The consent decree that New York City has signed with federal prosecutors over problems at the Housing Authority won't have a negative impact on the $89.15 billion Fiscal 2019 budget.

The city has committed to spending at least $2 billion over the next five years under a consent decree signed on Monday with federal prosecutors who have been investigating widespread problems at the New York City Housing Authority.

Geoffrey Berman, U.S. attorney for the Southern District of New York, and Mayor Bill de Blasio announced the decision in the morning and also agreed to the naming of a federal monitor to oversee inspections and repairs at the nation’ largest public housing system, where about 400,000 people live.

“The consent decree gives us a mutual framework for action with the federal government,” de Blaso said during a press conference at City Hall Monday afternoon. “The city commits $1 billion in capital funds over the next four years in addition to $200 million per year thereafter for as long as the consent decree continues. I think you all know by now there’s a five year minimum term to the consent decree.”

When asked if the consent decree had any effect on the budget that was agreed upon on Monday by the mayor and the City Council, de Blaasio said it would be reflected in the Fiscal 2019 capital plan.

“It will literally be a line in the budget,” de Blasio said at a budget news conference Monday evening. “The plan with the U.S. Attorney on the consent decree speaks specifically about capital funding. That’s where we expect to see the reflection in this adopted budget. That’s what’s explicit in the agreement.”

Already in the budget, the city had allocated $200 million in capital to upgrade heating systems at NYCHA developments and $13 million for short-term heating upgrades for next winter.

De Blasio said he wanted the state to come up with money its has promised for the housing effort as well.

“Our hope of course is that given this extraordinary commitment by the city, that now the State of New York will come forward with the half billion dollars previously committed to NYCHA and provide that money so we can do additional good work to protect our residents.”

NYC Mayor Bill de Blasio holds press conference at City Hall with administration and NYCHA officials Chip Barnett

De Blasio cited new leadership at NYCHA as an important step forward. In April, Stanley Brezenoff was named as NYCHA interim chair by the mayor after Shola Olatoye resigned the position.

“Stan Brezenoff has taken on the job as chair. Stan has seen this city through some of its toughest times in the aftermath of the fiscal crisis, he is one of the people who helped lead New York City back, and as recently as last year, he helped to turn around a Health and Hospitals Corp. that was also teetering on bankruptcy and ensured the continuity of our public hospitals and clinics,” the mayor said.

And he lauded Vito Mustaciuolo, who he appointed NYCHA acting general manager in February.

“Vito Mustaciuolo is a legend in city government for those who have seen his work up close. I’ve known him for a decade. He’s one of the most hands on managers I’ve ever met in all of my years in public service,” de Blasio said. “He is legendary for challenging landlords all over New York City who are not providing their tenants with proper heat and hot water and repairs and making them fix those problems ... These leaders, I am convinced, are the right people for this moment to take this situation and turn it around.”

However, City Comptroller Scott Stringer called for a complete revamp of the management structure at the authority.

“With the impending appointment of a federal monitor and dedicated city funding, NYCHA now has the chance to get this right after decades of disinvestment and mismanagement,” Stringer said. “But to ensure the monitor will be successful, here’s what needs to happen: we must overhaul the authority from top to bottom. NYCHA needs a single executive leader with a clear mandate and accountability, not today’s divided board structure with a chair and general manager operating as separate fiefs. NYCHA needs a modern governance structure with experts in managing large housing systems, not a board that rubber stamps all decisions.”

The Citizen’s Budget Commission weighed in on the pros and cons of the agreement in a series of Tweets.

“The decree acknowledges that in order to effectively address the serious issues it identifies, substantial changes are needed in NYCHA’s organization and management; in its regulatory burdens and procurement and construction restrictions; and in its union workrules and staffing structure,” the CBC Tweeted. “The consent decree could've gone further in giving the monitor direct authority to override or suspend some of regulations, restrictions and staffing agreements in order to remediate the hazards in the quickest, most effective way possible. But still, an important opportunity.”

The budget watchdog also said future of funding needs for the authority are uncertain.

“The decree also provides for additional funding by the City of New York to remediate health and safety issues: an additional $2.2 billion investment over 10 years, which more than doubles the city’s current capital commitment to NYCHA,” the CBC said. “However, given the enormity of NYCHA’s capital needs — projected to be at least $25 billion— the funding will have a modest overall impact and will not make up for more than a decade of underinvestment. More resources and transformational changes are needed.”

De Blasio also took some heat from critics for giving up some city control and agreeing to have a federal monitor oversee the authority.

But he countered that having a monitor was not a unique situation.

“The NYPD is acknowledged all over the country, all over the world, as the greatest police organization there is and yet it has a federal monitor this very moment. That monitor has been a very constructive, positive force working with the NYPD,” de Blasio said. “We have a federal monitor at the Department of Correction, also an example of a constructive, positive relationship that has yielded positive outcomes for all. I have seen with my own eyes that federal monitorships can work for everyone and we have faith that that will be the case here.”

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.