Gov. Andrew Cuomo will declare a state of emergency on New York City Housing Authority, he said Wednesday night.

Such a declaration could expedite bidding and contracting with outside companies to make repairs at NYCHA units. The authority's capital needs backlog runs upward of $17 billion.

"We're going to do an emergency declaration," he said on television station NY1. "We're going to do design-build. We're going to get this done in a very creative way and God forbid we don't need the federal government to come in here and tell us how to run our housing."

New York Gov. Andrew Cuomo
"We're going to get this done in a very creative way," said New York Gov. Andrew Cuomo.

Cuomo's counsel, Alphonso David, has proposed enabling the city on a by-project basis to execute design-build, a streamlined form of procurement under which one entity works under a single contract with the project owner to provide design and construction services.

Designated projects could include housing, Rikers Island prison and parts of the Brooklyn-Queens Expressway.

Problems at NYCHA, whose units house roughly 400,000 New Yorkers in 326 public housing developments, range from continued lack of heat to a city Department of Investigations report that accused the authority and its chief executive, Shola Olatoye, of doctoring lead-paint and mold statistics.

"The city has a tremendous backlog in the capital needs of its housing," said Howard Cure, director of municipal bond research for Evercore Wealth Management.

Robert Cornegy Jr. of Brooklyn, who chairs the City Council's housing and buildings committee, asked for the emergency declaration last month.

Cuomo, a former secretary of the U.S. Department of Housing and Urban Development, acknowledged the possibility of a federal takeover of the troubled unit.

"I think the federal government may very well come in," the governor said. "I'm surprised they haven't already, the way they came into Rikers Island and said this is a civil rights violation."

NYCHA also faces the threat of sharp federal funding cuts by the Trump administration.

The lead-paint controversy has put NYCHA under a harsh glare, according to Cure.

"They are really sort of self-inflicting some wounds as to what they knew or didn't know or disclosed about basic health issues within these housing projects," Cure said on a Bond Buyer podcast. "They are in a very tough position. They really need federal help; it doesn't look like it's coming. They really need to get some radical changes."

NYCHA's latest physical needs assessment, which determines funding requests, is overdue.

"There will be a real day of reckoning when this needs assessment comes out, because the types of things that have been put on the table that can bring new revenues into the system -- everything from better uses of the parking lights, better rates, charging for utilities ... leveraging some of the land, bringing in private management, the infill -- all these things have been met with tremendous community opposition and opposition from City Council leadership," said Maria Doulis, vice president of the watchdog Citizens Budget Commission.

Mayor Bill de Blasio's capital program includes an additional $200 million to NYCHA over four years to replace boilers and upgrade heating systems at the 20 most problematic developments. In addition, the city has earmarked $9 million in capital and nearly $4 million in expenses for rapid-response teams.

Attorney Jim Walden of Walden, Macht & Haran LLP, who is representing two tenant groups, called on de Blasio, the City Council and the state legislature to support the emergency declaration.

“Gov. Cuomo is right to warn New Yorkers that leaving this situation to fester a moment further puts NYCHA residents at risk of a takeover by a federally appointed monitor,” said Walden. “It would be a humiliation and a damning condemnation of the city’s leadership to place NYCHA tenants in the hands of the Trump administration.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.