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NYCHA Now Needs $78 Billion to Fix Aging Buildings as Costs Surge From 2017 Estimate

The housing authority’s own analysis blames the 73% spike on rising construction expenses, accelerating deterioration and new initiatives to abate lead and asbestos.

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Pedestrians and traffic near the Fulton Houses in Chelsea.

Hiram Alejandro Durán/THE CITY

The estimated cost to fix New York City’s deteriorating public housing has gone way up, to $78.3 billion from a prior estimate of $45.3 billion, according to a review the New York City Housing Authority released Wednesday of its aging building portfolio.

This “physical needs assessment” — last performed five years ago — blamed most of the spike on escalated construction costs. Also contributing are costs of the accelerated deterioration of some developments and of upgrades required by a 2019 agreement with federal housing officials to remedy squalid living conditions.

The authority revealed the 73% increase in the cost of needed big-ticket fixes on the same day it presented several proposals to employ new ways to fix up ailing structures while also scaring up funds to pay for a daunting array of projects. Those range from replacement of out-of-date boilers, to upgrading entire plumbing systems, to top-to-bottom facade replacements across developments. 

NYCHA — the nation’s biggest public housing authority — is currently struggling to reverse its longstanding failure to keep up with the declining state of its apartments. The vast majority of NYCHA properties were built before the 1970s.

The authority is now under the watch of a federal monitor and is required under a deal, now five years old, with the U.S. Department of Housing and Urban Development (HUD) to address widespread unsafe and unhealthy living conditions, including lead paint, toxic mold, busted elevators and rat invasions.

The new estimate of the need for $78 billion in capital investments over the next 20 years comes as the authority confronts the reality of tenants who stopped paying rent during the pandemic still not paying after a rent moratorium ended in January 2022. The authority now faces rent arrears of nearly $500 million and has seen its collection rate drop from about 90% to 63%.

This year’s physical needs assessment sought to quantify the scope of deterioration at 264 developments and 161,400 apartments. It did not include several developments, containing thousands of units, that NYCHA still owns but are operated by private managers under the federal Rental Assistance Demonstration program, or RAD.

NYCHA didn’t check every property but instead relied on inspections and interviews with staff and tenant leaders at a sample of 30 sites with more than 28,000 apartments. They discovered that a problem present in the 2017 assessment appears to have gotten worse: Many of the buildings’ assets such as boilers and elevators were close to, at, or beyond their useful life.

NYCHA officials blamed most of the $33 billion increase in the cost estimate on the rise in building material and labor costs ($28 billion), but also on an acceleration of already deteriorating conditions ($6.6 billion) and an expansion of the scope of work that NYCHA asserts needs to be done, including abatement of lead paint and asbestos ($8.9 billion).

Under a January 2019 agreement with HUD that followed a federal prosecutor’s report uncovering years of mismanagement, NYCHA committed to a strict timeline to attack longstanding problems like lead paint in apartments with young children and mold infestation in apartments housing residents with asthma.

The authority has made some progress, removing lead paint from some 2,200 apartments and cutting the number of mold complaints in half by replacing roof fans to eradicate moisture buildup in bathrooms — developments outlined by NYCHA Monitor Bart Schwartz in a Queens town hall meeting Tuesday.

But many of its developments need a total overhaul to bring them up to snuff, and the growing rent collection gap recently caused NYCHA managers to hedge about whether they can meet the timeline of the 2019 agreement going forward.

On Wednesday, NYCHA’s newly appointed Chief Executive Officer Lisa Bova-Hiatt and new Board Chair Jamie Rubin made clear that two reforms now in the works can pay for $38 billion of the $78 billion in estimated costs: turning over 22,000 more NYCHA apartments to private managers under NYCHA’s version of RAD, called Permanent Affordability Commitment Together (PACT), and fixing up another 50,000 units via the newly formed Public Housing Preservation Trust to float bonds to fund big-ticket repairs.

Another approach is finding new ways to change the rules for how much tenants must pay.

Under federal rules, public housing tenants pay no more than 30% of their income toward rent, but NYCHA recently released new rules for calculating that income, informing nearly 300 households they are “over income” and must pay higher “fair market rent.”

Another proposal to demolish and replace three housing developments that sit in the high-value Manhattan neighborhood of Chelsea has raised the ire of some tenants and affordable housing advocates. On Wednesday the Legal Aid Society took aim at this proposal.

NYCHA wants to upgrade the Fulton, Chelsea and Elliott Houses in Manhattan by having two private real estate firms,. the Related Companies and Essence, demolish all 2,055 apartments there and replace them with new buildings for public housing residents. The plan would also add 2,500 market-rate and 900 “affordable” units to be built on open space within the developments — so-called “infill” apartments.

A similar demolition plan proposed in 2019 at Fulton collapsed after resident objections over fears that their public housing would become privately owned. In this second round, NYCHA last month released the results of a survey in which they said 60% of 950 residents now supported the demolition plan.

On Wednesday the Legal Aid Society called on NYCHA to withdraw the new Chelsea plan, noting that the survey offered three options: two plans that would replace their units and one under which old apartments would be renovated. None of the proposals mentioned construction of the market-rate infill units on NYCHA land.

“We have serious concerns about all aspects of this survey ‘process’,” Legal Aid said in testimony presented Wednesday evening at NYCHA’s annual town hall for tenants.

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