Public Housing, Private Management: Is NYCHA Playing Good Cop, Bad Cop?

By Vincent Reid

Photo by Frances Cohen, Columbia Spectator

Since the conversion of the Ocean Bay Apartments to Section 8 voucher-based privately managed operations in 2017 from the government management, over 40% of the New York City Housing Authority’s (NYCHA) 335 public housing developments have been converted. Section 8 developments, also called RAD/PACT developments, are managed by private companies, including building upkeep and the charging of rent and possibly utility bills. Considering the fact that NYCHA needs an estimated $80 billion worth of capital investments to make necessary repairs to the developments, possible solutions from the private sector could be seen as a blessing. However the conversion has spooked tenants of those developments, who are worried about the possibility of evictions and rent hikes

With the maintenance backlog and lack of funding that NYCHA is experiencing, it seems inevitable that they would try to find economic solutions through the private sector. Although NYCHA is now allowing residents to vote on whether or not they would like their development converted to RAD/PACT, it is still unclear exactly how they are deciding on which developments will be slated to vote on the conversion to RAD/PACT. Is it possible that NYCHA has been offloading the least profitable developments to private developers?

Due to the controversial nature of the conversions and the fact that the City Comptroller’s office has already determined that there has been a spike in evictions in properties converted to RAD/PACT, NYCHA offloading the least profitable properties could be the best way for them to reallocate resources while letting a private company do the work of raising rents and evicting tenants. It is already difficult to get updated information on the operations of RAD/PACT properties, which have not been sharing those developments’ data on rent prices, resident counts, and more.

This can be determined by looking at developments that have already been converted. Every January, NYCHA shares their annual data development book which includes two figures of interest. The average monthly rent paid by the tenants in a building, and the cost per rental unit at construction. If NYCHA is offloading the properties that are the least profitable, the properties converted into RAD/PACT housing would have higher cost per rental units and lower average monthly rent in the years preceding their conversion.

Source: NYCHA Development Data Book

However, data from eight neighborhoods spread throughout four of New York City’s boroughs has not proved sufficient in demonstrating this selection process. In the year immediately preceding the conversion of a NYCHA development to RAD/PACT, six out of eight of the converted properties had a higher cost per rental room when compared to the developments that remained under NYCHA administration. This could indicate a possible tendency by NYCHA to slate developments for private management if were more expensive to construct, but it has not been shown that there is enough evidence to conclude that with any certainty. The data on the average monthly rent has been even less conclusive.

Source: NYCHA Development Data Book

When comparing the average monthly rent in developments that stayed under NYCHA administration with developments that were converted to RAD/PACT in the same neighborhood with data from the year preceding the conversion, converted developments weren’t shown to be more likely to have a higher rent than non-converted developments. Actually, in the eight neighborhoods studied, it was equally as likely that either a converted or non-converted development would have a higher rent in the year before a conversion. This result may also simply be a function of the way that NYCHA charges rent to its tenants. All units in NYCHA developments have a flat rental price, but not all residents pay that price. There is a process by which a resident may pay 30% of their gross income if that amount is calculated to be less than the flat rental price. It is important to note that this data is sourced based off of the rental rate, not the collection. An analaysis of rent delinquency could tell a different story.

So, while it can’t be confirmed definitively that NYCHA is giving its financially burdensome developments over to private developers, concerns about the conversions remain. It is critical that there be continued oversight of RAD/PACT conversions to maintain housing stability for the five hundred thousand or so residents of NYCHA developments.