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PEP January 2013
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Public Employee Press

Mismanagement at the New York City Housing Authority
Public housing in crisis
Workers and tenants suffer together in the projects of the top-heavy New York City Housing Authority, an agency plagued by mismanagement and contracting-out waste


NYCHA's Taft Houses, nine 19-story buildings in Harlem, are marred by broken elevators and disrepair. Residents have not had gas for months; NYCHA gave them hot plates and food stamps.

The city's public housing system is in crisis, with buildings crumbling and services vanishing after years of underfunding, mismanagement and neglect.

Many of the 334 public housing developments in the five boroughs - home to 600,000 tenants - are dilapidated, moldy and rat-infested, understaffed and underserviced.

Conditions in the city's public housing have worsened even as the cash-strapped New York City Housing Authority sits on $1 billion in federal funds. By spending this vast sum wisely, the nation's biggest landlord could correct its problems and fill public-sector jobs in a city that suffered 9.3 percent unemployment in October and much higher rates among African American and Latino men.

Superstorm Sandy made bad conditions worse in public housing projects in hard-hit Coney Island, Red Hook and Far Rockaway, where residents - many disabled and elderly - lived without power or heat for more than a month.

To chart a new course for the 78-year-old public housing system, NYCHA Chairman John B. Rhea announced in July a public-private initiative with Citigroup to raise millions by leasing unused housing authority land for luxury housing.

The Citigroup initiative has union officials concerned that NYCHA is headed down a slippery slope to gentrification and displacement of current residents while providing a windfall to banking and real estate interests.

The union is skeptical about the initiative, which comes after NYCHA has spent years downsizing its workforce, gutting services and contracting out work.

"They should first clean up their own act before embarking on this," said DC 37 Executive Director Lillian Roberts. "But if they go through with the private-sector partnership, we have to make sure that our tax dollars are monitored properly and safeguards are in place."

NYCHA's problems are not new

DC 37's Joshua Barnett, president of Local 375's NYCHA chapter, says outsourcing is costly and inefficient. A recent City Comptroller's audit said over half of NYCHA's outsourced construction projects are behind schedule.

A powerful series of investigative articles in the Daily News this summer put the Housing Authority under renewed public scrutiny. The News unearthed an astounding scandal:

  • NYCHA has sat on nearly $1 billion in unused federal funds for four years while its automated central call center has racked up a multiyear backlog of 338,000 repair orders, for items such as laundry room repairs and broken elevators.
  • NYCHA's inefficient system of ordering building supplies is bleeding the projects of millions of dollars.
  • NYCHA is jeopardizing the lives and safety of public housing residents; since 2010, crime in housing projects has risen 14 percent.

NYCHA services vanish as the workforce shrinks

UNION BUSTING tactics have reduced NYCHA staff and farmed
out social work to contractors who are getting rich off poor
people, says Community Associate Juan Ortiz, a Local 371
member who works at Brooklyn's Williamsburg
Community Center.

Rhea stalled a $42 million security plan to provide surveillance cameras, new intercoms and locks. After a City Council hearing in July, NYCHA acknowledged that the security cameras had sat in storage for two years. The lack of video equipment hurt investigations of high-profile crimes, including a cop shooting and the murder of a grandmother. A survey found that 55 percent of residents fear for their safety and over half report drug dealing and gunshots in and near their buildings.

The Daily News exposé hit home because of the downsizing and service cuts affecting members. The union strongly embraces the historic mission of the authority to provide decent housing for poor and working-class families.

The average family income of public housing dwellers is $22,824, and the typical monthly rent is $434. Some 15,000 DC 37 members and retirees live in public housing.

If NYCHA were a city, it would rank as the 21st largest city in the country, bigger than Boston. All told, 5 percent of New Yorkers reside in public housing, and another 235,000 receive Section 8 vouchers through NYCHA.

Dedicated to preserving public housing, DC 37 fought hard to secure millions in federal funding for NYCHA projects, but the Housing Authority responded to the union's help by gutting its unionized workforce and contracting out work traditionally done in-house.

NYCHA operates in the red, running a $6 billion deficit. Under the Bloomberg administration, NYCHA has laid off thousands of workers, including carpenters, plumbers, electricians, plasterers and painters, in favor of contracting out repairs to private companies.

Complaints and repair orders that used to come into NYCHA rent offices now go to the automated central calling center, which feeds them back to Housing Assistants at each project. At alarming rates, tenants report broken appliances, frozen elevators, faulty wiring, crumbling walls, mold, and infestations of mice, roaches and rats.

"Staffing shortages and management's pressure for clerks to process 80 or more complaints a day puts an overwhelming burden on the shoulders of clerical employees," said Local 957 President Walthene Primus.

Over the past decade, NYCHA's clerical staff has fallen from 1,086 to 679, social service staff has shrunk from 410 to 239, engineering and technical employees have declined from 438 to 210 and the information technology staff has gone down from 110 to 89. The number of DC 37 members working at NYCHA is down almost 1,000, from 2,327 to 1,354 (see box at right).

Robert Ajaye, president of Electronic Data Processing Employees Local 2627, criticized the outsourcing of information technology, saying NYCHA could save money by keeping work in-house and retraining its staff instead of employing excessively compensated consultants.

Rhea admitted that NYCHA missed out on $800 million in federal aid in 2010 and 2011 to repair roofs and brickwork because he lacked enough qualified staff to apply for the funds, the Daily News reported.

DC 37 Associate Director Henry Garrido said that while NYCHA continues to cut its frontline staff, it isn't carrying out similar downsizing of its well-compensated managers, who typically enjoy salaries of $125,000 to $150,000 and in some cases get bonuses.

From 2002 to 2009, NYCHA cut its nonmanagerial staff by 21 percent while trimming management by only 7 percent, according to City Limits magazine.

Contractors cost more, do less

Over the years, engineering and technical workers represented by Local 375 have seen their ranks erode as NYCHA contracts out design and construction management work.

"They are hiring outside construction managers at much higher costs than what we're paid, and they are not filling positions as in-house staff leaves," said Joshua Barnett, president of Local 375's NYCHA chapter. "Management has been unable to demonstrate to the union that the outsourcing is saving money or improving efficiency."

In 2003 and 2004, NYCHA's Capital Projects Division launched a pilot program to contract out construction management to outside firms. To streamline the division's design and bidding processes, the authority hired Jacobs Engineering, which brought in consultants.

In March, the City Comptroller's Office released an audit of the outsourcing initiative, CM/Build program, which has awarded $425 million to 10 construction management companies. The audit found that 71 of 131 projects were behind schedule. Outright privatization of public housing developments is something Mayor Michael Bloomberg said he would never do.

Instead, NYCHA privatizes piecemeal, said DC 37 officials. NYCHA's tilt toward contracting out is no surprise, considering the background of its leadership.
  • Rhea, a former Lehman Brothers executive from the financial sector that wrecked the economy, lacked extensive hands-on experience in public housing before Bloomberg appointed him.
  • The appointment of General Manager Cecil House in August was a clear signal of NYCHA's commitment to contracting out. House had been chief procurement officer of Southern California Edison, one of the largest electrical utilities in the United States.
  • Also in August, Rhea hired his own former employer, the Boston Consulting Group, for $10 million for a restructuring analysis that purports to save the agency $75 million over five years. Excluded from the information gathering for the report were the leaders and members of the 11 DC 37 locals that represent NYCHA employees.

Social services abandoned

Though it was funded by taxpayers, Rhea never gave the actual BCG report to the public. Instead he released a PowerPoint summary, which the City Council blasted for costing about $93,000 per slide.

Full of consultant-speak, it blames civil service rules and unions for NYCHA's inefficiency: "Labor procedures (civil service/union) impede ability to deploy resources more effectively," claimed BCG, which urged the authority to:
  • Adopt an "outsourced design model" for capital projects and "exit" technical employees "with obsolete skills."
  • Use outsourcing and automation to cut "non-core" functions, such as payroll, parking administration, utilities, building services, mail services, security, reception, office, print, and imaging services.
  • Move away from providing direct social services for residents.
NYCHA spends $51 million a year to run its community centers, which the report calls inefficient as it urges NYCHA to hand the centers over to various city and nonprofit agencies.

"NYCHA wants to abandon social services," said Anthony Wells, president of Social Service Employees Union Local 371.

For decades, Local 371 members at NYCHA community centers have provided vital social services that address issues, such as drug abuse, domestic violence and timely rent payments, and provide day care, summer day camp, after-school and recreational programs for residents and their children.

Now they see services declining and their jobs withering away as NYCHA replaces civil service workers with unqualified, underpaid nonunion workers. DC 37 continues to fight NYCHA's attempts to implement this two-tier plan.

"NYCHA has money; otherwise how could they pay the contractors?" reasoned Local 371 member Americo Santiago, director of the Cooper Park Senior Citizen Center in the Williamsburg section of Brooklyn.

NYCHA retains a skeleton staff of qualified city social service workers to meet city and state requirements while it farms out work to the Dept. for the Aging and the Dept. of Youth and Community Development, which in turn contract out the work to nonprofit agencies that typically pay $8 an hour to temporary workers.

"It's union busting," said Community Associate Juan Ortiz, a Local 371 member at the Williamsburg Community Center. "I don't believe it's an accident that NYCHA is sitting on the federal money. It's set up to fail."

As the neighborhood gentrifies, he said, NYCHA, private developers and consulting agencies are eying the property anew.

The Williamsburg center features soaring glass block walls, indoor basketball courts, and a garden, where seniors grow grapefruit and lemon trees, herbs and tropical flora. Ortiz, a lifelong Williamsburg resident, fears the building could be sold or "repurposed."

"Services are contracted out, so in a weird way we are collaborating with nonprofit consultants who are very connected to the Bloomberg administration," Ortiz said. The nonprofit Grand Street Settlement won a multimillion-dollar contract to run youth and family programs at WCC.

"The bulk of the money goes to administrative fees. A lot of people are getting rich off poor people," Ortiz said. "But the workers - they have no rights and they need their jobs."

Ortiz received grants to help provide computer literacy programs, but the funds went to NYCHA's central office and not his center, where a bank of computers sits unused and locked away. While NYCHA is $6 billion in debt, it continues to pay a high price for profiteering consulting firms to administer the same services NYCHA's unionized workforce provides.

"The difference," Ortiz said, "is the job we do helps families we've known for years. We've been here, and we are known for our social commitment to the children and the community."

What happened to services?
NYCHA's disappearing workforce
Titles 2002 2012
Accounting and bookkeeping 140 43 -69
Engineering and technical 438 210 -52
Social services 410 239 -42
Clerical 1,086 679 -37
Health care and social work 124 88 -29
Research and analysis 19 15 -21
Information technology 110 89 -19

Where does the money go?
Name Position Annual Pay
Rhea, John Chair $197,364
Kelly, Micheal Executive Director $195,075
Apple, Douglas Executive Director $188,705
Andrews, Earl Jr. Member, Housing Authority $187,147
Lopez, Margarita Member, Housing Authority $187,147
Youssouf, Emily Member, Housing Authority $187,147
Rivers, Natalie Deputy Executive Director $185,779
Morales, Ricardo Executive Agency Counsel $178,794
Laboy-Diaz, Carlos Admin. Contract Specialist $174,569
Spence, Hugh Admin. Comm. Relations Spec. $174,569


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