HUD: You Are Getting Scammed By NYCHA. Time To Pay Attention!

October 08, 2025 Francis Menton @ Manhattan Contrarian

A favorite subject of mine over the years has been the New York City Housing Authority, or NYCHA. NYCHA operates hundreds of buildings housing some 500,000 people, in some 170,000 +/- apartments, mostly built from the 1950s to the 1970s. Organized on a pure socialist model of public ownership with heavily subsidized rents, NYCHA has followed the trajectory of all socialist schemes ever attempted, having gone from an excited beginning into a long, slow death spiral that has now been ongoing for at least two decades.

When NYCHA was building the buildings, everyone seems to have assumed that bricks and mortar just last forever; so nobody bothered to consider that at some point the capital investment would need to be renewed, or to plan for how that would be done. By the 2010s, the buildings were turning 40, 50 and even 60 years old. In 2015 NYCHA announced that it had suddenly discovered a need for some $17 billion to fund urgently-needed repairs. Thereafter, the amounts claimed to be needed for such repairs escalated rapidly: by 2021 it was $32 billion; and by 2023 a new “audit” found the “need” to be $78 billion — about $460,000 per unit. And this is for “low income” housing. (For comparison, according to the most recent data from FRED, the median price of a single family house in the U.S. in the second quarter of 2025 was about $410,000.)

So what’s the plan now? In recent weeks, news reports have revealed that renovation projects are now moving forward on substantial numbers of NYCHA buildings (although a small percentage of the total). Costs, to the extent announced, are in the range of well over $400,000, and up to about $600,000, per unit. And where is the money going to come from? You will not be surprised to learn that they are being as opaque as possible about that. However, it is clear that the main plan is to scam the money out of the federal taxpayers.

HUD: It is time for you to get on top of this situation and shut it down.

Here is a smattering of reports on NYCHA renovation projects that I have come across in the past couple of weeks:

• Something called the NYCHA Journal had a piece on September 25 with the headline “NYCHA & Partners Close on Financing for $433M PACT Project to Renovate 5 Brooklyn Developments.”The piece states that the $433 million will cover “nearly 2,000 residents” in “14 residential buildings.” Since NYCHA buildings average about 3 residents per unit, this plan involves about 700 units, which means that the renovation cost per unit is in the range of $600,000 per unit.
• On October 3, the New York YIMBY website reported that a NYCHA project in East Harlem called the Gaylord White Houses had secured some $272.6 million in financing to renovate four buildings with 523 residential units. That would come to some $521,000 per unit. Again, the financing was said to come via this PACT program.
• On October 4, YIMBY reported that a “$93M Renovation Project [had been] Approved For Bronx River Addition In Soundview, The Bronx.” “The project will include repairs across 226 apartments in two buildings. . . .” $93 million divided by 226 units comes to about $412,000 per unit.
• An October 6 piece, again at New York YIMBY, reported that the NYC Public Housing Preservation Trust is seeking “requests for proposals” to renovate two NYCHA buildings in Bushwick, Brooklyn. The two buildings are said to contain “more than 400 residents” in 209 units. No price is yet available for this prospective renovation.

So what exactly is the plan to pay back these very large new loans?

As background, the average rent on a NYCHA apartment (2024 data) is $588 per month, or just over $7000 per year. Moreover, rents are limited to 30% of resident income, and the average income (same link) is said to be about $25,000 — so NYCHA has almost no ability to raise rents. The $588/month current rent covers only about a third of operating costs, with almost all of the rest provided by federal subsidies totaling in the range of $2.5 billion per year.

But the new loans are going to more than double the operating shortfall. Assuming that the borrowing entity can get a 6% interest rate (likely better than you could get today), and a renovation cost per unit of $400,000 (very optimistic), that means $24,000 annually of added interest cost per unit, or $2000 per month. Tenant rent stays at $588 per month, so taxpayer subsidy must then go from about $1500 per month to more like $3500 per month. If extended to all NYCHA apartments and paid for by the federal taxpayers, the extra $2000 per month per unit would take annual federal subsidies to NYCHA from about $2.5 billion to more like $6.5 billion. (For comparison, the total of rents collected from all NYCHA tenants is around $1 billion per year.)

The renovations are being financed under something called the PACT program (Permanent Affordability Commitment Together). The NYCHA Journal piece linked above has this to say about the PACT program:

The PACT program transitions developments from traditional Section 9 assistance to Project-Based Section 8 and unlocks funding for resident-selected PACT partners to complete comprehensive repairs and to oversee daily property management of the campus.

New York City has a web page further describing the PACT program. From that page:

Through PACT, developments will be included in the federal Rental Assistance Demonstration (RAD) and convert to a more stable, federally-funded program called Project-Based Section 8. This allows NYCHA to unlock funding to complete comprehensive repairs, while also ensuring homes remain permanently affordable and residents have the same basic rights as they possess in the public housing program. . . . Why do we need PACT? NYCHA needs more than $78 billion to fully restore and renovate all of its buildings, but the federal government has provided only a fraction of the funding needed for these improvements.

They are “unlocking” federal funding by going from “traditional Section 9 assistance” to “project-based Section 8" funding. “Section 9” means a multi-billion dollar annual subsidy payable directly from HUD to NYCHA. “Section 8” means that each tenant gets a subsidy in the form of a housing voucher covering the difference between his rent (30% of income) and a rental amount sufficient to cover all the new costs. This will then be “more stable” — with that term apparently meaning no more need to rely on tenants who may or may not pay rent when due, when you can now just get a big regular handout from Uncle Sugar’s infinite pile of money. The federal taxpayer will go from paying around two-thirds of the cost of operating these buildings, to more like five-sixths. And by the way, these buildings don’t pay property tax!

So, HUD, if you just let this happen, you will get scammed for an additional $4 billion a year or so, while NYCHA will remain as a sore tooth in New York City for potentially generations to come. You have an opportunity to shut it down now, through the device of not awarding unlimited Section 8 subsidies to this left-wing graft factory. With that step, you can force NYCHA into a long overdue fundamental restructuring, which otherwise will never occur. Time to pay attention!

 

NYCHA, Circling The Drain

May 23, 2023Francis Menton  @ Manhattan Contrarian

From time to time I like to check in on the latest from the New York City Housing Authority. NYCHA (along with many other municipal housing authorities) is one of the purest examples in the U.S. today of socialist-model economic organization. The state owns the buildings; the residents pay deeply subsidized rents based on income; and the state takes full responsibility for maintenance and upkeep. Is there any reason why this might not work for the long pull?

When we last looked back in 2018, NYCHA had just been sued by the U.S. Attorney for the Southern District of New York for failing to maintain “decent, safe and sanitary” conditions, including failing to remediate lead paint, failing to control mold and vermin, and failing to provide consistent heat, hot water., and elevator service. NYCHA had promptly settled that lawsuit with a Consent Decree in which it promised to spend some $4 billion of New York City taxpayer money to fix the identified problems.

In the intervening close to 5 years, NYCHA has been mostly out of the news. Surely, the large infusion of funds has turned things around, and all is now going smoothly? Sorry — that is not how socialism works.

On May 19 a civic organization called the Citizens Budget Commission has come out with a big Report on NYCHA with the title “Uncertain Future, Urgent Priority.” The Report is chock full of data and statistics on how things are going. The summary is, things have gone from bad to worse, and then still worse. Most importantly, nobody here cares about running a financially sustainable operation, so revenue dwindles while costs explode out of control. One can only conclude that the game plan is to engineer a real crisis to more effectively shake down the taxpayers for the really big bucks in the next round.

In privately-run rental housing, the rents must cover all of the costs — operating costs, taxes, debt service, and also capital improvements as they are needed — as well as profit to the owner, if any. At NYCHA, rents, such as they are, cover an ever smaller and smaller share of the operating costs, with nothing whatsoever for taxes, debt service, or capital improvements. Here is CBC’s chart of NYCHA revenues versus operating expenses:

Rent collections reached a peak in 2019, and then started shrinking in 2020 with the pandemic, and have continued to shrink at an accelerating rate through 2022. Federal subsidies increase, but don’t nearly keep up with rising costs.

At this point, collected rents cover barely a third of operating costs. It seems that the stated rent is now treated as merely a suggestion, with no effective penalty for non-payment:

Collections hit a new low of 63 percent in February 2023, down from 70 percent in February 2022 and 90 percent prior to the pandemic. . . . As of December 2022, 46 percent of NYCHA households were in arrears, having accrued $466 million in unpaid rent. . . .

Although the pandemic has ended, the new policy is to forget about evictions, even as nearly half of tenants have stopped paying rent:

Under the Transformation Plan, NYCHA has de-emphasized non-payment evictions in favor of working with residents to get on payment plans and to secure one-time hardship funding. Since then, NYCHA has followed through on its promise to avoid evictions. Between February 2022, when the eviction moratorium expired, and January 2023, NYCHA filed only 427 non-payment eviction notices, and 0 warrants for non-payment evictions have been executed.

Thus, with some 80,000 tenants in arrears, there have been only 427 non-payment proceedings. That is a sure-fire recipe for continued erosion of rent collections. Why would anybody pay in these circumstances?

Over on the cost side, it seems that NYCHA’s costs of operating a unit are about double those of private landlords on a per-unit basis:

Nearly all of the cost differential is in the category of labor costs, where NYCHA’s expenses per unit are about six times those of its private counterparts:

The CBC concludes that the large majority of NYCHA’s units are rapidly approaching a “moment of reckoning,” where “redevelopment would be more cost effective than repair.”

Once again, a seemingly well-intentioned government program has ended up leaving large numbers of the intended beneficiaries in a completely untenable situation. At this point, it’s only a question of how and when this situation comes to its final collapse.