Can NYCHA Be Saved?

While public housing agencies in other large cities were going through the throes of federally mandated reform in the 1990s, NYCHA stood aloof. Seemingly secure in its New York Times-conferred title of best-managed public housing system in the country, NYCHA basically defied HUD as the feds tried to cajole—and, failing that, force—the agency to demolish some distressed towers and replace them with lower-density, mixed-income housing. Because many New Yorkers and elected officials believed NYCHA was indeed well managed, this stance succeeded locally, and received very little harsh criticism. New Yorkers were proud that their city alone seemed to have made public housing work.

NYCHA today

But today NYCHA is functioning in a very different world—as the recent brutal series by the New York Daily News showed. The News charged that NYCHA is sitting on some $1 billion in unspent funds; that it routinely fails to make basic, crucial repairs; that it has millions of dollars worth of spare parts and supplies scattered and untraceable in over 5,000 warehouses; that crime has shot up even as NYCHA sat on $42 million set aside for security cameras; and much more. As if that is not enough, NYCHA has been running a $50 million annual operating deficit and a $7 billion backlog in capital projects.

There is really very little doubt but that the many inherent contradictions in federal public housing policy have caught up with NYCHA—and that it must reinvent itself in fundamental ways if its buildings are to survive as sound housing for low-income households. Chairman John Rhea knows that NYCHA cannot simply try to do its traditional tasks of building and maintaining public housing a little better. There is no political or financial support from either Washington or Albany for new conventional public housing—or even for fully maintaining the old. At the same time, the federal government retains regulatory control over much of what NYCHA does—and can veto just about any serious reform proposal.

Worse, NYCHA faces a fundamental problem that cannot be solved under the current framework: very low-income households cannot pay anything close to fair market rents. So long as NYCHA has very low-income households—and it always will—it must subsidize their rents through government subsidies, which are diminishing, or through the rents of other tenants. NYCHA has relatively little turnover, with the result that rent rolls are not replenished by higher-income tenants moving in, as happens in normal private-sector buildings. And while NYCHA (unlike most large authorities) has retained many working households, it has almost no ability to choose new tenants to subsidize the old. As City Limits recently posed the question: “does public housing represent temporary assistance during times of financial hardship or a boundless safety net in a city where affordable housing is increasingly scarce?”

John Rhea fully understands this dilemma, which is why he is looking to private development for new sources of income. At a speech last month before the Association for a Better New York, he proposed leasing vacant or underused NYCHA land to developers, who would build mixed-used projects that would include some retail and commercial space. He pledged that at least 1,000 apartments would be targeted for low- and moderate-income families. This plan is likely to be bitterly opposed, but he has few choices left, as a brief look at the history of public housing will show. A historic combination of contradictory congressional mandates and injudicious HUD regulations transformed public housing into today’s housing of last resort—and from last resort to demolition.

Public housing’s transformation in the 50s

Even when public housing began in the 1930s as a program financing the construction of low-rise, small-scale, attractive projects it was not all that popular. But its good-looking developments, like the Harlem River Houses, targeted at working-class households allayed suspicions that the federal government would build hostile, alien projects. By the 1950s, however, public housing was indeed building huge high-rise projects in racially and economically isolated neighborhoods, often for society’s poorest and most troubled members.

High-rises were assumed to be cheap and efficient but in practice were neither. Because 20 percent of towers must be pretty much devoted to elevators, stairs, and public corridors, high-rises were nearly always at least 20 percent more expensive than row houses. And while the Modernists and efficiency experts of the 1950s believed that the size and concentration of the projects would allow authorities to centrally manage life in the projects, the opposite turned out to be true. The Bauhaus ideology for worker housing had seemed alluring—clean, pure, well-constructed buildings that rejected the false trappings of the bourgeoisie, such as curtains, clutter, space, closets, and individual entrances. These ideas worked well enough when skillful architects using the finest materials built housing for wealthy families. But they worked deplorably when shoddy materials were carelessly employed in massive repetitive buildings housing poor families.

But public housing was a useful tool in the arsenal of urban renewal. Immense swaths of urban land were condemned, cleared, and rebuilt with projects, providing lucrative jobs and contracts handed out by city government. And while New York was as guilty as any large city in ruthlessly clearing whole areas, it was unique in distributing public housing projects throughout the city, forestalling the worst effects of racial isolation. Perhaps more than any other physical factor, the widespread location of projects saved NYCHA from a Chicago or San Francisco-like fate of devastation.

Good intentions, tough finances

Large public housing agencies might have been able to solve their problems if they had been left alone to pursue local strategies. Instead, by 1974, many projects were being pushed over the financial edge by full implementation of a congressional reform—the Brooke Amendments of the late 1960s. With incredible speed, the Brooke Amendments transformed public housing from a low-rent but self-sustaining program into a low-income—and eventually deeply subsidized—program. Brooke mandated that no tenant pay more than 25 percent of household income in rent.
There’s no question but that Congressman Brooke was trying to solve a real problem. Some tenants, often those living in the worst-run projects, such as Pruitt-Igoe in St. Louis, paid large proportions of their income in rent—65 percent and more. And where, advocates all over the country asked reasonably, were the very poor expected to live, if not in public housing? No fully funded federal programs existed then or now to house the very poor. The rigid congressional response, however, of capping all rents for all apartments regardless of location or size at 25 percent of income caused authority rental income to plummet.

The intention was good but the consequences were terrible. As large authorities started facing unexpected deficits, they began slashing operating budgets, including maintenance and repairs. For most of its history, public housing had been self-supporting—financed with long-term bonds issued by local authorities with the federal government paying the principal and interest. Authorities set their rents according to their expenses, much as in private housing. But the Brooke Amendments meant authorities could no longer support themselves and had to obtain deep subsidies from Washington. Yet subsidies, which depended on political support, were erratic, further undermining the ability of local authorities to manage their budgets efficiently.

More important, the Brooke Amendments drove out the group that had been the stabilizing force in projects: working-class families. For while Brooke’s intention had been to help the poor by setting a maximum on what they had to pay, the upshot of the 25 percent rule was that it penalized wealthier tenants—as Republicans knew it would. Working families required to pay 25 percent (later 30 percent) often found better and cheaper housing outside the projects. (Maximum rents were eventually set to ease the burden on working families.)

Meanwhile, suits by the ACLU and advocacy groups severely impeded the ability of authorities to screen applications and to evict troublesome tenants.

Just as Congressman Brooke had found allies among conservative Republicans to pass his amendments, advocates found Republican allies to push their principal of housing for the lowest-income groups, especially the homeless. In 1981, President Reagan’s HUD agreed with the advocates, requiring that 95 percent of residents be “very low income,” that is, with incomes below 50 percent of the area median. With the full support of Mayor Edward Koch, NYCHA fought back with all its might, making every effort to hold onto its working families while resisting giving preference to homeless families over the 50,000-plus households already on the NYCHA waiting list.

Congress responded by establishing federal selection preferences in 1987, mandating that authorities give priority to applicants who were eligible for assistance under other programs and who also were involuntarily displaced, living in substandard housing, or paying more than 50 percent of income in rent.

This revolutionized the tenancy in many jurisdictions. By 1991, according to the Final Report of the National Commission on Severely Distressed Housing, households having incomes below 10 percent of local median income constituted 20 percent of the total public housing population—up from 2.5 percent in 1981. Then in 1992, as a sort of coup de grace, Congress added to its preference list the disabled, defined to include recovering drug abusers and alcoholics, who were now eligible—regardless of age—to live in housing for the elderly.

The original concept of housing the working poor had been utterly abandoned in Washington—though never in New York, which kept fighting back. In 1994, NYCHA reported that, for the first time in its history, average adjusted gross family income fell—and therefore rental income fell. This was surely inevitable as working families left. As political scientist Phillip Thompson has noted, the proportion of working families decreased from 48 percent of all NYCHA families in 1985 to 30 percent in 1995.

But in that same year, 1995, HUD Assistant Secretary for Public Housing Joseph Shuldiner, a former NYCHA general manager, pushed through a new HUD directive allowing NYCHA discretion setting its own local preferences for half of its vacancies. NYCHA soon announced that its entire local preference would be to house working families—a position from which it never retreated. (Working families account for 47.2 percent of NYCHA households today.)

The flexibility HUD gave New York in 1995 was not an isolated act. Around the same time, the Clinton administration was ushering in a new day for public housing.

The Clinton revolution

In a sort of Democratic version of Nixon-goes-to-China, it was the Clinton administration that cast off conventional public housing, embracing the Republican-inspired Hope VI program in its stead. Hope VI mandated the previously unthinkable: it required the demolition of bad projects, replacing them with mixed-income developments that included lower-scale apartment buildings or townhouses, usually architecturally compatible with the neighborhood. Built partly on the ideas of New Urbanism, Hope VI sought to encourage the street life the old projects had shunned by developing walkable, attractive grids. Site densities were substantially lowered as former tenants were given Section 8 vouchers to find housing in the private market.

Targeted at the most distressed systems, such as Atlanta and Washington DC, Hope VI had relatively little to offer New York, which had few truly distressed projects. And even with its most troubled projects, NYCHA did not really want to demolish towers or lower their density. Why should it? High demand for its apartments never wavered, the vacancy rate seldom exceeding 2 percent. (The vacancy rate today is 0.7 percent.)

But that is not to say that the towers were actually the best housing for either their neighborhoods or their residents. NYCHA’s disdain for Hope VI meant it did not participate in some of the good ideas held out by New Urbanism. Jerilyn Perine, a former city housing commissioner who is now executive director of the Citizens Housing & Planning Council, says, “One really good thing about Hope VI was the idea that public housing needs to exist within a larger neighborhood context.”

But did Hope VI succeed where traditional public housing had failed?

Certainly HUD was correct in demolishing the projects that had become unsalvageable hellholes in Chicago, Atlanta, Washington, San Francisco, and elsewhere. And certainly the impulse to replace economically and racially projects with integrated, mixed-use developments was also correct. Yet Hope VI’s record is ambiguous. Its greatest success is probably Atlanta. Its potentially greatest failure may be Chicago, where many replacement developments were shoddily built and managed. Even worse for Hope VI’s prospects of turning around Chicago’s most troubled neighborhoods, the market is not yet supporting the attractive, mixed-income developments meant to lead the way forward out of blight and poverty.

Ironically enough, NYCHA has embraced Hope VI ideas in what may be its most notorious—but what could ultimately be its most successful—redevelopment project, Prospect Plaza.

What next for Prospect Plaza?

In 2002 NYCHA moved some 300 families out of three towers in Prospect Plaza, a traditional project in Brooklyn’s Ocean Hill-Brownsville neighborhood, promising they would be able to return to a fully rehabilitated development in three years. That did not happen in 2005—and still has not occurred today. Instead, NYCHA entirely shifted tactics, sending out a Request for Proposals soliciting major private developers.

Unquestionably NYCHA has made many missteps at Prospect Plaza—a classic but poorly built project from the 1970s. It promised rehabilitation, only to find out that per unit renovation costs would exceed $500,000—enough to pay for far better housing in most of the region. It set and broke dozens of deadlines—including the most recent one, promising a decision on a developer in August 2012—a deadline that was recently pushed back to December.

But the good news is that NYCHA received 10 full proposals, three of which have been short-listed as “potential designees,” with the final decision to be made in December. NYCHA officials emphasize that selection will be based in part on the New Urbanism criteria embodied in Hope VI. After the demolition of the three remaining towers, the new Prospect Plaza will have 360 housing units—80 public housing units and 280 affordable in a mix of housing types, along with 32,860 square-feet of ground-floor retail, including a supermarket and pharmacy; 12,000 square feet of community facility space; and 16,600 square feet of integrated open space. This will, of course, constitute a deep cut in density, but Patricia Barrera, NYCHA’s Senior Deputy Director of the Department for Development, points out that the lower density was widely praised in the three-day community planning workshop held in June 2010. In fact, all discussion groups rejected high-rise residential buildings as a replacement option, urging the maintenance of the neighborhood scale of six-story buildings and under– the kind of low-rise development built by NYCHA’s private partner, L&M Development Partners, on Prospect Plaza’s perimeter. Community residents also asked for far more and better retail, including bakeries and small shops.

In a sense, the community’s support for the demolition of Prospect Plaza says something profound about conventional public housing. After all, with the highest concentration of public housing in New York City, Ocean Hill-Brownsville was the ultimate neighborhood of towers. Nearly 20 percent of Community District 16’s people lived in NYCHA’s 22 developments. What will happen to the remaining 21?

Needed: a Mayor for NYCHA

When reporter Matt Chaban was researching a piece on NYCHA in August for the New York Observer, he was struck by the comments of a tenant picketing NYCHA headquarters. Why, she asked, could Mayor Bloomberg not make the rescue of NYCHA the top priority of his administration? Why could he not take the energy and resources he has devoted to other areas, like public health, and direct them to public housing in his remaining months?

Bloomberg has been a reasonably good—but not really devoted—public housing mayor. This is not a criticism—NYCHA is an authority, a state-chartered public benefit corporation, not a mayoral agency. The mayor appoints the chair, whom he can dismiss, but the board members have fixed, multi-year terms, and can only be fired for cause. In practice, they would almost surely resign if asked by the mayor, but by law they could fairly resist. Within this archaic structure, Bloomberg has helped NYCHA out in some dire situations. He intervened to provide large one-time allocations ($120 million in 2006) to close budget short falls, He worked with Rhea to realize the complicated federalization of the 21 projects built by the city and state of New York. Long thought to be unattainable, the 2010 federal takeover of the projects produced a windfall of an immediate $400 million in federal funds, plus an ongoing annual commitment of $65-75 million. Though bizarrely attacked by critics on both the left and right, the federalization was an immense achievement for NYCHA and City Hall.

Still, Chaban’s public housing resident has a point. Mayor Bloomberg has clearly not designated NYCHA a top concern worthy of his obsessive, laser-like concentration. But what if he did? What if he decided that in his final year in office, he would develop the vision and lay the groundwork for fixing public housing?

NYCHA has very few pathways out of its current troubles. Chairman Rhea has chosen what may be the most practical source of new revenue: leasing currently vacant or underused land to private partners, beginning with some 25 sites in Manhattan. Just the development rights on surface parking lots—many routinely half empty, built to meet federally-mandated minimum parking requirements—offer NYCHA an extraordinary but previously untapped source of wealth.

Rhea promises his plan will involve neither demolition nor displacement. Even so, he will face ferocious opposition locally and perhaps in Washington. He needs a powerful mayoral drive—a Bloomberg Campaign to Save Public Housing—to bring in new revenue, to reconfigure projects for today’s urbanism, and to restore hope and aspirations to families deeply worried about their homes and prospects. Bloomberg only has a year—but that is enough to set the debate for the 2013 mayoral campaign and the future of NYCHA and its 629,345 constituents.