Six Guidelines for NYCHA's New Federal Monitor
In January New York City officials and their counterparts at the U.S. Department of Housing and Urban Development (HUD) and the U.S. Attorney’s Office for the Southern District of New York (SDNY) announced the appointment of Bart Schwartz as a new monitor for the New York City Housing Authority (NYCHA). The federal monitor is tasked with ensuring NYCHA’s compliance with an agreement among the City, NYCHA, HUD, and SDNY that NYCHA will remediate its most pressing physical issues, including lead, mold, broken elevators, and other deficiencies. The City also committed to $2.2 billion in capital funding and $972 million in expense funding through 2027.
The appointment of a federal monitor is an opportunity to improve NYCHA’s operations and address the poor physical conditions of its developments. With a clear set of priorities and a focus on accountability, productivity, and efficiency, the monitor can be positive force for change.
The monitor should adopt the following guidelines for his work with the federal, State, and City governments and with NYCHA management and labor:
1. Establish ambitious yet achievable goals and implement a robust performance management system to assess progress while providing management the flexibility to drive change.
The monitor is tasked with working with NYCHA to develop plans to address the issues raised in the civil complaint and to ensure NYCHA follows through on these obligations. These action plans should be ambitious and set a clear timetable for achieving specific milestones or goals. The monitor should establish an accompanying performance management system that includes: 1) a portfolio of process, output, and outcome metrics; 2) a tracker with data showing progress against project milestones that will allow the monitor and the public to assess progress; and 3) a process to review the metrics and project tracking with NYCHA management.
The monitor should focus on promoting a culture of accountability while allowing NYCHA management maximum flexibility in the approaches used to meet performance targets. The monitor can also play an important role in restoring the agency’s credibility by reviewing and assessing the work of the newly formed departments for environmental health and safety, compliance, and quality assurance.
2. Advocate for federal changes to benefit NYCHA.
The consent decree did not include additional federal funding or regulatory relief, even though federal underfunding and operational restrictions are root causes of NYCHA’s capital crisis. The federal monitor should be a strong advocate for changing federal policies to benefit NYCHA.
- Increase Funding for Public Housing Operating and Capital Subsidies: Federal underfunding is a primary cause of NYCHA’s physical deterioration. For years Congress has failed to fund fully the public housing capital and operating subsidy program. Adjusting for construction cost inflation, NYCHA received 66 percent less federal capital funding in 2017 than it did in 2002. Increasing funding for the public housing subsidy programs will allow NYCHA to do more repair work.
- Improve Ability to Use the Rental Assistance Demonstration Program: The Rental Assistance Demonstration (RAD) program and other conversions to the Section 8 program are the best long-term option for revitalizing public housing. RAD allows NYCHA to leverage private funding, speed up renovations, and bring in new management without sacrificing affordability or long-term public ownership. However, Congress has capped the number of RAD conversions, and RAD transactions require additional public subsidies to complete. Lifting the RAD cap would allow NYCHA to do more conversions, while other actions including exempting RAD projects from the tax-exempt bond cap or creating dedicated tax credit programs for RAD would increase the financial feasibility of RAD conversions.
- Secure Regulatory Relief: HUD can provide waivers that would let NYCHA undertake repairs more quickly and more cheaply than at present. As part of the agreement, HUD pledged to create a working group to consider NYCHA’s waiver requests. The most significant relief HUD could offer would be to loosen rigid procurement rules that block NYCHA from selecting bids based on the best value rather than the lowest price and prohibit alternative procurement methods such as design-build for federally backed projects. In addition HUD can offer flexibility with federal capital and operating funds, including allowing NYCHA to reinvest any operating cost savings into capital projects.
3. Press the State to release funding and pass procurement reforms.
The previous two New York State budgets appropriated $450 million for NYCHA capital repairs; however, the funding has not yet been released. In addition to working with State leaders on funding, the monitor should urge the State to extend permanent design-build authority to all of NYCHA’s State- and City-funded projects and exempt NYCHA from Wicks Law.
4. Start with NYCHA 2.0.
The agreement requires the City to hire a third-party management consultant to examine NYCHA’s management structure, policies, and other systems, with the expectation that the consultant’s findings will help shape the monitor’s agenda. Over the past decade, NYCHA has retained consultants to undertake similar studies, most prominently when it hired the Boston Consulting Group in 2012. Redundant studies will not improve NYCHA and could sap precious resources and time. The scope for any additional consulting work should focus on gaps or ideas not previously studied, such as ways that NYCHA can evaluate and improve its project labor agreement.
NYCHA has also developed two strategic plans during the de Blasio administration. These studies proposed many laudable ideas, some of which formed the basis of pilot programs like FlexOps; others were never implemented due to bureaucratic resistance or inaction by NYCHA and City leadership. The more recent plan, known as NYCHA 2.0, provides a solid blueprint and should be the starting point for the monitor’s work.
5. Encourage the City to support fully the implementation of NYCHA 2.0
Successful implementation of NYCHA 2.0 is dependent on access to tax-exempt bonds, tax credits, and other financing; most RAD conversions are not financially feasible without additional public support. In the absence of further federal funding for RAD transactions, the City will need to allocate funding it currently reserves for its housing plan to NYCHA.
NYCHA also plans to raise capital for repairs by increasing the pace of market-rate infill development and the sale of air rights. The City can take additional actions to support NYCHA’s infill and air rights program. City actions to fast track permitting and land use approvals for infill projects would speed up the pace of development. Creating a special district for the transfer of air rights would expand the market for, and increase the value of, NYCHA’s transferable development rights.
6. Review labor contracts to improve workforce productivity.
The rights of workers should be respected, but labor reforms at NYCHA are crucial. Much can be accomplished through simple fixes like scheduling shifts on evenings and weekends in order to speed the pace of repair work, reduce the need for overtime, and bring NYCHA’s operating costs more in line with privately managed affordable housing buildings.
NYCHA recently negotiated new work schedules for caretakers, heating plant technicians, and other frontline workers as part of a new collective bargaining agreement. For the first time, NYCHA will schedule regular work shifts on evenings and weekends at a reasonable cost. This is a positive first step toward modernizing NYCHA’s operations, but NYCHA still has to pay for the change through shift differentials and sign-up bonuses. The monitor can help NYCHA implement additional reforms to boost productivity without increasing NYCHA’s operating costs.
Opportunities may exist to modify the agreements with NYCHA’s skilled trades, which include plumbers, painters, carpenters, and so forth. The skilled trades will play a critical role in addressing NYCHA’s work order backlog, but they also earn a disproportionate share of NYCHA’s overtime budget each year. The savings from reducing overtime could be used to support additional repair work.
Expanded job responsibilities of maintenance workers presents another opportunity. NYCHA has twice as many caretakers and maintenance workers as skilled tradesmen, but outdated job descriptions tightly proscribe their duties. Expanding work responsibilities could allow front line staff to contribute to repairs as part of their day-to-day work.
A third opportunity is to increase the span of accountability and control of frontline supervisors. The monitor should push NYCHA to continue devolving responsibilities to the development level, including requiring property managers to develop project-level budgets.
NYCHA also should continue efforts to bring in outside contractors for routine work. Private maintenance contracts allow NYCHA to speed the pace of maintenance and repair work and further reduce the need for overtime among its skilled trade staff. This would also allow NYCHA to assign skilled trades personnel to specific developments rather than spreading them among roving work crews.
If NYCHA’s unions do not negotiate contract modifications in good faith, the agreement includes a process allowing the federal monitor and NYCHA chair to petition the HUD Secretary to override local and state labor laws or to abrogate existing labor deals.
The appointment of a federal monitor is an opportunity to improve NYCHA. However, it also comes with significant political and financial risks for the City. Without a clear focus on these priorities, the monitor could become an open-ended burden on both NYCHA’s operations and on the City treasury.
Additional information on how elected officials and NYCHA's management and workforce can contribute to this effort can be found in the Citizens Budget Commission report, Stabilizing the Foundation.