On a Sunday radio talk show, City Comptroller Scott Stringer renewed his 2014 call to dedicate a portion of excess revenue generated by the Battery Park City Authority (BPCA) to New York’s crumbling low-income housing infrastructure.
The New York City Housing Authority (NYCHA), “is in crisis,” he said. “People who live in NYHCA have weathered sub-zero temperature without heat or hot water. There have been an astonishing 143,000 heat outages, impacting over 300,000 NYHCA residents. We literally have hundreds of thousands of New York City residents trapped in their own homes in the cold. And government is not solving this crisis.”
“So one of the proposals I have is to put $40 million in annual surpluses that the City receives from the Battery Park City Authority,” he continued, “and give it to NYHCA to address their capital needs and massive maintenance backlog. Let’s create a ten-year plan with $400 million. It would be the first new revenue stream that NYHCA has had, and it would send a message that the City and State are ready to take on this challenge.”
This was a reference to the large profits that the Authority (BPCA) generates each year, after collecting many hundreds of millions of dollars from residents and businesses located within the community and deducting its own expenses, chiefly in the forms of debt service on bonds and its operating budget. The money left over each year now runs to tens of millions of dollars.
For decades, the BPCA’s excess revenue — essentially the cash flow from ground rents, and payments in lieu of taxes (PILOT) — has theoretically been dedicated to affordable housing. Successive agreements between the Authority and various mayoral administrations have memorialized this pledge, but also left mayors with sufficient wiggle room to divert the funds to almost any other purpose, if they chose. (The loophole in these agreements said that the City was required to use BPCA monies for affordable housing unless it was needed, “to maintain fiscal stability… or existing city services.”)
“I have audited NYHCA more than any Comptroller in the history of this office,” Mr. Stringer added on the radio show, which was hosted by John Catsimatidis, the onetime mayoral candidate and billionaire owner of Gristede’s supermarkets. “We have found a lack of repairs, and lack of investment. NYHCA is crumbling before our eyes. We have to step up and take bold action.”
Mr. Catsimatidis observed that the Battery Park City Authority is part of the State. Has the Governor attested that he’s willing to do that?” This was a reference to the fact that Battery Park City, although physically located within the confines of New York City, is controlled by Albany, through the BPCA (a State agency), which acts as a de facto local government.
Mr. Stringer replied, the promising news is that there are three people who could make this happen. One is the City Comptroller, that’s me. The other is the Governor, who has supported this proposal in the past.”
“I have to convince the Mayor,” Mr. Stringer continued. “He’s the third vote. The three of us have to do this unanimously.” This was a reference to the fact that much of the BPCA’s excess revenue goes into a so-called “Joint Purpose Fund,” which can be spent only with the three-way consent of the Mayor, Governor, and Comptroller.
“If we were to do this,” Mr. Stringer noted, “we would put our money where our mouth is. It’s not going to be the money that we need. We’re still short $17 billion from the federal government. But we’ve got to get in there and have a revenue stream for boilers, to fix the windows, to take care of the kids of NYHCA. We need this proposal. It’s bold, because it’s never been done before. And three elected officials can play a role in changing the lives of people in NYHCA.”
Mr. Stringer’s proposal is groundbreaking in two ways. First, he wants a legally binding agreement that would earmark BPCA funds for maintenance at NYCHA properties. Second, he hopes to create a protocol so that “funds are tracked to ensure that they supplement, not supplant, current revenue sources, and are expended in a manner that equitable, efficient and responsive to the most pressing needs of NYCHA residents.” This is significant because there has never been a requirement that BPCA funds used for affordable housing be allocated in addition to (rather than instead of) other City spending in this area. In this way, for example, $50 million in BPCA money spent on some form of affordable housing could simply replace the same amount, subtracted from other City spending on affordable housing. Effectively, this has often meant that BPCA excess revenue nominally allocated to affordable housing could translate instead into spending on almost any other priority a mayor wished.
NYCHA operates 334 public housing developments around the five boroughs, housing more than 400,000 low-income, elderly, and disabled residents. (More than three quarters of NYCHA tenants live at or below the poverty line.) Among NYHCA properties, 110 developments (or roughly one-third of the total) are more than 50 years old. This has led to a spike in violations of health, fire, safety, and building regulations, such as leaking roofs, broken heating systems, missing or cracked windows, mold, buckling walls, and collapsing ceilings. In 2011 (the last year for which figures are available), more than 75 percent of NYHCA apartments had at least one “deficiency.”
Mr. Stringer’s policy would not represent any increased cost to Battery Park City residents. Their financial obligations to the BPCA are specified in the ground lease that governs property ownership in the community, and the terms of this contract cannot be modified without the consent of all parties to the agreement. Instead, Mr. Stringer’s proposal would create a new process for distributing the money that Battery Park City property owners have always paid to the Authority.