I find myself locked in a sort of silly battle with New York City’s Department of Housing Preservation & Development (HPD).

Part of the deal done when where I live was deregulated allowed folks like me to enter into the federal Section 8 subsidy program, keeping our rent consistent with our limited incomes. Each year, I “recertify” — I demonstrate that I am still eligible for this. It’s not as stable as the old Mitchell-Lama (state) program, but it keeps the escalating rent in check. It would work better still if, when my income falls (as it will this year), my rent would de-escalate.

HPD is the designated supervisory agency. In past years, I put in the pile of paperwork. This includes all sorts of letters from people we work for, pay stubs and our IRS form 1040, including W2 forms. HPD went kapocketa kapocketa and three months later spit out a “rent breakdown” specifying what I was to pay in rent.

This time, HPD took eight months (May through December, 2006). The “rent breakdown” informed my new rent was based on Sue’s and my income being around $13,500 more than reported income — that is, the income on our 2005 income tax return, and more than $20,000 more than we will actually earn in tax year 2007. I asked how these numbers were calculated; I was told the numbers came from my 2005 tax return. Nope; I have that form, too, and that is not what it says. I have the 2006 form 1040 (I do taxes early…); those numbers are even lower.

In short, either the folks at HPD are illiterate, or they are arithmetically challenged — or something….

I am not the only person living where I do, getting this assistance to keep my home of 30-some years at a rent I can afford, having this problem with HPD. Something is going on.

I decided to see if I could figure it out. Effectively, this is a three-horned problem; here’s what seems to be happening:

bossbloomberg3 First, Mayor Mike promised lots of new low- and middle-income housing back in 2002 — starting with $3 billion to build or renovate 65,000 new housing units. In 2004 he hired a new HPD commissioner with public housing credentials. Commissioner Donovan’s brief was to start the ball rolling on 160,000 new units of “affordable housing” to house a half-million people. This housing was to be done by private sector developers with substantial city incentives.

Almost immediately, this program had problems. $600 million dollars paid to the city by the Battery Park City Authority in lieu of property taxes was supposed to be used to build new low-cost housing. It was spent on other things. [David Chen, “City Diverted $600 Million Set Aside for Low-Cost Housing”, New York Times 5/27/2004] Asked why not spent on housing, Bloomberg’s aides alleged that the refurb’d housing was happening — but a literature survey turns up no reports of new or renovated housing, only studies of how hard this is to do. [See the report, “Affordable Housing in New York” prepared for the city’s Public Advocate’s office, appropriately dates April 1, 2005.]

Three years into HPD Commissioner Donovan’s term, the big “new idea” is nothing more than a revived 421-a program: This gives real estate developers a tax break if they allocate some apartments for low-cost housing, either in the main project on on adjacent property. [Janny Scott, “New York City Acts to Add Low-Cost Homes”, New York Times 10/11/2006] So far: Apparently, not a lot of takers.

The logic is inescapable: Three years into a 10-year project, with about two years of effective governance by Mayor Mike’s crew, the city Dept. of Housing Preservation & Development has failed to accomplish its mission. Not good; something must be done lest Mayor Mike and a whole lot of his crew looks, well, seriously imprudent.
We come then to the second horn: Mayor Mike’s administration has a second housing agency, the New York City Housing Authority (NYCHA). It actually owns buildings; some are city-built, some are acquired in one way or another.

In short, the city is a major landlord — and not one of the best. NYCHA is commonly reported to be riddled with corruption. A literature survey reveals numerous complaints of poor responsiveness to repair and maintenance problems. This is important because a great deal of the NYCHA housing stock of all provenance is old and consequently difficult to maintain. A lot of it is not eligible for direct federal funding; on the other hand, it can be indirectly funded through section 8 vouchers. A two-bedroom NYCHA apartment rented directly for around $350-$500 a month carries a section 8 contract rent of over $1,000 a month; the bookkeeping appears to be — interesting. [NYC IBO, “Examining NYCHA’s Plan to Preserve Public Housing”, June 2006]

NYCHA’s own reports show it has been notably unsuccessful at contributing new housing to the city. It’s own website, in an undated but presumably current capital report, shows it created only 1,138 new or substantially renovated housing units. The Authority offers this as its contribution to the $3 billion, 65,000 unit commitment made by the Mayor Mike administration.

Again, the conclusion is clear: The city’s main public housing operating authority has not been doing a brilliant job. Again, it’s pretty obvious, Something Must Be Done to save Mayor Mike from looking, well, about as you’d expect for an ex-techie out of a stock-brokerage.
The third horn is purely fiscal, and has to do with the way the city has determined to manage its Section 8 programs — perhaps, move some money around to make it look like Mayor Mike and his crew weren’t talking through their hats.
Keep in mind, the money available for Section 8 support is limited. Though appropriations bills passed in Summer 2006 called for a modest increase in section 8 spending (essentially, enough to keep up with inflation), a continuing resolution passed at the end of the last Congress holds actual 2007 funding to 2006 levels, except for defense and homeland security. That is, under this Republican resolution, not yet disavowed by the Democrates, other agencies are funded at the same levels as in 2006. Allowing for inflation, this is actually a three percent decrease. Section 8 funding is correspondingly reduced.

Against this, there are the local political considerations:

  • Mayor Mike has an absolute need to show he has delivered on promised low- and middle-income housing.
  • He needs to pump money into NYCHA, to generate revenue to renovate that agency’s aging housing stock.
  • Having raised taxes in 2002, then reduced them in time for the next election, he cannot very well raise them, especially for something like public housing.
  • He is constrained by all sorts of limits from borrowing money.
  • There is no new money to be had from Washington.

The evidence seems to be, Mayor Mike has resolved on a financial shell game.

On January 29, 2007, NYCHA reopened its section 8 voucher list to new applicants for the first time in 12 years. [NYCHA Press Release, 1/29/07] NYCHA has available 22,000 new section 8 vouchers. Ostensibly, this reflects an additional $100 million in section 8 funding; this has to be reconciled with the likely effect of the continuing resolution noted above, the fact that only some of that money might be available for city use and the time it takes to actually move appropriated money into operating accounts.

This is an interesting set of numbers: $100,000,000. divided by 22,000 vouchers works out to pretty much a full-ride rent for very-low-income folks, and about two-thirds of the rent for working-poor folks — making under $35,000 a year gross. The federal government will, in this scheme, pick up the slack between a contract amount and what the tenant pays. If the contract amount is generous enough, NYCHA (&c.) actually gets a chunk of money for which it would otherwise not be entitled. In short, an addition of 22,000 new vouchers should allow NYCHA to move marginal tenants already in place to the better-yield program, thus bolstering what the city’s Independent Budget Office believes to be seriously shaky finances.

Add to this:

  • the target population for Mayor Mike’s vision of section 8 is largely homeless and poorest-of-the-poor housing.
  • HPD section 8 contract rents set just a couple years ago are no longer “market rents” in some formerly middle-income residential neighborhoods.

Where I live, the HPD contracted rent is about $600 per month per room. New tenants pay $800 per month per room. Landlord Larry was delighted to have me here when that meant a full rent roll while he restored the Speculator’s Blush; he’ll be happy to see the back of me now that he’s painted this aging beauty’s face to conceal its blemishes and can sucker the 30-somethings with the cheapest-on-the-block Tribeca rental. This ignores the fact that one reason he got the buildings cheap is their age, and another is that the city paid for them, borrowing the money at 10½ percent, then giving it to the developer at 1½ percent, along with various rebates and deferrals that made the “loan” effectively interest-free.

It is entirely plausible that HPD policy is to find as many extant “working-poor” and borderline middle-income section 8 participants who can be removed from the section 8 rolls on some pretext or other. The resources thus freed can be reallocated to the just-announced NYCHA section 8 program:

  1. NYCHA gets its needed influx of capital, regardless of what Washington eventually does.
  2. Mayor Mike gets his housing initiative to finally show some movement.
  3. Private-sector landlords, stuck with section 8 contracts they cannot easily void, rid themselves of tenants who cannot pay rapidly escalated rents.

City pols seem to be generally accepting this political shell game. This is interesting if only because the elected officials and their staffers created the solution only a few years ago, to cover over inadvertently giving away housing bought and paid for with taxpayer dollars.

And I, it seems, am screwed. Along with a lot of other folks who really thought the republic was also a commonwealth.

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