Testimony: NYCHA PACT Plan

Comments of

Community Service Society (CSS)

Community Voices Heard

The Legal Aid Society

Local Initiatives Support Corporation (LISC) NYC

New York Housing Conference

 

submitted to

New York City Housing Authority (NYCHA) Public Hearing on the Significant Amendment to the Annual PHA Plan for FY 2019

February 13th, 2019

 

We—the organizations listed above—have focused our comments on the changes proposed to the NYCHA PACT Plan, which are contained in the significant amendment to the FY2019 Plan and in the NYCHA 2.0 Plan to convert 62,000 units of public housing from NYCHA to alternative ownership over the next ten years.  Our concerns include:

  • Resident opportunities to influence the RAD capital assessment and the scope of rehabilitation work included in the NYCHA Request for Proposals (RFP).
  • Permanent affordability under HUD Section 18 conversions.
  • Opportunities for community preferences and the involvement of community organizations.
  • Early resident training and apprenticeship-related programs prior to conversions, to create a “pipeline” of residents to fill jobs created by PACT.
  • Waiting lists for vacant units in converted developments.
  • Environmental protections for residents undergoing in-place rehabilitation.
  • Using HUD 964 regulations to form and recognize duly-elected resident organizations.
  • Setting aside vacant units in converted developments for the homeless.

Our brief comments and recommendations follow:

 

RFP Scope of Work: Resident Input

For all PACT conversions—whether under RAD, HUD Section 18 Disposition, or for Unfunded Units—NYCHA plans to use the RAD Capital Assessment process to determine the scope of rehab work to be included in the RFP and carried out by the selected development team. The RAD assessment is conducted by a qualified third party approved by HUD and NYCHA, based on inspection and on input from authority management. It focuses on “critical repair needs” and “imminent threats to the health and safety of residents.”

But, prior to the release of the RFP, affected NYCHA residents are not consulted for their views on what repairs need to be done and do not have an opportunity to review and comment on the RAD needs assessment. However, HUD states that resident input at that stage is permitted by some housing authorities. In New York City, it is only after the development team is selected by NYCHA that residents are engaged by the developer and can try to negotiate changes in the scope of work.

 

Recommendation:

Residents have long-term, up-close experience with building conditions and can provide valuable input to the RAD capital needs assessment.  They should be directly consulted and/or surveyed in the assessment process. Moreover, they should have an opportunity to review and comment on the RAD Capital Needs Assessment before it is incorporated into the RFP.

 

Permanent Affordability Under the HUD Section 18 Disposition Program

Although NYCHA’s presentations about its conversion plans emphasize the HUD RAD program (or the vague PACT program), it is clear from the proposed significant amendment and the NYCHA 10-year Plan 2.0 that the authority plans to make considerable use of the HUD Section 18 Disposition program in the conversion of 62,000 units to alternative ownership. The amendment requests HUD approval of NYCHA’s conversion plan for the Brooklyn bundle in Bushwick, with 58 percent of the units under Section 18, and only 42 percent under RAD. (HUD now limits Section 18 to at most 25 percent of any RAD conversion.) The advantage of Section 18 over RAD is that it comes with tenant protection vouchers (TPVs), which bring larger rent subsidies, set at Fair Market Rent (FMR) levels. In contrast, RAD conversions are “revenue neutral”, with rent assistance set at lower public housing subsidy levels.

There are important differences between the two HUD programs. RAD comes with a package of resident rights and protections—such as the residents’ right to organize and continued funding of the resident organization. To its credit NYCHA has succeeded in gaining HUD approval of a waiver that would grant similar resident rights under Section 18 conversions now in process.

However, there are still uncertainties about the question of permanent affordability under Section 18. RAD provides assurances of ongoing affordability that are not matched under Section 18. Under federal law and HUD regulations, RAD requires that, at the end of the 20-year rent assistance contract, HUD must offer to renew the contract and the owner must accept the offer, thereby guaranteeing ongoing affordability. In contrast, Section 18 TPVs are a budget line item subject to annual Congressional appropriations. There is no assurance that Congress will appropriate the funds needed for the large number of Section 18 conversions that NYCHA envisions, or that Section 18 rent assistance contracts will be sustained after they end in 20 years.

 

Recommendations:

  • Given the differences between Section 18 and RAD conversions, NYCHA must make clear to affected residents under which HUD program their apartment or development is being converted. The use of the umbrella term, PACT, is not helpful.
  • Ideally, NYCHA should seek federal statutory guarantees of ongoing affordability under Section 18 conversions similar to those under RAD. Short of that, if it must rely on Section 18, NYCHA’s plan should clarify how it plans to mitigate the uncertainties and risks.
  • NYCHA 2.0 plan states that “under PACT rules” all converted developments must be permanently affordable. The questions are 1) how NYCHA and the city will back up these assurances with concrete measures, and 2) what levels of affordability will be permanent? One way is for the regulatory agreement with the owner/developer to specify, in the event Section 18 Tenant Protection Vouchers are not renewed, how the city will make up the difference in rent assistance needed to maintain affordability for current residents and continued access to vacant units by low-income households on the waiting list.
     

Community Opportunities and Preferences

NYCHA conversions will benefit from the support and involvement of the communities with which they are engaged.  Under current plans, it is unclear whether or how resident and community preferences can be exercised in the conversion process, or how community organizations and resources can assist and strengthen resident organizations during the transition from NYCHA to alternative ownership.

 

Recommendations:

Residents and community stakeholders should have an opportunity to register their preferences among development teams responding to the RFP.  In its assessment of proposals, NYCHA should take these preferences into account.

Community-based (mission-oriented) housing developers should be permitted to respond to RFPs, without regard to capacity limitations. Credit should be given to bidders who are partnering with community-based developers. For instance, the current Brooklyn PACT RFP excludes bidders that have not handled projects at the $300 million scale. (NYCHA has since lowered the threshold to $75 million.)  Community housing development organizations have invaluable, long-term experience in the community, and the related services they often provide deepen their base of support.  They should be allowed to compete. At a minimum, smaller bundles should be included in RFPs. If necessary, the city budget should augment NYCHA staff capacity to handle multiple closings per year.

 

Pre-Conversion Training and Job Opportunities for Residents

NYCHA’s planned conversion of 62,000 units is estimated to generate $10 to $12 billion in construction activity over the next ten years. This is an unusual opportunity to expand Section 3 training and job opportunities for residents, both in the construction activity and the permanent management jobs generated under alternative ownership.

 

Recommendations:

  • NYCHA should not wait for conversions to happen before it opens up resident training and job opportunities. It should have an early plan to train a large pool or “pipeline”of NYCHA residents so that they can fill these jobs once they are open. 
  • The plan should include agreements with labor organizations to provide pre-apprenticeship training and pathways to apprenticeship.

 

Waiting Lists

NYCHA currently plans to use the site-based public housing waiting lists to fill vacancies at PACT-converted developments.  Once that waiting list is exhausted, it will use the Section 8 voucher waiting list and site-base it to fill vacancies at each converted development. If a vacancy occurs and the site-based list is exhausted, NYCHA may accept referrals from the owner/manager to fill it. There are no NYCHA guidelines governing owner/manager referrals. This can be problematic, since owner/managers are likely to prefer higher-income, eligible households and may screen for credit standing, former homelessness, and other criteria. These referrals will not be subject to public review and the criteria may exclude families who most need the housing.  

 

Recommendations:

  • NYCHA should maintain full control/oversight of the process for filling vacancies.
  • In its regulatory agreement with the owner, NYCHA should specify how the owner should maintain a waiting list and what screening criteria are expressly prohibited.
  • NYCHA should conscientiously see that its site-based waiting lists are frequently updated to minimize owner/manager referrals.

 

Environmental Protections

NYCHA plans to carry out the conversion of 62,000 units with “in-place rehabilitation” rather and does not envision the major relocation of residents.  In place rehabilitation can engender certain health and environmental hazards, particularly for vulnerable residents, such as those who have asthma or cannot tolerate risks of construction dust, asbestos, and the like.

 

Recommendation:

NYCHA must specify how it and its developers plan to deal with potential environmental health hazards that may be generated in the course on in-place rehab. These measures must be consistent with HUD 970.4 environmental regulations governing the disposition of public housing.

 

Forming and Sustaining Resident Organizations

The owners/managers of converted developments must recognize residents’ right to organize, provide meeting space, regularly meet with resident organizations, and provide funds (at $25 per occupied unit annually) to underwrite their activities. Under its conversion plan, NYCHA provides no guidance as to how new or existing resident organizations must be formed in order to be recognized by the owner/manager.  (There have been cases in federally-subsidized housing where there are competing resident organizations.) 

The HUD 964 regulations on tenant participation in public housing provide clear guidance about how a duly-elected resident body needs to be formed in order to earn recognition as the sole representative of residents in the development. There is no such guidance once a development undergoes conversion.

 

Recommendation:

NYCHA should incorporate relevant parts of the HUD 964 regulations in its regulatory agreements with developers. 

 

Homeless Set-Aside

NYCHA currently sets aside 1,000 vacant public housing units per year for homeless individuals and families. With the conversion of 62,000 units, these housing opportunities will be lessened unless there is a specified set-aside in PACT converted developments as well.

 

Recommendations:

  • Consistent with recent City Council initiatives, we recommend that at least 15 percent of vacant units in converted developments be set aside for the homeless. This should be documented in all NYCHA regulatory agreements with owners/developers.
  • Arrangements for supportive housing and social services to formerly homeless new-comers should be set up by NYCHA for admissions to converted developments.

Issues Covered

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