Where will Shola Olatoye, Mayor Bill de Blasio’s recent appointment as chair of the New York City Housing Authority (NYCHA), take that embattled agency? Will she be able to solve the authority’s financial woes? Can she do so without opening up NYCHA’s projects to private development, as the previous chair under Mayor Michael Bloomberg did? Will the new leadership truly engage the residents, who have widely opposed private infill development, in its decision-making?
Over the past decade, facing severe budget cuts and an overheated real estate market, NYCHA steadily moved away from its commitment to preserve public housing, cutting staff and services and opening up its operations and land to private investment. All the while, the authority has failed to adequately inform the public and engage its residents in its plans.
Will the de Blasio administration seek to correct this course or follow suit? The new NYCHA leader’s background as an expert in the development of public-private partnerships, and the new mayor’s statements, could signal that NYCHA will follow a path similar to the one charted in the Bloomberg years. However, the administration’s aim of working more closely with residents could lead to different outcomes.
NYCHA’s legacy of sound public housing
Since the 1980s the federal government has been getting out of the business of public housing, steadily reducing funding to local authorities. Many housing researchers and policy wonks say that public housing was poorly designed, concentrates poverty, and is a disservice to the people who need it most. Cities like Chicago and Atlanta, supported by federal programs, have traded in their public housing projects for new public-private, mixed-income developments. New York, on the other hand, continues to operate the largest public housing system in the nation.
If we look at NYCHA’s nearly eight-decade history, we find ample evidence that flies in the face of conventional wisdom that public housing is a failed model. NYCHA houses over 400,000 people and has a national reputation for its professional management. Unlike other cities, New York has not demolished projects and many of them are tightly integrated in the city’s hundreds of neighborhoods. Tenants in NYCHA projects have a wide range of incomes, with 40% at moderate- and middle-income levels. In other words, NYCHA is the prime example of “public housing that works” – to borrow from the title of an authoritative history of NYCHA by Nicholas Dagen Bloom. A by-product of this legacy, however, is a reputation for top-down management that has left many residents feeling ignored or threatened by new programs and plans.
Public- private partnerships and the infill plan
Over the last decade, New York drifted away from its long history of sound public stewardship. Last year, when NYCHA revealed its plan to build 3,000 units of mostly market-rate housing on eight NYCHA campuses in Manhattan, it seemed to have finally followed the national trend of public-private redevelopment. Facing federal funding cutbacks and deteriorating physical conditions, NYCHA claimed it needed a large dose of private money. However, NYCHA’s “Infill” plan faced strong resistance from public housing residents, elected officials and housing experts, and several lawsuits. The opposition argues that the Infill plan would provide inadequate revenue, have negative social and environmental impacts, further segregate communities, and could ultimately displace current residents. The plan has now been placed on hold—although the authority has reviewed developer proposals.
The Infill plan was not just an audacious move by an administration on the way out. It was the most recent and boldest of NYCHA’s steps towards privatization over the last decade. Central to this shift was the promotion of “public-private partnerships” as the solution to declining budgets.
The framework for this march towards private development was set out in NYCHA’s 2006 and 2011 strategic plans. The 2006 plan was dubbed a “plan to save public housing” but included many strategies that opened up public housing to private interests. NYCHA, with the City’s Department of Housing Preservation and Development, initiated partnerships with private developers to build on NYCHA land. The projects, which received public financial support, included differing degrees of “affordable” housing that target income groups that largely exclude NYCHA residents. NYCHA also welcomed financing from Citigroup (which allowed NYCHA to secure badly-needed federal funds) when New York State withdrew its funding for 21 housing projects. In addition, particularly under the leadership of Wall Street veteran John Rhea, Bloomberg’s appointed chair of NYCHA, the authority cut staff and contracted out many services. Those cutbacks coincided with a continuing backlog of repairs and maintenance issues. Thus, a decade of creeping privatization and cutbacks contributed to a convenient narrative: public housing is broke and only private money can fix it.
NYCHA is not broke
Deep federal funding cutbacks and the loss of state and city aid have certainly cut into the housing authority’s budget. But in this wealthy city, potential resources could go far to bolster NYCHA’s finances. The authority reports an annual operating deficit of around $87 million. As many resident groups have pointed out, this deficit could be easily erased if the city would stop charging NYCHA for police and other city services, amounting to $100 million each year. In his first budget message, Mayor de Blasio stated he would cover around half that amount.
The authority’s capital needs are another matter. These represent major repairs that have been deferred and are needed to improve NYCHA’s facilities. According to NYCHA, its five year capital plan (2013-2017) is $3.9 billion, but $13 billion more is needed. However, there has been no independent analysis of these needs. NYCHA residents know things need serious fixing, but have little information regarding how NYCHA assesses and prioritizes these needs. The public knows little about the authority’s financial management, aside from official budget reports, which offer little detail, and the occasional leak in the press regarding questionable or mismanaged spending. Given the widespread skepticism about NYCHA’s information, incoming Comptroller Scott Stringer has vowed to conduct an audit of NYCHA’s finances. Yet, to truly restore transparency and the public’s faith in the Authority, a public, independent review is needed. Once there is an objective audit, it will be possible to prioritize real capital needs and seek other government funding sources.
How to keep the public in public housing
The first step in preserving NYCHA is to put the public back in public housing. The increasing utilization of private sector partnerships is leading NYCHA to turn over its land to private developers. In these public-private partnerships, the private sector can come out on top. In the long run, putting market-rate housing right in the middle of established NYCHA communities can open up the path towards the eventual elimination of the low-income units – a fear articulated by many public housing residents who opposed the Infill plan.
Mayor de Blasio’s appointee to head NYCHA is an expert in leveraging private money for public-private partnerships. The mayor, who opposed Bloomberg’s Infill plan, has already signaled that would welcome new proposals that “create affordable housing, create jobs for NYCHA residents, and steer money back into NYCHA to address its backlog of maintenance and repairs,” as he told The Observer in December 2013. This suggests we can expect more proposals to build on NYCHA land.
Almost 80 years of “public housing that worked” proves that when housing is well-managed and treated as part of a public trust, it can last for generations. This can be done while addressing some of NYCHA’s historic shortcomings, particularly a top-down management approach that fails to recognize the valuable contributions of residents and neighbors.
Some preliminary ideas, offered and echoed by many residents and housing advocates and professionals, include:
NYCHA’s hundreds of developments in the five boroughs are not just buildings with apartments. They are communities with families that have lived there often for generations. They are an essential part of the city’s complex urban fabric and sustaining them ought to be a priority of government. Blighted public housing can only have a negative effect on the neighborhoods it is part of.
NYCHA residents are also part of the large chunk of the city’s low-wage labor force that has faced decades of stagnant wages. The squeeze between low wages and skyrocketing housing costs has produced a new consensus in both public and private sectors that affordable housing must be a public priority.
After a decade that saw a net loss of tens of thousands of affordable units and the erosion of rent regulations, public housing stands as one of the largest and most reliable sources of affordable housing. Ensuring its long-term physical and financial viability—and quality—is essential to any affordable housing plan for the city. NYCHA has pitched Infill as essential to preservation but, as opponents have pointed out, new development could actually degrade the quality of existing public housing. Any plan must be assessed not only for its financial benefit, but also for its impact on the physical, social, and environmental health of NYCHA housing and communities.
During the Bloomberg years, the majority of housing units in the city’s affordable housing plan were the result of preserving existing units and not building new ones. And many of the newly built units, which are not permanently affordable, are out of reach even to middle-income New Yorkers. This should give pause to those who claim that new housing development is going to solve the city’s affordability problem.