New York Must Respond to Threats to Public Housing

One of the toughest problems and biggest worries facing New Yorkers is an affordable place to live. Although the city is one of the tightest, high-cost housing markets in the nation, over the past 70 years it has been home to the largest, and reputedly the best, public housing program in the country, a major affordable housing resource for low-income New Yorkers. The New York City Housing Authority (NYCHA) provides housing to over half a million New Yorkers --more people than live in Cleveland or St. Louis -- in over 180,000 apartments in 340 developments.

Unlike many other large cities, New York's public housing serves a broad mix of household incomes --average income is over $20,000. One out of four households has an income more than twice the federal poverty level. In New York City, public housing is the housing of choice for many, as evidenced by a waiting list of over 130,000 families.

Financial Crisis

Yet NYCHA now faces a major financial crisis -- an annual operating deficit of $225 million. When Washington created public housing in the 1930s it provided the capital for construction. Tenant rents were supposed to cover the costs of operating the housing. By the late 1960s, it was clear that the rising costs of operating low-income housing outpaced household incomes and could not be covered by rents alone. Washington created operating subsidies to cover the gap. The state and city soon followed suit for public housing they built without federal aid.
The current NYCHA deficit is the combined effect of the failure at every level of government -- federal, state, and city -- to meet its obligations to provide adequate operating subsidies. The blame is not Washington's alone, although NYCHA receives $159 million less in federal operating aid than it should.

NYCHA also owns and manages 16,000 units of state public housing and 5,000 units of city public housing, built without federal aid, that do not receive federal operating funds. The state units run an annual deficit of $62 million.

Governor Pataki eliminated operating subsidies since 1998 and Governor Spitzer eked out only $3.4 million for NYCHA in this year's budget. The city units run at a deficit of $25 million a year. Since the 2003 fiscal crunch Mayor Bloomberg eliminated city operating subsidies. Although the city allocated a one-time $120 million appropriation last year to help cover NYCHA's growing deficit, this year the city budget contains no operating aid. Together, the city and state account for over a third of the NYCHA operating deficit.

Layoffs Planned

To cover the deficit, NYCHA plans to lay off 500 workers this year with further cuts in the future. The authority has already cut 1,500 workers in the last decade. The primary effect of the layoffs will not just be job losses. Because field workers are most likely to be hit, there will be further cuts in maintenance services and continuing deterioration, threatening the physical plant, reputation, and the livability of NYCHA communities.

NYCHA also plans to divert Section 8 voucher funds -- 8,400 vouchers -- to its state and city developments to increase rent streams and cover the operating deficits the state and city are turning their backs on. Since Section 8 is a separate federal program, also administered by NYCHA, it will need approval of the Department of Housing and Urban Development (HUD) to shift these funds. If this happens, the losers will be the 120,000 low-income families on the Section 8 voucher waiting list, many of whom will be deprived of housing opportunities the vouchers provide.

The state and the city also shortchange NYCHA on public assistance rent payments to which they contribute. NYCHA receives a "shelter grant" of $157 a month for a two-bedroom apartment occupied by a family on public assistance, well below actual operating costs. If that same family lived in private housing, the landlord would receive at least $400 in shelter allowance.

Nation's best
public housing

About a quarter of NYCHA households receive some public assistance. If they received a shelter allowance on par with private households, it would mean an additional $47 million a year for NYCHA. The State Assembly and Senate have passed the legislation to accomplish this -- now it is up to Governor Spitzer. This would greatly assist in closing the gap.

The city budgeted nothing for public housing this year. The irony is that NYCHA pays the city $23 million a year in lieu of property taxes (that other nonprofits are exempt from) and another $73 million a year for "special police services" that resident leaders claim they do not receive. Under these agreements, NYCHA is paying the city nearly $100 million this year and getting nothing back. These agreements should be waived or eliminated to allow NYCHA to be fiscally solvent.

The success of public housing is crucial for the continued existence of low-income families in the city. If these deficits continue, NYCHA may be forced to sell off its state and city developments to private entities, thus privatizing the most successful public housing program in the nation. We must not allow this to happen. It is time the state and city gave the preservation of public housing the attention it deserves.

From the New York Amsterdam News
June 28 - July 4, 2007