
Judge William H. Pauley III in the U.S. District Court for the Southern District of New York rejected the proposed Consent Decree on November 14 and strongly suggested that the federal government take over NYCHA. He said the agreement “is not fair, reasonable, or consistent with the public interest.” He ordered the parties to submit a report by December 14 with their positions on how to proceed.
Judge Pauley questioned the intent to utilize a court-appointed monitor. He wrote that “HUD’s comparative abdication of its remedial responsibilities and powers is particularly striking, especially given all of the Government’s allegations regarding deplorable conditions of NYCHA’s housing and NYCHA’s deliberate attempts to pull the wool over HUD’s eyes. Indeed, the proposed Consent Decree relegates HUD to a narrow, auxiliary role in relaxing its own regulatory constraints to allow NYCHA to comply with the decree.”
The judge acknowledged that the federal government had considered a HUD receivership, but the administration thought a monitor made the most sense given NYCHA’s size and the need for buy-in and support from community residents and employees. The judge noted, however, that in the past HUD had taken over the Chicago Housing Authority and appointed receivers to oversee the Boston and Washington, DC, housing agencies. He asserted that the powers of a receiver would be broader than those of a court-appointed monitor.
Judge Pauley also said the proposed Consent Decree did not have strong enough enforcement mechanisms, calling them “formless.” The performance requirements for NYCHA would be developed in the future by the monitor and “are not subject to the court’s approval.”
Finally, the judge wrote that the “adversarial positions the parties have staked after signing the proposed decree” while waiting for the Court to approve it, “portend this Court’s de facto conscription into superintending NYCHA indefinitely – a role that judges are ill-equipped to assume.”
As reflected in an op-ed by the Community Service Society of New York, advocates would prefer that the relevant parties could agree to propose a new Consent Decree that better meets the judge’s objections: one that would place NYCHA in the hands of a federal monitor, preferably reporting to the court, with full powers to set capital project priorities and reform NYCHA’s organization and property management operations; that lays out specific standards for what is to be accomplished; and that might compel additional capital commitments from government. If the judge cannot accept this option, then advocates would prefer a judicial receiver overseen by the court rather than an administrative receiver overseen by HUD given the greater effectiveness of judicial receiverships and the Trump administration’s proposals to end the public housing capital fund. Vic Bach of the Community Service Society was interviewed by Spectrum News NY1 and provides a discussion about receiverships in general, what is needed to improve conditions at NYCHA, and a preference for a federal monitor.
Late on December 14, the U.S. Attorney’s Office and the city submitted papers to the court requesting that they have until January 31 to submit a joint status report.
Mayor de Blasio Announces “NYCHA 2.0”
New York City Mayor Bill de Blasio announced on December 12 a comprehensive plan, “NYCHA 2.0,” to preserve the city’s public housing. The plan claims to address over a ten-year period $24 billion out of NYCHA’s estimated $32 billion capital shortfall. Of the $24 billion, $8 billion will be from regular streams of federal capital funds, plus previously pledged state and city funds. (This shifting of the financial burden of maintaining public housing to local and state governments is the expressed policy of the Trump administration.) NYCHA 2.0 has four components, the previously announced “PACT to Preserve” and newly announced “Build to Preserve,” “Transfer to Preserve,” and “Fix to Preserve” initiatives.
The Permanent Affordability Commitment Together (PACT) component, announced in November, will address $12.8 billion in overdue repairs at 62,000 units, one-third of NYCHA’s housing stock, by using HUD’s Rental Assistance Demonstration (RAD) to convert public housing to project-based vouchers (PBVs). The converted developments will be maintained and operated by private developers, but they will remain permanently affordable to public housing-eligible households. NYCHA will have ground leases for the properties and will maintain oversight of all major decisions.
NYCHA will combine RAD with a unique use of HUD’s Section 18 demolition/disposition process to lease the land and buildings to developers (there does not seem to be an intent to demolish the properties). Section 18 usually results in residents obtaining “tenant protection vouchers” - Housing Choice Vouchers for residents to use elsewhere in private market-rate housing. But in this case NYCHA has obtained HUD waivers to allow Section 18 tenant protection vouchers to be converted to PBVs used in a portion of the units at former public housing developments converted under RAD, so that there is a one-for-one replacement of hard units to enable residents to remain in their current homes.
The Build to Preserve (BTP) component will build new mixed-income housing on underused publicly owned land and dedicate 100% of the proceeds, estimated to be $2 billion, to make repairs at the surrounding NYCHA public housing developments containing 10,000 units. The new buildings will be subject to the city’s Mandatory Inclusionary Housing obligation that requires various levels of “affordability” with some of the new units. NYCHA and the City estimate that there will be an additional 10,000 units of variously “affordable” units in the new buildings.
The Transfer to Preserve (TTP) component will use “air rights” above NYCHA properties – buildable space in otherwise crowded neighborhoods - to generate $1 billion for capital repairs for adjacent NYCHA developments.
The Fix to Preserve (FTP) component will rapidly address rehab and repair issues related to elevators, heating, pests, mold, and lead problems.
HUD Gives NYCHA until January 31 to Submit Acceptable Plan of Action
HUD Secretary Ben Carson sent a letter to NYCHA on December 14 stating that if the U.S. Attorney’s Office and NYCHA did not produce a plan of action acceptable to HUD by January 31, 2019, HUD would declare NYCHA in substantial default. Under the Housing Act of 1937 HUD has a variety of actions it can take, including receivership. A media release on December 14 elaborated on the short letter. In particular, the plan of action must remedy problems related to lead, mold, lack of heat, elevators, vermin, and management. The media release states that HUD will not agree to any arrangement unless it establishes tangible goals and milestones to address serious health and safety standards, including lead and mold. One of ten key principles laid out in the media release is “local control of day-to-day operations by NYCHA and New York City.”
The congressional delegation’s letter is at: https://bit.ly/2RVLDg2
The proposed Consent Decree is at: https://bit.ly/2CbSw7r
The judge’s opinion is at: https://bit.ly/2zTZqwn
An op-ed written by the Community Service Society of New York published in the New York Daily News is at: https://nydn.us/2S7sDuQ
Watch the T.V. interview with Vic Bach, senior housing policy analyst for Community Service Society at: https://bit.ly/2CekJKM
Mayor de Blasio’s press release about NYCHA 2.0 is at: https://on.nyc.gov/2LbquM8
HUD December 14 media release is at: https://bit.ly/2GnXdPw
Secretary Carson’s letter to NYCHA is at: https://bit.ly/2QSTYE3