Moving Money Around To Try to Cover NYCHA

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All around her, Ann Valdez sees evidence of the New York City Housing Authority’s budget shortfall of more than $225 million. A third-generation resident of the Gravesend Houses in Coney Island, Valdez, 41, complains that the building she grew up in has been deteriorating. Residents endure long waits for frequently needed elevator repairs, and because of leaks, the basement often smells like sewage. At Gravesend Houses, the NYCHA deficit is hitting home.

Soon public housing projects may get a much-needed and long-awaited funding boost, but at a cost. The federal Department of Housing and Urban Development (HUD) is currently reviewing NYCHA’s request for membership in the Section 8 Voluntary Transition Program, which would allow the authority to use some of its federal Section 8 funds flexibly. The tradeoff, affordable housing advocates say, is that if HUD accepts NYCHA’s proposal, 8,400 fewer housing subsidy vouchers would be made available to low-income New Yorkers who are on the waiting list for Section 8. Instead, the money would go to subsidize operating costs at 21 city and state public housing complexes, currently run by NYCHA without any help from the federal government.

Advocates say this solution will mean relief for public housing residents – at the expense of other low-income New Yorkers. If Section 8 funds are diverted, “the major losers would be the … families on the Section 8 housing waiting list,” said Victor Bach, senior housing policy analyst at the Community Service Society of New York.

John Goering, a professor of public affairs and political science at the School of Public Affairs at Baruch College with 20 years’ work experience at HUD under his belt, said, “In any pure sense nobody would want to rob Peter to pay Paul.” But he also said NYCHA is not immune to the high cost of maintaining buildings in New York City. The money, he said, has to come from somewhere.

The authority is faced with a bleak financial picture – one that’s been years in the making due to rising costs coupled with large city, state and federal funding cuts. The approximate annual cost of operating public housing, according to the New York City Independent Budget Office (IBO), is $1.5 billion, though at present about 15 percent is missing – the shortfall of $225 million. NYCHA has tried to close the gap by raising rents, selling vacant land to the city’s Department of Housing Preservation and Development, using capital funds for operations, reducing services, and implementing a partial hiring freeze. But the IBO, even after taking those changes into account, projects a deficit of more than $44 million by this year’s end. (NYCHA’s fiscal year is the same as the calendar year.) In coming years, the IBO projects shortfalls of several times that amount.

These fiscal woes drove hundreds of public housing residents and NYCHA workers to a rally that filled City Hall Park on Oct. 4. With signs, chants and speeches, demonstrators told the city administration they want an annual budget line allocating $30 million toward the operation of city-owned public housing developments. One public housing resident, Hazel Noble of St. Mary’s Park Houses in the Bronx, told the assembled, “I remember when my development used to be a clean well-kept place to raise my family.” But, she said, a lot has changed since then. “The elevators seem to all be broken, the maintenance workers are scarce, but the rats are plentiful.”

The rally was organized by Manhattan City Councilwoman Rosie Mendez, chair of Council’s public housing subcommittee, City Councilwoman Melissa Mark Viverito, representing parts of Manhattan and the Bronx, Teamsters Local 237, which represents housing authority workers, and District Council 37, whose membership includes NYCHA workers and residents. Also involved were advocacy groups including Community Voices Heard, New York City Public Housing Resident Alliance, Good Old Lower East Side and Red Hook Initiative.

One decade ago, New York state stopped contributing annual operating subsidies to NYCHA. In 2004 the city also cut off funding. It was during the same period that Valdez of Gravesend Houses, a member of the antipoverty group Community Voices Heard, and other public housing residents say their buildings took a downward turn. Although NYCHA spokesman Howard Marder said, “It is our intention to preserve core services to our residents,” he conceded that “there has been some trickle down” of deficit woes to residents.

Because of the state and local cuts, IBO deputy director Preston Niblack said in testimony before Mendez’ public housing subcommittee early this year, “federal operating aid is being stretched to cover all 179,000 NYCHA units,” amounting to a loss of $60 million annually. And the federal government has not fully funded the authority since 2002. “Since then it’s been downhill,” said Marder.

City and state funders have made some contributions to NYCHA lately, but in the face of the needs it’s simply not enough. Gov. Spitzer recently increased the amount the state pays to public housing authorities in shelter allowances, putting them on par with what the state pays private landlords who house publicly subsidized residents. That contribution will amount to almost $47 million a year by the time it is fully implemented in 2010. The state also allocated $3.4 million dollars towards operating costs in 2007. That gave NYCHA and housing advocates hope because it created a line item in the budget, but that drop in the deficit bucket was the first money the housing authority has seen from Albany in a decade. The city also allocated $120 million for public housing last year, but that was a one-shot deal. Still, says Marder, “If anyone has stepped forward in support of public housing, it has been this mayor.”

“The city has certainly done its share,” agreed Dawn Walker, a spokeswoman for Mayor Bloomberg. “It’s up to the state and feds to do [their] share.”

All of that brings HUD to review NYCHA’s proposal to use Section 8 voucher funds to pay for public housing. The independent budget office projects this would save $36 million in 2008, $63 million in 2009, and $75 million in both 2010 and 2011. But Mendez says shuffling around insufficient funds is not the solution. “We here at all levels of government have to step up and fund the authority adequately,” she said.

Goering of Baruch agreed that if the government does not increase its public housing funding, tenants could end up “paying market rents or leaving the city or becoming homeless.”

The same financial need that has led NYCHA to apply for the Section 8 Voluntary Transition Program has also led U.S. Rep. Maxine Waters, a California Democrat, to propose federal legislation that also would allow housing authorities to shuffle around funds. The U.S. Senate will soon vote on The Section 8 Housing Voucher Reform Act of 2007 (SEVRA), which recently passed the House of Representatives with broad bipartisan support.

The bill would allow some fiscally distressed housing authorities nationwide to use all capital, operating and Section 8 funds flexibly, meaning NYCHA could use unlimited Section 8 funds to operate public housing. While housing advocates would like to see a bill that minimizes the effect on Section 8 and tenants’ rights, political realities appear to present a tension between the desire to maintain Section 8 funding and to preserve public housing, period.

Advocates like Bach understand NYCHA’s need for some flexibility in funding to stay afloat. But they would rather see the city and the state pick up what they say is their fair share. “We don’t want the Section 8 voucher funds to be lost, and if they have to be lost, we want to keep it to a minimum,” Bach said. “We’re concerned they may do it without getting the city and state to provide their fair share of the load.”

Contrary to the advocacy community’s understanding, Marder of NYCHA maintains “there really is no direct link” between using Section 8 funding to operate NYCHA and the future availability of Section 8 vouchers. He would not explain exactly how it will work, however.

Legal Aid Society and Community Service Society are not planning on trying to block the bill’s passage because, according to Bach, “the idea now is not to pretend we can stop it.” Also, one thing they like about the legislation is that it does address Section 8 funding by adding 100,000 Section 8 vouchers nationwide over five years, rolled out at 20,000 annually. “People like the increase in Section 8 voucher funding that SEVRA represents,” said Bach.

Still, worries about the bill are numerous. The new law, if passed unchanged in the Senate, would not only allow NYCHA to spend Section 8 funds as it sees fit, it would also waive some tenant rights now afforded to public housing residents. The Brooke Amendment, which limits participants’ rents to 30 percent of their income, would be waived and housing authorities would be able to impose work requirements on tenants plus time limits on a person’s public housing residence.

NYCHA’s Marder said that the authority would not implement any of those requirements if the bill passes. Instead of blocking the bill, both Legal Aid and Community Service Society are in talks with NYCHA and U.S. Sen. Charles Schumer to remove its most controversial elements before the Senate votes.

No matter where the money comes from, housing advocates say unequivocally that they should not come at the expense of Section 8. “Every dollar saved for NYCHA we think of as a dollar saved for Section 8 voucher funds,” said Bach. Section 8 slashes would come at a time when the number of homeless people in the city is rising and the number of affordable and subsidized apartments is dwindling.

“I think it’s a cop-out,” said Valdez, of Gravesend, of the plan to use Section 8 funds to maintain housing projects she has lived in all of her life. “The people who live in New York City public housing get screwed. The people in Section 8 get screwed,” she said.

Not so, says Marder of NYCHA. “No one will lose their apartment as a result [of] this program.”

– Kate Pastor