NY City, HUD agree on a federal monitor for NYCHA

A federal monitor will oversee New York City's public housing operations an agreement Thursday between the city and the U.S. Department of Housing and Urban Development.

The compromise, on a HUD-imposed deadline day to finalize a settlement by tenant groups, does not include a full federal takeover of the New York City Housing Authority, which the federal agency had threatened.

Housing and Urban Development Secretary Ben Carson.
Ben Carson, retired neurosurgeon and 2016 Republican presidential candidate, listens to a question during a Bloomberg Politics interview in Des Moines, Iowa, U.S., on Wednesday, Jan. 27, 2016. Carson has made his Christian faith and the kind of issues that motivate faith-based voters a central part of his pitches to Iowa's heavily evangelical Republican caucus-goers but in the state that will kick off voting for a presidential nomination with its Feb. 1 caucuses, hes being bested by Donald Trump. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Ben Carson
Andrew Harrer/Bloomberg

Mayor Bill de Blasio, flanked by HUD Secretary Ben Carson at the Jacob Javits Federal Building in lower Manhattan, called the agreement constructive. "There is a much clearer spirit of partnership," said de Blasio, a former HUD regional director.

NYCHA, the nation's largest public housing agency, is starting at a $32 billion capital-repair backlog, based on its most recent needs assessment. The authority serves 400,000 residents, or 5% of the city's population, in 175,000 apartments.

The city will provide $2.2 billion over 10 years and the federal government will earmark $1.5 billion this year. De Blasio said the city would continue with its NYCHA 2.0 improvement plan, which earmarks for $24 billion in capital spending. He also said city officials would push for more funding from Washington.

Also on the agenda is expansion of HUD's Rental Assistance Demonstration program to convert 62,000 NYCHA apartments into Section 8 housing and attract private capital.

Recent crises have included lack of heat in many units throughout the winter, mold and rodent infestation, media reports of staff sex orgies on agency overtime and the forced resignation of NYCHA chief Shola Olatoye, after a city Department of Investigations probe accused Olatoye of lying to federal regulators about lead-paint statistics.

The authority's strain on the city's operating and capital budgets has resonated in the capital markets. Fitch Ratings ranked NYCHA maintenance, along with mass transit funding, as "notable spending pressures" on the city.

"There's definitely exposure for the city there, and there have been so many twists and turns on this," Ronnie Lowenstein, director of the watchdog New York City Independent Budget Office, said on a Bond Buyer podcast.

Lowenstein said pullback in federal funding and NYCHA's mismanagement over the years contributed to the crisis. "That combination has been deadly."

Last year, the city agreed to settle the federal lawsuit, promising to submit to an appointed monitor and spend $1.2 billion on emergency repairs. In November, however, federal judge William Pauley III rejected the accord and ordered NYCHA and the U.S. Attorney for the Southern District of New York back to the table.

Pauley does not have to sign off on Thursday's announcement.

"I believe this is going to work," said Carson, who expects to name a monitor within two weeks. "We will not try to micromanage what is going on."

De Blasio said once the monitor is in place, the city would search for a new NYCHA chief executive. Interim chief Stanley Brezenoff does not want the permanent position.

City Comptroller Scott Stringer scolded the federal agency.

"Now they want a monitor? NYCHA already has monitors – its residents who have suffered from decades of disinvestment," he said.

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Infrastructure Budgets Bill de Blasio City of New York, NY New York Washington DC
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