No. 14 July 1999

THE FUTURE OF PUBLIC HOUSING IN NEW YORK CITY

After much debate, the Quality Housing and Work Responsibility Act (QHA) was enacted in October 1998 as the first major reform to public housing in its 60-year history. In New York, the convergence of Washington reforms and local housing agendas can seriously affect the city’s capacity to house its poorer residents.

The QHA is a product of Washington’s thrust toward capped funding and devolution of social programs to lower levels of government. Intended to deregulate public housing authorities (PHAs), the law grants them unprecedented flexibility, under minimal federal oversight, to address local needs. For some time, the New York City Housing Authority (NYCHA), owner-manager of the city’s public housing, has sought deregulation, notably relief from “federal preferences” requiring priority admissions for families with urgent housing needs. Combined federal and local pressures may dramatically change the city’s primary low-income housing resource, 346 developments totaling 182,000 units housing 600,000 residents. (See Chart A.)

SOURCE: NYCHA Project Data, 1997

New York City’s Public Housing

Among cities, New York uniquely benefits from public housing. NYCHA runs the largest program, one of seven units nationwide. The next largest, in Chicago, is one-fourth its size. Within the city, public housing is a major rental sector, comprising one out of 12 units in a tight, high-cost rental market.

NYCHA holds a national reputation as a “high-performing” authority. Its high-rise developments counter the negative images of “housing of last resort” elsewhere. They are fully occupied, with open spaces that appear well used and well kept. A long-standing “mixed-income” admissions policy has contributed to community diversity. Nearly half of resident households have incomes above the federal poverty level (45 %) and are not on public assistance (47%); and over one-third (35 %) are working families. Although African Americans and Latinos dominate, with whites underrepresented, one out of five developments is integrated into census tracts containing a majority white population. (See Chart B.)

SOURCE: 1996 Housing and Vacancy Survey

Residents are often critical of NYCHA management, but they prize their housing and communities. A growing citywide waiting list --120,000 families, with a wait averaging eight years -- attests that lower-income New Yorkers seek the opportunity to move into, not out of, public housing. The immediate question is whether federal and local policy will preserve the city’s public housing and build on its strengths.

The Quality Housing Act

Framed by a regressive Congress, the draft bills preceding the QHA contained extreme provisions. The cornerstone 1937 Housing Act was targeted for repeal, as was the Brooke Amendment, which caps rents at 30 percent of household income. Echoing welfare reform, time limits on tenancy were seriously considered. Removal of “good cause” protections threatened eviction at the authority’s pleasure when leases expired. Advocates succeeded in gutting the worst proposals, but a “work responsibility” provision passed, requiring able-bodied, adult residents who are not employed, in training, or students to contribute eight hours of community service monthly. The QHA’s key provisions offer housing authorities greater flexibility while they impose new federal restrictions.

 Targeting admissions by income level:  Admissions are still restricted to families below 80 percent of the HUD area median income (AMI), in New York City below $38,450 for a three-person family. The law repeals “federal preferences” that had opened doors to very poor families. PHAs can now target admissions to a wider income range, with constraints: 40 percent of admissions must be “extremely low income” families below 30 percent of AMI, in New York City below $14,400 for a three-person family. This quota can drop to 30 percent if PHAs use Section 8 vouchers to place the remaining 10 percent in private rentals, thereby raising incomes and rents in their own housing. PHAs must comply with a “deconcentration” requirement to reduce poverty concentrations by development. For the first time, PHAs can skip over waiting lists to reach their income targets or achieve deconcentration.

 Use of federal funding:  Capital and operating funds, allocated by formula, can be more flexibly used by housing authorities. A new provision promotes partnerships with the private sector to develop “mixed-finance” housing, with suitable numbers of units leased as public housing. PHAs can flexibly develop local plans, but they are prohibited from development that would increase the number of units under public ownership.

 Rent and eviction:  Both the Brooke Amendment and “good cause” eviction protections are continued. PHAs can charge minimum rents, up to $50 monthly, and must offer “flat rent” options, based on local market levels, to encourage working families to stay. (NYCHA “ceiling rents” are income-blind, but not market-based.) PHAs must institute one-year leases. Noncompliance with community service is statutorily defined as good cause for eviction, which PHAs must exercise as leases expire. PHAs must also institute “earned income disregards” to graduate rent increases and sharpen incentives for families shifting from welfare to work.

 Planning and resident involvement:  PHAs must prepare a five-year plan of long-term objectives and annual plans for operations, including rent setting, admissions, capital improvements, community service, grievance procedures, and plans for demolition, sale, or development. Public hearings must be held on the plans before submission to HUD. Larger PHAs must have a resident on their governing boards. (However, NYCHA has a salaried, full-time board which, under state law, cannot include residents.) PHAs must involve residents in their planning by designating a Resident Advisory Board (RAB). Existing HUD “964 regulations” (24 CFR Part 964) promoting resident participation are retained as a resident bill of rights.

Major Impacts in New York City

 Net loss of low-income housing resources:  With weakened income targets in place of federal preferences, many doors of public housing will close to the poor. NYCHA will be able to target higher-income, working families to increase its rent streams and augment inadequate federal funding. Waiting list skipovers will facilitate reaching higher income applicants, while the list size and waiting times for poorer families increase.

If, over the next 10 years, NYCHA meets only the minimal targets required by the QHA, an estimated 10,000 to 16,000 units will be lost to the poor (below 30 percent of AMI). This estimate assumes annual turnover at 4.5 percent at all income levels and depends on the extent to which NYCHA provides vouchers instead of apartments. Losses will be moderated by the court-ordered Davis consent decree, while it stands, which retains federal preferences in developments with past discrimination. Further losses may result from NYCHA plans for demolition, sale, or redevelopment. In the past year, NYCHA proposed three HUD HOPE VI projects involving demolition, without replacement, of low-income units in Central Brooklyn and the South Bronx.

 Growing displacement pressures on current residents:  PHAs can increase operating revenues by raising rents for current residents. Ceiling rents are ripe for termination or increase to higher, market-based flat rents. Since NYCHA can select working families on the waiting list, retaining them is less pressing. NYCHA recently proposed ending ceiling rents in several marketable developments, which would raise rents for working families by 60 percent.

PHA policies can also force out low-income families, opening vacated units to higher rents. Hard-line eviction policies bear down on low-income residents most at risk of rent delinquency, criminal involvement of household members, or noncompliance with community service. NYCHA has been actively lobbying the state for special procedures to accelerate evictions. Further displacement will follow NYCHA’s HOPE VI demolition plans, as low-income residents relocate to other public housing or to vouchered private units, with only promises of right to return.

Mutual gains for residents and PHAs can be realized through job-related programs that raise employment and incomes and, therefore, rents. In addition to “earned income disregards,” stronger NYCHA implementation of Section 3 -- a long-standing federal provision requiring HUD funds be used to maximize job creation among residents -- has potential. NYCHA’s multi-billion dollar annual operations offer major opportunities.

 A shift toward privatization:  Among federal housing programs, public housing is unique: it produces “bricks and mortar” housing under public ownership to continue to meet low-income needs regardless of market pressures. In contrast, HUD-subsidized housing -- under Section 236 or Section 8 -- is privately owned and subject to expiration. Owners can “opt out” of time-limited subsidies to convert to higher market rents; the government retains no equity or restrictions requiring low-income use. The permanence of public housing, and the public equity it represents, compel continued federal support despite program controversy and waning housing priorities.

One key objective of the QHA, however, is to say “no more” to public housing, indeed, to have less of it. PHAs are prohibited from increasing the housing stock they own. One-to-one replacement of demolished units is abolished. Instead, public-private partnerships are promoted, permitting PHAs to invest federal funds in private “mixed-finance” developments in return for leased units. The parallel HOPE VI program encourages PHAs to demolish distressed developments and undertake entrepreneurial redevelopment.

A recent NYCHA proposal targeted several developments with market potential for upscale treatment: Ceiling rents would be phased out and vacant units reserved for working families. As buildings become self-supporting and saleable, unneeded operating subsidies would be channeled into mixed-finance projects. NYCHA views this strategy as “expanding the pie,” but the pie shrinks for low-income families who lose access to public housing. For those offered private NYCHA-leased units, what happens after 10 or 20 years if owners decide not to renew expiring leases is a pressing question that now besets both HUD-subsidized and Mitchell-Lama housing.

 Weak NYCHA accountability:  With greater power to initiate local plans, free of federal regulation, authorities will become more autonomous and entrepreneurial. Stronger reins of local accountability are needed -- to residents, to affected communities, and to the city. However, the QHA’s minimal accountability mechanisms rely largely on the PHA-designated RAB and the public hearing process.

In New York, the prospects for effective resident involvement seem dim. NYCHA has designated as its RAB the existing resident advisory structure -- ICOP, the Interim Council of Presidents. Formed in 1992, ICOP consists of nine district chairs, each elected by resident association presidents from developments in the district -- three districts in Brooklyn, two each in Manhattan and the Bronx, and one each in Queens and Staten Island. ICOP has a reputation of being ineffective and unassertive. As of early 1999, NYCHA had not convened a citywide ICOP meeting in two years, a period of unprecedented policy change for public housing. The information gap led resident leaders to form an independent citywide organization -- the New York City Public Housing Resident Alliance -- to fill the vacuum.

Other questions abound. Does ICOP comply with HUD regulations? Can a nine-member RAB effectively represent 182,000 households? Are districts disproportionate? Manhattan-North has 28,000 households in 50 developments; Staten Island 5,000 households in 11 developments.

The shift of federal and local agendas toward serving higher income tenants and promoting private ventures puts a premium on effective resident involvement and NYCHA accountability. Long-standing assumptions that NYCHA interests coincide with those of resident and waiting list families need to be checked if the strengths of New York’s public housing are to be preserved.

Congress should:

• exempt high-performing housing authorities in tight-market localities from the QHA prohibition against further public housing development
  
  
• include resident organizing and voter registration as eligible activities for community service
  
  
• require housing authorities to earmark a specific portion of federal funds for resident participation activities

NYCHA should:

• target admissions to minimize net losses in public housing available to the poor; its plans should project any expected net losses and justify them
  
  
• use federal funds to preserve and expand public housing, rather than invest in private, leased units
  
  
• bar demolition or sale unless low-income units are replaced on site and displaced residents assured the right to return
  
  
• restructure the Resident Advisory Board by forming smaller, equally represented subdistricts
  
  
• restructure the NYCHA Board as a non-salaried board with an equal number of elected residents and appointed nonresidents

For more information, contact Victor Bach, Senior Housing Policy Analyst, at 212-614-5492.