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Can Mayoral Hopeful Shaun Donovan Save New York City’s Crumbling Public Housing?

The ex-city and federal housing boss created a controversial private management program now used in NYC. NYCHA’s lead-poisoning scandal festered while he was in Washington. Now Donovan says he can rescue residents.

Like most mayoral hopefuls, Shaun Donovan has a plan he believes can solve one of the city’s most vexing challenges: fixing the sorry state of public housing.

But unlike the other candidates, Donovan has already played a behind-the-scenes role in the NYCHA saga. From 2009 into 2014, Donovan ran the U.S. Department of Housing & Urban Development (HUD), the federal agency that provides the New York City Housing Authority with 90% of its capital funding and 70% of its operating budget.

During the time Donovan was HUD secretary, NYCHA regularly lied to the agency about deteriorating conditions there.

And the biggest of those lies — a claim no lead-poisoned children lived in the aging 400,000-tenant system — festered during Donovan’s tenure.

While at HUD, Donovan also created a program called Rental Assistance Demonstration (RAD), which brings in private operators to upgrade and manage public housing.

Public housing authorities around the nation — including NYCHA — have embraced RAD and the financing it unlocks as key to repairing crumbling buildings.

NYCHA has begun an effort to move a third of its 175,000 apartments into the program Donovan invented. And despite the opposition of some tenants to turning public housing over to for-profit real estate firms, NYCHA is now full speed ahead on RAD.

Whoever wins the race to City Hall will have to confront a daunting challenge at NYCHA: Management now estimates $40 billion is needed to bring every apartment up to livable condition. Public funding at that scale is hardly available, and there is little belief that NYCHA is up to the task even if it had the funding.

“I’m the only candidate that has a concrete plan on how you get the $40 billion that you need,” Donovan said, emphasizing that real progress won’t take place without dramatic changes in the way NYCHA raises funds and manages its properties.

He Didn’t Fill Key Job

Donovan’s resume is steeped in housing issues.

He worked at HUD decades ago, then went on to become housing commissioner under Mayor Mike Bloomberg before President Barack Obama made him HUD secretary.

His history as a player in one of the city’s most crucial areas hasn’t yet helped distinguish Donovan among the Democratic mayoral pack. A poll released last week by Fontas Advisors andCore Decision Analytics, put him toward the bottom of the heap, with a 2% showing, although half of voters surveyed said they were undecided.

In recent interviews with THE CITY, Donovan defended his record on dealing with NYCHA, saying he relied on subordinates to keep him informed of day-to-day issues.

Public housing authorities are required to tell HUD every time a child living in one of its apartments has registered an elevated level of lead in their blood. HUD can withhold funding if it finds serious problems with housing conditions — like the persistent lead paint, mold and broken elevators that have plagued NYCHA residents for years.

During nearly all of the time Donovan was HUD secretary and beyond, NYCHA management reported to HUD’s regional office that among the tens of thousands of children who live in 175,000 apartments, there was not a single case of a child registering an elevated level of lead, according to Manhattan federal prosecutors.

Donovan told THE CITY oversight of public housing authorities “is in the local offices.” The HUD regional office that oversees New York and New Jersey — known as Region II — would have been the level of the bureaucracy where the NYCHA’s lies could have been spotted.

But for much of Donovan’s tenure at HUD, the job of running that office was vacant.

As HUD secretary, one of Donovan’s jobs was to tap administrators to run regional offices. In his first year on the job, he didn’t get around to making his own appointment until May 2010. That administrator quit in February 2012, and Donovan didn’t fill the slot until January 2014.

So for 39 of Donovan’s 66 months as HUD Secretary, the job of Region II Administrator — who oversees the city with the most public housing in America — went unfilled.

The Donovan campaign noted that the director of public housing for the region, Mirza Negron-Morales, served as Acting Regional Administrator in between his first and second appointees. “Given her background, there was always leadership that understood and was focused on NYCHA,” the campaign said.

‘He Punted’

There’s no record that HUD headquarters or HUD Region II officials questioned NYCHA’s claim of zero lead-poisoned children, despite knowing that most of the apartments in the nation’s largest housing system had been built before 1978 when lead paint was still universally used.

And NYCHA’s pattern of reporting zero lead-poisoned children to HUD continued into 2016, after Donovan had moved on. They only began reporting the number of lead poisoned children to HUD after federal prosecutors in Manhattan began investigating NYCHA, prosecutors say.

After prosecutors filed their complaint, Mayor Bill de Blasio ordered the authority to reinspect 134,000 apartments that likely contained lead. In 2018, NYCHA finally admitted that more than 2,300 children living in NYCHA had been lead poisoned between 2010 and 2018. That included 1,555 while Donovan was HUD secretary.

“When Donovan was in the HUD job and had real power, he punted,” said the Rev. Getulio Cruz Jr. of Manhattan Together-Metro Industrial Areas Foundation, the housing advocacy group that sued NYCHA over its failure to address mold infestations.

Cruz argues that while Donovan was secretary, HUD did not actively monitor NYCHA as the decrepit living conditions there became glaringly apparent in press exposes and elected officials’ demands for help.

“So he left scores of thousands of NYCHA tenants, particularly vulnerable children, and millions of American homeowners in the lurch,” he said.

In an emailed response to questions from THE CITY, Donovan’s campaign said the city health department used a higher standard than HUD to define reportable cases and that’s likely why NYCHA didn’t tell the agency about any cases. And he said there were concerns about at HUD’s local level about the crisis.

“There were alarm bells going off at HUD — the local staff performed its own inspections on lead to check documents,” Donovan’s campaign wrote. “Based on what Shaun remembers hearing from the local staff, they were seriously concerned about this issue.”

The scope of the problems at NYCHA came fully into sight in June 2018 when Manhattan federal prosecutors released a complaint detailing years of lies and mismanagement. The complaint led to the appointment of a monitor who currently oversees the authority.

‘We Were Skeptical’

Prosecutors revealed that from 2010 well into 2016, NYCHA had filed document after document with HUD falsely certifying it was inspecting apartments for the presence of lead paint and properly cleaning it up. Much of that occurred while Donovan led HUD.

Prosecutors also detailed how NYCHA fooled HUD inspectors who would show up to spot-check apartments. HUD would let NYCHA know ahead of time when to expect an inspection, giving NYCHA managers time to perform quick fixes to mask deteriorating conditions.

Donovan insisted to THE CITY that he was not aware of any of this deception on lead paint until after he had left the agency.

But in his final year and a half, he said, he did become concerned about a non-lead paint issue: NYCHA’s campaign to attack its enormous backlog of unresolved repair requests.

In December 2012, Bloomberg ordered NYCHA to reduce the open “work tickets” from what was then 420,000 to 100,000 by the end of 2013. The numbers quickly began to drop.

When HUD learned of Bloomberg’s repair ticket campaign, Donovan summoned John Rhea, then-NYCHA’s chair, to Washington. Through the spring of 2013, NYCHA provided HUD with what it said was real-time data on ticket reduction. Donovan’s campaign also says they discussed the lead paint issues at this meeting.

“The oversight of the public housing authorities is in the local offices. We were getting concerns from the local office,” Donovan told THE CITY. “My team began to get very skeptical. This went all the way up to the assistant secretary. NYCHA’s the largest housing authority. We discussed what to do and I said to the [assistant] secretary we need to call them in. We were still doing inspections and we weren’t seeing conditions improve.

“I’m literally calling the chair in to read him the riot act on the work tickets,” he added. “I’m not saying we knew that they were lying at that point, but we were skeptical.”

Throughout 2013, NYCHA issued regular press releases claiming it was chipping away at the backlog. On Jan. 2, 2014, NYCHA claimed it had “successfully reduced its backlog” of open repairs from 423,000 to 106,000.

Donovan was not sure how the issue was resolved by the time he left HUD in July 2014.

Prosecutors later revealed that NYCHA reduced the backlog simply by closing open requests if a tenant wasn’t home when the repair staff showed up. This practice continued well into 2014 after Donovan was gone and was not fully disclosed until the Manhattan U.S. attorney issued his report in June 2018.

A Mix of Fixes

The current lineup of mayoral candidates has proposed a variety of solutions to overhaul NYCHA.

Scott Stringer would steer $40 million in Battery Park City revenue surpluses to NYCHA annually.

Maya Wiley wants more state and federal funding. Kathryn Garcia, who briefly served as interim NYCHA chair, supports the authority’s “Blueprint for Change” to generate funding via bond sales.

Eric Adams would sell air rights to developers to build on land adjacent to NYCHA complexes. Andrew Yang supports increased funding but has not specified where the money would come from.

Dianne Morales said she’d commit $2 billion in city dollars each year to the housing authority. Ray McGuire vowed to work with the Biden administration to secure more federal funds.

Donovan said he would take a hands-on approach to fixing NYCHA. He, too, has vowed to steer $2 billion annually from the city budget for NYCHA big-ticket building upgrades.

He would also modify the management structure to shift more resources and decision- making from bureaucrats at central headquarters to local development managers. That’s the opposite approach of his former boss, Bloomberg.

But a key tactic Donovan embraces is a program he devised: Rental Assistance Demonstration, better known as RAD.

‘Do Something or Do Nothing’

RAD is currently NYCHA’s main strategy now underway to fund significant building fixups, with 62,000 units set to go into the program if all goes as planned.

Under New York City’s version of RAD, NYCHA retains ownership of the buildings but turns over management and upkeep to private-sector entities. The developers collect the rent, which remains the same at no more than 30% of a tenant’s income, along with a federal subsidy known as Section 8. They use the inflow of funding as collateral to borrow enough money to fix and maintain the buildings, which have suffered from years of neglect.

NYCHA managers say that as the buildings’ owners, they are required to continue to monitor the private sector operators to ensure they bring the buildings up to code, treat tenants fairly and respond promptly to repair requests. And shifting repairs to private sector managers frees up NYCHA workers to address what is once again a huge backlog of 480,000 unresolved repair requests.

Ocean Bay Houses in Far Rockaway became the first development converted to RAD in 2018, and NYCHA has since put more developments into the program. By year’s end the authority anticipates a total of 9,517 apartments will be in RAD and will generate $1.7 billion in funding for apartment upgrades.

Another 11,860 apartments are expected to go into the program by the end of 2022, yielding another $2.4 billion for repairs.

Donovan argues that private sector involvement is essential because federal funding for NYCHA has either been cut or flatlined for decades. Without private involvement, he says, NYCHA will never be able to climb to the top of that hill.

“It was a very simple choice for me: Do something or do nothing,” Donovan said. “And I chose to do something and that was the only real pathway that was going to save public housing.”

‘A Long Road’

In February when NYCHA announced RAD-funded construction was complete at the Betances Houses and Baychester Houses in The Bronx, tenant leaders praised building upgrades.

“The renovations and changes have transformed our community,” proclaimed Baychester tenant association president Sandra Gross.

But not everybody is on board. Some residents are concerned that once a building is handed over to private managers, NYCHA will no longer be held responsible for apartment conditions and the private sector players will do as they please to maximize profits.

At a recent protest outside one of NYCHA’s downtown Manhattan offices, Saundrea Coleman, co-founder of a tenants’ group at the Holmes Towers and Isaacs Houses on the Upper East Side, led  a crowd of tenants and housing rights organizers in a chant of “Scrap RAD! Scrap RAD!”

“We are sick and tired of their privatization schemes,” she said. “Now decades later our savior is privatization? Absolutely not. No. NYCHA is responsible for their portfolio. They are the ones who are responsible for these deplorable conditions. They are the ones who are responsible for eradicating it. Keep public housing public and stop making developers richer.”

Donovan said he understands why tenants don’t trust NYCHA after years of neglect.

“You have a deeper distrust that makes it very hard to break through to the residents,” he told THE CITY. “They’ve waited years to get their apartment fixed with [work] tickets that are outstanding.”

But Donovan said he has confidence in the program he devised — and would make a centerpiece of his plan to save public housing, if elected mayor.

“There is a long road to doing this,” he said.

This article was originally posted on Can Mayoral Hopeful Shaun Donovan Save New York City’s Crumbling Public Housing?

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