Cuomo Order on Public Housing May Carry Big Costs for City

NEW YORK — For years public housing residents in New York City felt abandoned. Neglect led to failing boilers and leaking roofs. Mold plagued apartments. Lead paint that was supposed to be removed was left in place.

So tenants rejoiced when Gov. Andrew Cuomo ordered the appointment of an independent monitor to oversee repairs he said the New York City Housing Authority was too incompetent to manage. A slew of city officials, with the notable exception of Mayor Bill de Blasio, joined Cuomo onstage when he signed the executive order this month in the crowded gymnasium of a public housing development in East Harlem.

Once the ink had dried and the fine print was made public, one clause became a concern for some of the same officials who had cheered Cuomo’s tough, take-charge talk: the city would be required to pay for whatever repairs the monitor ordered, a cost that could total hundreds of millions of dollars.

By declaring that the health and safety problems in public housing constitute a public nuisance, the executive order, pursuant to state public health law, obligates the city to cover those costs.

But when they took their places alongside the governor for the signing, most of the city elected officials had not been given a copy of the emergency order. Now, they are scrambling to decipher how the executive order might affect the city’s finances and how the city will fund repairs to the largest public housing system in the country.

The order by Cuomo was an unprecedented intervention in the agency’s 84-year history, one the governor had been hinting at for days, as he escalated his criticism of the agency’s performance under de Blasio — the latest clash in the fractured relationship between governor and mayor.

At a news conference two days later, de Blasio voiced his frustration. “I don’t see how you write an executive order like this without having a consultative process with the city,” he said. Last week de Blasio said he “did not expect the hits from Albany to be as bad as they ended up being” and that the agency would “have a serious price tag attached” in this year’s budget.

Before the governor’s mandate, the city had no legal obligation to fund the housing authority, according to experts and city officials. It, like other public authorities in New York, is a state-chartered entity, though the mayor appoints its seven-member board. Its budget is not part of the city’s budget, and it relies primarily on dwindling federal subsidies and rental payments from the system’s 176,000 units.

In recent years, the city has nonetheless chosen to voluntarily fund the agency in response to the authority’s growing deficit, investing $3.7 billion in the agency since de Blasio took office, city officials said.

At the signing of the governor’s order, Corey Johnson, the City Council speaker, and Letitia James, a public advocate, both commended Cuomo and posed for photographs with him, but they later acknowledged that while the governor had reached out to them about the mandate, they had not seen the language of the executive order beforehand.

Johnson said his office was “evaluating its impact on the city.” James said the order “constitutes an unfunded mandate.” She said Cuomo should reconsider forcing the city to pay for the repairs and called on the state to fund them instead.

The eagerness of Johnson and James to jump on the governor’s bandwagon, even as they knew little about the specifics of the order, underscored how the beleaguered housing agency has ended up in the middle of bitter political and legal fights, and how elected officials are striving to be on the right side of an issue that affects the well-being of 400,000 New Yorkers.

Two weeks ago, after months of criticism over her handling of lead-paint inspection and widespread boiler failures, the chairwoman of the authority, Shola Olatoye, said she was stepping down. Then last week a state judge hearing a lawsuit by public housing residents ordered the agency to conduct thousands of missed lead inspections within 90 days.

The mayor has named an interim chairman, who will start in June as the city searches for a permanent replacement for Olatoye. But whoever takes the post will step into a position certain to be reshaped by the monitor, who is to be chosen by early June by the mayor, the council speaker and an authority tenant leader.

The full cost of immediate repairs won’t be clear until a monitor is appointed and drafts an emergency plan. But the authority’s needs are staggering: more than $17 billion in unmet capital needs, including roofs and boilers that need to be replaced. Since Cuomo took office in 2011, the state has pledged only $550 million to the agency.

Despite the governor’s order, some say it is unlikely that the city will foot the whole bill. “It’s unreasonable to think the city can give NYCHA a blank check, but it puts pressure on the mayor to do more,” said Maria Doulis, vice president of the Citizens Budget Commission, a city budget watchdog. “The city is a creature of the state and state actions are always a wild card for the city.”

Cuomo has said that the main issue is not funding, but the agency’s inability to manage its spending. “Delivering money to NYCHA is like throwing it out the window,” Cuomo said when he signed the order. As it is, the housing authority’s spending is already under close watch. After the agency was found to have been filing false paperwork related to lead-paint inspections, the federal government said it could not draw on federal funds without permission. The city-state squabble comes on the heels of the tug-of-war between Cuomo and de Blasio over who should pay for the city’s ailing subway system, which is run by the state-controlled Metropolitan Transportation Authority. Last month the mayor acquiesced to the governor’s demands that the city pay for half of the subway’s emergency repair plan.

While some officials, like Johnson and James, say they are concerned about the costs the city may have to bear, others stood by the executive order, saying it provided the accountability the housing authority urgently needed.

“No responsible executive should stand on the sidelines of a humanitarian crisis,” said Councilman Ritchie Torres, who has been a vocal advocate for public housing residents.

Torres said he had not read the executive order beforehand and acknowledged that the powers of the emergency manager under the executive order “are far more extensive than people might realize.” Housing officials and experts agree that disinvestment at all levels of government led to the authority’s precarious situation.

The federal government has cut about $2.7 billion in funding to the agency since 2001, housing officials said.

And for decades, the city and state financed a small pool of public-housing developments until those subsidies were phased out, burdening the authority with having to finance those buildings.

Under the Bloomberg administration, the city terminated subsidies to six public-housing developments, leaving the authority with a shortfall of $240 million until 2010, when the developments were federalized.

And in 1998, Gov. George Pataki also terminated subsidies to 15 state-financed housing projects, burdening the authority with an extra $720 million, according to a 2017 report, until those developments were also federalized.

“The state has been, in a sense, starving NYCHA from 1998 on,” said Victor Bach, the author of the report and a senior housing policy analyst at the Community Service Society.

Now, the state has stepped in as the agency’s savior. But Judith Goldiner, head of the Legal Aid Society’s civil reform unit, said the governor’s executive order raised questions about the extent of the city’s liability and whether the monitor would just be “another layer” of bureaucracy.

“You appoint a monitor and they have a blank check,” Goldiner said. “Is that best for the tenants?”