Cuomo intervention could let feds off the hook, says NYCHA official

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Gov. Andrew Cuomo's emergency order for the New York City Housing Authority could be counterproductive to efforts to improve public housing, NYCHA's general manager said Wednesday.

It could hinder city operations and provide the federal government further motivation to reduce funding, Vito Mustaciuolo told City Council members.

Increased state and city funding "cannot be -- and should not be considered -- a replacement for [Housing and Urban Development] funding," Mustaciuolo said during a two-hour joint meeting of the council finance and public housing committees and the subcommittee on the capital budget.

"There are real areas of concern here, including that it lets the federal government off the hook for committing to providing NYCHA with a long-term and stable funding stream and could interfere with the day-to-day operation of the authority," Mustaciuolo said.

Federal funding accounts for 59% of NYCHA's $3.3 billion operating budget. The city's five-year capital plan includes $898 million in appropriations and nearly $1.5 billion in commitments.

According to Mustaciuolo, Washington has shortchanged NYCHA to the tune of $3 billion in operating and capital funding since 2001.

Cuomo's order in March, which called for an independent emergency manager among other measures, followed a string of crises at NYCHA that included accounts of squalid living conditions and a report from the city's Department of Investigation that accused former chief executive Shola Olatoye and her staff of falsely certifying lead-paint and mold statistics to federal regulators.

Olatoye resigned on April 30. Stanley Brezenoff, former city Health + Hospitals president, will become interim chief on June 1.

"While the manager may work within the city's existing capital budget constraints, there is the potential that city expenses on NYCHA could skyrocket," said the New York City Independent Budget Office.

NYCHA's challenges, beyond federal uncertainty, include a roughly $47 million annual operating deficit, even after federal funding and rent collection; an estimated $25 billion capital-needs backlog; lawsuits from tenant groups; a worsening public perception; and a running crossfire between Cuomo and Mayor Bill de Blasio.

According to Cuomo, design-build project delivery, which the state General Assembly approved for limited city use, could enable the city to expedite critical repairs to equipment such as boilers by more than a year.

Deborah Goddard, NYCHA's executive vice president for capital projects, said design-build would apply to projects under the emergency manager, not ones now in the pipeline.

Goddard also said the authority, which has completed its recent and overdue capital needs assessment, upon which it bases funding requests, but will not make it public until it briefs Brezenoff.

A public release the second week in June "sounds reasonable," Goddard said.

While the state allocated $200 million and $250 million in fiscal 2017 and 2018, respectively, NYCHA has yet to receive those funds, Mustaciuolo said.

He added: "We remain concerned that the process the governor has established to distribute and manage that funding will hinder our ability to spend money quickly and with maximum benefit to our residents."

Council members questioned Mustaciuolo about NYCHA's operations, from its reluctance to embrace HUD's rental assistance demonstration program which converts buildings to Section 8 for leasing to private businesses to lead-paint mitigation.

Bronx Councilman Mark Gjonaj said privatizing NYCHA "has to be discussed in the open."

Councilwoman Vanessa Gibson, who chairs the capital budgets subcommittee, found Mustaciuolo's responses suspect.

"Some of these answers are a little shaky to me," she said. "We've been talking about a lot of systemic issues for quite some time, especially lead paint which is a real public issue we should focus on."

Gibson called the additional $20 million de Blasio earmarked for work-order backlog in executive budget proposal a pittance. The council in its budget response had sought a further $2.4 billion in capital funding.

"Twenty million in operating funds barely registers on the scale," she said.

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Infrastructure Budgets Bill de Blasio Stanley Brezenoff City of New York, NY New York City Housing Authority New York