Design-build, a streamlined project delivery method, has emerged as a playing chip in a multi-pronged crisis engulfing the New York City Housing Authority.

The state General Assembly this week approved city use of design-build projects on a limited basis. Other target projects include Rikers Island prison and parts of the Brooklyn-Queens Expressway.

Under design-build, said Gov. Andrew Cuomo, the city could waive the authority’s procurement requirements and speed up critical repairs to equipment such as boilers by more than a year.

NYCHA Chair Shola Olatoye testifies during a New York City council meeting on March 14, 2018
"There is no magic fairy. We need a stable financial model," said NYCHA chief executive Shola Olatoye. John McCarten/NYC Council


Cuomo last week said he would declare a state of emergency for NYCHA. Residents in up to 80% of NYCHA’s 176,000 units have gone continually without heat this winter.

The authority has an estimated $17 billion capital-needs backlog. Its latest physical needs assessment, which determines funding requests, is overdue.

Cuomo’s counsel, Alphonso David, said in a letter to City Council Speaker Corey Johnson that the declaration would enable the selection of an independent company to work as construction manager. The mayor, council and NYCHA tenant leadership could create a three-member monitoring board.

“It’s impossible to understate the vital role design-build continues to play in communities throughout the state of New York,” said Lisa Washington, executive director of the Design-Build Institute of America. Washington cited the new Mario M. Cuomo (nee Tappan Zee), Kosciuszko and Goethals bridges; La Guardia airport; the Javits Center; and Hurricane Sandy repairs.

New York State has used design-build for itself but until recently has not allowed the city to do so.

“Why limit this authority at all? What works, works,” said Washington.

The heating crisis and a scathing report by the city’s Department of Investigations accusing NYCHA chief executive Shola Olatoye of fudging lead-paint statistics have added emotional twists to the traditionally dry budgeting discussions.

Design-build is one dynamic in the NYCHA storm, which includes the specter of sharp federal cuts for public housing; questions about the authority’s management practices and governance structure; and a lawsuit by two tenant groups against the authority.

"Design-build will not help us if we don't know what to do with it," said Vanessa Gibson, who chairs the City Council's capital budgets subcommittee.

Meanwhile, the running feud between Cuomo and Mayor Bill de Blasio --- well-chronicled during the transit funding debate -- has spilled over to public housing.

Cuomo and de Blasio agree on design-build for NYCHA but little else. Several council members, in fact, discussed NYCHA with Cuomo in Albany on Tuesday without de Blasio on hand.

One day last week after Cuomo said he would declare a state of emergency for the authority, de Blasio announced an initiative to speed up major public housing heating upgrades by eight to 20 months, depending on project size.

More sniping between the two ensued.

Cuomo cited the state’s recent $300 million allocation to NYCHA, but said part of the problem is NYCHA's management.

“The bureaucracy, the maze of bureaucracy, they just can't make the repairs fast enough,” said Cuomo. “They now estimate that if you give them a dollar today, it takes three years for them to actually get that dollar translated into progress.”

Cuomo called on city leaders and the state legislature to make progress by the state’s April 1 budget deadline. If not, he said, “I will put forth a solution but believe the decision is better left to local authorities.”

The prospect of federal takeover of NYCHA is chilling for city officials, given their perceptions of the Trump administration as hostile toward public housing. While secretary of the U.S. Department of Housing and Urban Development during President Clinton’s second term, Cuomo oversaw takeovers of public housing systems in New Orleans, Chicago and Beaumont, Texas.

De Blasio, who in January announced he would earmark $200 million in heating system upgrades at the 20 most troubled developments, defended his handling of NYCHA, calling it “the polar opposite” of previous administrations.

“We’ve invested $2.1 billion in capital funding for NYCHA since my administration started – $1.6 billion in new expense funding on top of that,” the mayor said.

According to de Blasio, New York State still owes NYCHA $250 million from the 2015 and 2017 state budgets.

“So, if the state wants to help, how about sending us the money that you were already supposed to send us,” said de Blasio.

Olatoye, before the council’s public housing committee on Wednesday, said the NextGeneration NYCHA 10-year strategy has produced three straight years of balanced budgets and has enabled the authority to build reserves. NYCHA’s board in December approved the authority’s five-year operating and capital plans, which for 2018 project an overall surplus of $12 million.

Still, said Olatoye, federal cuts cast a huge shadow.

NYCHA receives operating and capital subsidies from HUD based on an eligibility formula that Congress appropriates. The 2018 operating plan assumes nearly $2 billion in federal operating subsidies and $306 million in federal capital funds, which comprises 59% of the authority’s current-year capital budget.

While the funding situation is still fluid, Trump’s fiscal 2019 budget proposal requests $39.2 billion for HUD, reflecting an $8.8 billion, or 18.3% cut for housing programs nationwide.

“There is no magic fairy,” said Olatoye. “We need a stable financial model.”

The state created NYCHA in the 1930s, granting it bonding capability to raze slums and build new housing. NYCHA’s budget is separate from the city’s budget and its fiscal year follows the calendar year.

Suggested changes for NYCHA include converting the authority to a mainstream city department to better access capital dollars. Another option is to tap private management through the federal Rental Assistance Demonstration program in conjunction with Section 8, although de Blasio, beholden to labor, may be reluctant to cede control to private entities.

City Comptroller Scott Stringer has suggested using annual surplus funds the city receives annually from the Battery Park City Authority for NYCHA infrastructure, which he said could generate $400 million over 10 years, money that could be bonded.

“It’s something that’s been talked about,” Olatoye said Wednesday.

“[But] what NYCHA needs is sustainable and long term as opposed to a one-off injection. We’ll take that, too, but we need a long-term source of funding.”

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Paul Burton

Paul Burton

Paul Burton is the Northeast Regional Editor for The Bond Buyer and the author of the book "Tales from the Newsrooms." He is a sought-after public speaker and has appeared on radio and TV shows, including former CBS News White House correspondent Sharyl Attkisson’s public-affairs program, “Full Measure.”