Housing Boss: Big Deficits Remain

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The Alfred E. Smith Houses on the Lower East Side, part of the NYCHA empire of 334 developments and 179,000 residents that has endured severe financial strains for years.

Photo by: Jarrett Murphy

The Alfred E. Smith Houses on the Lower East Side, part of the NYCHA empire of 334 developments and 179,000 residents that has endured severe financial strains for years.

Michael Kelly wants to break the New York City Housing Authority (NYCHA) out of its shell by linking with other government agencies and local nonprofits, building on under-used NYCHA land, and hopefully balancing the budget. Before he took over as general manager of NYCHA in October, Kelly was chief of public housing authorities in San Francisco, New Orleans, and Washington, D.C.

How is NYCHA different from other housing authorities where you have worked?

It’s the largest in the country by far… Also, the decay that occurred in much of the public housing throughout the nation through the 80s and 90s did not happen here. In New York, for the most part, the public housing is the same kind of housing that is built for moderate-income and market-rate housing. The style itself is a New York City style, whereas across the country a lot of this stuff was built as temporary World War II military housing that was converted over to public housing control, or it was built with really substandard materials or substandard design, which contributed to its distress.

The classic model of public housing redevelopment practiced in many other cities tears down a public housing site and replaces it with, say, one third affordable homeownership and two thirds various kinds of affordable rental housing. Are there barriers to doing that here?

I don’t know if it’s barriers so much as it is a real commitment to replacing the affordable rental housing units that were on the site. Once you’ve established that principle, the question is how much of that other stock can the site support?

So NYCHA is committed to one-to-one replacement of any existing public housing demolished in redevelopment, so that no affordable housing is lost?

I think it is. Never say never, but particularly with regard to demolition of existing structures, I think my board of commissioners would want that question answered.

The formal rules for federal public housing redevelopment also had a commitment to lowering the density of public housing projects. How does that apply in New York City?

It’s dangerous to get into strong generalizations… but just the opposite. I think that we would be looking for infill opportunities [that could add new density]… If we were to have projects that would reintegrate the street grid within one of our larger sites, then development could very well happen along either side of that newly-created street that would have the kind of neighborhood amenities—that folks would come into our property to get their dry cleaning done or buy a sandwich.

Last month NYCHA closed a deal with HUD that will provide new funding to thousands of public housing apartments built by the city and state. These apartments have received no city or state funding for years, so that NYCHA has been stuck paying for them, including the cost of rent subsidies for residents and maintaining the buildings.

I don’t know if ‘stuck’ is the right word… They were provided as a resource to NYCHA in the best of spirits when they were built. [But over time] the city and the state’s local resources were no longer able to operate and modernize these sites.

How many of these apartments are there in the city?

Over 20,000 apartments in total, of which 2,000 are [already] receiving Sec. 8 to subsidize their operations. About 12,000 of these units were part of this mixed-finance transaction. [That means] these units are now getting their own [federal rental] subsidy and their own capital dollars to improve the maintenance and physical conditions of the sites, and just as importantly, dollars aren’t being drained from other sites to pay for that.

In part because of supporting these apartments, NYCHA has had huge budget problems. How close is NYCHA to balancing the budget?

We are moving anywhere in the $150 million structural debt range, of which this transaction will bring in approximately $60 million or $70 million a year. And then the next phase is the 6,000 [remaining state and city public housing apartments]… We are working with HUD to provide subsidy to the rest of the units. And then the third area is to look at having some philanthropic partners… so that they are providing the services directly rather than NYCHA having to provide them. [NYCHA spends $70 million a year to provide community social services that are no longer federally funded.]

Some housing advocates are convinced that the housing authority is warehousing apartments. The underlying fear seems to be that these apartments will be flipped to become condos.

It’s simply not true… We currently have 99 percent occupancy rate on the units that are available.

Are there some properties that have a larger number of vacant apartments, and is there something that makes them different? Absolutely. It’s the Whitman Ingersoll property in Brooklyn, which I think is the one that is getting the most attention…This is a major modernization project… a gut rehab job that requires us to take those units off-line so that we can do a comprehensive modernization.

Is there a barrier that would make it impossible to use those apartments as anything but public housing?

The barrier is New York City itself. There is a love for the preservation of public housing here that is stronger than anyplace I’ve ever been to… Anything on any kind of scale… would require a public review.

About the Sec. 8 “housing choice” voucher program, which provides rental subsidy to low-income families. How many Sec. 8 vouchers does NYCHA have?

We administer over 100,000… New vouchers only become available through the number of people that turn back their vouchers through attrition [about 6 percent a year on average or 6,000 vouchers].

But last year… attrition was more in the 3 percent range [providing just 3,000 vouchers]… The larger economy had a tremendous impact, fewer people moved out… Suddenly we had thousands of participants with no vouchers in their hands and we can’t stop this train… at that point there’s no way of turning back.

So [to date] 3,000 families didn’t get the Sec. 8 voucher that they had been promised by the housing authority. What is happening to these people now?

They just remain on the waiting list until the housing authority predicts it has resources to begin pulling from the list. [We can try to help them] by communicating with them about what is and what isn’t available and communicating with our sister agencies, to let them know about what housing opportunities there might be outside of NYCHA’s.

Why do you commit the Sec. 8 vouchers before you’re sure that you will have them?

Housing authorities are given an allocation [from the federal government]. We need to manage to that number, and we are penalized if we go below or above the number… It becomes very, very difficult… At NYCHA, we need to put out thousands of vouchers at a time, just to hit that magic number.

[Since this interview, NYCHA’s crisis with Sec. 8 vouchers has worsened as NYCHA may now be forced to revoke funding from as many as 10,000 Sec. 8 vouchers that are already being used by families]