NYCHA interim chief Brezenoff no stranger to troubleshooting
Stan Brezenoff needed no prodding when New York Mayor Bill de Blasio asked him to oversee the city’s troubled public housing agency.
“I don’t like retirement, but it just needed to be done, and I find it very hard to say no to mayors and governors, with a few exceptions,” Brezenoff, the interim chairman of the New York City Housing Authority, said after Wednesday’s speech at a Citizens Budget Commission breakfast forum.
Long recognized as a public-sector Mr. Fix-It, Brezenoff now has the embattled New York City Housing Authority under his watch.
NYCHA, which serves 400,000 residents — or 5% of the city's population — in 175,000 apartments, has a $32 billion capital-needs backlog, has agreed to federal oversight and faces a constant media glare over mold and peeling-paint conditions, winter heating breakdowns and broken elevators.
Brezenenoff's long resume includes stewardship of another long-troubled city unit, Health + Hospitals, under Mayor Ed Koch during the 1980s. He later was Koch’s first deputy mayor and after that, executive director of the Port Authority of New York and New Jersey.
Even with $8 billion in overall commitments, NYCHA still has a five-year capital funding gap of $24 billion.
“The resources are simply not there to do the entirety of the job,” Brezenoff said. “If you take a certain perspective, you can say everybody needs $30 billion. It’s probably a number that’s out there in the cosmos and it floats down to whatever set of needs is presented.”
Wall Street has noted the expected strain on the city's operating and capital budgets.
Fitch Ratings ranks NYCHA maintenance, along with mass transit funding, as "notable spending pressures" on the city. "Some of the funding will be for capital projects and likely debt-financed, which may pressure already sizable carrying costs," Fitch said.
Management has repeatedly come under fire. NYCHA’s previous chief, Shola Olaytoye, resigned in April after a city Department of Investigations report accused her of lying to the federal government about lead-paint levels.
NYCHA must also counter a credibility issue, said Brezenoff, who joined the authority June 1.
“In candor, we are not viewed currently as a competent organization. We are not viewed as a credible organization," he said. "Some of that is a reflection of reality, some of it is exaggerated and distorted, but it’s a fact.”
Underfunding from Washington hasn’t helped. According to Brezenoff, who arrived at NYCHA on June 1, the authority has lost about $3 billion of support from the federal government over 10 years, split equally between capital and operating funds.
The federal monitor is a cornerstone of the consent decree to which the city agreed in mid-June with the U.S. Attorney’s Office for the Southern District of New York. The city agreed to allocate an additional $2 billion in capital spending over 10 years.
Federal Judge William Pauley III must still sign off on the monitor.
Brezenoff, who signed off on the agreement, called the prospect of intrusive monitoring "troubling."
“I have concerns about what could be a creeping monitorship that’s more in the operational mode as opposed to a monitor who monitors,” he told reporters at the Yale Club of New York. “When I signed it, I saw it as more of a monitorship and in some of the interactions that are going on, I see the possibility that others might have a different view of it.”
The authority itself has roughly $3 billion through the fiscal 2019 operating budget that de Blasio and the City Council adopted in June. The mayor is expected to release an updated financial plan in November.
Acknowledging a "triage and prioritizing” approach to repairs and given the funding gap, Brezenoff expects to tap into public-private partnerships through the federal Section 8 Rental Assistance Demonstration program, which the U.S. Department of Housing and Urban Development launched in 2012.
“We are going all in to the extent possible on RAD,” he said.
NYCHA’s first such venture was the 1,400-unit Ocean Bay Apartments in Far Rockaway, Queens, a $560 million undertaking that involved federal, state, city and private funding. Brezenoff called it the largest of its kind in the country.
According to the New York City Independent Budget Office, Chicago leads RAD participation nationally, with roughly 10,300 units either completed or approved for conversion to private operation under long-term affordability contracts. El Paso and Nashville were second and third with nearly 6,000 and 5,500 units, respectively.
Another tool for New York is design-build project delivery. Gov. Andrew Cuomo granted the city limited use in March, as the NYCHA crisis spiraled and Cuomo declared a state of emergency. The city can also employ design-build for its 1.5-mile Brooklyn-Queens Expressway triple-cantilever reconstruction and for prison construction as it prepares to close its Rikers Island facility.
“That’s a help, especially on projects of size. Design-build is an important tool that others have and that will be very helpful to us,” Brezenoff said. “[For] the larger projects, it’s very helpful so you don’t have a multitude of specific contractors.”
Beyond P3s and design-build, NYCHA must manage itself better, he added.
Under the current trajectory, 90% of the authority’s units may be too costly to repair by 2027.
“Our infrastructure is in trouble but it’s very hard to put numbers to it. The most dramatic example is what’s happened to public housing in New York,” former lieutenant governor Richard Ravitch said on a Bond Buyer podcast.
“Did anybody ask in the last 50 years — and some of this housing was built in the ‘30s and ‘40s, when public housing started — didn’t anybody say ‘hey, shouldn’t there be some way of measuring the appreciation and therefore creating some reserves or have some idea where we’re going to get the capital to maintain the physical integrity of these buildings? Nobody asked the question.”
As Metropolitan Transportation Authority chairman in the early 1980s, Ravitch had his staff take inventory of the useful life of all MTA assets before pitching the authority's initial five-year capital plan.
“I spent time with the engineers, not with the politicians,” he said.
Infill development is one of NYCHA’s most promising revenue-raising strategies, according to Sean Campion, senior research associate at the watchdog CBC. For the right to build, a developer agrees a to make an upfront payment to NYCHA, which in turn funds needed repairs.
“NYCHA controls a significant amount of unused development rights because NYCHA properties are smaller than what could be built at those locations today under the city’s zoning code,” Campion said. “Many NYCHA developments were built as part of so-called super blocks, with buildings set back from the street in campuses that span multiple city blocks.”
Open spaces including playgrounds, open fields and parking lots sit between buildings.
Infill development involving a building with 80% market rate and 20% affordable units could yield NYCHA $33 million in a strong market and $16 million in a moderate market, Campion said.