Public Housing Privatization Paradox
I’m a believer in privatization. Government shouldn’t be in the business of running things. It should set the rules, provide the incentives, and get out of the way. Nobody has yet to figure out how to fix, create, or change how NYCHA (New York City Housing Authority) operates. It is so messy with so many people involved, yet we need more housing, and not necessarily the housing that is available.
There has been decades-long institutional failure on many levels. Many people in government had tried to do work arounds to make it better from RAD/PACT (Permanent Affordability Commitment Together) that congress created in 2012, and NYCHA launched in 2016 which was a “work around”. Section 9 is funded through the congressional capital fund, a pool of money that has been underfunded for decades. RAD was to convert those section 9 units to section 8 contracts that are long-term and federally guaranteed, aka bankable. Private lenders will extend financing against future rental income stream, just like any other deal in real estate. It is clever but it doesn’t fix the underlying $80B hole of capital improvements needed.
There is also the Multifamily Homeownership Program. The pitch: move into a nicer unit, keep your job, put down a small deposit, and, within 18 months, NYCHA will sell you the apartment. Real equity. Real ownership. The whole American dream wrapped up in a public housing unit. It fell apart. Years later, fewer than half of those apartments ever became co-ops. The buildings had leaky roofs, no heat, mice. . Here’s the thing. You can’t sell someone ownership of a building you haven’t maintained. Nobody wants equity in squalor. Ownership only works as a wealth-building tool if the underlying asset is actually worth something — and NYCHA’s chronic disinvestment ensured that much of it wasn’t. As I wrote, NYCHA needs somewhere around $78–80 billion to bring its buildings into good repair. Not to make them nice. Just functional. It’s why residents don’t trust “homeownership opportunities” offered on top of buildings falling apart.
I do believe that private capital can fix what the government starved for decades. And to be fair, PACT(Permanent Affordability Commitment Together- NYCHA’s brand of the RAD program) has now generated close to $9 billion in actual renovations. That’s not nothing. But you can’t out-privatize eight decades of federal disinvestment overnight, and residents who’ve been burned before are right to be skeptical of yet another plan that asks them to trust an institution that let their homes rot.
Here’s the part that should make everyone furious regardless of politics: it currently takes NYCHA over a year — in some cases pushing 18 months — to turn around a single vacant apartment. Lead testing, asbestos abatement, internal turf wars between departments. Meanwhile thousands of units sit empty while 200,000+ families wait on a list. This isn’t a hard problem. This is a software and workflow problem. An intake agent, automated document verification, parallel-tracked inspections instead of sequential ones — this is solvable with off-the-shelf technology, not another ten-figure capital plan. This tells you everything about why people don’t trust government to run anything, even when the money is there.
This brings me to the rent freeze supported by Mandami for stabilized units. I understand the instinct — protect people from getting priced out. But it raises the same question from the other direction. What percentage of landlords stuck under a freeze are actual slumlords who never gave a damn, versus someone who inherited a building, rents it out, and genuinely can’t afford the repairs without raising rent? Because those are two very different problems, and one blanket policy treats them the same.
I don’t think government should own or operate housing. I think it should own the rules. Tax incentives for landlords who maintain their buildings. Real penalties for the ones who don’t. Rent increases tied to actual economic indicators on a predictable cycle — not political whim, not indefinite freezes — so tenants get stability and owners can plan. Privatization isn’t the villain. Privatization without oversight, and public ownership without accountability, are both the villain. I want to believe that many people understand this but it seems insanely difficult for NYCHA to solve the decay.
We’re going to keep watching well-intentioned plans — homeownership programs, RAD conversions, rent freezes — solve one problem while quietly creating another. Many of the NYCHA buildings should be torn down, but how do we move all those residents somewhere else before that happens while giving them clean functioning apartments of the same size?
Roughly one in 17 residents live in NYCHA buildings. In Europe, non-profit housing associations run large swaths of social housing, meaning the government outsourced the management to these organizations, and it works. These non-profit organizations sit between the government and the tenant. Perhaps NYCHA needs an equivalent to that.
I truly wonder if this cycle will ever change.