Developers Pushing Past Tenant 'PTSD' To Tackle NYCHA's $78B Repair Backlog

When Dantes Partners began rehabilitation early last year of the Audubon Houses, Bethune Gardens and Marshall Plaza public housing projects in Harlem, the D.C.-based developer was immediately met with 1,000 work orders from the community of just over 550 units. 

Residents were accustomed to a lack of response — and funding — from their landlord, the New York City Housing Authority. But after they saw repairs actually happening, Dantes was flooded with more requests. Within a year, it had fielded 4,000 orders for needed repairs, said Corey Powell, the chief operating officer of Dumas Collective, the development firm’s parent company.

“There's a bunch of stuff we inherited,” Powell said. “These are buildings from the '60s, one of them from the late '70s, that haven't had a lot of TLC, and a long history as to why that is the case.”

Dantes is one of dozens of developers and contractors that have started work on rehabilitating properties in North America’s largest public housing system, where years of neglect have driven the cost of needed repairs and replacements to an estimated $78.3B over the next two decades. 

To address the backlog, New York City launched the Permanent Affordability Commitment Together program, which brings in private developers to take on the projects by converting the NYCHA buildings from Section 9 to Section 8 housing. 

However, the program requires that developers partner with existing NYCHA residents on even the most minuscule aspects of their projects, forcing two historical adversaries — landlords and low-income tenants — to build trust and overcome long-held resentment.

“There is a lot of PTSD from residents and resident leaders in not having their needs met, not having resources to have their needs met, and having their needs be deferred for such a long amount of time that there was a psychology of numbness towards any promises that NYCHA would be bringing in the future,” said Naim Brown, Senior Vice President of Place-Based Development for Urbane, which is restoring 15 different campuses with a total of 88 buildings. 

“It was definitely a learning curve to encourage folks to participate in the process and show them, step by step, that the process was real.”

As of November, eight PACT projects have been delivered spanning 9,500 units, according to a Bisnow analysis of NYCHA data. Those repairs reduced NYCHA’s outstanding repair bill by approximately $1.8B. 

Another 29 projects are in construction or planning stages and are estimated to cover total repair costs of about $11.5B.

PACT was launched in 2016 under then-Mayor Bill de Blasio. Under the program, NYCHA continues to own the land but brings in privately owned developers to restore the physical properties, manage the grounds and provide social services. In exchange, developers receive a reliable flow of income and tax credits.

Not only must developers submit to a request for proposals and interview with the community prior to beginning construction, but they also must have residents vote on everything — from appliances in the kitchens to paint colors on bedroom walls — throughout the process. 

The Arker Cos. has three projects spanning a total of 25 buildings, each in different phases of planning, construction and completion. That includes a bundle with 2,625 units throughout Brooklyn, including rapidly gentrifying Williamsburg.

“There was, rightfully, concern there about displacement,” Arker Managing Director of Development Simon Bacchus said. “If anything, it reinforced our desire to first build relationships before doing the work, let alone work that entails significant relocation.”

'Sounding The Alarm For Decades'

A year after PACT was introduced, NYCHA was hit with a damning report: the New York City Department of Investigation found that the authority had for years been submitting false documentation to the U.S. Department of Housing and Urban Development.

Not only was the authority, which oversees more than 177,000 apartments in over 2,500 buildings across 335 complexes, failing to conduct mandatory safety inspections on lead paint, it was also lying about it. 

The lack of action was only further contributing to the deterioration of living conditions for NYCHA residents. 

“Advocates have been sounding the alarm for decades. You can't just patch a boiler, you have to fully replace it, and then you have to fully replace all the pipes,” New York Housing Conference Executive Director Rachel Fee said. “It's a price tag that keeps growing.”

The findings resulted in an agreement with HUD and the appointment of a federal monitor to ensure that NYCHA maintains its properties properly. In August, the monitor released an updated report on the housing authority’s work.

“NYCHA’s achievements should not be understated. NYCHA now is a very different organization than the one that signed the HUD Agreement in 2019,” the monitor wrote. “At the same time, there are still too many obligations imposed by the HUD Agreement that NYCHA has failed to meet and are now past due.”

Among the remaining issues: Nearly 70% of elevators have multiple instances of no-service per year, 39% of rat complaints are not responded to within two days and mold is not removed in the proper timeframe 88% of the time. 

The report did not include buildings in PACT partnerships, but publicly available NYCHA data shows that elevator, rat and mold issues in PACT developments are resolved on time in 75%, 64% and 88% of cases, respectively. 

“When [PACT] started, they had a federal monitor appointment, they were going through this transformation plan on operations,” Fee said of NYCHA. “I think there was a lot of uncertainty if they could really pull it off. And I think that they've done a really great job.”

Since PACT's introduction, residents and public housing advocates have protested the program, leading marches and passing around petitions, claiming that the scheme would result in eviction, rent hikes and other forms of civil rights violations.

“The de Blasio administration is using privatisation as an excuse to walk away from environmental protections and basic responsibilities they owe public housing residents,” reads a 2021 protest archive from anti-privatization group Fight For NYCHA. 

Some NYCHA residents continue to oppose partnering with private developers. In September, tenants at Coney Island Houses and Unity Towers, which have 700 households combined, voted against transitioning to PACT. In those cases, the projects go into a public trust system, through which NYCHA will attempt to get funding for renovations through the federal government and by issuing bonds.

At Manhattan’s Fulton and Chelsea-Elliott Houses, Related Cos. and Essence were recently approved to demolish 2,000 public housing apartments and replace them with 3,500 units — enough to house current residents and add new affordable and market-rate apartments.

Despite the approval, some residents who opposed the transition to PACT have organized a protest against the plan due to fears of increased rent and displacement. But under the program, new management is prohibited from raising rents or terminating leases. Households that must be temporarily relocated due to renovations sign agreements guaranteeing their right to return.

Decades of disinvestment have made these promises difficult to believe, and that has made it hard for developers to proceed with restoration. But the $2B in work completed so far has given the next wave of projects a template to refer back to.

“There are examples that NYCHA can point to to say, ‘This is not a bad thing. Go take a look at this complex that is completed. Go speak to the residents of the complex that's been completed and have them show you what the end result is,” said James Simmons, CEO and founding partner of Asland Capital Partners, which is rehabilitating more than 400 units at the Sack Wern Houses in the Bronx. “That's number one, and number two is that there's been learning between the beginning of the PACT program and today.”

'A Leap Of Faith'

For developers, NYCHA projects are difficult and time-consuming, especially since many portions of the buildings haven't been recently inspected or maintained.

Douglaston Development has been tapped for three campuses, including one that the New York-based developer's founder, Jeffrey Levine, lived in as a child. After implementing a new reporting system at the properties, work orders surged, Senior Vice President of Affordable Development Jessica Sherman said.

“Many of these buildings are decades old, and you never know what you're going to find behind any wall,” Sherman said.

Simmons said that both the private development community and NYCHA have learned lessons from the first PACT projects.

To engage residents, developers have experimented with hosting meetings in various venues at different times, building mock apartments and busing residents to site tours, all in the effort to convince them to approve projects for needed upgrades to their buildings. 

NYCHA, for its part, has modified its RFPs over time. In addition to restoring apartment interiors, PACT RFPs require developers to install security systems and free campuswide WiFi. Laundry facilities and community spaces must also be built or restored.

Following completion, new management is required to bring in literacy programs, food pantries and other social services to the complexes. 

In July, BFC Development Partners, which is working on multiple PACT projects, hosted a groundbreaking of the West Brighton Houses. The nearly 600-unit campus is one of the first in Staten Island. 

This year alone, the developers involved in the project have hosted Trunk or Treat for Halloween and a turkey giveaway for Thanksgiving.

Beyond that, the developers have had to hire several translators in order to communicate with residents. In one meeting, the tenants told the builders to scrap plans for a restored basketball court and replace it with a playground. 

BFC principal Joseph Ferrara said that the project is expected to cost $332M in total, above NYCHA's estimate of $283.3M, according to its dataset. 

“Honestly, it’s not even about the dollars,” Ferrara said. “It's more so about the staff that's needed. The staff that's needed to guide the managerial process and the day-to-day operations of these complexes has to be massive.”

At this point, the project is approximately 20% completed and running ahead of schedule, Ferrara said. During the process, he said he’s had tenants follow him on social media and even send thank you letters to the firm. 

“[For tenants,] it’s a leap of faith,” he said. “The worst thing you could do is promise somebody something and then not deliver.”