When you can’t say anything NYCHA: Part 4, “little consistency with best practices”

September 7, 2012 | Bureaucracy, Housing, Management consulting, New York City, NYCHA, Public housing, Regulation, Rental, Section 8, Unions

[Continued from yesterday’s Part 3 and the preceding Part 1 and Part 2.]


By:David A. Smith


Thus, having worked through all of Boston Consulting Group’s operational recommendations in its long-awaited and quite expensive critique, Reshaping NYCHA support functions (link to the full 1.78 Meg report in pdf), we come back to where I started this post, with the total failure of NYCHA’s leadership to establish appropriate executive management:


How can we be doing badly? We meet endlessly!


6. Sham governance, cronyism, and meddling


In Part 1, I mocked the faint praise BCG struggled to bestow upon NYCHA’s board:


If 90% of life is just showing up, then NYCHA must be scoring 90%


The absence of achievements is bad enough – more damning still is this exposition of how the board is wrongly constituted:


We’re not a board, we’re a cabal – and what’s wrong with that?


For the moment, pretend that you do not know what these four individuals are titled, either individually or collectively, and just look at what they do:


All board positions are full-time positions.

• With the exception of Resident member


Full-time board members are also fully compensated


Curious: these people work full-time at NYCHA, yet they are not in the organizational chart.


Several key management roles (e.g., GM, DGMs) remain unfilled.


Even more curious: under Chairman Rhea’s leadership, what would normally be the executive leadership (general manager, deputy general managers) have long been vacant, and as we have seen, all the long-serving professionals vacated the premises in the last year and a half.  In fact, the current board members appear to have supplanted what would ordinarily be professional management:


Board members have substantial expertise in key operational areas (e.g., Finance, Stakeholder Engagement and Affordable Housing)


They are all, of course, Friends of Mike:


“Yes, that’s right, he appointed me even though I told him I wasn’t the right man for the job”


Fixed, small number of Board members, appointed by Mayor


All right then, who are these people, who in fact run NYCHA:


Board member Emily Youssouf


Emily Youssouf‘s principal credential is her experience at HDC, which as it stands is directly relevant – for a CFO-type position:


In 2003, Ms. Youssouf was appointed President of the New York City Housing Development Corporation (HDC) by Mayor Michael R. Bloomberg. She brought to HDC an extensive investment banking background in housing finance, loan securitization, and structuring innovative financing strategies.  


Under her direction, HDC was turned around from a troubled public benefit corporation to become the number one issuer of multi-family affordable housing bonds in the country for 2004 through 2007.  During Ms. Youssouf’s tenure, HDC issued $7 billion in bonds, financed 37,000 units of affordable housing in NYC and total assets increased from $2.3 billion to $9 billion. She successfully restructured the corporation, established a risk committee, and a credit department; and greatly improved the organization’s governance by strengthening its board involvement.


Margarita Lopez is an advocate for mental health, multiculturalism, and homelessness – which are important matters, to be sure, though not NYCHA’s core mission.


Board member Margarita Lopez


Ms. Lopez’ service on the Mental Health Committee was the next and logical step to a career dedicated to work with the homeless and mentally ill population of New York City. For the twelve years preceding her election to the City Council, Ms. Lopez worked as a Senior Team Leader, securing homes and services for individuals diagnosed with mental illness, some of whom also suffered from drug and alcohol addictions. She served on the MacArthur Foundation’s Advisory Committee on Mental Illness and the Law, participated at the Meeting on State Mental Health Authority Housing Issues organized by the Federal Task Force on Homelessness and Severe Mental Illness, and lectured and trained outreach workers in such cities as Los Angeles, CA, Seattle, WA, Philadelphia, PA, Washington, D.C., Providence, RI, and San Juan, PR on issues pertaining to multiculturalism and team building, under the auspices of the National Resource Center on Homelessness and Mental Illness.


Atefeh Riazi is a promotion-in-place, her forte being information technology – which is terrific if the wetware modems (aka the workers) are actually entering accurate and timely data:


Atefeh Riazi, in her prior job


As a senior IT executive with a degree in engineering, Ms. Riazi has served in both the public and the private sector as a CIO managing large scale technology projects and initiatives. Throughout her career, she has had an impressive record of innovation and successful large-scale deployments allowing for productivity gains and competitive advantage. In addition, as a philanthropist, Ms. Riazi is the Executive Director of CIOs Without Borders, a global not-for-profit organization focused on using technology and innovation for the good of humanity.


All of these people are paid.  Not so the remaining board member, Victor Gonzalez. who gained his broad seat recently, only because the New York State legislature, extremely belatedly, enacted a law allowing residents to be on public housing boards:


Lifelong New Yorker, NYCHA resident and board member Victor Gonzalez


Mr. Gonzalez, who has lived in NYCHA’s public housing for 50 years, currently resides in the Rabbi Stephen Wise Towers on Manhattan’s Upper West Side. He is a tireless public housing resident leader and advocate, and has served as president of the Wise Towers Residents Association since 2003 and as alternative member of NYCHA’s Resident Advisory Board.


He is an American success story, and an exemplar of those whom public housing should serve:


Born in New York City to Puerto Rican parents, Mr. Gonzalez received his Bachelor’s degree from Mercy College and served for five years in the U.S. Air Force, honorably discharged after reaching the rank of Sergeant of Security Police.  Following his military service, he spent 33 years working for the United Parcel Service, retiring as international Team Leader in Customer Service in 2005.


All of them would make useful board members if they were acting as a board.  But they are not, as BCG demonstrates with graphics that are overly simplistic, and paradoxically thus more compelling:


One of these things is not like the others

One of these things is just not the same


As can be seen, compared with other PHAs, NYCHA’s board is (a) small, (b) full-time employees (!?), and (c) well paid (!?!?), as the Daily News delighted in reporting, over and over:


They earn close to $200,000 a year, ride in city-owned cars, live in tony Manhattan apartments — and are sitting on hundreds of millions of dollars intended to benefit low income New York families.


Then too, the NYCHA board looks less and less like any board of directors in my experience:



Not independent, not evaluated, no core committees, no CEO evaluation


As the BCG chart makes clear, the board does not evaluate the CEO, it does not evaluate the board’s effectiveness, it lacks watchdog committees normally required under Sarbanes-Oxley (and basic principles of proper governance), and it is not independent. 


Translation: The board is in management’s pocket.


A scandal by the numbers


Then what in the name of all that’s holy does the blessed board do?  It meddles (slide 98):


Board members become entrenched in day to day operations (ie, “surrogate senior managers”)

• Creates difficulty in maintaining needed separation and independent viewpoint

• Drives members to actively involve themselves in responsibilities typically reserved for senior management


Now, meddling is a full-time job, especially when you’ve chased away the professional managers who might actually do the work, so the board meets in a state of semi-permanent crisis:


Record this for posterity, class, under the heading, How not to be a board


This graphic is a scarcely-believable indictment.  Aside from meeting every two weeks, the board:


  1. Involves itself in individual tenancy and disciplinary cases (assuring the staff are kneecapped and guaranteeing that everyone will appeal to the sovereign).
  2. Uses an “informal process to standardize submissions,” meaning the material is haphazard and not vetted.
  3. Has only a two-day window between materials and meeting, leaving “little time to prep.”
  4. “Back to back meetings often run over, due to volume of items, causing backup and impacting staff productivity.”


The whole central office is thus portrayed as rushing about from meeting to meeting, crisis to crisis, individualized response to individualized response.


In short, to all intents and purposes, NYCHA has no board.  It has an ad hoc privy council of four individuals:


We’re all here just looking out for ourselves


None of these people, including Chairman Rhea, is in any way experienced or expert in:


  1. The ownership and operation of public housing.
  2. Managing, motivating, and negotiating with a unionized and heavily entrenched workforce.
  3. Interacting with the Federal government on subsidy flows and public housing recapitalization.
  4. Strategizing and executing a comprehensive renovation and recapitalization program for residential apartments.
  5. Operating a property management company
  6. Developing government-side partnerships, joint ventures, or long-term operating contracts with the private sector.


These might not be fatal omissions if these people were a board overseeing an actual management team.  But there is no management team, just dedicated interlopers who are tackling a task for which they are poorly suited, and at which they are collectively, failing in every way.


NYCHA doesn’t have a people problem because it has bad systems, and it doesn’t have bad systems because it has bad people.  It has bad systems and bad people because it has bad governance, bad management, and no strategy for modernizing either. 


NYCHA spent $10,000,000 for the Boston Consulting Group to tell it that in gory detail, and then sat on the report for months and months until goaded into releasing it.  The Daily News‘s series evidently had a galvanizing effect, because very shortly after the report appeared, Chairman Rhea took two long-overdue actions.  First he announced a proposed change in board structure:


The city will overhaul the New York City Housing Authority board, eliminating its highly paid members and bringing in unsalaried replacements, the agency’s head told the Daily News.


NYCHA head John Rhea made the surprising announcement Thursday [August 16, 2012 – Ed.] as a long-awaited report was released that blasted his agency as inefficient, mismanaged and slow moving.


The current NYCHA four-member board is headed by Rhea, who earns $197,000, and includes two other members making $187,000 a year plus one member who is a NYCHA resident.


The city will sponsor legislation in Albany to allow the change in the board.


The new-look board will include five members, four of them unsalaried — and two of them living in NYCHA housing, Rhea said.


That future-tense verb worries me.  The current board should go now, and professional managers should have been hired a long time ago.  In fact, the Daily News had it right:



The board restructuring, if it happens, is good news, but what followed it a week later is not:


The troubled city Housing Authority has filled the long-vacant job of general manager with an Ivy League-educated business executive with zero housing experience, the Daily News has learned.

Cecil House, 51, who has worked for years as a corporate executive for utility companies, arrived Thursday to fill a crucial position that’s been open for nearly two years.


House has never worked in housing, but at Edison in California he worked in procurement, an area that needs dramatic overhaul at NYCHA.


“The difficulty in recruiting qualified applicants to high level positions is an ongoing challenge that is impacted, many believe, by the agency’s reputation as a structurally diffuse organization where many decisions must be made at the board level, rather than by executive staff,” stated a report by Manhattan Borough President Scott Stringer.


Not all Ivy Leaguers are incompetent, nor are all incompetents Ivy Leaguers, so we will hold nothing against Mr. House – except that he is the wrong man for the job. He has none of the qualifications NYCHA needs (helpfully listed above)


Now, Cecil, don’t believe anyone who tells you you’re just the fall guy