BY ZACH WILLIAMS | The East Village’s Campos Plaza I is now half privately owned and there is no turning back, Shola Olatoye, chairperson of the New York City Housing Authority, told members of the City Council on Feb. 10.
Members of the Council’s Committee on Public Housing said little notice was given before NYCHA agreed late last year to a 30-year partnership with two private developers for the plan, which, along with Campos Plaza, includes five other federally funded Section 8 developments. Among them is the low-rise E. Fourth Street Rehab, between Avenues B and C.
In all, 900 units in Manhattan, Brooklyn and the Bronx are in the plan.
The developers now control a 50 percent ownership stake in the buildings, in return for which they will pay NYCHA $250 million within the next two years, plus another $100 million over the next 15 years.
In return for upgrading the units under their control, the developers will be eligible for federal funding to cover the difference between market-rate rents and what the Housing Authority charges for rent.
The development team includes L&M Development Partners along with Preservation Development Partners (the latter a partnership formed by K&R Preservation and Donald Capoccia’s BFC Partners).
Olatoye said that, under the plan, the developers will invest $80,000 per unit, installing new kitchens and bathrooms, in the 900 apartments. Building lobbies also will be renovated and security improved. In all, the private partners will reportedly pour more than $100 million into the buildings’ renovations.
Olatoye assured that the deal would not lead to the developments’ future privatization. However, it is in fact possible that after the 30 years are up, the units could become market rate.
Yet, NYCHA continues to own the land, plus can remove the private managers if dissatisfied with the arrangement.
“With this transaction,” Olatoye told the committee, “NYCHA has forged a solution to the chronic and unyielding funding shortage suffered by these six developments, and raised money for the rest of our developments.”
Residents of Campos Plaza I, located at 635 E. 12th St., who receive Section 8 vouchers will not see rent increases under Triborough Preservation LLC, the new public-private partnership overseeing the developments.
There’s no question the agency is strapped for cash. Funding cuts from local, state and federal governments created a $77 million budget deficit for the Housing Authority. The federal Section 8 units, in particular, have been among the hardest hit by federal funding decreases. Meanwhile, the agency needs $18 billion for repairs across the roughly 178,000 apartments it oversees, according to NYCHA.
City councilmembers agreed that NYCHA indeed faces massive financial challenges. However, during the agency chairperson’s testimony, they expressed concern about elements of the deal. These included the extent of community input, fair-pay employment opportunities for residents at the developments and the long-term financial health of the six developments.
Campos Plaza I — which has 270 apartments and an estimated 720 residents — is in Rosie Mendez’s City Council district.
“NYCHA is between a rock and a hard place,” Mendez said in an interview. “They do not have all of the money in order to do the capital repairs and the day-to-day repairs that are needed. However, the way in which they are moving forward with this project is problematic.”
Councilmember Darlene Mealy of Brooklyn said that she was “disgusted” by the deal because she had reached out to NYCHA in the past regarding the future of Saratoga Square, in Crown Heights, which is part of the private-ownership arrangement.
“I come now two years later, the building halfway sold and you’re telling me it’s a done deal without coming to the elected officials?” she asked incredulously.
Mendez asked Olatoye during the hearing why NYCHA only is maintaining 50 percent ownership in the new enterprise, in contrast to other public-private partnerships where the city has kept 51 percent, a majority interest. Mendez also requested the sign-in sheets from prior public hearings on the now-defunct NYCHA “infill” development plan in order to check if they were counted toward public input for this new deal. This new plan is an outgrowth of the aborted infill plan.
Problems and confusion could have been avoided had NYCHA responded to requests for more public meetings before the deal was made, Mendez told The Villager. But she did secure a promise from Olatoye to appear before Community Board 3 in the future to address neighborhood concerns. Explaining the differences involving units in the federal Section 8 program to public housing residents whose buildings are not part of the deal is key, Mendez said, since the other public housing residents will want to know why their units aren’t getting renovated, too.
Olatoye assured the committee that NYCHA retains right of first refusal within Triborough and that 40 meetings were held with residents to determine the priorities for the deal. As for the plan’s 50/50 ownership breakdown, she explained that the 1 extra percent of ownership would preclude Triborough from eligibility for 4 percent low-income housing tax credits and city Housing Development Corporation tax-exempt bonds.
Olatoye expressed confidence that if Triborough ever were to default, the city would rescue the developments.
“I would imagine that it’s very much in the city’s interest,” she said of that hypothetical.
Councilmembers said that only 30 years’ time will tell what happens to the developments given the volatility of the city’s politics and economics. In addition, under the agreement, the Section 8 units would become rent-stabilized should the federal Department of Housing and Urban Development not extend funding for the developments in the future, according to Olatoye. Due to annual rent increases, over time, rent-regulated units can become “decontrolled” and turn market rate.
Most of the buildings in the six affected developments are too small to have their own community centers, Olatoye noted, in response to a question from Councilmember Laurie Cumbo of Brooklyn. But two of the buildings will receive on-site supervisors. And community centers that already exist will continue.
Campos Plaza I will also have landscaping work done, not only to spruce up the place, but also to help manage storm water at the development, which was inundated during Superstorm Sandy, Olatoye said. Other resiliency work will place infrastructure outside or on top of the building rather than in the basement, she added.
Olatoye said the deal is already making a difference for residents of the developments, who for years have had to put up with decrepit housing, mold and the uncertainty of a Housing Authority in a dire financial situation.
“There is a real momentum forward here,” she said.
