Public Housing Committee Holds Oversight Hearing on NYCHA Private Investment

The City Council holds an oversight hearing on NYCHA's public-private partnership agreement. Image credit: CityLand

The City Council holds an oversight hearing on NYCHA’s public-private partnership agreement. Image credit: CityLand

NYCHA Chairwoman Shola Olatoye answered questions on the Triboro Preservation Partners agreement.  On February 10, 2015 the City Council Committee on Public Housing held an oversight hearing on Triborough Preservation Partners, a public-private agreement between the New York City Housing Authority, L+M Development Partners, and BFC Partners. The venture was designed to rehabilitate six of NYCHA’s Section 8 properties containing nine hundred units: Bronxchester Houses, Saratoga Square, Campos Plaza, Milbank-Frawley, East 4th Street, and East 120th Street.  Under the terms of the agreement, L+M and BFC own a fifty percent stake in the properties over the next thirty years.

NYCHA Chairwoman Shola Olatoye began her testimony by outlining the details of the partnership, stating Section 8 buildings are subsidized through the federal Department of Housing and Urban Development and cited “a steady erosion in government support – federal, state, and local” since 2001 caused deficits of over $1 billion.  Chairwoman Olatoye testified project-based Section 8 houses are ineligible for federal capital funding and the partnership agreement will provide $80 million in capital work for the subject properties.  The chairwoman testified about the ownership divide between NYCHA and the private partners, stating that to access specific tax credits and bonds, NYCHA’s stake could not exceed fifty percent.  The chairwoman affirmed the units will remain project-based Section 8 and subject to rent stabilization, that residents’ share of the rent would remain at thirty percent of their income, and that NYCHA retained approval rights over major decisions and oversight that affect the developments.  Chairwoman Olatoye praised L+M and BFC as experts in tenant-in-place rehabilitation projects, and in the event a tenant must be temporarily relocated, they will do so at no cost to the tenant.  The chairwoman testified that under the terms of the agreement, Triborough will hire NYCHA residents for a minimum of twenty percent of the construction work and fifty percent of the maintenance workforce at a wage of $15 per hour.  Chairwoman Olatoye finished by stating public-private partnerships were nothing new, and “[g]iven the continued lack of support from Washington, we would be negligent in our responsibility to our residents if we did not harness the tools that other Public Housing Authorities have demonstrated work well to preserve and protect their housing stock.”

Council Member Ritchie Torres, who chaired the hearing, applauded the influx of needed funding for public housing but questioned Chairwoman Olatoye on the conduct and labor practices of the private partners, asking why a recent project labor agreement excluded the Triborough properties.  The chairwoman argued the PLA predated the Triborough agreement, but no union workers were displaced but instead reassigned to other NYCHA properties.  Public Advocate Letitia James continued the labor thread, asking about laxity in hiring NYCHA residents under Section 3 of the 1968 Housing and Urban Development Act and why there was no provision for the Triborough workers to be union workers.  Chairwoman Olatoye admitted that more can be done under Section 3, but there were other programs which have been successful in promoting the hiring of NYCHA residents.  The chairwoman re-emphasized what the Triborough deal achieves for the building residents in terms of rehabilitation and steady funding, and argued the deal met the maximum amount of tenant priorities as possible.

Council Member Rosie Mendez pushed for details on Campos Plaza, which is located in her district.  Chairwoman Olatoye testified storm resiliency efforts would go to one building of Campos Plaza, but not the other one, even though both buildings took flood damage from Superstorm Sandy.  The Council member also took issue with outreach efforts by NYCHA on the Triborough deal, requesting documentation from Triborough meetings and suggesting NYCHA was doubling up by claiming meetings held with community groups to discuss infill were also meetings to discuss Triborough, though no such discussion transpired.

Council Members Donovan Richards and Laurie Cumbo asked about whether the Triborough partnership was a pilot for other developments.  Chairwoman Olatoye told Council Member Richards that this is the last deal necessary to address Section 8 buildings, but there were other development deals going forward.  Council Member Cumbo pushed further, arguing if Triborough was to be used as a pilot for other developments then the decisions made in Council carried an extra gravity, and stated her “greatest fear” was the Triborough private partners would take 100 percent ownership of the building at the end of the deal.  Chairwoman Olatoye testified NYCHA has right of first refusal on the buildings at the end of the deal, and stated the authority would have the money when the time came, though she could not give any guarantees beyond New York’s longstanding commitment to public housing.  The Council member objected to NYCHA completing the Triborough deal prior to this hearing, pointing out that no outcome would impact the current partnership.  She ended by recognizing the position NYCHA is in from a lack of federal funding, but stated “We were elected by hundreds of thousands of people.  We have to be in the room when the decisions are shaped.”

City Council, Public Hearing (Feb. 10, 2015).

By:  Michael Twomey (Michael is the CityLaw Fellow and a New York Law School graduate, Class of 2014.)

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