By keeping NYCHA underfunded and dilapidated, de Blasio can keep trying to sell it

Omnibus update on NYCHA :  Funding, mold, and Section 8 sale


The de Blasio administration has rebuffed financial assistance and offers of financial assistance, and is not following-up on a large grant for the New York City Housing Authority, or NYCHA, thereby leaving the struggling housing authority no option but to continue to sell or lease its real property to developers, a review of recent efforts show.

Despite $100 million in financial assistance from New York State in last year’s budget and a standing proposal by Comptroller Scott Stringer (D-New York City) to create a $400 million funding stream for NYCHA, the de Blasio administration has not embraced efforts to shore up the housing authority’s finances that would allow the administration to forego the disposition of NYCHA's real property.

Moreover, there is still no word about a $3 billion allocation from the Federal Emergency Management Agency, or FEMA, that was expected to pay for capital improvements at NYCHA housing developments for damage caused by Hurricane Sandy.  It’s almost been one year since U.S. Sen. Charles Schumer (D-New York) announced the FEMA grant.

Wiley Norvell, the housing spokesperson for Mayor Bill de Blasio (D-New York City), did not answer an interview request made by Progress Queens.

Last year’s funding for NYCHA did not pay for capital repairs or improvements

New York Homes and Community Renewal Commissioner James Rubin testified before a budget hearing on February 1.  He faced questions from State Senators Velmanette Montgomery (D-Red Hook), Leroy Comrie (D-Jamaica), Adriano Espaillat (D-Washington Heights), and Brad Hoylman (D-Chelsea).

Amongst these state legislators, whose questioning of Commissioner Rubin were made available online by the New York State Senate, only State Sen. Montgomery asked Commissioner Rubin for a report-back about the $100 million in state funding allocated in last year’s state budget to NYCHA.

Commissioner Rubin testified at the budget hearing that the first allocation was directed to pay for NYCHA housing development security improvements determined in consultation with NYCHA CEO Shola Olatoye

“The first $40 million of that has been already been allocated to NYCHA for security purposes, and by security I mean very specific building-by-building expenditures on specific security measures that I had the opportunity to actually review at a meeting with Ms. Olatoye and her staff several months ago,” Commissioner Rubin testified, in response to a question by State Sen. Montgomery, adding that, “That work is under way -- has been announced and is under way -- between the Dormitory Authority of the state, DASNY, and NYCHA.”

After Commissioner Rubin elaborated on the pending allocation of the balance of the last year’s funding, State Sen. Montgomery objected to spending monies for repairs that did not address capital improvements.  “All due respect, security is not capital,” State Sen. Montogmery said, adding, in part, “We really need to be able to create a sustained way of making sure that housing stays available and is upgraded, as needed, and I would hope we could begin to talk about ways in which the state can work with the city and with the Federal funding streams to make sure that NYCHA is sustainable for the people that it was built for and that it serves.”

The repairs for which the remaining $60 million are being earmarked have not been finalized, and, therefore, the monies have yet to be allocated, Commissioner Rubin testified.

State Sen. Montgomery specifically addressed the need to carry-out mold abatement at NYCHA’s housing developments, having told Commissioner Rubin, in part, “And I must say to you, when I go into the [NYCHA] buildings in my district, and I see the great degree of disrepair and the needs there -- the molding and the leaks and some of the units that are not even usable, because they are so bad -- I really -- it really amazes me that we have gone so many years ignoring this particular source of housing.”

In questioning by State Sen. Espaillat, Commissioner Rubin admitted that the state as making no new funding resources available to NYCHA “in this budget cycle.”

For this report, NYCHA would not make CEO Olatoye available for an interview, continuing the agency’s blackout on interviews with Progress Queens ever since Progress Queens raised questions about the controversial 2014 sale of a portfolio of project-based, Section 8 apartment buildings, playgrounds, green spaces, and parking lots.

Scott Stringer’s plan for a dedicated NYCHA funding stream

In a transcript of testimony delivered on January 26 by Comptroller Stringer at a state legislative budget hearing, the city’s fiscal watchdog reiterated a 2014 plan to create a dedicated funding stream for NYCHA from the surplus funds from the Battery Park City Authority.

“Battery Park City generates a surplus every year.  As part of a 2010 settlement agreement between the City and the State, a portion of those dollars have been directed to affordable housing and other city capital needs.  We now have an opportunity to direct those dollars explicitly toward NYCHA -- our largest source of affordable housing,” read the transcript of Comptroller Stringer’s budget hearing testimony.

Under Comptroller Stringer’s plan, Battery Park City Authority would direct $400 million over ten years to fund capital repairs at NYCHA.

“NYCHA residents shouldn’t have to wait any longer for roofs to be fixed, mold to be eradicated, and doors to be secured.  We should make this happen this year,” read the transcript of Comptroller’s testimony.

Gov. Andrew Cuomo (D-New York) supported Comptroller Stringer’s proposal, but Mayor de Blasio announced he was opposed to the plan.  Any changes in the use of Battery Park City Authority funding must be approved by each of the mayor, the governor, and the comptroller.

Hours after Comptroller Stringer testified about his plan to create a $400 million funding stream for the housing authority, NYCHA CEO Olatoye announced that the de Blasio administration’s plan to build privately-owned buildings on NYCHA’s green spaces, parking lots, and playgrounds would summarily move forward, whether NYCHA’s tenants liked it or not.

This was the second such obstinate declaration on behalf of NYCHA CEO Olatoye.  Of the de Blasio administration’s plans to lease open spaces for real estate development, NYCHA CEO Olatoye told the journalist Laura Nahmias in August 2015 for an article published by POLITICO New York, "It’s not a question of if.  It will happen."

Mayor de Blasio’s resistance to Comptroller Stringer’s plan appears to allow him to focus on carrying-out plans to sell or lease NYCHA properties, including Section 8 buildings and open lots, to developers for the construction of privately-owned apartment buildings.

The land use policies of Mayor de Blasio’s housing plan will benefit real estate developers, as was noted by a 2014 report filed by Samuel Stein for the Leftist magazine, Jacobin.  A recent report in The Real Deal revealed that the real estate industry were grateful that Mayor de Blasio had turned out to be “more pro-development” than many real estate developers had expected. 

Increasingly, NYCHA tenants have grown skeptical of the de Blasio administration’s plans to dispose of NYCHA properties as a way to build new apartment buildings, referred to as the infill plan, but moves that would largely not create monies for capital repairs or improvements of existing facilities.  In a report filed by Will Bredderman for The New York Observer, NYCHA tenants at a recent town hall “voiced concern that the city and real estate interests were simply looking to cash in on the growing cachet of the surrounding neighborhood, and that the current NYCHA tenants would reap few benefits from the arrangement” of the mayor’s infill plan.

Politically sensitive to criticism, Mayor de Blasio and NYCHA CEO Olatoye are now set to appeal to the city’s charity set to raise monies for NYCHA, according to a report filed by Ginia Bellafante for The New York Times.  It’s unknown how Mayor de Blasio will now woo big money benefactors in New York City.  In 2015, The Wall Street Journal documented that Mayor de Blasio had largely snubbed the philanthropy community.  More recently, Mayor de Blasio risked further alienating influential Central Park Conservancy-types with his failed plan to move the horse carriage industry into Central Park.

Left unexplained is why Mayor de Blasio has contorted his NYCHA policies into untenable positions, even to the point of having opposed Comptroller Stringer’s proposal to create a 10-year, $400 million funding stream for NYCHA.  Some critics of the housing policies of the de Blasio administration have noted that so long as NYCHA is desperate for cash, Mayor de Blasio can continue to dispose of NYCHA’s distressed properties at distressed prices.  As reported by Progress Queens, at a protest marking the fourth-year anniversary of Occupy Wall Street, Michael D.D. White, a Brooklyn activist and a co-founder of the group, Citizens Defending Libraries, noted that depriving public agencies, like NYCHA, of funding is key to how such agencies are dismantled.  “Under-fund our public assets -- deliberately under-fund them -- drive them into the ground and say, ‘Oh, well !  It's not working.  You see, we have to sell it off and privatize,’” Mr. White said.

Regarding Mayor de Blasio’s resistance to the Battery Park City Authority funding proposal, Comptroller Stringer issued a statement to Progress Queens, writing, “As the to-do list at NYCHA keeps getting longer, and federal cuts continue to take a daily toll on the lives of NYCHA residents, there is no question that we must think outside of the box to find new revenue streams for our City’s largest source of affordable housing.  Dedicating surplus Battery Park City Authority funds to NYCHA would bring in $400 million over the next ten years to support capital improvements.  Approving this change requires a unanimous vote by the Governor, the Mayor and the City Comptroller.  I vote yes and the Governor has voiced his support to create the first new source of recurring revenue for NYCHA in a generation ; now we need Mayor de Blasio to sign on.”

A representative with the Battery Park City Authority did not answer a request made by Progress Queens for the agency’s response to the funding proposal.

Two project-based, Section 8 buildings in Brooklyn, which NYCHA sold to a consortium that included real estate developers.  New York City issued bonds to finance the investment that politically-connected real estate developers made to buy into the consortium.  In reports published by Progress Queens, questions were raised about major repairs a cash-strapped NYCHA made to some of the buildings in the time leading up to their sale, contradicting claims made by NYCHA officials that the housing authority could not afford to maintain the buildings.  Source :  Google Street View

Two project-based, Section 8 buildings in Brooklyn, which NYCHA sold to a consortium that included real estate developers.  New York City issued bonds to finance the investment that politically-connected real estate developers made to buy into the consortium.  In reports published by Progress Queens, questions were raised about major repairs a cash-strapped NYCHA made to some of the buildings in the time leading up to their sale, contradicting claims made by NYCHA officials that the housing authority could not afford to maintain the buildings.  Source :  Google Street View

The promised FEMA grant of $3 billion grant to NYCHA could address mold abatement

Even larger than Comptroller Stringer’s funding proposal is the outstanding FEMA grant of $3 billion for Hurricane Sandy repairs.

At the time of the announcement of the FEMA grant, on March 31, 2015, city housing officials were mum about whether the $3 billion grant would lead to the cessation of the sale of NYCHA properties.

A request made by Progress Queens to the FEMA press office for information about the status of the grant was not immediately answered.

The redirected state funding, the rebuffed Battery Park City Authority funding, and the outstanding FEMA funding could be being used to address the urgency of NYCHA’s mold problem.

At the close of the administration of former Mayor Michael Bloomberg (R-New York City), NYCHA tenants were organized, and a Federal class-action lawsuit was filed on their behalf in order to force the housing authority to undertake the long, over-due abatement of mold.  As reported by Progress Queens, NYCHA has not aggressively removed the mold from its housing developments, and, as a consequence, NYCHA tenants and churches have called on CEO Olatoye to resign.

Proceedings in the class-action mold case have recently become tense.

U.S. District Court Judge William Pauley has rejected a special master nominated by NYCHA and plaintiffs to oversee the troubled housing agency’s compliance with a consent decree ordering mold removal.

The parties had nominated Christopher Panther, an executive from Exiger, a consulting firm, but U.S. District Court Judge Pauley overruled the nomination and, instead, unilaterally appointed Francis McGovern, a Duke University School of Law professor, who has extensive experience in mass tort litigation

Even though Mayor de Blasio faces political fallout over the deplorable conditions of NYCHA apartments, he has remained unmoved.  In an editorial, The New York Daily News shamed Mayor de Blasio’s lack of empathy for NYCHA’s tenants, writing, in part, “Mayor, show you care.”

Call for a state takeover of NYCHA

Displeasure with Mayor de Blasio’s mismanagement of NYCHA have reached the point where one of the state’s housing officials has invoked his readiness to call for a state takeover of NYCHA.

Assemblymember Keith Wright (D-Harlem) and Local 237 Teamsters President Gregory Floyd, head of the union representing NYCHA employees, joined with tenant and community leaders last month to call for a radical change in Mayor de Blasio’s land use policies, and they telegraphed the possibility that they would support a transfer of management of NYCHA from the municipality to the state.

In a joint statement, Assemblymember Wright and Local 237 President Floyd wrote, “Chairwoman Olatoye has said she does not care what NYCHA residents think.  This is the beginning of the privatization of NYCHA, which will only increase gentrification, increase profit for luxury housing developers, and destroy America’s largest affordable housing program.  We are calling for a moratorium on luxury housing construction that uses public monies, especially on NYCHA property, until the city can present a plan that takes into consideration the concerns of the tenants and protects NYCHA’s future.” 

Assemblymember Wright added that, “If NYCHA can’t take care of tenants, and take care of its properties, then we need a state takeover.  I am prepared to introduce legislation that allows Governor Cuomo to do just that.”

As Mayor de Blasio tries to keep NYCHA just enough insolvent and dilapidated to enable its privatization, the political winds may change on him, and he may soon lose all control over NYCHA.

Update on the sale of Section 8 portfolio

After Progress Queens revealed in 2015 that the de Blasio administration denied the public any input in the sale by NYCHA of a portfolio of project-based, Section 8 buildings to a consortium of real estate developers, neither the city’s Comptroller’s Office nor the city’s Department of Investigation ever commented about that and other issues with the sale. 

For this report, a press representative for State Attorney General Eric Schneiderman (D-New York) would not answer a request for an interview about the conflicts of interests and other issues with the 2014 sale of the Section 8 portfolio.

One of the real estate developers, who invested in the consortium that purchased the Section 8 portfolio was BFC Partners, which is headed by Donald Capoccia.  A prolific campaign contributor, Mr. Capoccia has, in the past, been a campaign contributor of State Attorney General Schneiderman and Comptroller Stringer.  Mr. Capoccia is also vice chair of the Battery Park City Authority, from which Comptroller Stringer has proposed directing surplus funding to fund capital improvements at NYCHA.

That Mr. Capoccia has been a previous campaign donor of State Attorney General Schneiderman represents a potential conflict of interest for the highest-ranking prosecutor in state government and is in contravention to the campaign fundraising practices of previous State Attorney Generals, who would refuse to accept campaign contributions from real estate developers.  For a time, former Attorney General Robert Abrams (D-New York) used to have a voluntary ban on accepting campaign contributions from real estate developers with business before New York State.  In contrast, State Attorney General Schneiderman has accepted, and defended his acceptance, of campaign contributions from controversial real estate developers, including Glenwood Management Corporation.  In the opinion of the Editorial Board of The New York Post, elected officials, including State Attorney Schnedierman, should return the campaign contributions they received from Glenwood.