Mayor Lauds Public Housing. Will He Pick Up the Check?

On Monday Mayor Michael Bloomberg hosted a Gracie Mansion shindig to celebrate the 75th anniversary of the New York City Housing Authority—a.k.a. NYCHA, the nation's oldest and largest public housing system. He offered kind words for NYCHA's role in giving "many New Yorkers the foundation they need to make their way up the economic ladder and to move on to successful lives."

What he didn't offer was a resumption of city payments to NYCHA. The suspension of those annual payments five years ago has contributed to the fiscal crisis at the agency that houses more than 400,000 people.

Public housing gets a bad rap…when it's painted with a broad brush. Indeed, some massive developments in major cities—like Cabrini Green in Chicago or Pruitt-Igoe in St. Louis—were disasters, brought about by a combination of bad design, lousy location, poor management, inadequate federal support and the impact of joblessness, drugs and crime. Right-wing opponents of public housing would have you believe every housing project was like Cabrini Green.

Yet even when the feds in the early 1990s embarked on the current fad of destroying public housing—they've eliminated 200,000 units nationwide since 1995—most public housing was not deemed a failure. A national commission in 1992 reported that only 6 percent of public housing units nationwide were categorized as "severely distressed."

Meanwhile, New York City's public housing was always considered among the best built and managed in the country. In many of the city's poorest neighborhoods, during the darkest days of abandonment and blight, public housing was the only stabilizing force around. That's because most of NYCHA's 338 developments were well constructed and located near mass transit rather than isolated. It's also because NYCHA exempted itself from some problematic federal rules by building public housing funded not by Washington, but by Albany or City Hall.

New York is one of only four states to have built its own public housing, and New York City is the only municipality to do so. Of the 180,000 apartments in NYCHA's portfolio, about 12,000 were state-built and 8,000 were city-funded. Among other things, NYCHA used its autonomy from the feds to maintain a diverse income mix in its public housing developments—one of the factors credited for public housing's success in this city.

Public housing rent doesn't cover what it costs to operate the buildings, so the government subsidizes it (that's kind of the point). For NYCHA, the state and city for decades subsidized the units they built, augmenting the federal subsidy that was supposed to cover the other units. The state forked over about $11 million, which didn't cover the $60 million annual cost of administering the state-built units, but helped. The city paid around $30 million a year--which covered the cost of the city-built units--until 2001, then reduced the subsidy to about $16 million. It wasn't enough, but it was something.

Then in 1998, the state stopped paying its subsidy. In 2004, the city followed suit. That meant NYCHA had to stretch its federal subsidy to cover the state and city units—more units than that money was intended to support. Worse, at around the same time, that federal subsidy shrank as the Bush administration began underfunding the federal share of public housing, paying NYCHA as little as 83 percent of what it was owed in some years. From 2001 to 2008, NYCHA estimates it lost over $600 million in funding. At the same time, federal support for capital upkeep also dried up, just as many NYCHA buildings were getting to the age where major repairs were needed.

As its revenues dropped, NYCHA began running nine-digit deficits. It tapped into its reserves. There were layoffs and cutbacks on upkeep. Some rents were raised. And last year, in a controversial move, NYCHA won approval to use Section 8 vouchers—which are supposed to help low-income people rent private apartments—to pay rent for some of the city and state units, effectively using one affordable housing resource to save another.

In 2006, the Bloomberg administration provided NYCHA with a one-time injection of $121 million—a generous infusion, but not enough to make up for the city subsidy losses before and since. City developments cost $24 million a year to run. Meanwhile, since public housing (like most government property) doesn't pay property taxes, the city charges NYCHA around $76 million a year for police and sanitation services, on the argument that NYCHA developments use a disproportionate share of both. NYCHA also makes millions in "payments in lieu of taxes" to the city.

Last year, NYCHA's woes made headlines after a little boy died in an elevator accident, attracting attention to the authority's widespread elevator maintenance problems. And serious concerns emerged about the authority's capital plan.

This year, there's good news: NYCHA will receive $423 million in federal stimulus funding to start dealing with a $6 billion backlog of capital projects. But that capital funding won't help cover the annual gap in operating expenses, which has been narrowed by the Section 8 plan and other policy moves but is still predicted to be more than $137 million in fiscal year 2010.

That's not exactly Bloomberg's fault. The federal government has the lion's share of responsibility for public housing, and its abdication of that responsibility is the overriding reason why NYCHA is in a pinch. What's more, Albany's record of shortchanging public housing residents goes back further than the feds' cheapskating and has cost NYCHA a lot more than the city's closed wallet. Plus, the mayor didn't end the NYCHA subsidy in a vacuum. At the time, the city was still reeling from post-September 11th deficits. A lot of things were getting cut.

But the Bloomberg administration has been all about stepping into the gaps created by federal negligence—coming up with a new definition of poverty to fix long-standing flaws with the federal measure, going after out-of-state gun dealers whose Congressional allies stand by them even as their products kill our neighbors, moving to make New York City more environmentally sustainable as the feds argue over whether to respond to global warming. He could take a stand on public housing as well, especially since the city-built units are not really Washington's responsibility, but City Hall's.

Whatever the Obama administration does or doesn't do on public housing, for a successful NYCHA to survive rather than shrink, the city might need to ante up every year. Perhaps for the authority's 76th anniversary, Bloomberg or his successor will bring a gift to the party.