Activists worry that de Blasio administration will keep selling NYCHA to developers, undermining regulated rents

By LOUIS FLORES

The sale by the de Blasio administration of approximately 900 project-based, Section 8 housing owned by the New York City Housing Authority, or NYCHA, to a consortium of private real estate developers is worrying tenants’ rights activists that market rate rents may soon creep into public housing.

According to NYCHA's statistics, over 600,000 New Yorkers live in over 178,000 apartments owned by NYCHA in over 2,500 residential buildings.  NYCHA sold at the end of last year six of those residential buildings that had offered project-based Section 8 housing to two politically-connected real estate developers, L+M Development Partners and BFC Partners, two politically-connected real estate development firms with influential lobbyists, which have close ties to senior housing officials in the de Blasio administration.

Despite complaints by each of City Councilmembers that the sale was not transparent and tenants’ rights activists that the sale may be the first of many more sales to come, NYCHA CEO Shola Olatoye hinted that such sales were attractive to a cash-starved NYCHA.

“We don’t know what the future holds,” NYCHA CEO Olatoye said, adding that, “I think it would be irresponsible for us to not take advantage of tools that, frankly this city has utilized and pioneered to create thousands of affordable housing units.”

Activists for affordable housing and advocates for tenants’ rights noted that NYCHA CEO Olatoye defended the sale of Section 8 apartments as a way to “create” affordable housing units.

NYCHA's press office did not answer a request for an interview for this article.

Fallout from the sale of the approximately 900 apartments has continued to reverberate amongst activists and NYCHA tenants and was front and center at a recent, yet farcical City Council hearing, where Councilmembers expressed being shocked by the lack of transparency by the de Blasio administration in respect of the sale, a claim that some tenant activists did not believe.

“If there had been some transparency or more transparency, they might have gone along with it," said John Fisher, a tenants’ rights activist and founder of the TenantNet newsletter, of some of the shocked officials, adding that, "They are just whining to some degree.”

The fight in New York city between politicians, who receive large campaign contributions from the real estate industry, and grassroots activists is playing out against a backdrop of the fight to renew city rent laws up in Albany.

Democrats were hoping to take back majority control over the State Senate in order to enact a strengthening of rent laws, not just their renewal.  Some Democrats viewed the joint control by State Senate Republican Majority Leader Dean Skelos (R-Rockville Centre) and Independent Democratic Conference Leader Jeffrey Klein (D-The Bronx) as blocking pro-tenant legislation. 

State Senator Klein was coincidentally joined last week by City Councilmember Ritchie Torres (D-The Bronx), the chair of the City Council committee on public housing, in naming NYCHA as the city’s worst landlord, an announcement that some saw was a way to manufacture public outrage in a cynical attempt to force further sales of NYCHA buildings.

Due to a planned trip to Israel, Councilmember Torres was not available for an interview with Progress Queens, and Senator Klein’s office did not answer a request for an interview. 

In his stead, Councilmember Torres’s chief of staff, Sindri McDonald, provided to Progress Queens Councilmember Torres’ prepared remarks for the recent City Council hearing about the NYCHA sale.

Speaking of NYCHA’s inability to pay for the maintenance of its own buildings, Councilmember Torres said, according to his statement, “In the real world, NYCHA essentially had two options.  The worse option would have been demolition by neglect,” he said, in part, adding that, “The better option is preservation by means of a public-private partnership.  A public-private partnership enables NYCHA to access funding that it could not obtain on its own because of federal law.”

The press office for City Hall did not answer a request for comment, however, Mayor Bill de Blasio (D-New York City) has defended the sale of NYCHA’s project-based, Section 8 apartments, telling the news publication City & State that, “On the question of these particular Section 8 units I believe fundamentally in what we did here because this is a very narrow slice of the properties associated with NYCHA.”

However, Mr. Fisher, the tenants’ rights activist, said that the sale of NYCHA apartments in exchange for proceeds to help fund NYCHA was a slippery slope for public housing.

“It’s still a tip of an iceberg of what can happen down the road.  This is something I raised as a big issue about 10, 15 years ago, when Hudson Yards was just first starting,” Mr. Fisher said. 

Some government reform activists have cautioned that real estate developers sometimes engage in corruption to find ways to game property tax abatements or zone-busting development approvals.  Some tenants rights activists are also worried by how some elected officials have described the NYCHA sale.

“In order to access these critical funding sources, NYCHA was required by law to form a public private partnership,” Councilmember Torres said, according to his prepared remarks. 

The Councilmember’s statement was misleading, some activists assert, because the legal requirement was given by the sale of the NYCHA buildings.  The sale was not a legal requirement just because NYCHA has unfunded needs.  Indeed, NYCHA and elected leaders have squandered opportunities to increase city funding for NYCHA.

NYCHA has a certain number of vacant apartments, which some estimate to be between 2,000 to 5,000 units.  Activists have wondered how much subsidies are lost, because those apartments are kept vacant.

Mayor Bill de Blasio has made increasing the amount of affordable housing a key issue of his administration, according to the State of the City address he delivered on February 3, 2015, as seen here, at Baruch College.  However, the mayor's plan to sell Section 8 buildings owned by NYCHA to real estate developers have raised concerns about market rate rents creeping into buildings intended for people needing subsidised housing.  Source :  Photo Illustration/Progress Queens

Mayor Bill de Blasio has made increasing the amount of affordable housing a key issue of his administration, according to the State of the City address he delivered on February 3, 2015, as seen here, at Baruch College.  However, the mayor's plan to sell Section 8 buildings owned by NYCHA to real estate developers have raised concerns about market rate rents creeping into buildings intended for people needing subsidised housing.  Source :  Photo Illustration/Progress Queens

Mayor de Blasio inherited a $2.4 billion budget surplus from former Mayor Michael Bloomberg (R-New York City), but none of that money was dedicated to NYCHA, even though Comptroller Scott Stringer (D-New York City) proposed a $400 million be set-aside over ten years for NYCHA from the surpluses generated by the Battery Park City Authority, a proposal that the de Blasio administration did not make happen.

Mismanagement also cost NYCHA approximately $700 million in federal funding, according to an audit of NYCHA conducted by Comptroller Stringer.

The de Blasio administration could also raise revenue that could be dedicated to NYCHA by fighting to end the controversial tax abatements to real estate developers known as 421a program, which has been exposed to be gamed by real estate development projects, like the $2 billion luxury condominium tower, One57.

(An editorial by Progress Queens has also raised the possibility of City Hall raising income taxes on the wealthy in order to fully fund NYCHA.)

Some real estate developers may be looking to take advantage of mismanagement of NYCHA to get a foothold in buying NYCHA properties, some housing activists claim.

 “You don’t do this all at once.  It starts out with a little bit here and there, and then, over time, it’s called mission creep, where they come in and start taking more and more and more,” Mr. Fisher said.

Mr. Fisher noted how some Section 8 buildings have already crept toward market rate rents, similar to what has happened at Manhattan Plaza, the large apartment building on 42nd Street, where tenants have sometimes been forced to retroactively pay the difference between subsidised rents and market rent rates if tenants made more income than they had estimated, a backdoor way that landlords have used to both try to convert apartments at rent stabalized buildings into market rate rent apartments and to change the demographics of tenants.

One of the Councilmembers, who feigned outrage at the NYCHA sale, was Councilmember Inez Dickens (D-Manhattan), who, Mr. Fisher noted has a poor record as a landlord herself.  The office of Councilmember Dickens did not answer a request for an interview.

Asked if he thought politicians were manufacturing a crisis out of NYCHA’s financial troubles to spur further sales, Mr. Fisher, the tenants’ rights activist, said he was cautious of their motivations.

“Knowing these people as politicians, and I’m more implying not so much about Ritchie Torres, that they are very likely to be doing something like that.  Is it part of some grand plan ?  I don’t know,” Mr. Fisher said, noting that some buildings owned by NYCHA are in prime real estate areas, like in the Hudson Yards, the Midtown West, and the Upper West Side neighborhoods of Manhattan, adding that the recent NYCHA sale represented “just another bite” by real estate developers at eventually working their way to perhaps reach their goal of buying NYCHA properties in prime real estate neighborhoods.

Mr. Fisher noted that Mayor de Blasio “came out and said, ‘Well, these are only Section 8 buildings,’” that are being sold, ‘”NYCHA is sacrosanct.’  Don’t believe it.  That was this week.  There’ll be another thing next week.”