More U.S. Oversight Is the Price of Fixing NYC’s Public Housing

(Bloomberg) -- New York City Mayor Bill de Blasio agreed to give the Trump administration veto power over his leadership choices for the crisis-ridden housing authority in order to fix the largest U.S. public housing system’s shoddy living conditions.

Rather than take over the agency, U.S. Housing and Urban Development Secretary Ben Carson said federal prosecutors must approve de Blasio’s appointments of a chief executive officer and chairman at the authority. They would be overseen by an independent monitor chosen by HUD and U.S. Attorney Geoffrey Berman.

The city’s compliance with Carson’s demands will trigger the federal government’s withdrawal of its lawsuit against the administration. The two sides had an agreement last summer that U.S. District Judge William Pauley III rejected, saying it didn’t go far enough to fix conditions he described as deplorable.

“We are not going to micromanage the process here in New York City,” Carson said at a news conference at HUD’s Manhattan office.

The agreement commits the city to spend $2.2 billion over the next 10 years. HUD will continue to support authority with a subsidy of $1.5 billion. This is similar to what the parties agreed to last summer. The new aspects of the deal focus on the mayor permitting federal oversight of the agency’s management. The agreement gives the city 30 days to visually assess and remedy any apartments identified as presenting a lead-based paint hazard.

“I’m sure that there are many who would have predicted that Secretary Carson and I would not have been able to work together well and communicate and find common ground,” said de Blasio, who was a HUD regional director in former President Bill Clinton’s administration. “What we’ve done here today creates a strong path forward.”

Takeover Threat

Carson’s decision followed months of conflict between HUD and the city, with the threat of a federal takeover of the agency hanging over Blasio’s administration for months. It has been a political embarrassment for the mayor, a Democrat who won election in 2013 decrying economic inequality and who has vowed to create or preserve 200,000 units of affordable housing.

The New York City Housing Authority consists of 326 developments scattered among the five boroughs, with about 176,000 apartments. In an era of reduced government subsidies, failure to repair and maintain the housing stock led to leaking roofs, mold and months-long delays in making repairs. Last winter, boiler breakdowns kept heat and hot water from more than 75 percent of the housing authority’s 400,000 residents.

Amid freezing temperatures on Thursday morning, the authority reported 5,540 residents had no heat and hot water in 26 buildings, including the entire 2,162-unit Wagner Houses in Harlem.

Seven Democratic members of the city’s congressional delegation hailed the agreement for stopping short of a federal takeover, while agreeing with Carson that “there must be additional accountability and transparency at NYCHA, so that the agency once again becomes responsive to tenants’ needs.”

Attracting Investors

While the mayor has committed more than $3.5 billion in operating and capital spending through 2027 and another $213 million for heating emergencies and improvements, officials say the system needs about $32 billion for renovation and repairs.

De Blasio has sought federal approval to move 62,000 apartments, about 35 percent of the authority’s units, into the U.S. government’s Section 8 rent-subsidy program in the next decade. This would help attract private investors to take over management of the buildings, because it could rely on a steady stream of revenue instead government block grants that repeatedly fall short of covering expenses.

The system has so far been used in Far Rockaway, Queens, to renovate almost 1,400 units with $560 million in private and government financing. Another two complexes housing about 13,000 have been formally approved.

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