Bonds, Vouchers, Tax Credits, & More: Mayor Adams' Federal Housing Agenda
Mayor Adams and Chief Housing Officer Katz unveil housing plans (photo: Ed Reed/Mayor's Office)
Facing an affordable housing and homelessness crisis, Mayor Eric Adams has set an ambitious goal to build 500,000 new homes, rehabilitate a collapsing public housing system, and transform social service delivery.
While most attention is paid to policies at the city and state levels, Adams is relying in part on action from Washington, D.C. that could bring in billions of dollars in subsidies and make it easier for New Yorkers to access housing benefits. That includes enough tenant protection vouchers to then borrow $5.5 billion through bonding, which officials say is needed to upgrade 25,000 NYCHA apartments under the Public Housing Preservation Trust, a major financing tool created last year by state lawmakers at the city’s urging.
New York City Chief Housing Officer Jessica Katz was in Washington, D.C. in January, pushing the administration's agenda with federal officials.
"All the easy stuff we've tried already in housing," Katz said on a recent episode of The Housing Problem podcast, hosted by two long-time New York housing players. "Now we're trying to push the boulder up the mountain to some more difficult things. And the collaboration between the federal and state and city government is going to be the whole ballgame," Katz said.
According to the mayor’s office, the administration’s federal agenda includes passing legislation to expand key affordable housing financing mechanisms, reducing administrative hurdles to access Section 8 and other federal low-income housing programs, and the additional voucher funding that will make the NYCHA Preservation Trust work.
The $5.5 billion that could be raised from voucher-backed bonds accounts for only a fraction of NYCHA's $40 billion capital and operational shortfall. The city has been looking for billions in direct aid from the federal government for NYCHA repairs for many years, but no such funding has been forthcoming, even under full Democratic control in Washington in 2021 and 2022 and the passage of several major spending packages, including the trillion-dollar infrastructure bill. Members of the city's congressional delegation continue to push for tens of billions of dollars in direct public housing capital funding, but in the absence of that, other strategies are being pursued.
A number of the administration's federal proposals were in Adams' first housing plan, "Housing Our Neighbors," released last June, including funding for NYCHA and easing administrative hurdles to securing benefits. Several others, like doubling the Low-Income Housing Tax Credit, the strongest available federal resource for financing affordable housing development, are more recent goals, according to a City Hall spokesperson, who provided the full federal agenda to Gotham Gazette upon inquiry (though no comment for this article).
Governor Kathy Hochul has also made housing production a major priority of her first term, promising to create or preserve 100,000 units of affordable housing over five years and build 800,000 new homes overall in the next decade. She is prioritizing some of the same measures in Washington as Adams, including capital funding for NYCHA and extending the Low-Income Housing Tax Credit, according to a spokesperson.
Hochul met with members of New York's congressional delegation in Washington in February where she "highlighted ways State and federal leaders can work together to address the housing crisis," the spokesperson, Justin Henry, wrote by email.
"[T]he Governor looks forward to continuing to work with our federal partners to bring her vision for a more affordable New York to fruition," he wrote. Hochul is also seeking a new federal tax credit to build or renovate 1-4 family housing in distressed parts of the state and greater monetary rewards for state and local governments that reform discriminatory zoning policies.
Many of the provisions Adams and Hochul are seeking have failed to gain traction in recent years, despite their inclusion in early drafts of major pandemic-era legislation. Now, in a divided Congress, advocates see an even steeper uphill battle to achieve their goals.
"Every branch of government has a really important role to play in addressing the housing crisis," said Annemarie Gray, a former city housing official and now executive director of Open New York, a housing advocacy organization.
"And frankly for too long politicians at all levels of government sat on the sidelines and haven't actually done what they need to do to address the housing shortage," she added.
Housing Supply Legislation
The Adams administration is also seeking the passage of three bills through Congress that would finance affordable housing construction by expanding the reach of private activity bonds, the Low-Income Housing Tax Credit, and low-cost loans to housing financing agencies. New York City's Department of Housing Preservation and Development and the Housing Development Corporation use these types of tools in conjunction with private developers, including for- and not-for-profit entities.
The New York City capital budget includes $5 billion for affordable housing over five years. That includes $3.6 billion for the Department of Housing Preservation and Development and $1.2 billion for NYCHA's PACT program (a separate rehabilitation program outside of the Preservation Trust), and another $200 million for NYCHA developments in Brooklyn.
The state budget includes $5.7 billion in capital spending for affordable housing production, part of a five-year, $25 billion plan to help finance the building or preservation of 100,000 units across the state, 10,000 of which will be supportive housing.
Another $8.8 billion will come from state and federal tax credits and other federal funding. And $11 billion will go toward rental subsidies and operating shelters and supportive housing.
A handful of federal bills could add billions in capital dollars to help boost New York's affordable housing supply.
Affordable Housing Credit Improvement Act and SAVE Act
The Low-Income Housing Tax Credit (LIHTC) is the most valuable available federal mechanism to facilitate affordable housing construction. The Affordable Housing Credit Improvement Act would extend an increase on the "9% tax credit," a form of LIHTC that is used to finance new construction and expires in 2024. It also increases tax credits for extremely low-income households.
Critically, according to housing advocates, it would reduce the "50% test" on affordable housing projects financed through the sale of private activity bonds, a type of bond that can create tax-exempt interest when used for affordable rental housing, among other non-housing-related categories. Affordable housing projects that use private activity bonds to pay for half or more of the total costs (hence, "50%") are able to generate LIHTCs, which incentivize production.
The federal government limits the number of private activity bonds a state can issue and thus the number of projects that can reach the 50% threshold. The Affordable Housing Credit Improvement Act would lower the threshold to 25%, increasing the number of developments eligible to receive LIHTCs. The bill would also allow states to reuse previous bond allocations, a practice known as bond recycling.
The Adams administration estimates the measures could generate an annual $1.3 billion in new funding to finance affordable housing.
"It would really unlock affordable housing supply in New York. We would have the ability to finance double what we're financing now," said Rachel Fee, executive director of New York Housing Conference and former federal policy lead at the city Department of Housing Preservation and Development.
"Right now we use all of our federal resources for affordable housing and we're at the limit," Fee said.
In February 2021, Fee and U.S. Rep. Hakeem Jeffries, a Brooklyn Democrat and now the House Minority Leader, penned an op-ed calling for LIHTC increases and the bond cap exemption, along with fully funding Section 8 to create a form of universal rental assistance. None of those proposals made it across the finish line last year.
The limits on LIHTCs make it difficult for the city to finance affordable housing directly. That was part of why Mayor Bill de Blasio focused on private production and the implementation of Mandatory Inclusionary Housing – which permits greater density in exchange for affordable housing – and tax incentives like the now-defunct 421-a. Fee said more LIHTCs would allow the city and state to build more 100% below-market-rate rental buildings.
Another bill – the Support Allowing Volume Expansion Federally-Assisted Housing Act, or SAVE Act – would go further, exempting affordable housing projects from volume caps on private activity bonds, meaning more would become eligible for LIHTCs.
"We hope [changes to LIHTC] will be enough of a bipartisan issue that can get a little traction even despite the challenges of the political landscape in D.C. right now," Katz, the city’s chief housing officer, said on the podcast.
Henry, Hochul's spokesperson, said changes to the 50% test and the bond cap are among the measures the governor is pushing in Washington this session.
Federal-Financing Bank Risk-Sharing Act
The city is also seeking an extension of the Housing Finance Agency Multifamily Loan Risk-Sharing Program. The program provides low-cost capital to build and maintain multi-family affordable rentals. Advocates from New York City pushed for its temporary reinstatement in 2021, after it sunset in 2018. The program will expire again in 2024 without the passage of the Federal-Financing Bank Risk-Sharing Act.
Adams had previously included the SAVE Act in his "Housing Our Neighbors" plan, while the other bills are newer sights for the administration.
Biden’s Budget
In his budget plan, released last week, Democratic President Joe Biden included a reduction in the 50% test for LIHTCs to 25%, in line with the Adams administration agenda. According to an analysis from the audit and tax services organization Novogradac, lowering that threshold could create 1.48 million new affordable rental units nationwide from private activity bonds issued between 2023 and 2032. Biden also wants to extend the "9% tax credit" in 2025.
The proposed federal budget, which will inform spending and policy negotiations with Congress, also includes $51 billion in Low-Income Housing Tax Credits and other subsidies used to develop affordable rental and owner-occupied units. Congress will pass its budget resolutions and formally approve appropriations over the coming months.
Biden also included over $8.9 billion in total discretionary spending on public housing nationally, including $5.1 billion in operating funding and $3.2 billion for capital. That funding also includes $535 million specifically earmarked for environmental upgrades, lead remediation, and other improvements. Given NYCHA is the largest public housing authority in the country, by far, it would likely receive a significant portion of any public housing funding.
The budget also places $7.5 billion in mandatory capital funding for the public housing properties with the most dire needs. By including that funding in the mandatory side of the budget, Biden signaled support for making public housing an entitlement that would be shielded from fights over discretionary spending. But that inclusion is being viewed by advocates as a symbolic gesture given its near impossible chances of being passed by a divided Congress. House Republicans are proposing drastic cuts to HUD including reducing housing programs by up to 43%, according to a report from the National Low Income Housing Coalition.
Administrative Burdens
Most publicly-funded affordable housing is subject to federal eligibility requirements that can be onerous for individuals and families to access, leaving available units vacant. Applicants for public assistance, rental subsidy vouchers, and affordable units are often asked to provide excessive and duplicative paperwork, and attend in-person appointments – all while facing the trials of housing instability.
Experts, including Katz, argue these regulations are unnecessary and counter to the purpose of public assistance – while having the effect of keeping shelter populations artificially high.
"Housing Our Neighbors" outlined a number of administrative shifts in the processing of Section 8 rental assistance and other state and federal housing placement programs.
A spokesperson for Mayor Adams said changes to HUD and IRS standards, both administratively and through statute, would have a serious impact on housing access in New York City. For example, aligning HUD regulations with Treasury Department and IRS rules around tax-credits and tax-exempt bonds would limit the administrative overlap of various programs.
A recent HUD rule change allowed government housing agencies, like New York City's Department of Housing Preservation and Development (HPD) to use income information held by other programs and agencies to determine an applicant's eligibility.
"I think the timing is good for that because money is tight so where they can help us with regulation and not cash, I think people are more than interested in stepping up and helping," Katz said of her recent trip to Washington.
"We actually got a surprising number of administrative burdens nerds to talk to us up there and we're hoping to make some real progress both on the regulatory and the legislative sides with administrative burdens," she said.
But for Fee, the political environment is less favorable to administrative fixes than when Democrats controlled both chambers of Congress and the White House.
"It just seems so dysfunctional and I think for Republicans controlling the House, housing is not going to be a top priority for them," she said. "Nothing is easy in Washington," she added. "Like, nothing is easy."
NYCHA and the Public Housing Preservation Trust
NYCHA is America's largest public housing authority and the city's largest affordable housing provider. With over 177,000 apartments, it is home to an official count of roughly 370,000 residents, though in reality it is likely far more.
Most of NYCHA's 335 developments are in need of serious repair, with failing elevators and boilers, mold, vermin, lead paint, and a host of other building and apartment deficiencies. The authority estimates the total price tag for capital repairs is around $40 billion, having ballooned over decades of scant support from city, state, and federal leaders. (NYCHA projects an additional operational shortfall of $35 million this calendar year, in part due to growing rent arrears.)
Housing experts warn that if officials don't act soon, it may no longer be cost effective to repair the existing public housing stock.
NYCHA's five-year spending plan includes just $8.6 billion of the $40 billion capital needs, of which $3.7 billion is available this year. From 2023 to 2027, federal capital dollars are expected to total nearly $4.3 billion, with another $3.5 billion from the city, and $538 million from the state, according to a presentation from NYCHA's chief financial officer in December.
To pay for some of the costs, state lawmakers created the Public Housing Preservation Trust, a publicly-controlled entity that leases NYCHA property in order to secure Tenant Protection Vouchers. The vouchers and rent revenues support the issuance of bonds, which can be used to rehabilitate apartments at twice the value of NYCHA's current federal subsidies, according to NYCHA. The law creating the trust authorizes funding for an initial swath of 25,000 units, with officials hopeful to significantly expand that number eventually.
"We worked very hard last session with the state government to pass the Public Housing Preservation Trust but all of that is incumbent upon this federal government now to come to us with the tenant protection vouchers that we need," Katz said on The Housing Problem podcast.
NYCHA estimates the 25,000 eligible units – to be selected by development based on a tenant-approval process – will cost $225,000 per unit in repairs, on average, for a total of $5.5 billion.
Washington lawmakers have apparently heard the call. In the current fiscal year, Congress appropriated $337 million for tenant protection vouchers, more than three times the previous year. According to NYCHA spokesperson Barbara Brancaccio, the 25,000 unit conversions are unlikely to fall in the same year and the current federal funding "provides ample levels for initial tranches."
Experts say that a higher level of investment must be sustained in order to meet and eventually expand the goal of the Preservation Trust. The city's Independent Budget Office estimates NYCHA will need $500 million in vouchers to leverage to rehabilitate the 25,000 units under the Trust.
Biden's spending plan, which will help shape negotiations with Congress, includes $385 million for tenant protection vouchers, a $48 million increase from the current enacted budget.
"This is really a proof of concept," said Iziah Thompson, a senior policy analyst at Community Service Society, a nonprofit focused on economic mobility. "They are only targeting the 25,000 units first…if they can get these votes and developments to go for the trust then maybe they can reset 25,000."
Thompson warned that leaders at all levels of government must not lose sight of NYCHA's mammoth overall needs, including the thousands of units that will remain under NYCHA management. "Those units can't be forgotten and there is still a great need to provide capital for those from the state, city, and the federal governments," he said.
Assembly Member Linda Rosenthal, a Manhattan Democrat and the Assembly's housing committee chair, said NYCHA needs federal help to cover unpaid rents, many of which were not covered by the state's Emergency Rental Assistance Program. "A lot of us with NYCHA developments [in our districts] are very concerned that NYCHA is already dipping into its reserves and that's not a good thing," she told Gotham Gazette.
A group of state lawmakers, NYCHA tenants, and housing advocates is pushing for an additional $389 million for ERAP to be included in the state budget this year to cover eligible tenants who applied for assistance but were denied because they live in public or subsidized housing.
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by Ethan Geringer-Sameth, reporter, Gotham Gazette
@GeringerSameth @GothamGazette
City Libraries Launch Push to Beat Back Mayor Adams' Budget Cuts
At a library in Queens (photo: John McCarten/City Council)
The city’s public library systems launched a campaign on Monday to push back against tens of millions of dollars in budget cuts in Mayor Eric Adams’ proposed budget. Adams’ $102.7 billion preliminary budget for the 2024 fiscal year, which begins July 1, is now the focus of a series of City Council hearings.
For the past several months, the mayor’s budget moves have invited criticism as he pushed major cuts to city spending. Ahead of a mid-year November modification to the current fiscal year’s budget, he announced a Program to Eliminate the Gap (PEG), to find cuts and savings worth 3% across most city agencies in the current fiscal year and 4.75% in the next three fiscal years.
For the city’s three public library systems, with 200 branches across the city, and the city’s Research Libraries, the 3% PEG meant a $13.5 million reduction in operating aid in the current fiscal year, which they have had to absorb.
In the mayor’s preliminary budget for the 2024 fiscal year, the library systems together are now facing about $20.5 million in reductions, which they are hoping to reverse. They are also calling on the administration to baseline a $15.7 million discretionary one-shot allocation that was made by the City Council last year in its “Schedule C” that comes with the adopted budget, for a total of $36.2 million.
The realized and planned library funding reductions, among broader cuts at many city agencies, created an uproar in the City Council, which symbolically refused to vote on the November mid-year budget modification.
Many Council members, including Speaker Adrienne Adams and finance chair Justin Brannan, as well as advocates, service-providers, and others are now pushing back on the mayor’s preliminary budget and looking to restore much of the funding cuts before a budget deal is reached in June. Among the most-cited examples of proposed cuts that they are upset with are those to early childhood education, CUNY, and libraries.
“This is a serious threat to the ability of the city’s public libraries to serve New Yorkers at a time when we should be investing in these essential public institutions, not cutting them,” said leaders of the Queens, Brooklyn, and New York Public Libraries in a joint statement (New York Public Library serves Manhattan, the Bronx, and Staten Island). “The good news is that New Yorkers love their libraries and are ready to tell the administration and the City Council how important libraries are to every community.”
Adams’ preliminary budget, released in January, proposed an allocation of $150 million for The New York Public Library, nearly $114 million for The Brooklyn Public Library, about $118 million for The Queens Borough Public Library, and $29.1 million for the Research Libraries for a total of about $411 million. That funding is about $41.7 million less than the $452.7 million allocated for libraries when the current city budget was adopted last June and about $50 million less than the $461 million for libraries in the modified budget for this fiscal year.
But, as mayoral spokesperson Jonah Allon noted, the 2024 funding is likely to increase since it does not yet include state or federal funds that get passed through the city or any discretionary funding that the City Council could choose to allocate. (The library systems also raise philanthropic dollars, among other sources of revenue.)
The library systems say the mayor’s cuts are already hurting their ability to serve New Yorkers, and that future reductions will only worsen services. On Monday, they sent out an email blast to all their subscribers, calling on everyday New Yorkers to sign letters to push back against the funding cuts. Leaders of the library systems will also headline a rally outside City Hall on Monday, March 20, before they testify at a budget hearing held by the City Council.
The Council has already expressed its displeasure with the mayor, repeatedly criticizing his budget proposal and specifically pointing to libraries as one of the areas where they intend to oppose any cuts. “Our libraries are neighborhood resource hubs that provide critical programs and services for New Yorkers of all ages in every community,” said Speaker Adrienne Adams in a statement to Gotham Gazette. “Funding for our library systems that enrich and improve the lives of residents are critical to achieving healthier and safer neighborhoods. The Council will fight to protect these community centers of opportunity and safe haven in the city budget.”
“Our libraries are always the first to be cut whenever we are in an age of austerity,” said Council Member Chi Ossé, chair of the Council’s Committee on Cultural Affairs, Libraries, and International Intergroup Relations, in a phone interview. He stressed the important role that libraries have played during times of crisis, including providing COVID-19 resources and PPEs during the pandemic, hosting COVID-19 testing and vaccination sites, and providing services to the thousands of migrant asylum-seekers arriving in the city.
Ossé also pointed to the December hearing where library officials pleaded for more funding to avoid cutting programs. “There's no more fat to trim, they were at the bone after those PEGs came into fruition,” he said. “I'm sure that at [next week’s] hearing, we're going to hear that we're touching marrow now.”
“This administration has made critical investments in the city’s three library systems and recognizes the vital role they play in our communities,” said Jonah Allon, a spokesperson for the mayor, in a statement. “While every agency has been asked to tighten its belt in the current Fiscal Year in response to fiscal and economic conditions — including more than $4 billion in migrant costs by next year, the expiration of labor contracts that went unresolved for years, and skyrocketing health care costs — it is inaccurate to say we cut libraries’ funding in January’s Preliminary Budget. We will continue to evaluate their needs and work with them through the budget process.”
After the preliminary budget was released, Mayor Adams also sought to defend the proposed library cuts in a press conference, insisting that he was merely reducing budgeted vacancies without affecting services. His proposed budget removed 4,300 vacant budgeted positions across all agencies, even as 23,000 vacancies remain in city government . “I'm a big believer in libraries,” he said at the time. “What we're looking at are the vacancies…We are saying 50% that we want them to remove. And that's the same for our libraries.” The mayor’s savings program, however, very clearly defines the library cuts as “Baseline reduction to Operating Subsidy” rather than vacancy reductions.
The library system provides a wide range of services to New Yorkers from traditional book-lending and a place to read to free internet access and English-language classes to early-childhood education and after-school programs, and more. Library officials had already warned the Council at a previous hearing in December that they will be forced to reduce service and staff if the cuts should go through. “We have become more efficient. But at some point you get to the bone,” Tony Marx, president and CEO of New York Public Library said at the hearing. “This may push us over the edge.”
Linda Johnson, president and CEO of Brooklyn Public Library, called the proposed budget cuts a “gut punch” in an email blast on Monday. “If these cuts proceed, we will be forced to make agonizing choices about shortening hours, cutting programs and collections, and rolling back services,” she wrote.
Similarly, Dennis Walcott, president and CEO of Queens Public Library, said the cuts would result in “fewer programs, like storytimes, homework help, language classes, and digital literacy workshops, reduced hours at our locations, and fewer books, magazines, and newspapers. We cannot let this happen.”
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
NYCHA Officials Sound Alarm at City Council Budget Hearing
City Council Member Alexa Avilés leads the NYCHA budget hearing (photo: William Alatriste/NYC Council)
The New York City Housing Authority is facing a fiscal crisis as rent revenue has plummeted in the wake of the pandemic, affecting its operational budget, constraining its ability to hire personnel, and forcing it to suspend dozens of infrastructure improvement projects. Amid the city's larger affordable housing and homelessness crisis, the public housing authority is also struggling with a worsening ability to get vacant units repaired and filled with new tenants, a problem apparently exacerbated by Mayor Eric Adams' budget cuts.
At a City Council budget hearing on Monday, NYCHA officials outlined the dire situation facing the public housing authority as it struggles to recover its financial footing while continuing to make repairs and upgrades at its 175,000 units, home to nearly half a million New Yorkers and many in deep disrepair. The authority is in the midst of implementing a major transformation plan, while also complying with the mandates of an agreement with the federal Department of Housing and Urban Development (HUD) to make repairs at thousands of apartments under the watch of a federal monitor.
“Our public housing is an incredible asset and a lifeline to hundreds of thousands of New Yorkers who deserve healthy and safe homes,” said City Council Member Alexa Avilés, a Brooklyn Democrat and chair of the Council’s public housing committee, in her opening remarks. “But its beleaguered finances present existential challenges.”
“Every level of government can and should do more,” she added. “Each level is making active choices to defund NYCHA or minimally fund NYCHA. Every day this choice imperils residents and some of our greatest social housing assets.”
As part of NYCHA’s transformation plan, repairs and upgrades are being made at 62,000 apartments under the Permanent Affordability Commitment Together (PACT) program – which turns over developments to private management, allowing them to access federal funds under the Rental Assistance Demonstration (RAD) program. Last year, Governor Kathy Hochul and the State Legislature also worked to fulfill one of Mayor Eric Adams’ top priorities, approving a new Public Housing Preservation Trust that is projected to help the authority raise billions of dollars for repairs for about 25,000 apartments.
While the priority has usually been NYCHA’s $40 billion capital need for maintenance and upgrades to its buildings and units, this year the authority, its residents and their allies are more urgently focused on filling the hole left by tenants that have not paid their rent.
NYCHA relies on rent for about a third of its annual operating budget and current tenant rent arrears total about $466 million across 73,000 households, up from $125 million in 2019. The authority only collected about 65% of rent it was owed over the last year, and had to dip into its reserves to cover an operating deficit.
NYCHA officials predict an operating budget of $4.4 billion for the 2023 fiscal year, with a $35 million deficit while again having to rely on reserve funds. That will also leave the authority with less than one month of reserve funds, though HUD recommends that public authorities should have at least three to four months of reserves on hand.
[READ: NYCHA Rent Arrears Crisis Shifts Budget Focus from Capital Needs to Operating Assistance, But Hochul’s Budget Includes Nothing]
“Without additional funding or an increase in rent payments beginning next year, NYCHA will have no choice but to significantly cut expenses and curtail repairs, including those related to the HUD agreement, which will have a real impact for our residents,” said NYCHA’s interim CEO, Lisa Bova-Hiatt, in her opening testimony to the City Council. Though she said the agency will undertake cost-cutting measures and expects to cover its projected deficit, that deficit will grow to about $57 million by 2027 if rent losses continue to mount.
NYCHA has sought emergency funds to help its tenants. The authority applied for $120 million worth of aid for more than 31,330 households from the pandemic-era Emergency Rental Assistance Program (ERAP), a state program created with federal funding. But the state placed NYCHA residents at the bottom of the priority list, and not a single NYCHA tenant has received ERAP funding so far.
Rent arrears for those households have already grown to about $240 million. The agency is now looking for $330 million from the state to help cover lost rental revenue, though Governor Hochul included no new NYCHA money in her executive budget released earlier this year, which is now the subject of negotiations with the Legislature. A deal is due by the April 1 start of the new fiscal year.
When Avilés asked about NYCHA’s contingency plan if state aid does not come through, and whether they would ask the city for help, officials insisted that they do not want to let the state off the hook. “There has to be funding from the state for ERAP,” Bova-Hiatt said. “There has to be a way to protect affordable housing and our NYCHA residents.”
Brian Honan, NYCHA’s senior vice president for intergovernmental affairs, said the authority is working hard to lobby on the issue before the Legislature. “We feel very confident in our ability to make our case and I think we have made our case,” he said. “However, if that does not come to fruition, we will come right back to the Council, I'm telling you, on April 2, to present a plan B. I do not want to give that today because I think that we'll be letting other folks off the hook.”
NYCHA has several allies in the fight for rent arrear funding. The New York State Association for Affordable Housing (NYSAFAH), a trade group, and Legal Aid Society have proposed a $2 billion Tenant Fund for Affordable Housing (TFAH), of which, $500 million would be dedicated to NYCHA. State Senator Brian Kavanagh, chair of the Senate Housing Committee, and Assemblymember Grace Lee, member of the Assembly Housing Committee, have also called for $389 million in additional ERAP funding to cover both public housing tenants and those living in subsidized housing.
The State Senate and the Assembly will each soon pass a one-house budget resolution, likely this week, that outlines their priorities and help inform negotiations among the two houses and governor. NYCHA funding will be among many closely-watched items in the one-house budgets.
At Monday’s hearing, Bova-Hiatt said NYCHA’s challenges aren’t limited to rent revenue. There are other NYCHA costs that are out of its control including the rising cost of utilities and employee benefits, and the escalating costs of maintenance and repairs to the aging housing stock. To control costs, the authority has taken several measures including eliminating 145 vacant positions, cutting nonessential contract spending, and submitting an operating subsidy appeal to HUD to cover some costs of the HUD agreement.
Bova-Hiatt also ran down a lengthy list of capital repairs that NYCHA has achieved in recent years. The agency has about $2.45 billion in available capital funds for 2023 – including about $390 million in federal funds and $741 million in city funds, and other funds from previous years – and is expected to spend about $935 million.
“While the capital funding we receive is only a fraction of the more than $40 billion needed to provide residents with the quality of life they deserve, we are making a difference with the money we do receive,” she said. There are currently more than 700 capital projects underway across the city, she said, including more than 250 that are under construction this year. The agency has also consistently met or exceeded HUD deadlines for allocating and spending federal funds, she said.
She also outlined smaller projects backed by discretionary funding from the mayor, City Council, and borough presidents. She said that 72 such projects were expedited last year – 20 are substantially complete, 32 are under construction, and 20 are in the procurement or completion of design phase and will move to construction this year. But, she said those capital projects could be affected by the authority’s operating shortfall and the consequent staffing issues.
“We are mitigating these impacts to the extent possible, but have identified approximately 70 projects that we must pause in the next few months as a result of our operating budget constraints, which are due to growing rent arrears, insufficient operating funding, rising expenses and staffing and resourcing limitations,” she said, though she noted that they do not relate to the HUD agreement and will not create health, safety or security issues.
Sounding a familiar theme in this month’s budget hearings, Council members also raised concerns about NYCHA’s staffing vacancies. Though the authority’s overall personnel vacancy rate is about 7%, vacancies in core operations such as heating, elevators, and safety services rise to 17.5%. “This is a problem,” said Avilés. “To get the repairs that tenants so desperately need, we need those kinds of operational staff.”
NYCHA officials did insist that their hiring goals were manageable. “Out of 937 budgeted positions, only 696 have to be filled,” said Bova-Hiatt. “We actually think that that's a pretty achievable goal.”
As Avilés noted, the effects of the various challenges facing NYCHA are apparent in its Vacant Unit Readiness program. Wait times for NYCHA to turn around vacant units more than doubled from 182 days in January 2022 to 399 days in January 2023, and the number of vacant units increased from about 486 to 3,593 in that time.
Council members seemed particularly incensed that Mayor Adams’ November budget modification cut contracts for the Vacant Unit Readiness program by 10%, a decrease of nearly $31 million over the next four years. “Cutting this program to get units back online amidst a housing crisis is simply unconscionable for residents who both need to transfer and for some of the quarter of a million people that are waiting on NYCHA’s waiting list,” Avilés said.
Council Member Lincoln Restler echoed that point. “Could you just clarify for us how it's conscionable to cut this program when we're seeing such an extraordinary increase in the length of time that apartments are vacant?,” he asked.
Eva Trimble, NYCHA's Chief Operating Officer, said that NYCHA “worked closely with [the mayor’s Office of Management and Budget] to realign the forecasts” of actual spending on the program, which involves making repairs to vacant apartments, including abating lead and asbestos. “We've worked with OMB to match the funding to our production volume and so we have never had a shortfall in funding to do the work that we need to do,” she said, while insisting that delays in turning around apartments also stem from stricter standards for housing conditions implemented in recent years.
Restler, however, was dissatisfied with the explanation. “OMB is cutting us off at the knees and preventing us from actually being able to do the work that's necessary to fill these vacant apartments and get them inhabitable,” he said. “That's why I'm angry.”
Citizens Budget Commission, a nonprofit fiscal watchdog, also presented testimony at the hearing, reiterating recommendations that NYCHA should speed up repairs of deteriorating buildings, improve property management, boost rent collection and find savings and increased productivity through collective bargaining. In the testimony, Sean Campion, CBC's director of Housing and Economic Development Studies, noted that NYCHA's operating costs are increasing faster than those of comparable rental properties, even though the number of properties under its management has decreased. Overtime costs have also increased despite the authority's efforts to reduce them.
Campion also pointed out that NYCHA has relied on non-operating revenue and city subsidies to balance its budget, an unsustainable practice in the long run.
"While a balanced budget remains in sight for 2023, fiscal stability is not on the horizon. Ultimately, structural reforms, not just one-time bailouts, are needed to put NYCHA’s operations back on the path to solvency," he said.
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
Note - this article has been updated with testimony from Citizens Budget Commission.
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