What Happens in NYCHA Goes Bankrupt?
During Covid, many Americans had a hard time making their rent. The Federal Government provided emergency rental assistance with funds for each state. The acronym is ERAP. ERAP saved countless people from being homeless and landlords from losing mortgages on their buildings. It was a win-win for everybody except those in public housing.
People who live in public housing (New York City Housing Authority- NYCHA- in NYC) pay rent, although HUD and the state subsidize a piece of that. Tenants pay roughly 30%. Public Housing is not free. Because of this decision to not give ERAP to NYCHA residents, NYCHA has a shortfall of over $450m, that is, 73,000 households. Keep in mind that NYCHA is larger than the city of Atlanta and houses almost 16% of NYers, and the list to obtain public housing is long, meaning many NYers would benefit from public housing, and so would our city.
It is murky what precisely the HUD agreement is with NYCHA considering that they have not funded the need to keep properties in good shape. At this point, it would cost $40B to repair the mess that the buildings are in. Can you imagine owning a property and doing nothing for 30 years?
The mounting losses are shameful. There is a good chance that if the state does not lock down a budget that gives ERAP to NYCHA, NYCHA could be bankrupt. Then what? How many agencies rely on funds from NYCHA to barely keep those buildings running? How about the basics, such as water and gas?
Isn’t it time to get HUD out of public housing? If NYCHA goes bankrupt, my guess is there would be a Federal takeover which could be disastrous based on how HUD appears to have done nothing proactive in the past, or maybe it could be a blessing in disguise.
Let the states choose private entities to oversee these buildings in each borough. Have a NY Government board oversee these private companies to ensure they are doing the right thing, keeping the facilities in clean working order and not lining their pockets. Have HUD pay NY the $40B it would cost to fix the problem over ten years with a locked-down business plan to not only fix the issue but expand public housing. Everyone should have a roof over their head; it makes all the difference, particularly the children.
We might be approaching the end of NYCHA because the state was not treating NYCHA residents like all other NY residents who needed rental assistance during Covid. It is time for a change at NYCHA. NYCHA should not be run by one entity mired in Government bureaucracy. Like most things, it is hard to make changes within, but it is easier to make changes outside of the box.
The operating budget for NYCHA is $4.5B a year. The operating reserves are almost gone. If NYCHA does go bankrupt, not only will there be zero oversight on building maintenance, 13000 NYCHA employees will be without a paycheck. This is not going to be pretty, and it doesn’t seem like much thought has gone into the long tail of ignoring these residents’ financial needs during Covid.
I hope somebody is working on Plan B. NYCHA has needed one for a very long time.