New York City Housing Authority CEO Shola Olatoye announced on Tuesday that, in spite of the controversies created by allowing real estate speculators to buy equity in NYCHA Section 8 buildings, NYCHA would consider future privatization deals with real estate investors to access new sources of funding.
Much has been made of the $18 billion shortfall in NYCHA's capital fund, an issue that drove, in part, several 2013 mayoral candidates, including then Public Advocate Bill de Blasio, to spend an evening the Lincoln Houses public housing development up in Harlem.
However, the photo ops from that campaign stunt have done little to address the financial crisis facing NYCHA. Former Mayor Michael Bloomberg, in moves expected from a big business supporter, had proposed (i) selling leases to open spaces in NYCHA complexes to real estate developers, who would construct zone-busting luxury condominiums on NYCHA property and (ii) allowing real estate speculators to buy into NYCHA real estate.
Mayor de Blasio has put off the land lease deals, for now, it seems, but he has moved forward with former Mayor Bloomberg's privatisation plan to sell interests in NYCHA buildings to investors willing to speculate on the appreciation in the future value of NYCHA real estate. Last December, it was announced that L+M Development Partners and BFC Partners were selected to pay or make investments valued at approximately $450 million in exchange for a 50 per cent. ownership stake in approximately 900 apartment units, according to a report of the transaction published by The Wall Street Journal.
The $450 million transaction was made by the de Blasio administration without the advice or the consent of the New York City Council, as revealed during hearings held on Tuesday.
The role of real estate lobbyists in the NYCHA transaction reveals close ties between the real estate industry and the de Blasio administration. Mayor de Blasio appointed a lobbyist, Jonathan Greenspun, from the lobbying firm, Mercury Public Affairs, which represented one of the NYCHA investors, to serve on the New York City Commission on Human Rights. A real estate lobbyist will now be amongst the commissioners deciding how the city protects residents against housing discrimination by landlords. Such a conflict of interest and potential for self-dealing appears to matter not to the de Blasio administration, which is keen on developing and fostering close ties to wealthy real estate developers. Indeed, during his campaign for mayor, then Public Advocate de Blasio accepted the campaign and fund raising assistance of another real estate lobbyist, James Capalino, who lobbied on behalf of Rudin Management Company for the luxury condo conversion of St. Vincent's Hospital in the West Village. Another lobbying firm, BerlinRosen, advised the real estate developer behind a zone-busting project anchored at the Domino Sugar refinery in Brooklyn at the same time when the lobbying firm was advocating for the mayor's expansion of prekinder classrooms. Further enmeshing Mayor de Blasio with BerlinRosen, the same lobbying firm also served as campaign consultants to Mayor de Blasio's 2013 campaign committee. (BerlinRosen would appear to later represent both sides in the sale of the Pacific Branch of the Brooklyn Public Library, as well.)
The persistent duplicity of real estate lobbyists having close access to the de Blasio administration at the same time when the same lobbyists are negotiating on behalf of real estate developers and wealthy landlords begs several questions about the integrity of the de Blasio administration's approach to turning significant amounts of control over public housing and affordable housing plans to private real estate interests.
As was noted by Norman Oder, author of the Atlantic Yards Report, then Public Advocate de Blasio did not press the developer of the Atlantic Yards development to deliver on its promise of building affordable housing, possibly due to the involvement of prominent de Blasio supporter, Bertha Lewis. Mr. Oder wrote that then Public Advocate de Blasio avoided a confrontation with the developer, Forest City Ratner, in part, "because de Blasio owes supporters like Bertha Lewis (ex-ACORN, Forest City Ratner's housing partner) and the Working Families Party, and because he got/expected campaign cash from developer Bruce Ratner and associates."
Ms. Lewis entered into a Community Benefits Agreement on behalf of a coalition of community groups, including the now-defunct group, the Association of Community Organization for Reform Now, or ACORN, that promised to deliver affordable housing, which never materialised. What did materialise, however, was a $1 million loan by Forest City Ratner to bailout ACORN, according to Mr. Oden.
Now that Mayor de Blasio has singled out Jamaica, Queens, for the construction of affordable housing, Ms. Lewis has begun to appear at community meetings. Some wonder if Ms. Lewis' interest in Jamaica masks an effort to assess whether she can participate in the negotiation of similar community benefits agreements. In January, Ms. Lewis appeared at a meeting of the Southeast Queens for Community Action.
In real estate transactions, where the de Blasio administration has no lobbyists involved, the result is either neglect or retaliation. Witness the fact that Mayor de Blasio has become a braggart about his own "progressive" credentials. Yet, from the start of his administration, he has not settled a federal class action lawsuit filed by the Legal Aid Society on behalf of homeless youths. Since there's little to no money for lobbyists to make from funding homeless shelters for youths, the "progressive" mayor has not been in a rush to provide shelter to homeless youths, as required by law.
The de Blasio administration's plan to convert hotels into homeless shelters to deal with a record 60,000 homeless individuals has divided communities and earned the scorn of some elected leaders, such as State Senator Tony Avella (D-Bayside), who has complained about the lack of kitchens and hot water for tenants of the Pan American Hotel in Elmhurst, Queens, for example. Again, since there is no role for lobbyists to make large amounts of consulting fees on the homeless, there's no priority to provide adequate shelter for residents at the Pan American Hotel.
Or witness how New York City Councilmember Carlos Menchaca (D-Sunset Park) was removed from a leadership post after he had wanted more control over a $115 million real estate project at the South Brooklyn Marine Terminal in Sunset Park, Brooklyn. If Councilmember Menchaca would have gained leverage in that project, then he would have had deprived the de Blasio administration of a closer working relationship with the lobbyists and the developer of the project, some government reform activists noted. Since Councilmember Menchaca disrupted the de Blasio administration's role in that project, Councilmember Menchaca was removed from his post as a leader of the Brooklyn delegation of Councilmembers.
As Mayor de Blasio carries out his administration's plans to privatise NYCHA, City Hall must provide more information to the public about the relationships between real estate developers and their lobbyists with each of Mayor de Blasio, his campaign committees, and his associates.
Allowing real estate speculators, wealthy landlords, and influential lobbyists to wrestle control over public housing developments and affordable housing projects away from people will exacerbate the drastic imbalances of wealth and income in New York, leading more and more New Yorkers to pay more and more for housing, leading to situations ripe for abuse by the wealthy over the poor, a situation that true progressive activists should not accept or allow.
If Mayor de Blasio wanted a progressive solution to funding NYCHA's capital fund, perhaps he should consider that proposed tax increase on the wealthy, an idea which he unceremoniously abandoned last year ?
-- Progress Queens