Dramatic Demolition Plan Arrives Alongside Big Spike in NYCHA’s Cost Estimate for Fixes
Estimates to replace or upgrade all public housing developments jumps from $45 billion to $78 billion even as the number of apartments drops from 176,000 to 161,000.
This week the extreme challenges faced by the New York City Housing Authority came fully into focus within 24 hours of a single day.
Early Wednesday morning, NYCHA management released an analysis that claimed the cost to fix public housing in New York City had jumped from $45 billion to $78 billion in just five years — even as the number of apartments they manage had dropped.
Several hours later at their annual meeting, held at Stuyvesant High School, leaders trumpeted the most dramatic approach the authority has put forth in years to try and turn things around: a proposal to demolish and rebuild several Manhattan developments.
The revised cost estimate and the discussion of actually demolishing public housing in New York City — something NYCHA has deliberately avoided for decades — represents a potential turning point for the nation’s biggest public housing authority and its more than 400,000 tenants.
The new cost estimate came via NYCHA’s latest “physical needs assessment,” an analysis NYCHA performs only once every five years.
The 2017 estimate of $45.3 billion was based on 176,000 apartments. But since then, NYCHA has turned over thousands of its public housing units to private managers under a federal program known as Rental Assistance Demonstration, or RAD.
The new $78.3 billion estimate applies to 161,000 apartments that are still managed by NYCHA — so that 73% increase in cost comes despite an 8% decrease in NYCHA’s housing stock.
NYCHA officials mostly blamed the higher costs on escalating construction expenses, but also noted the accelerated deterioration of some developments and a broader scope of upgrades triggered by a 2019 agreement with federal housing officials to remedy squalid living conditions.
Authority Chief Executive Officer Lisa Bova-Hiatt, who last week was made permanent NYCHA CEO after serving in an interim role since last fall, said the assessment “demonstrates the tremendous magnitude and scale of the needs and challenges of NYCHA following decades of disinvestment in public housing.”
Jamie Rubin, a former top aide to ex-Gov. Andrew Cuomo who was appointed chair of NYCHA’s board last week, promised to work with Bova-Hiatt “to explore all viable options that will help reduce this gap and put the authority on a better trajectory for the long term.”
Some of those options emerged at their annual meeting Wednesday as NYCHA’s newly installed leaders presented their latest strategies to tackle the daunting list of much-needed upgrades.
That included continued expansion of a tactic they’ve employed over the last few years of turning over NYCHA apartments to private managers under NYCHA’s version of RAD, called Permanent Affordability Commitment Together (PACT). NYCHA expects to place another 20,000 apartments into PACT through next year.
And NYCHA managers also vowed to begin employing another new approach: fixing up another 20,000 units via the newly formed Public Housing Preservation Trust that will float bonds to fund big-ticket repairs.
But the one proposal that stood out has already triggered backlash: a plan first revealed last month to demolish and replace three housing developments that sit on high-value property in the Manhattan neighborhood of Chelsea.
NYCHA has proposed putting the Fulton, Chelsea and Elliott Houses in Manhattan into RAD and having two private real estate firms, the Related Companies and Essence Development, demolish all 2,000 apartments and replace them with new buildings for public housing residents.
In exchange, the developers would also get to build 2,500 market-rate and 900 income-restricted “affordable” units on open space within the developments — so-called “infill” apartments. Because these developments happen to be located in the affluent Chelsea neighborhood, those market-rate units will likely net Related and Essence a steady stream of high-end rent.
This is the second go at this type of proposal. A similar demolition plan floated in 2019 at Fulton collapsed after residents accused NYCHA of privatizing public housing. In round two, NYCHA released the results of a survey of 950 residents in which they say 60% voiced support for the demolition plan.
Final approval is pending, but at the Stuyvesant town hall meeting, several tenants of the Chelsea developments showed up to speak out against the proposal.
“I do not want RAD-PACT, I want you guys to pay and fix our developments and stop this nonsense,” said Jackie Lara, 60, a Fulton Houses resident who was part of a working group of tenants that had promoted an earlier plan to renovate the developments without demolition.
Chelsea Houses resident Celines Miranda, 48, said the developers were “pushing the narrative that these buildings are deteriorating. But it’s a gross exaggeration of the truth. Yes, we could use some repairs and better maintenance, but destroying the buildings is a solution that only benefits the developers.”
Two groups advocating on behalf of tenants, the Legal Aid Society and Community Service Society, called on NYCHA to withdraw the latest proposal, noting that the survey offered three response options: two plans that would replace their units and one under which old apartments would be renovated. None of the proposals described to tenants in the survey mentioned construction of the market-rate infill units on NYCHA land.
“We have serious concerns about all aspects of this survey process,” Lucy Newman, a Legal Aid lawyer, testified at the meeting, predicting that the plan “will undoubtedly lead to the permanent displacement of resident families.”
NYCHA disputes this. At the same time the annual meeting was underway Wednesday, Jonathan Gouveia, NYCHA’s vice president for real estate development, told a virtual Manhattan Community Board 4 meeting that if the plan goes forward, every resident of Fulton, Chelsea and Elliott Houses would be guaranteed an apartment in the new buildings.
Gouveia made clear that rent would stay capped at 30% of income, all succession and grievance rights would remain in place, and that the vast majority of residents — 94% — would remain in their apartments until the new buildings are up. He insisted that “only a relatively small number of households” would have to be relocated during demolition and rebuilding, and that they would be moved into vacant NYCHA units within the developments or placed in affordable housing within the Chelsea neighborhood.
The plan that Gouveia says was supported by the majority of residents who took the survey involves rezoning and would be complete within six years, with the first move-ins taking place in three years if the necessary zoning change is approved.
The tenant associations of these developments support this proposal.
But Gouveia also acknowledged that some residents of the developments may not have participated in the survey, and he promised that the door-knocking to provide them with information on the plan is not over.
“We are going to continue robust engagement,” he said.
All of this is unfolding as NYCHA continues its struggle to reverse a long-standing failure to keep up maintenance of its apartments. More than 70% of NYCHA properties were built before 1970.
The authority is now under the watch of a federal monitor and is required under a now five-year-old deal 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 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’s federal monitor Bart Schwartz in a Queens town hall meeting Tuesday.
But many developments need a total overhaul to bring them up to snuff, and a growing rent collection gap recently caused NYCHA managers to hedge on whether they’ll be able to meet the timeline of the 2019 agreement.
A wave of tenants who stopped paying rent during the pandemic did not resume when a rent moratorium ended in January 2022, creating rent arrears of nearly $500 million.
Before the pandemic, NYCHA’s rent collection rate hovered around 90%. As of last week, it had dropped to just 63% with no sign of turning around.