Affordable Housing Institute : US

By: David A. Smith

 

Before we unleash a new financial drug on the world, might it require some clinical field trials?   That question lies behind a fascinating Harvard Business Review op-ed by of all people and places, Lawrence Candell from MIT’s Lincoln Laboratories:

 

What can you do in a democracy when you rely on the private sector for solutions in an area of critical national importance?

 

The few … the proud … the highly paid

 

The abstract answer is, contract purely technical functions, reserve essentially governmental functions for publicly accountable bodies.  But that answer begs the next question: what functions are sufficiently technical?

 

One inherently governmental function is the setting of compulsory standards (of disclosure, capitalization, or trading).  With a few exceptions, that business of compulsory standard-setting cannot be left to private entities, for they invariably either form cartels or structure the rules to maximize their upside and minimize their downside.  Enter the government:

 

In the case of US national defense, the government funds nonprofit research centers like the one I work for—MIT Lincoln Laboratory, in Lexington, Massachusetts.

 

Massachusetts is a hotbed of ideas

 

Can this approach be applied to financial products? 

 

Right now, we have seen the emergence of standard-setting or standard-scoring bodies of greater or lesser independence, sophistication, standard-imposing power, and effectiveness: FASB, the Basel II accords, SEC, and the rating agencies.  None of them is really akin to Lincoln Labs, or its fellow travelers of Greater Cambridge – in this context, both Lexington and Boston may be considered satraps of Greater Cambridge – which is a veritable hotbed of such entities, with MITRE and DARPA. 

 

And Lincoln Labs, where they build things

 

These centers are stocked with technology experts and innovation capabilities [A] as good as those to be found in industry, but [B] they answer only to the public, [C] not to profit-seeking shareholders.

 

Mr. Candell’s summary contains three suppositions: equality of capability, public accountability, and non-profit status.  The third of these, [C] non-profit status, is in my view not essential, since non-profits can in some cases be just as venal as for-profit entities.  A better formulation for [C] is that Testing Centers be [C] free from potential conflicts of interest, a condition which can be achieved in several different ways (to which we’ll return below).

 

[D] Seated across the table from large defense contractors, [E] federally funded R&D centers function as independent honest brokers:

 

Now Mr. Candell’s summary adds two postulates to give the Testing Centers clout: [D] mandatory pre-usage engagement between the proponent and the Testing Center, and [E] government funding of the Testing Center.

 

They allow innovative defense contractors to thrive, as the system needs them to do, but they also check the contractors’ occasional temptation to do what is most profitable rather than what is really needed.

 

Mmm … profits

 

I’m no expert on defense-contractor review, and Mr. Candell is, so let’s take as fact his assertion of the Testing Centers’ effectiveness both in checking the taking of unnecessary financial risk (by the government) and in not inhibiting the free.  Can this be made to work in finance?

 

These centers clearly perform a valuable function, and the cost of funding their expertise is less than 1% of the Defense Department’s budget.

 

Well, 1% of DoD’s $650 billion is still a gargantuan number – but if the Testing Centers really perform the function, that would be money well spent.  And that much money would buy you a lot of smart reviewers.

 

As the financial crisis erupted in late 2008, some of my colleagues and I couldn’t help wondering why there was no similar setup in the financial industry.

 

There was supposed to be such a setup.  They were called ‘rating agencies’ and they abdicated their responsibilities, preferring to become symbiotes of those they were rating.

 

Here was another area of extreme national importance. Why didn’t the wizards who were devising new financial instruments in the private sector have a mirror image operating in behalf of the public?

 

Here’s a key point.  Rating agencies were never set up to be mirrors, nor to be windows.  They are oracular, and held themselves out as reliable even if inscrutable.  Unfortunately, we learned that behind that inscrutability was unreliability.

 

I have all the answers right here

 

Of course, there are many public-spirited experts developing and studying next-generation financial solutions at our universities—just as there are many professors working on military technology. But that academic contingent can’t be expected to protect the public interest.

 

Of course not, for many reasons.  (1) They are not chartered with protecting the public interest, so they have no standing to intervene, making independent protest so much noise.  (2) They have other things to do – you know, like teach – and can choose to research in their spare time.  (3) In pursuit of intellectual freedom, they resist being slaved to tasks imposed by others.  (4) In terms of resources brought to bear on individual DoD-related problems, they’re massively outgunned.

 

I’m only interested in knowledge

 

To decide how best to invest its resources, the Department of Defense needs understanding and guidance at the systems level. The same would seem to be true for a financial industry that annually moves trillions of dollars.

 

The Breakthrough Idea

 

Let’s federally fund an R&D center that, borrowing the best practices of defense research centers, could design, analyze, prototype, and troubleshoot financial innovations, making sure they promoted our economic security and prosperity.

 

Let’s think out-of-the-egg, shall we?

 

At this point in the article, I said to myself, Hmm … how could this be made to work?

 

To start with, why hasn’t it been tried up to now?  Several reasons:

 

1. We didn’t know we needed it.  The industry was unregulated and new innovations are generally unregulated.

2. The difficulty of specifying which innovations are material enough to warrant scrutiny.

3. The last fifteen years saw a net deregulation, as financial products evolved much faster than regulatory thinking about them.  As the new instruments gained market share, the percentage of financial instruments subject to this kind of scrutiny shrank.

4. The talent updraft.  Private-sector employers can and do generally pay much better than their public-sector counterparts.

 

In any outgunned situation, you need to change the rules, to balance the tension, by providing the government side with something that compensates for its lack of gunnery.  Mr. Candell implicitly addresses these with his last two points (D and E) – standing granted by making the review mandatory, and Federal funding adequate to pay for very smart people.

 

You vant to sell your decadent innovative securities, tovarisch, you pass our checkpoint.

 

To create these conditions in our imagined Financial Invention Review Board (FIRB), the nation would need (a) a pre-review of every new type of financial product [Or else what? See below. – Ed.], and (b) delegation of review authority – including signoff authority – to the newly created and fully independent FIRB.

 

The FIRB would then have the following powers:

 

Financial Invention Review Board: powers

 

1. To prohibit sale in the United States of a particular financial product (FP), even to sophisticated investors.  [Or else what? See below. – Ed.]

2. To mandate disclosure requirements for said FP.  These would go beyond the ‘omit no material fact’ standard representation in offering circulars; it would be much more like an SEC S-1 review, with the FIRB able to demand additional information and to compel its disclosure before approving a sale.

3. To require the issuer or banker of said FP to post liquid collateral, with a secure and independent escrow agent, equal to some ratio established by the FIRB.  The FIRB could change the required ratios from time to time, presumably by lowering them based on greater experience.

 

Want to have power over all finance?  Read on!

 

[Continued tomorrow in Part 2.]

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By: David A. Smith

 

[Continued from yesterday's Part 2 and the preceding Part 1.]

 

In using the New York Times’s superficial examination of the Ingersoll and Whitman public housing properties in New York City to bring out the challenges facing not just these two large properties but the entire legacy public housing inventory, we have so far listed:

 

If only we could see them that clearly

 

Challenges facing Ingersoll/ Whitman

 

1. Illegitimate birth.  The properties were temporary housing turned over to New York by the Navy after World War II.

2. Decades of non-reinvestment.  Our whole public housing delivery system is a Gordian knot catching the properties in a dependency trap: starved for resources.

3. Warrant-of-habitability risk.  A landlord that rents a substandard apartment is liable to the resident for damages, and housing authorities are uniquely vulnerable to such litigation.

4. Brass-ring capital planning mentality.  Scarcity of funding prevented incremental improvements over time, leading to obsolete apartments needing a comprehensive and expensive overhaul.

5. Funding cuts after housing authorities’ plans were made.  Funding promised at one time would be unpromised later, necessitating painful reductions in scope even as costs rose.

 

Ingersoll and Whitman face three additional challenges:

 

Getting out of these bond covenants is just the first problem

 

6.         Resident-relation complexities

 

Public housing residents are government customers.  Years and decades of observation have taught them to expect promises from their government, and then to be disappointed. 

 

Anxiety remains high at Whitman and Ingersoll, tenants, elected officials and community advocates said, because unoccupied units have been used by drug dealers, vandals and squatters, and so many apartments have sat empty for so long.

 

Public housing residents have unusually powerful political voices:

 

They attributed the delay to … the complicated process of relocating hundreds of tenants with different housing needs at different times.

 

It’s always easier to renovate a property if the residents are moved safely off-site, but so powerful is the distrust and paranoia within the public housing community that most authorities have long ago acquiesced to the enormously more tortuous procedure of rehabbing with the residents in place, by shuttling them about on the same site:

 

New Orleans public housing tenants: maybe wrong, never silent

 

The first tenants were relocated years before construction started. Residents could transfer to other apartments in their developments or elsewhere in the city, or receive a federal voucher that would allow them to move into subsidized private housing.

 

One would think that a generous offer – move out of a crumbling, decrepit apartment to other public housing apartments (that you approve), or receive a portable voucher and move to an apartment that will take a voucher.  But wait, there’s more!

 

Lynn Godfrey, a Housing Authority spokeswoman, said the agency had tried to minimize the disruption, in part by paying moving expenses.  “Given the huge mass undertaking and what we will accomplish at the end, the hope is that people will feel that it was well worth it,” she said.

 

All of this is entirely for the current residents’ benefit, but as we know no act of generosity goes unquestioned:

 

Yet skepticism — and a lingering suspicion — remains. “It looked more to me like they wanted to get the people in an exodus, to move them out of here as quickly as they could,” said Edward Carter, 76, a longtime tenant at Whitman.

 

Activists from Community Voices Heard, New York City

 

That’s utter nonsense, of course.  The property is encumbered by a permanent deed restriction that can be lifted only with HUD consent.  Nevertheless, paranoia strikes deep, fostered by the enemies within.  Here, for instance, is a comment about Ingersoll from August, 2007:

 

There is a HUGE rumor mill about anything regarding these projects (or any projects). A real estate broker trying to sell a desperately overpriced building across from projects told a friend that, “It was okay to speculate because the Jews had bought the projects and everyone was going to be moved out.” This is a freaking quote.

 

Seventeen years ago when my daughter was born, my hospital roommate lived in the Whitman houses and she told me – in all seriousness – that Chase was buying out tenants but they were trying to force people out and she knew people who refused to move whose windows had been shot out by the bank.

 

Another friend, who lives in projects out in Coney Island repeated the same rumor – almost word for word – several years later about the buildings she resides in.

 

It’s a scary rumor mill anywhere else.

 

These rumors are ineradicable.  As the Times notes:

 

An area on the rebound: Fort Greene, Brooklyn

 

[The renovation plan] has fueled rumors, repeatedly denied by the agency, that low-income residents are being pushed out to convert the buildings into private luxury housing as Fort Greene gentrifies.

 

Where Fort Greene’s upwardly mobile want to live

 

Even long-delayed good news barely makes a dent:

 

Residents received some good news last month, when the Housing Authority held a ribbon-cutting for a $7 million community center on Myrtle Avenue. It had been expected to open in 2004.

 

7.         Promises made before funding was rock-solid

 

Confronted with the brass-ring challenges mentioned before, NYCHA elected to proceed with some of its plan:

 

So far, 611 units have been renovated and are occupied, with construction under way in some buildings but not yet in others.

 

A 2006 report by the city comptroller, William C. Thompson Jr., found that thousands of apartments at Whitman, Ingersoll and five other developments remained empty longer than necessary because the agency removed units from the rent rolls “well before it had a clear idea of how or when it planned to proceed” with construction projects.

 

Comptroller Thompson speaks after the fact

 

That’s easy to say after the fact; I have a more sympathetic view.

 

People are not numerate; they hear financial changes but have no tactile convertibility between the numbers and the changing scope and expectations.  Thus, when NYCHA promised to do such-and-such provided so-much money came through, people heard only the dish, not the price.

 

The project was announced in 2002, and work began in 2006. 

 

More than likely, when NYCHA started, it thought the money would be there. 

 

The Housing Authority told residents in October 2004 that the renovations were expected to be completed in five years. This past April, officials said the project was instead scheduled for completion in February 2012.

 

When bad things happen to good economies, the result is scope shrinkage, something residents and the general public want not to hear.

 

I’m sure I don’t want to hear what you’re saying

 

Apartments awaiting renovations at both complexes have been vacant for an average of four years, according to the housing agency.

 

That’s what happens when funding is interrupted.

 

8.         The pure-public ownership model

 

We know who should fund it; who should own it?

 

I’ve written extensively before about the essential housing authority, into which today’s housing authorities should evolve:

 

Effectively a publicly accountable charitable institution, a housing authority receives public subsidy, via the indirect collection agent of government — if it doesn’t, the system breaks down completely — and deploys it for the public benefit of affordable housing and healthy low-income communities.  That’s the essential function:

 

 

We can expand this single goal into a short menu of activities:

 

 

Everything else is a technical function, which means it can be contracted, and if it can, it should.

 

 

Thus the essential housing authority is a holding company:

 

 

Yet today’s typical housing authority is anything but a holding company.  Instead it’s an insular expanding universe unto itself. 

 

I am a universe unto myself; everything is encompassed within me

 

The future essential housing authority will be a publicly accountable Mission Entrepreneurial Entity, one that can finance its own improvements, buy and sell its own properties, and contract with private entities to do things at which private developers excel – like construction:

 

The agency is spending more money to renovate the two low-income complexes than a developer recently spent building a $152 million condominium tower nearby known as Toren.

 

Much of this difference is explained by the handicaps under which NYCHA operates – an argument to contract out those functions.  It’s much easier to avoid picking up unfunded mandates when you have restricted the government’s role to its essential functions, and outsourced the rest to the private sector.

 

Michael Kelly, the housing agency’s new general manager, said it had “turned the corner” on the project, which is being accelerated with $108 million in federal stimulus money and which comes at a time when public housing authorities across the country have chosen to demolish, rather than preserve, many of their buildings.

 

“This level of reinvestment suggests that NYCHA is committed to providing public housing resources for folks for generations to come,” Mr. Kelly said.

 

If anybody can move NYCHA out of its legacy of command-and-control functions toward its future essentiality, it’s Mike:

 

Seeing corners around the bend? Mike Kelly, new general manager of NYCHA

 

He has his work cut out for him:

 

Challenges facing Ingersoll/ Whitman

 

1. Illegitimate birth.  The properties were temporary housing turned over to New York by the Navy after World War II.

2. Decades of non-reinvestment.  Our whole public housing delivery system is a Gordian knot catching the properties in a dependency trap: starved for resources.

3. Warrant-of-habitability risk.  A landlord that rents a substandard apartment is liable to the resident for damages, and housing authorities are uniquely vulnerable to such litigation.

4. Brass-ring capital planning mentality.  Scarcity of funding prevented incremental improvements over time, leading to obsolete apartments needing a comprehensive and expensive overhaul.

5. Funding cuts after housing authorities’ plans were made.  Funding promised at one time would be unpromised later, necessitating painful reductions in scope even as costs rose.

6. Resident-relation complexities.  Public housing residents’ fears about being relocated or gentrified cannot be placated except by rehabbing with them in place – adding to the costs.

7. Promises made before funding was rock-solid, leading to painful and poorly understood reductions in rehab scope.

8. The pure-public government ownership model, instead of reinventing into the essential housing authority.

 

Eight challenges are enough, aren’t they Magic 8-Ball?

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By: David A. Smith

 

[Continued from yesterday's Part 1.]

 

Yesterday we visited Ingersoll and Whitman Houses, two large public housing properties in Brooklyn’s Fort Greene neighborhood, where the New York Times showed the obligatory photographs of empty apartments and broken windows before giving an assemblyman a platform to spout complaints about the invisible ‘administrative management’ that makes such a convenient whipping boy.

 

As an elected official, I wield the flail on whom I choose

 

Yet, overlooked by the Times and by the fulminating assemblyman, Ingersoll/ Whitman are emblematic of the challenges facing US public housing, which go far beyond one bureaucrat, one property, one city, or even one era. 

 

Yesterday we identified:

 

Challenges facing Ingersoll/ Whitman

 

1. Illegitimate birth.  The properties were temporary housing turned over to New York by the Navy after World War II.

2. Decades of non-reinvestment.  Our whole public housing delivery system is a Gordian knot catching the properties in a dependency trap: starved for resources.

 

These two are bad enough; what follows makes it even more difficult.

 

More problems for a pure-public owner

 

3.         Warrant-of-habitability requirements

 

While more than 130,000 families are on the waiting list for a city public housing apartment, hundreds of units at the Ingersoll Houses and the adjacent Whitman Houses are vacant — 923 out of nearly 3,500 units, according to the landlord, the New York City Housing Authority, the city’s public housing agency.

 

Obviously, this is a terrible shame, but for many of these apartments, NYCHA has done the right thing, in view of the warrant of habitability risk.  Simply stated, in New York:

 

Tenants are entitled to a livable, safe and sanitary apartment. Lease provisions inconsistent with this right are illegal. Failure to provide heat or hot water on a regular basis, or to rid an apartment of insect infestation are examples of a violation of this warranty.  (Real Property Law §235-b)

 

A vacancy at Ingersoll

 

If a landlord breaches the warranty, the tenant may sue for a rent reduction. The tenant may also withhold rent, but in response, the landlord may sue the tenant for non-payment of rent. In such a case, the tenant may counter sue for breach of the warranty.

 

Actually, for landlords it’s worse than this; breach of the warrant of habitability allows enterprising public-interest lawyers to sue for damages.  Housing authorities are a sitting duck defendant – they cannot leave, they cannot file bankruptcy (they’re an arm of the city), they cannot plead insolvency.  NYCHA is confronted with apartments like these:

 

Someone had pried open the metal door of an 11th-floor apartment at a public housing complex in Brooklyn with what appeared to be a crowbar, leaving a gash near the lock.

 

Teenagers who broke into a vacant unit in the building recently left the door unlocked.  One evening, there was a bicycle next to the refrigerator, gang graffiti on the walls and a condom wrapper on the floor. The light in the kitchen still worked.

 

An apartment that suffers too much interior damage goes past the point of operational reparability, known in the lingo as a down unit.  It has to be secured, and often it is cannibalized – fixtures removed to repair other apartments.  With half a century of under-maintenance, it would be surprising if NYCHA didn’t have a significant inventory of down units.

 

NYCHA’s Chelsea-Elliott housing property

 

That leads to …

 

4.         Brass-ring capital planning mentality

 

When a public housing property’s problems compound beyond its ability to solve them, the housing authority pursues a comprehensive revitalization: one massive upgrade of everything, all at once:

 

Agency officials defended their handling of the renovations and their oversight of the vacant units, and described the work as the largest public-housing renovation project in the country.

 

They attributed the delay to the broad scope of the project, which has included combining some apartments in developments that are more than sixty years old ….

 

)

More of Roosevelt’s legacy: Archdale Village, Boston

 

Brass-ring thinking is imprinted in public housing authorities because of their dependency schema.  Public housing has no replacement reserve; its properties generate no positive cash flow (that’s why it needs operating subsidy).  It has no ability to borrow long-term and finance improvements.  Thus it is operating sixty-year-old high-rise buildings.  Built before we worried about lead-based paint, much less asbestos, radon, or mold.  Built before broadband, before the personal computer, before television even.  Public housing has not kept up with the evolving modern home.  These properties have missed a half-century’s worth of trends in affordable housing.  Electrical circuitry is beyond obsolete; so too plumbing and piping.  

 

Now comes the magic moment when just possibly we might get funding.  We have to do everything at once: the physical reconfiguration, the upgrades, the operational improvements. 

 

The original renovation plans included improving elevator service, adding floors to buildings and reconfiguring some apartments to add space by reducing the number of units per floor.

 

I knew I’d grasp it eventually

 

The scope expands, and with it the cost, and the timing, and the complexity:

 

The Housing Authority told residents in October 2004 that the renovations were expected to be completed in five years. This past April, officials said the project was instead scheduled for completion in February 2012. The total cost has now reached $248 million, nearly triple the $83 million the agency said it would cost in 2004.

 

Once one has committed to a complete repositioning, not just fixing some down units, arises the next challenge: residents in place.

 

5.         Funding cuts after housing authorities made plans

 

Because of their dependency schema, housing authorities basically have no money of their own. 

 

How the other half lives: Riis Houses, New York City

 

Anything they need for large-scale upgrading or renovation must come from Uncle Sugar, which exercises the sovereign’s prerogative of insisting on approving the plans in detail.  That’s a challenge because gut rehab of occupied apartments is much more complicated than building new:

 

The agency is spending more money to renovate the two low-income complexes than a developer recently spent building a $152 million condominium tower nearby known as Toren.

 

Partly this is due to governmental self-imposed restrictions like union rules, Davis-bacon, and prevailing wage.  It’s also because of protracted delays:

 

The majority [of the vacant units – Ed.] are unoccupied because of a costly, long-delayed modernization project that has forced ['Caused' is more likely – Ed.] hundreds of tenants to relocate.

 

I expect that, in anticipation of funding – which was probably promised – NYCHA in turn made promises to residents and began prepping the buildings for renovation by relocating residents on turnover.

 

Who promises more wins … doesn’t he?

 

The original designs were changed because of a lack of financing, and the plan to add floors was dropped.

 

Each time one redoes the design, some sunk costs become unrecoverable, and the overall project cost expands.

 

Some non-recoverable costs there …

 

[Continued tomorrow in Part 3.]

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By: David A. Smith

 

What bureaucrat can we blame for this?

 

The New York Times story inspiring this post follows the time-honored journalistic formula for spotlighting a problem to deplore: start with an incontrovertibly deplorable problem, chase it with a provocative quote, and skate superficially through the background. 

 

It’s simple, class; to publish, you must write

 

Someone had pried open the metal door of an 11th-floor apartment at a public housing complex in Brooklyn with what appeared to be a crowbar, leaving a gash near the lock. No one was home. But then, no one is ever home: Apartment 11D was vacant. So was 1E — insulation covered the door’s missing peephole — and at least two dozen other apartments in the 11-story building at the Ingersoll Houses in Fort Greene.

 

 “This is a classic case of administrative mismanagement,” said Assemblyman Joseph R. Lentol of Brooklyn. “It’s really pathetic when you think about how long this has taken and how administratively they could have done it better.”

 

Assemblyman Lentol knows who he wants to blame

 

While Mr. Lentol is of course entitled to his opinion, he’s wrong.  His explanation fingers the convenient whipping boy of faceless bureaucracy, rather than seeing Ingersoll and Whitman as archetypal of what’s wrong with the Gordian knot of our whole public housing delivery system, and how rehab deferred is rehab denied.

 

To give Mr. Lentol his due, the situation is utterly unacceptable:

 

At Ingersoll, the windows of a few empty units have been shattered.

 

Empty windows are invariably broken, and broken windows invariably lead to broken rules.  A streetscape of physical neglect leads to a society that neglects its laws.

 

Teenagers who broke into a vacant unit in the building recently left the door unlocked. One evening, there was a bicycle next to the refrigerator, gang graffiti on the walls and a condom wrapper on the floor.

 

Ingersoll in Fort Greene, Brooklyn

 

Like many New York City public housing properties, Ingersoll is large:

 

Raymond V. Ingersoll Houses in Brooklyn has 20 buildings, 6 and 11-stories tall on 22.9-acres with 1,802 apartments housing some 4,532 residents. Completed February 24, 1944, it is bordered by Park and Myrtle Avenues, Saint Edward’s and Prince Streets.

 

 

And it’s named after an inspiring figure:

 

Raymond V. Ingersoll (1875-1940) served as Parks Commissioner and Brooklyn Borough President and was a staunch advocate for Public Housing. He also championed broader public use of parks, playgrounds and beaches. He was instrumental in the consolidation of the subway systems, creation of health centers, a central library building, the Brooklyn College campus, Brooklyn Civic Center site, and better roads and parkways linking Brooklyn to the other boroughs. He was a member of the State Commission which revised tenement and housing laws in 1928-29. Ingersoll strongly advocated non-partisan municipal government. He once wrote: “The dreamer dies, but never dies the dream.” Ingersoll Houses is in Brooklyn.

 

Dreams notwithstanding, empty apartments are temporary houses of crime; they invite neighborhoods to become slums.

 

At Whitman, 17% of the units are vacant. At Ingersoll, nearly 35% are empty.

 

To form a viable civil society, properties need high occupancy.  Anything above (say) 15% vacant has probably double the security risk.  Anything above 30% vacant is asking for a crime plague, and it becomes essential to board up the buildings to prevent vermin human and animal.

 

“As these renovations have been taking place over the last several years, Whitman and Ingersoll have had a ghost-town-like feel to them,” said Assemblyman Hakeem Jeffries of Brooklyn.

 

Assemblyman Jeffries worries about ghost towns

 

No question about it, that much vacancy is a threat

 

A woman who lives in the Ingersoll building with the vacant unit with the missing peephole said it had been used recently by crack dealers. While crime has increased slightly at Ingersoll and Whitman — with 58 felony assaults and other serious crimes reported this year, as of November, compared with 49 in the same period last year — Paul J. Browne, the Police Department’s chief spokesman, said there was no “crime trend” related to the vacant apartments.

 

No trend, just chronic crime, and it will persist until Ingersoll is substantial improved.  Will it be?

 

Michael Kelly, the housing agency’s new general manager, said it had “turned the corner” on the project, which is being accelerated with $108 million in federal stimulus money and which comes at a time when public housing authorities across the country have chosen to demolish, rather than preserve, many of their buildings.

 

An optimist after thirty years: Mike Kelly

 

I’ve known Mike Kelly many years; in that interval, he’s run the Washington DC Housing Authority, and before that, the Housing Authority of New Orleans (HANO).  Not only is he a centurion of public housing, he’s among the most capable and  best-respected executives in housing authorities nationally, and currently president of the Council of Large Public Housing Authorities (CLPHA, rhymes with laffa).

 

A noble motto: wish it were truer

 

“This level of reinvestment suggests that NYCHA is committed to providing public housing resources for folks for generations to come,” Mr. Kelly said.

 

How did Ingersoll and Whitman get to this sorry state, with these protracted delays and unfulfilled promises?  The inter-related causes are emblematic of public housing’s challenges.  Ingersoll and Whitman demonstrate why, if we do not comprehensively remake the delivery system, and enable entities like NYCHA to become essential housing authorities, all of public housing will face the Ghost of Christmas Yet to Come with futures like theirs.

 

The reasons are legion.

 

1.         Illegitimate birth

 

Ingersoll and Whitman were developed in haste:

 

Ingersoll and Whitman are among the city’s oldest public housing developments — both comprise a total of 35 6-story, 11-story and 13-story red-brick buildings completed in February 1944.

 

What Brooklyn looked like when Ingersoll and Whitman were being developed

 

They were built amidst emergency:

 

The upgrade is long overdue, as the buildings have been out of compliance with the buildings code ever since they were transferred by the US Navy to the city. Did you catch that? The city has been running the complex for decades under conditions that it would never allow a private owner to. The shortcomings include everything from a lack of real kitchens in some units to insufficient light and air levels.

 

New York City family, 1944; the little boy at lower left grew up into …

 

Hector Elizondo, age 73 in 2009

 

2.         Decades of non-reinvestment

 

For the first decade after their completion, Ingersoll and Whitman probably received little upgrading, because New York was in the midst of a major demographic and real estate boom driven by returning GI’s eager to start families. 

 

Agency officials have said the units were built as temporary housing, with many providing cramped living space, like kitchens in living rooms or hallways.

 

As I’ve previously written, temporary structures can become permanent; housing constructed mainly for emergency shelter can petrify into the residential landscape:

 

The temporary usually becomes the permanent, as our humble Quonset Huts show:

 

The Quonset hut of St. Patrick’s Catholic Church served as the center of Catholic life in Barrow until 1993. The church replaced the hut with a wood-framed structure.

 

With some adaptability, and possibly some easy-disassembly features, reusable shipping containers could represent the embryo house, giving people a nexus around which to establish a tenure and tenancy and gradually improve and personalize their homes.

 

Martie Rozkydal and her granddaughter, Julia Nesslage, beside the hut they painted together, 2003

 

After World War II, New York City adopted rent control as a ‘temporary emergency’ measure, and it remains today, a harmful anachronism that I’ve analyzed and criticized in many other posts.  Public housing’s funding structure is equally anachronistic, as I detailed at length in public housing’s dependency trap:

 

Public housing in the United States was established in the 1937 National Housing Act. Way back then, there were no state housing finance agencies, no GSEs, no FHA mortgage insurance, no specialized business of affordable housing, virtually no mission-oriented sponsors. Back then, affordable housing meant slums, rooming houses, or tenements.

 

Chicago, 1910

 

Like many a chief executive elsewhere around the globe, facing failing urban housing markets, Roosevelt decided to put the Federal government directly into the housing business, so the 1937 Act established a four-point structure:

 

1. Public ownership. Direct public ownership of the housing.

2. Local ownership. Even if funded from Washington, each property to be owned by local housing authorities.

3.  Up-front grants, grant-based funding of all capital costs, therefore no debt.

4.  Cheap rents, set at the cost of operations.

 

Later, when it became clear that the poorest of the poor could not afford even the cheap rents, two more planks were added:

 

5. Mean-tested rents, set at a percentage (initially 25%, today 30-32%) of each household’s income.

6. Federal operating subsidy to bring Net Operating Income back up to zero. (Later, realizing that zero NOI also precludes capital improvements, HUD added the concept of modernization funds.)

 

For the last forty years, these six elements have formed public housing’s operating paradigm.

 

Whitman today: recognizable to Roosevelt

 

In such a structure, and with public housing’s deliberate and unconscionable Federal under-funding over the last decade and a half, public housing has been starved for resources for which no amount of scrambling for short money could compensate.

 

[Continued tomorrow in Part 2.]

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By: David A. Smith

 

[Continued from yesterday's Part 1.]

 

Continuing the recap of December’s post, during December we looked globally (Dubai’s shadow bankruptcy) and locally (New York City’s public toilets).  Gotham City, the cradle of American apartments, also served as the setting for an Experiment in urban micro-living: Part 1, the pluses, and Part 2, the minuses:

 

It’s quite clear that the Prokops have made a conscious choice – foregoing large elements of what you and I would consider minimum acceptable living in exchange for security of tenure and controllability of occupancy cost, some potential for appreciation, and above all reduced occupancy cost.  They then have taken the resulting savings and spent it on things they value more than their mousehole apartment.

 

The welcome mat marks my territory

 

In making that choice, what have they renounced?

 

* Children

 

Unlike cats, they cannot be left alone all day, and unlike dry cleaning, they cannot be parked elsewhere overnight.

 

* Entertaining guests

 

She joked that the tiny apartment gets her out of hosting duties and dissuades long-term guests.

 

“No one ever stays too long,” she said. “It’s too small.”

 

Am I the only one who hears enforced brightness in their comments?

 

9. Christopher, 35, and Zaarath, 37, pop open a bottle of champagne.

 

The Big Apple also hosted a tussle over personal behaviors in the privacy of one’s own home, in Not illegal, merely despised:

 

And Audrey Silk, the founder of Citizens Lobbying Against Smoker Harassment, a nine-year-old advocacy group, said the trend was troubling from a civil liberties perspective.   “If we’re talking about annoying odors, where do you draw the line?” she said. “What about cooking odors, from fish or curry?”

 

In A Wild and Crazy Guy (1978), Steve Martin explained how, when asked by a fellow passenger on an airplane, “Mind if I smoke?” he would answer, “No, mind if I fart?”

 

“It’s one of my habits!”

“Yeah, they got a special section on airplanes for me now.”

 

These issues of urban cohabitation and coexistence are critical, for during 2009 humanity passed the majority-urbanization mark, homo urbanis overtaking homo agricolas, and whether or not we like it, we are hurtling toward the future city, such as the ultimate future city: Trantor:

 

Continuing our occasional series on the Ultimate Future City:

The Caves of Steel, by Isaac Asimov, 11/07

The Naked Sun, by Isaac Asimov, 11/07

The World Inside, by Robert Silverberg, 12/07

Diaspar, The City and the Stars, by Arthur C. Clarke, 3/08

 

Displaying our technology for the universe to see

 

The half-century in which we are living, which opened in 1975 and will close in 2025, will be without equal in human history for its urbanization.  In both its rate and scale, this fifty years will permanently remake our planet, as homo agrarius gives way to homo urbanis.  We are moving to the cities, and our world will never be the same.

 

Coruscant from Star Wars, modeled on Trantor

 

Shifting from the cities to the Mission Entrepreneurial Entities that develop, own, and operate affordable housing in those cities, I reported on my ULI Affordable and Workforce Housing Council meeting, where I moderated a debate on the Low Income Housing tax Credit, and where I also heard from long-time housing consultant Helen Dunlap, who offered Rumfeldian organizational suggestions in Knowing your unknowns: Part 1, real estate, and Part 2, organization and governance:

 

“Mission” (multiple bottom lines) is achieved when the business works, not the other way around.

 

Amen.

 

All you little mission Hulkamaniacs, take note

 

Too many MEEs think that mission will carry them, and that business principle and systems are to be avoided, at least an allergy, more often a positive infectious rash to be scrubbed out. 

 

An MEE is a business that pursues mission and redeploys its profits into expanding mission.  Any other orientation eventually fails.

 

Make the money first, then reinvest it in good works

 

Freshly back from a gates Foundation convening in Durban, South Africa, I posted what was for me the most personally moving event, my Pictures at an enumeration:

 

What is important is not principally what happened – it totaled a few hours’ work, and resulted in a stack of papers with information.  Papers that had legal validity to the city of Durban, hence economic, judicial, and political consequences. 

 

I realized with a shiver that I’d seen this dynamic before – at real estate closings.  The same curious convergence: months of work, negotiations, bringing people together, culminating in a gathering where papers are filled out and signed, then taken to government for recordation. 

 

Information becomes part of the legal reality.  A bargain is struck, a bargain with consequences. 

 

In a closing, it’s about property and money and future obligations.  So too in an enumeration – property and money and future obligations.

 

The city has now taken cognizance of this neighborhood, its people, and their property. 

 

Enumeration is the inauguration of urban citizenship.

 

Enumeration creates citizenship rights

 

Finally, Sherlock Holmes took time out from his intertemporal schedule to explain What makes a good consultant? Attributes of character, Part 3a and Part 3b:

 

It was always Watson’s place to listen actively

 

Continued from the previous Part 2b and Part 2a, which dealt with services and activities.]

[A previous trio, Part 1a, Part 1b, and Part 1c, covered the rules of engagement with clients.]

 

Quick to absorb and process new information

 

Holmes feared subconsciously anchoring his or his client’s expectations through half-baked theorizing and prescribing.  For that reason, he sought to ascertain and enumerate the whole ecosystem of facts surrounding a particular case before making any deductions:

 

“You don’t seem to give much thought to the matter in hand,” I said at last, interrupting Holmes’s musical disquisition.
“No data yet,” he answered. “It is a capital mistake to theorize before you have all the evidence. It biases the judgment.”

A Study in Scarlet, Part 1, Chapter 3

 

Start by examining the evidence

 

Voraciously he sought data:

 

“I am an omnivorous reader with a strangely retentive memory for trifles.”

The Adventure of the Lion’s Mane

 

Is constantly learning

 

 “Education never ends, Watson. It is a series of lessons with the greatest for the last.”

The Red Circle

 

So is a blog.

 

There is yet more to learn, Watson

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