Federal Audit Demands Better Oversight of Program Key to NYCHA’s Survival Plan

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NYCHA Chair Shola Olatoye and Congressman Gregory Meeks tour Ocean Bay Apartments, what would become the first NYCHA development to go through a RAD conversion, in September 2014.

These days, it seems like everybody thinks RAD is rad.
 
The federal Department of Housing and Urban Development’s Rental Assistance Demonstration program, launched in fiscal year 2012, encourages private investment in the nation’s decrepit public -housing stock by allowing public housing developments to be converted to privately managed project-based Section 8 properties, while the local public housing authority retains some kind of control or ownership.
 
Congress has repeatedly lifted the cap on how many units can be converted to RAD, most recently raising the cap from 225,000 to 455,000 public housing apartments in last week’s FY 2018 budget bill, as well as increasing the types of other housing complexes that can apply to the program. The Trump administration is also all in favor of RAD, and has asked for repealing the cap completely as well as increasing funding for the program in FY 2019.
 
In New York City, NYCHA has so far converted 1,395 units of housing through the RAD program (at Ocean Bay Apartments in the Rockaways), which will fund $325 million in repairs at the development, and has also applied to convert more than 5,000 additional units. NextGeneration NYCHA, the authority’s ten-year plan, calls for a total conversion of 15,000 units.
 
But a government report released last Thursday expresses concerns about HUD’s oversight of the program. The report, which can be viewed here, was authored by the Government Accountability Office (GAO), a federal agency that audits and investigates government programs.
 
The report says that HUD might be miscalculating, and overestimating, RAD’s success at leveraging other funds. While HUD claimed in a press release last May that RAD was “leveraging $19 in capital for every $1 of public housing funds,” according to a different calculation used by GAO and focused specifically on private funds leveraged, RAD only actually leverages $1.23 private dollars for every one public dollar. Furthermore, GAO found that about a third of RAD conversions included no repairs.
 
The report also says HUD could do a better job of tracking outcomes for residents of RAD conversions and not just rely on local agencies and owners to maintain such information. While recognizing some progress, it says HUD needs to continue improving its oversight procedures to ensure RAD developments are abiding by the program’s required tenant protections, such as by improving procedures for monitoring “the phase-in of tenant rent increases, resident representation through tenant organizations, and choice mobility requirements.”

The report conducted its own analysis of 26,000 households affected by RAD but could not collect comprehensive data.  For instance, it found that 57 percent had experienced some kind of rent increase but could not determine the reasons why.  Certainly, there are legal ways through which rent can increase under RAD: a tenant’s income may have increased, or, the tenant may have been paying less than 30 percent of their income on rent prior to the conversion, but the limited data makes it difficult to ascertain whether such increases were made appropriately.
 
While recognizing there are already some protections in place, the audit also calls for better procedures to ensure the long-term affordability and preservation of RAD properties in the event of default, foreclosure, or noncompliance with the program.
 
GAO also conducted interviews with residents of RAD developments. For instance, while residents in seven of 14 focus groups said RAD had improved their living conditions, residents in 6 of 14 focus groups said renovations were of poor quality. Residents in 11 of the 14 focus groups had complaints about property management. No residents reported involuntary displacement but some reported problems with the new process for calculating rents.
 
In a response to the report, HUD by and large agreed that there could be steps taken to improve oversight and monitoring, but also emphasized the success of the program, declaring that $5 billion in construction investment had been secured across 87,000 units nationwide in RAD-conversions.
 
The National Housing Law Project, an organization that fights for housing justice, heralded the conclusions of the report. The organization wrote to HUD with a strident critique of RAD last October, reporting a variety of problems, from new owners illegally interfering with tenants’ ability to organize, to the illegal re-screening tenants for readmission, to illegal evictions.
 
“While we support the broad goals of the RAD program to preserve and repair public housing, we are extremely concerned about HUD’s capacity to monitor and adequately enforce tenants’ rights as Congress continues to rapidly expand the RAD program,” said the organization’s executive director Shamus Roller, in a statement. “HUD cannot continue to rely only on self-reporting by owners or formal complaints filed by tenant advocates. HUD must be more proactive in its enforcement and oversight of this program.”
 
In New York City, NYCHA calls its implementation of the RAD program “Permanent Affordability Commitment Together” or PACT. While implementing PACT, NYCHA has agreed to follow a set of guiding principles regarding tenants’ rights and protections created by a roundtable of tenant associations and organizations like the Community Voices Heard and Enterprise Community Partners. The guiding principles are intended to supplement the protections required by HUD.
 
Victor Bach of the Community Service Society says expanded HUD oversight of all its programs would be a good thing, but he is also not particularly worried that in New York City, abuses of the program that will lead to infringement of tenants’ rights.
 
“NYCHA and the advocates have done a fairly good job in building in the kind of residents’ rights and protections that are needed to accompany federal law and regulations,” he said.
 
In addition, because NYCHA maintains ownership of the land where buildings are converted through the RAD program, in the event of foreclosure, the developments would still belong to NYCHA.
 
Bach says he is concerned to hear that about a third of RAD conversions in the nation do not involve repair work.
 
“Priority ought to be given to capital-starved authorities—not just to those authorities that want to pass off the administration of their [public housing programs]. I think that’s a misuse of the federal tool,” he says.
 
The city’s first conversion in the program, at Ocean Bay Apartments in the Rockaways, has led to major renovations and has garnered positive reports in the media.  But not everyone thinks it’s going well. City Limits received a comment from one resident who complained of higher rents, new managers evicting tenants illegally, shoddy repairs, and managers changing locks on apartment doors so they could enter at any time, among other complaints.
 
In an e-mail to City Limits, NYCHA argued that evictions can happen in any form of housing due to nonpayment of rent, that rent increases go no higher than 30 percent of a tenant’s income, and that rehabilitation work undergoes “monthly requisition reviews” and “an engineer’s review.” The authority also said that an analysis a few years ago found RAD for NYCHA would leverage $9 for every $1 in public value.
 
“NYCHA worked tirelessly with a group of community activists and resident leaders to create the PACT guiding principles, which ensure residents are guaranteed similar tenant protections as previously enjoyed during their NYCHA tenancy,” wrote a NYCHA spokesperson in an e-mail to City Limits. “Additionally, NYCHA’s RAD conversions have included hundreds of millions of dollars in repairs while mandating long term affordability when closing on these transactions.”

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