Fund for Public Housing

NYCHA, Don't Sell Out - Hold Out!

Jacob Riis Houses, a pillar of public housing success (homebodynetwork)

Jacob Riis Houses, a pillar of public housing success (homebodynetwork)

It’s budget season and President Trump’s first proposal to Congress has sent shockwaves through all levels of government for the audacity of its cuts.  Nowhere is that clearer than at HUD, where he is proposing $6b in cuts.  NYCHA, which gets two-thirds of its $3.2b operating budget from HUD, could be devastated.  However, recent plans to inject private capital into NYCHA (to offset some of its $17b in outstanding capital needs) show how much is at risk to the long-term mission of providing public housing by grasping for private sector funds under these circumstances.

The Trump Administration has always been clear about gutting HUD and why – because it helps the wrong people.  Much of the President’s “skinny budget” is merely symbolic posturing, with little chance of passing through Congress, but I would bet a lot of these HUD proposals would find sympathy from conservative Republicans.

NYCHA is a telling example.  By far the largest public housing agency in the country, it provides homes for over 400,000 poor and low-income residents across 2,500 buildings and 176,000 units. In addition, it also provides housing assistance through Section 8 vouchers for another 200,000 residents.  If it were its own city, it would be the 30th biggest city in the country.

However, it’s made up of poor and low-income residents, many of them very old or very young, with the majority of them representing minority communities.  When President Trump speaks of“making America great again” and “America first” he is simply not speaking to or for this population.  The Republican Party, and frankly some parts of the Democratic Party, has little interest in helping residents of New York City in general, and poor, minority residents specifically.

That’s why NYCHA has already received word to expect $35 million in cuts for the rest of 2017.  This would dramatically reduce the agencies ability to fund its operations and Section 8 programs – even before the more dramatic cuts to HUD in the president’s budget proposal. It has been called “devastating” by Shola Olatoye, the chair of NYCHA.

Public housing still gets a bad rap in the broader public image, but the truth is far more inspiring, which makes these cuts all the more depressing.  Despite years of poor management in the past, in 2016 the agency actually saw a surplus of $21m - which is now entirely wiped out. And despite some major issues, to be expected across such a large footprint, the vast majority of residents have a positive view of their homes.  There is a waiting list with nearly 260,000 families who want to move in.  This isn’t a failed government program, it’s a shining example of a living, thriving public commitment to housing.

The main problem facing NYCHA is the $17b in outstanding capital needs that remain unfunded (compounded by the missing $3b promised by FEMA for Sandy recovery.)  Many of the complexes were built at the height of the New Deal and are over 70 years old.  These buildings need new roofs and plumbing, remodeled fixtures and appliances, lead paint removal, new electricity and energy investments - just to name a few of the daunting list of projects.  This was true even before the Trump budget proposal and only becomes more of a threat to NYCHA’s long term viability if its operating budget keeps getting hacked apart (it was already potentially facing a deficit of $200m by 2020).

Starting during the Bloomberg Administration, NYCHA has increasingly turned to the private sector for ideas to make up for its funding gap.   One part of Mayor de Blasio’s 2015 plan, NextGeneration NYCHA, has called for selling underutilized NYCHA-owned land to developers in exchange for committing 50% of new units to affordable housing. It hopes to net 10,000 additional affordable units on NYCHA land, with about 7,000 market-rate units.

This part of the plan has been extremely controversial with residents and housing advocates. Though there are reasonable arguments to be made around selling certain pieces of land on individual developments, ‘underutilized land’ in many cases seems to mean a parking lot or a playground. Many residents would question how underutilized this land actually is (and some feel under-represented in these conversations).  

NYCHA has also partnered with private developers to upgrade some of its existing housing stock in exchange for equity stakes in those developments, which some advocates worry is the beginning of a slow creep towards privatization of public housing.

In the Far Rockaways, NYCHA has placed over 1,400 units in HUD’s Rental Assistance Demonstration Plan (RAD) that removes them from public housing and instead enrolls them in a Section 8 program. This allows the agency to partner with private lenders to qualify for mortgage-backed tax breaks netting significant revenue while removing fixed costs.

The program began under President Obama and has many supporters in the housing world, however, despite its outlined tenant protections, there is a distinct risk that these units will eventually lose the federal funding that protects them (more likely now, surly) forcing them to convert to market rates eventually.

In the East Village, NYCHA has sold 50% of its stake in several developments, notably Campos Plaza on Ave C to L+M and PDP Triborough in exchange for $350 million over the next 15 years.  Campos I has already seen parts of the $100m investment from developers in the form of remodeled units, a remodeled façade, and a new park.  However, a portion of those units can now be rented at market rate, with the private developers capturing the difference between market rates and the 30% income cap NYCHA can charge residents. 

In both cases, NYCHA has contractual protections in place to dismiss their private partners if they are unhappy with their services; and they have right of first refusal if they wish to sell their stakes.  That sounds good, but in reality NYCHA has gone down a road where they can’t risk scaring off potential private developers by dismissing them and they can’t anticipate being more financially solvent in 15 or 20 years based on current federal and state support. 

Private developers, even the most progressive, know this.  Maybe things work out well under this model, but these developers have more protections than NYCHA if it doesn’t. The risk is real that these units will leave public housing. It’s also opened the door to rationalize more private intervention in the future, perhaps across entire developments.

It’s difficult for me to criticize the Mayor or NYCHA employees for pursuing every option to fund its operating costs, especially given the federal hostility to its mission even before President Trump’s arrival.  The majority of the initiatives outlined in NextGen deserve our support, including investments in infrastructure,  more effort on efficiency gains in management and energy, tenant-centric empowerment and reach out, and new interior/exterior design guidelines, and a non-profit fundraising org. If you accept the reality that we live in, this is probably the best you can get.

However, this already frustrating reality is going to get a lot worse very quickly because so much of NYCHA’s plans rely on current HUD funding commitments.  Those are going to decrease, even when the President’s budget gets chopped down through Congress. How much can this plan work without the predicted fed funding? Mayor de Blasio has come out forcefully against the proposal but, cautioned that it's just the beginning of the process.  That reeks of hoping for the best and reeks of not working out.

But I also think this reality is unacceptable, cuts or not.  NextGen talks about the origins of NYCHA during the heights of FDR’s New Deal through LBJ’s Great Society.  There were 30 years of successful federal and state commitment to public investment in housing, along side a viable, competitive private sector. That's the reality we should live in again - with public housing on the offensive, not the defensive.

But don’t conflate the two.  Public housing should remain committed to being public.  Selling off to the private sector slowly over another 30 years will betray the values at the heart of the program.  As a republic, we should commit ourselves to offering affordable housing to all citizens. We already have a model that shows it can work if we remain committed to it. Even for all its leaky roofs, NYCHA still serves almost half a million New Yorkers, which shows that public housing is a strong investment the city and the country. 

Instead, for the last 30 years, too many housing advocates and government employees have been apologizing for the decline in funding, largely amongst themselves, rather than making the easy case for more funding to the broader public. They have accepted that the private sector is the only answer even though it hasn’t been in previous housing crisis.   They have accepted a reality that will only lead to public housing’s demise. All Americans would suffer in its absence.

We should, once and for all, reject the outdated narrative of public housing’s failure and reclaim the real one – that public housing works. Public housing is a commitment to and an investment by Americans for Americans.  It has worked in the past and continues to work today. 

We should be parading NYCHA around the country as a sign that supporting public housing is not just a great social program, but also a phenomenal economic development program. We should be organizing NYCHA residents together with NYCHA employees to promote its virtues to other Americans, rural or urban, who would benefit from more federal intervention in housing. We need to be a loud, passionate group that shifts the conversation politically.  A Tea Party for government investment.

NYCHA is fighting for its life, but if it recognizes and embraces that its fight is a bigger one for the right to affordable housing for all Americans, for a return of federal commitment and investment in public life, I believe it will find allies across all parts of the country.  Rather than being a symbol of past ‘failed government overreach’ it should be a symbol of hopeful, smart government investment.  The cause has the security of being true and the obligation of being right. 

The answer is clear – NYCHA must endure without conceding to the private sector.  It must endure without conceding to cynical dismissals of its purpose or possibilities.  It must endure in the Trump Age, because the ebb and flow of history will inevitably bring in another age, one committed again to the power of government and the power of public housing. NYCHA, its residents, and supporters should focus on bringing on that age sooner than later.

The Virtues of Public Housing

Queensbridge Houses in Queens (nycha)

Queensbridge Houses in Queens (nycha)

Two articles appeared in the New York Times last week that directly and indirectly showcase the plight of public housing in New York City.  The first article covered the manslaughter conviction of Officer Peter Liang who accidentally shot and killed Akai Gurley, a resident of the Louis H. Pink Houses in East New York in 2014.  The second focused on a newly-created non-profit, The Fund for Public Housing, which hopes to encourage philanthropic giving for public housing.  

The tragic death of Mr. Gurley has become part of the larger national narrative of protesting state-sanctioned violence against minority communities that has galvanized large segments of Americans and has already impacted the Presidential race.  Sadly, the specific details of the shooting - a rookie cop patrolling a notorious project, accidentally firing his weapon into a dark stairwell, which ricocheted off a wall and struck an innocent passerby - are more of an indictment of the systemic failures impacting residents of public housing in the city.

That Officer Liang was trained to draw his weapon in a residential complex shows how the training and tactics deployed by the police in public housing failed residents and the young officer with devastating consequences.  This event is simply the byproduct of decades of political and economic neglect that has isolated residents of public housing and subjected them to shocking pockets of violence despite the historic decline in crime across the city.  However, we have effectively "normalized" this dichotomy and, outside of moment-capturing events such as Mr. Gurley's death, we are rarely forced to face it.

It is easy to forget the scale of achievement represented by public housing in NYC.  The New York City Housing Authority (NYCHA) owns and operates 328 developments containing 177,666 apartments and over 400,000 residents, the vast majority of which are income-burdened (the average family income is $23,000.)  1 in 12 New Yorkers live in a NYCHA development. There are 77,000 seniors and 110,000 children under 18.  For all intensive purposes, NYCHA is affordable housing in NYC.

Most of the buildings were constructed between 1950 and 1970, and unlike the majority of other public housing authorities in the US, they were built largely through city and state funds, with limited federal funding.  This partly explains why NYCHA reached such a scale and why it endures while many other Public Housing Authorities across the country have been torn down. But it also explains the deeply embedded problems facing the agency.

It is difficult to picture government intervention on such a massive scale now and, given its dubious motivations, there are many reasons to argue against it.  "Slum clearance" - the raison d' etre for the intervention - was undoubtedly tinged with racism in its redistribution of public resources to private interests that (coupled with red-lining policies) exacerbated inequality for minorities.  Tower-in-the-park designs embraced by the movement have been widely discredited for fostering isolation and alienation.  Seen as temporary housing, little thought and planning were put to sustainable financing for maintenance, causing terrible living conditions.  As quickly as governments, particularly at the federal level, funded the construction of public housing, they retreated from the necessary long-term stewardship needed to maintain them.

Today, NYCHA is estimated to have $17 billion worth of outstanding capital and operating costs (pitch-black internal hallways are just one example). That is a truly staggering and disheartening shortfall.  Much of this gap comes from the decision to discontinue federal funding at all more than 15 years ago. It should also be noted that NYCHA has come under fire for mismanaging funds and failing to properly disclose previously granted federal money.

To make up for the shortfall, both the Bloomberg and de Blasio administrations have suggested variations on a program called "in-filling" which would allow NYCHA to sell or lease underutilized land owned by the agency to private developers.  This report shows that there are significant trade-offs depending on where the land is located (obviously developers would be more interested in lower Manhattan than Brownsville for example), but it is probably the only way to accumulate significant revenue without a sea change in political priorities nationally or even in the state. However, even optimistic projections of infilling wouldn't cover the needs of the agency.

This brings us to the second NY Times article, about The Fund for Public Housing.  An off-shoot of NYCHA, it is a non-profit designed to make NYCHA a high-profile option for giving along the lines of Central Park, Lincoln Center, or even Harvard.  If you're skeptical that NYCHA has the same sex appeal as those other 'non-profits', you are not alone

The stated fundraising goals are a relatively modest $200m over 3 years, but Rasima Kimani-Fyre, the fund's director and a former NYCHA employee, does have an intriguing strategy to achieve it - NYCHA housing alumni.  Given the scale of the agency, it's not surprising to learn that it has produced a large list of former residents who have gone on to have staggeringly successful careers - Jay-z, Lloyd Blankfein (chairman of Goldman Sachs) Howard Schultz (chairman of Starbucks) and Supreme Court Justice Sonia Sotomayor are just are few.  

Though some of these individuals could certainly contribute healthy amounts of money and bundle together other generous benefactors,  what could be more useful in the long-run is simply claiming pride in being a resident and advocating for public housing. Reframing the narrative about public housing around the people who have most benefited from its purpose would be a powerful tool for advocates and do much to shake off the nagging popular image of public housing that permeates the city as well as the country.

It's not out of the question that with some positive PR, coupled with the increasing awareness of the inequalities within the US and the affordability crisis within NYC, public support could shift back to seeing public housing as a better focus for tax money than boondoggles like sports stadiums or casinos.  The money going into support of public housing would flow back into the local economy and improve utility and opportunity for thousands of struggling New Yorkers.  

And compare the impact of donating to Central Park with donating to NYCHA.  About 42 million people visited Central park last year, or an average of 115,000 a day.  NYCHA has 400,000 people coming and going every day. That kind of reach, coupled with a more accurate portrayal of the positive impact that public housing has had for many people, would surly attract some high profile patronage.

PR might score some high-profile benefactors, but it wouldn't cover $17b in costs.  I'm certainly not suggesting that the fund or even in-filling are the sole solutions.  But if they can reinvigorate the conversation on public housing and change the narrative that dominates it, they would surly create the opportunity for us to start focusing on why public housing matters and why it is worthy of our collective support.