The $6 billion question

During budget hearings in March, Shola Olatoye, chair of the New York City Housing Authority, relayed a sober message to the City Council’s housing committee. New York’s share of the $6.2 billion the Trump administration wants to cut from the Department of Housing and Urban Development would immediately affect repairs and maintenance, she explained. And this would come at a time when the public housing authority is already chained to a $17 billion capital backlog.

The fleecing of HUD for the U.S. military and a Mexican border wall would slash NYCHA’s capital subsidy by more than two-thirds and siphon $150 million from its operating budget. “At some point the question will come,” Olatoye told the committee. “What, as a city, is a level of service we can tolerate?”

Deborah Goddard, executive vice president for capital projects at NYCHA, told The Real Deal that 60 percent of its buildings are more than 50 years old. While previous administrations have curbed the growth of new public housing and made gradual reductions to the overall subsidy, a single blow on the order of hundreds of millions of dollars would be a “devastating disinvestment,” she noted.

“The order in which we would do our work would be roofs and brick — seal the building and then you move indoors and you do the systems — boilers, water lines and so forth —and then you get to kitchen and baths. We aren’t going to get to kitchens and baths,” Goddard said. “If we’re looking at a two-thirds cut, we know we have to cut some boiler projects next year — that’s heat and hot water. And we may have to cut some roofs that would have been done by the federal money and not by the state money.”

Shola Olatoye

It’s not just public buildings that would be shut out by the Trump administration’s budget cuts. The city’s Department of Housing Preservation and Development regularly steps in for tenants when their landlords won’t, and the agency also relies heavily on federal funding. Many of HPD’s key programs — which include court-ordered enforcements, emergency repairs, emergency demolitions, distressed-property identification and tenant legal services — are either 75 percent or 100 percent funded by the federal Community Development Block Grant program. The White House wants to eliminate that program — a $3 billion annual national expenditure — entirely.

“The enforcement programs under my jurisdiction at HPD will be decimated by the loss of any CDBG dollars,” said Vito Mustaciuolo, the agency’s deputy commissioner for enforcement and neighborhood services.

“We respond to approximately 600,000 complaints called in to 311 each year,” he added. “Of that, about 200,000 are directly related to a lack of heat and hot water services. Should we be faced with any cuts from the budget, we’re going to be making some very difficult decisions.”

A lack of enforcement and repair would also impact rental assistance subsidies, including the Section 8 housing voucher, said Rachel Fee, executive director of the New York Housing Conference, an affordable-housing advocacy group. “You can’t use the Section 8 voucher if the apartment isn’t meeting certain standards of safe and decent living conditions,” Fee explained. Without the proper enforcement mechanisms in place, “you could potentially see conditions slide in neighborhoods,” making the search for an affordable home even more challenging, she noted.

As for Section 8, NYHCA estimates that the proposed HUD budget’s quashing of rental assistance programs would mean some 20,000 Section 8 housing vouchers in New York state are now at risk. NYCHA’s Olatoye testified to the City Council that if Congress delivers anything close to what the White House is looking for, the agency may have to begin reducing the number of active vouchers or dial back the payment standards. In turn, low-income tenants would owe more in rent than they do now.

“It’s really unprecedented,” said Alex Schwartz, an urban-policy professor at the New School. “What Reagan did in the 1980s was basically put the brakes on the expansion, the growth of subsidized housing. What Trump is proposing is retrenchment. We’ve never had anything this drastic. Ever.”

The city’s housing agencies have started to confront the Trump administration head on. Olatoye traveled to Washington, D.C., in late March to make the case for public housing, and HPD’s Mustaciuolo says no one should expect the city to take these cuts without a fight.

“Without preserving the existing housing stock, we could start to see the wholesale loss of affordable housing units in New York City,” he said. “That’s not a position that we’re going to accept lightly.”

The White House did not respond to requests for comment.