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Manhattan Institute

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To Fix NYCHA, de Blasio Needs Trump

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To Fix NYCHA, de Blasio Needs Trump

New York Daily News December 6, 2017
Urban PolicyNYCHousing

The enmity between Mayor de Blasio and President Trump can’t be overstated. The mayor went out of his way to use Trump as a foil in the just-concluded reelection campaign; the mayor’s signature ad characterized Trump as “using fear and hate as weapons.”

So it is no small irony that, in order to address an ongoing crisis that has just reached a boiling point, the mayor will have to hope he gets help from the Trump administration.

Conditions in the city’s public housing developments — symbolized by the failure of the Housing Authority to conduct required lead paint inspections and claiming that it had — can be fixed on a large scale only through funds that can flow through an underappreciated HUD program, one for whose help NYCHA failed to apply for when it had friends in high places in Washington.

During the Obama administration and since, there’s been a HUD program designed to bring millions in repair funds into public housing.

Now it must hope the federal Department of Housing and Urban Development will not hold the mayor’s attacks on the President against the homes of some of our poorest citizens, who, as the liberal Community Service Society has written, endure “resident living conditions (that are) deplorable, far worse than those facing low-income tenants in the private rental market.”

It may seem that doing anything about a $17 billion maintenance backlog is an impossible task. But during the Obama administration and since, there’s been a HUD program designed to bring millions in repair funds into public housing. NYCHA, the nation’s largest public housing system, has trailed others badly in participating. Worse still, the chance to do so may be slipping away, just as NYCHA, to its credit, has finally come alive to its promise.

Something called the Rental Assistance Demonstration program, RAD for short, was the 2012 brainchild of Obama-era HUD Secretary Shaun Donovan, the former Bloomberg administration head of the city Department of Housing Preservation and Development. But current HUD Secretary Ben Carson has also made clear that it’s his favorite approach to dealing with the estimated $26 billion in capital repairs the nation’s public housing needs.

The technically brilliant, though complex, program brings millions of private dollars to bear on fixing up public housing.

Here’s the simplified version of how it works: Housing authorities transfer a project to private ownership and management, while HUD guarantees that the rent on all the units will be paid with federal low-income housing vouchers.

The proceeds of a public bond issue provide capital for fixing up developments — and the private owner (with the help of tax credits) pays back the principal and interest, providing funds for a next project to be repaired.

The improvement on the typical public housing situation can’t be overstated. As things stand, if NYCHA invests in new, more efficient heating systems, thus reducing its operating costs, the authority will perversely see its federal operating assistance get cut — because its costs are lower.

To date, HUD credits RAD with bringing $4 billion into public housing nationwide, at a time when federal operating assistance has declined.

With Donovan at HUD, it seemed a cinch that the New York City Housing Authority would be first in line for RAD. But even as Congress has authorized HUD to include up to 225,000 units of public housing in the RAD approach, the nation’s largest authority (owner of 173,000 apartments) has lagged other cities in taking advantage of the program.

NYCHA has, to date, formally announced only one definite “RAD conversion” that’s going ahead: the 1,395-unit Ocean Bay complex in the Rockaways.

That’s fewer than Texas (9,000), California (7,500), Illinois (10,500) and even tiny Alabama (7,400).

This despite the fact that NYCHA alone represents some 15% of all U.S. public housing.

HUD reports NYCHA has received initial approval for an additional 4,952 units (not guaranteed to go ahead) and submitted “letters of interest” for another 9,000. By coincidence, it formally filed to convert 6,000 units this past July 31, right about the time the mayor went to Germany to protest while the President attended G-8 talks.

De Blasio needs to move full speed ahead on out-of-the box thinking at NYCHA...

Better late than never, but those applications are now on a HUD waiting list of requests from around the country that’s 75,558 units long — none of which will go forward unless the current RAD conversion ceiling is lifted, as proposed by, yes, the Trump administration.

NYCHA’s timing may not be the best. RAD needs to secure private financing, and thanks to the new tax reform bill, cuts in the corporate tax rate could make low-income housing tax credits less valuable, and new restrictions on the sort of “public benefit” bonds involved in RAD could pose further problems.

It’s all a way of saying that de Blasio needs to move full speed ahead on out-of-the box thinking at NYCHA, where so many of the city’s poorest live. And, though he likely won’t admit it, he needs the President’s help.

This piece originally appeared in the New York Daily News

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Howard Husock is the Vice President of Research and Publications at the Manhattan Institute.

Photo by Debbie Egan-Chin / New York Daily News
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