Adi Talwar

NYCHA’s LaGuardia Houses in the lower East side section of Manhattan is one of three developments selected for a program build market-rate housing in an effort to let NYCHA balance its books.

During President Trump’s first 100 days, the national conversation turned on big ideas: whether it was right to bar refugees, whether Obamacare was worth keeping, and more. Over the next several weeks, City Limits will explore less recognized ways in which the Trump administration and its supporters might affect life in New York.
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The numbers are grim. The New York City Housing Authority — which provides homes for more than 400,000 New Yorkers in 2,462 buildings across the five boroughs — has a $17 billion capital funding backlog.

Over the past two decades, federal funding for public housing has disappeared. Other cities like Chicago or St. Louis or Atlanta — a city whose total population is about the size of New York’s public-housing tenant roll — folded in the face of the cuts and started to demolish or privatize their public housing stock.

But New York City, far and away home to the country’s largest public housing population, tried to hang on. Roofs deteriorated, elevators broke down, repair needs mounted. Local and state funding tried to keep up with the loss in funding at the federal level, and in recent years that funding did increase. Mayor de Blasio’s NYCHA leadership crafted a “NextGeneration NYCHA” plan in 2015 to implement cost-saving and efficiency measures that seemed to be working—until President Trump’s first budget began to take shape.

“Last year, NYCHA able to clear its operating deficit for the first time in 15 years or thereabouts,” says Victor Bach, senior housing policy analyst for the Community Service Society of New York.

“And the federal budget cuts will set that back by 15 years.”

Of all the potential cuts City Limits has written about over the last few weeks in this series, none would have as serious an impact on the lives of so many New Yorkers as cuts to housing programs. The Trump administration’s most recent budget proposal for fiscal year 2018 could be a death blow.

“This is a disaster budget for us,” says NYCHA Chief Shola Olatoye.

In total, New York City would lose about $751 million annually for housing initiatives under Trump’s proposal, according to the website affordablehousingonline.com, which created a portal to track the cuts.

The budget is unlikely to remain as currently proposed before the 2018 federal fiscal year begins on October 1, but it’s nevertheless a sign that New York City’s struggle to provide housing to low-income people will be harder than ever over the next four years. And that makes housing advocates and residents deeply angry, because many felt NYCHA was finally starting to right the ship. “And then Trump was elected,” says Aixa Torres, president of the resident association for Alfred E. Smith Houses on the Lower East Side.

Gains made in recent years are threatened under the budget cuts, but they are not the only potential casualty. Rule changes at HUD may increase rents for one-in-20 New Yorkers. And as a result of the cuts, NYCHA is even more committed to plans to lease public land to private developers that have stirred fear and opposition among some residents.

Higher rents ahead?

For public-housing residents more worried about their own finances than NYCHA’s budget, HUD’s proposed rule change to income requirements would be enormously significant. In its fiscal year 2018 budget book, HUD floats the idea of increasing tenant rent contribution from 30 to 35 percent of gross income.

In 1969, the so-called Brooke amendment created an income-based rent payment cap in public housing of no more than 25 percent. That cap was increased to 30 percent in 1981.

The average family in NYCHA makes $24,336 and pays an average monthly rent of $509. If HUD changed the rent contribution from 30 to 35 percent, the average income would increase about $84 per month, or just over $1,000 per year.

“Maybe for most other New Yorkers, that’s not so significant, but given that our annual average family income is $25,000, that’s a significant amount of money,” Olatoye says.

Torres said it’d be hard for families to come up with another 5 percent of their income for rent.

“At 30 percent, residents are struggling, at 35 percent I guess we’ll all be homeless,” says Torres. “The thing about it is that you’re broke, and unlike the president, public housing residents pay taxes.”

More pressure to build new

Right now, the authority gets approximately $300 million in capital funding from the feds. Trump proposed cutting that to $100 million. Olatoye said the authority has to make a soon make a $60 million bond payment that was used to fix up 14,000 apartments recently.

“So that would leave us with about $40 million in capital funding a year to deal with our $17 billion and growing capital deficit,” Olatoye said during a press briefing last week. “The cuts are real.”

Even before Trump’s ascension, NYCHA was as part of its NextGen plan trying to close the funding gap by resurrecting an idea that the Bloomberg administration had proposed and then dropped: leasing public housing land to private developers to build a combination of market-rate and affordable housing. De Blasio’s approach is different from his predecessor’s: Many of the infill projects will be 100 percent affordable (although the incomes targeted could still be substantially higher than what most tenants in the existing NYCHA buildings could afford) and those that involve market rate will be 50 percent affordable.

The authority has already begun 50/50 projects at three locations and has always said it is planning more. The question is whether the new and potentially devastating pressure on the NYCHA capital budget will require an even more aggressive approach to infill development.

In a press briefing last week, Olatoye was not specific about any changes to the current plan, but called it a “living breathing plan” that will evolve.

She said NYCHA is “aggressively trying to do the revenue generating work” given the “unprecedented” proposed cuts at the national level.

“I think in an instance like this you would double down and you would go… really, really hard on the things that are going to raise the most money for you,” said Olatoye. “But the challenge for us is this is hard community engagement conversations about change, about what people perceive to be a loss.”

As City Limits has reported in the past, many residents are opposed to the plan that they say is a shortsighted step toward privatization (although NYCHA would lease, not sell, the land involved). The skeptics are concerned that building 50 percent affordable, 50 percent market-rate towers on their playgrounds and parking lots will result in overcrowding and change neighborhood economics in a way that forces out the local stores they like and can afford.

Critics also say the money just isn’t enough to justify leasing public land to a private company. Recently, NYCHA selected its first developer for Holmes Towers on the Upper East Side of Manhattan. Developer Fetner Properties will give NYCHA an up-front payment of $25 million for a 99-year lease where it will build a 47-story apartment building and community center on what is an existing playground.

NYCHA has a list of 79 other locations the authority has deemed suitable for development. The overall plan is to eventually lease 30 to 40 plots of public housing land to private developers to bring in $300 to $600 million over the next ten years. With a $17 billion backlog, critics argue that’s a drop in the bucket, or as resident Bernadine Weeks said more eloquently during a hearing last year, the plan is “like a Tic Tac in a whale’s mouth.”

But NYCHA is desperate — and that certainly won’t change if the federal budget cuts go through. “When you have negative $17 billion, $25 million sounds pretty great,” Olatoye said last week.

Both sides of the argument cite the threat of a loss of public housing. Skeptics see potential for that in the infill plan. The authority and its allies think it could happen through physical deterioration if it doesn’t do new development to generate funds.

“In the long run, what’s going to happen is there will be a tipping point, where public housing will become fully privatized,” says Harry Kresky, attorney for the Committee for Independent Community Action that has organized opposition to NYCHA’s plan.

“For the last 15 years, NYCHA has been threatening to sell if its plans are not accepted,” Bach says. “We certainly don’t have good examples in front of us. If you look at Chicago, they have wholesale demolition and conversion. Atlanta has wiped out their entire public housing stock.”

Bad for RAD?

Recently, one of the HUD programs that looked to be the most promising in helping NYCHA dig out of its never-ending financial crisis is the Rental Assistance Demonstration (RAD) program.

Under this program, NYCHA plans to convert thousands of Section 9 (i.e., public housing) units to Section 8, decreasing its capital needs by about $3 billion.

But New York City could lose 13,000 Section 8 vouchers under the proposed federal spending plan, according to NYCHA projections. Right now, the city runs the country’s largest Section 8 program with 87,000 vouchers that help 200,000 households. That could significantly limit NYCHA’s ability to convert public housing to Section 8.

“NYCHA was well on its way, sort of inch by inch, to an ameliorated situation and now the federal cuts,” says Bach. “So it’s really a setback at a time when it has been moving forward and wrestling and dealing with its problems.”