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How New York Can End the Public Housing Trap

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eye on the news

How New York Can End the Public Housing Trap

It’s time to think outside the superblock box. October 15, 2020
New York City Reborn

Nearly half (47 percent) of all the households in New York City public housing have lived in their apartments for 20 years or more. Some 18 percent have lived in the projects for at least 40 years. This is not just intergenerational dependency. Spending a lifetime in public housing also reflects a lifetime of missed opportunity.

The two main features of public housing are artificially low rents and resident income limits. Low rents encourage long-term tenancy, and income limits penalize those who work to increase their earnings. Both conditions block public housing families—disproportionately African-Americans—from building wealth.

These facts lend themselves to an idea both radical and practical: buyouts for public housing tenants. The aim of such a program would be to help compensate those who faced historical discrimination in the private housing market and were then effectively lured into the financial dead end of public housing. It would also hold out the promise of “unfreezing” public housing real estate, creating a financial bonanza for the city.

It would be impractical and likely not lawful to target only African-Americans for these buyouts, but the history of public housing in New York is inextricably tied to the black community. Blacks make up 45 percent of households in public housing, but just 26 percent of New York’s population and 27 percent of households living in poverty. Those numbers were even more lopsided in 1980, when blacks made up 27 percent of the city’s poor but 51 percent of households in public housing.

Though blacks as a group have always been among the poorest Americans, it was not inevitable that they would disproportionately wind up in public housing, whether in New York or elsewhere (blacks make up 47 percent of public housing residents nationally). This outcome required a pernicious mixture of housing discrimination and special liberal attention, both of which date to the period just after World War II.

In 1948, the housing development firm Abraham Levitt and Sons, led by the Brooklyn-born William Levitt, began construction on what would become the archetypal postwar American suburb: Levittown, 17,000 homes of 800 square-feet each, built on a former potato field on Long Island. The homes were wildly popular with returning soldiers and their families, who had previously been crowded into city apartments with in-laws. Groups long at odds within the city—Irish, Italians and Jews—now peacefully coexisted in their new neighborhoods.

But not everyone was welcome in Levittown. Levitt & Sons included a deed restriction in its legal agreements with renters and buyers: “the tenant agrees not to permit the premises to be used or occupied by any person other than members of the Caucasian race.”

Levitt was convinced that the presence of blacks—even those as well-qualified financially as whites—would be bad for business. “I have no room in my mind or heart for racial prejudice. But I have come to know that if we sell one house to a Negro family, then 90 to 95 percent of our white customers will not buy into the community,” he said.

The tragic consequences of this injustice linger to this day. As Columbia University historian Kenneth Jackson put it, “There was such a demand for houses—they had people waiting on lines—that even if they had said there will be some blacks living in there, white people would have moved in.” Furthermore, the Supreme Court ruled, in a St. Louis case that same year, that such racial covenants were unconstitutional (though widespread enforcement of the ruling would have to wait for the 1968 federal Fair Housing Act).

A year later, with passage of the National Housing Act of 1949, the Truman Administration embarked on a massive national public housing project. New York City had already been building its own housing projects and now would get federal assistance to build more. The city would tear down many historically black neighborhoods, such as those in central Harlem, to make way for the new developments.

Reflecting the assumption that these structures would continue to house blacks specifically, many were named for prominent African-Americans—including Langston Hughes, James Weldon Johnson, Mary McLeod Bethune, George Washington Carver, Frederick Douglas, Jackie Robinson, Louis Armstrong, and Marcus Garvey. The same held true for projects serving other groups historically overrepresented in New York public housing. The Taino Towers, for example, were named for the indigenous residents of Puerto Rico.

Thus a mixture of racial discrimination and compensatory liberal benevolence consigned many black and Hispanic New Yorkers to being renters rather than owners, and before long, the projects themselves became dangerous and dilapidated. By 2018, federal district judge William Pauley, in a decision that led to the appointment of a federal monitor, found that the New York City Housing Authority’s size was “paralleled by its organizational disarray in providing any semblance of adequate housing for some of [society’s] most vulnerable citizens.”

To make matters even worse, the rent regulations governing NYCHA helped perpetuate poverty by linking increased income to higher rents. Two-earner households, for example, paid more than single-earner households. It’s no coincidence that 78 percent of NYCHA households are headed by women, and that the average income per resident is just $10,000. In this mixed-up system of incentives, poverty pays.

New York City’s much-maligned public housing system presents an opportunity not only to right historical wrongs but also to boost economic growth. Here’s how.

As the owner-operator of 326 apartment complexes, NYCHA is the nation’s largest public housing authority. Its landholdings are extensive. Most are set on large campuses with vast open land. In contrast with most real estate on which developers aspire to build, these sites are already “assembled”—their sole owner, the city, is in position to sell the full acreage.

The currently locked-up value of this property is substantial. According to the city’s Finance Department, the total value of all 305 public housing sites is $7.1 billion, but this is undoubtedly an undervaluation. It’s hard to imagine, for instance, that the sprawling Ingersoll project, with its proximity to brownstone Brooklyn, commands only $33 million for its 20-acre site. Indeed, developers recently paid NYCHA $25 million for the air rights alone. The redevelopment of NYCHA property in Park Slope, Bushwick, and Fort Greene, as well as projects in Harlem and the Lower East Side, could kickstart a New York real estate revival.

If tenants were simply given notice that they had to move out, such a clearance project would be politically unthinkable. But there’s a better way: compensating tenants for the many years they spent in public housing, paying artificially low rents but effectively penalized for seeking to increase their earnings.

Consider these figures. The Jacob Riis Houses on the Lower East Side (1,191 apartments) are conservatively valued at $87 million. Typical heads of household have lived in Riis for 29 years. NYCHA units on average have only two residents. Thus if every resident in Riis were to receive $2,000 for each year spent as a tenant, the full cost of tenant buyouts would be $69 million. Meantime, NYCHA would receive at least $87 million in a sale—and undoubtedly far more for the two full superblocks between Sixth Avenue and 13th Streets. And NYCHA would no longer have to pay to maintain the aging complex.

Where would Riis’s long-term low-income tenants go? It’s possible that many would choose to take the $58,000 per tenant buyout and leave the city. Such a sum would serve as a substantial down payment on a home in many parts of the United States. Or perhaps they would use the money to start a business or pay for more education. The choice, for a change, would be theirs.

For those who would choose to find another apartment in New York, the timing has never been better. A July report by real estate firms Douglas Elliman and Miller Samuel found that 13,000 apartments stood vacant in Manhattan alone, and that “the number of apartments for rent, or listing inventory, more than doubled over last year and set a record for the 14 years since data started being collected.” What’s more, the report continued, rents have dropped by 10 percent and many landlords are offering more than a month’s free rent to entice tenants. “All segments of the market, from the high end to the low end, saw declines,” the report says.

NYCHA is currently helmed by perhaps the most imaginative team it has ever had. Its chair, Greg Russ, has shown a commendable willingness to experiment in bringing private money to bear on the system’s $20 billion to $30 billion capital-needs budget. But there is no reason to continue to burden taxpayers with the maintenance costs normally the responsibility of private owners. And it’s worth sending the message to low-income New Yorkers that public housing need not be a lifetime situation.

It’s time for NYCHA and New York to think outside the superblock box. The city can unlock the value of its public housing, give tenants a chance to improve their lives—and right an historical wrong in the bargain.

Photo by Drew Angerer/Getty Images

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