NYCHA Blames Dreary Financial Outlook on $454 Million in Unpaid Pandemic Rent

More than 73,000 NYCHA households are behind on rent, which officials say will force the public housing authority to draw from dwindling operating reserves and make other cuts in the year ahead—and could potentially hamper its repair plans. Meanwhile, the state’s already exhausted Emergency Rental Assistance Program (ERAP) to aid New Yorkers in arrears is unlikely to reach NYCHA.

More than 73,000 NYCHA households are behind on rent, which will force the public housing authority to draw from dwindling operating reserves and make other cuts in the year ahead—and could potentially hamper repair plans required under an agreement with the feds, officials said Wednesday.

Meanwhile, the state’s already exhausted Emergency Rental Assistance Program (ERAP) to cover New Yorkers’ rent arrears is unlikely to reach NYCHA tenants, who were given the lowest priority under the COVID rent relief initiative. The roughly 31,330 NYCHA households who have applied for ERAP relief owe a combined $250 million, authority officials said, but the relief fund, which pays landlords up to 12 months of unpaid rent, could only cover a maximum of $120 million.

“Any money we’d get through ERAP only solves half of the problem of arrears,” NYCHA Chief Financial Officer CFO Annika Lescott-Martinez said.

The revenue hole, she added, will make it harder for the housing authority to comply with the requirements of its 2019 agreement with the U.S. Department of Housing and Urban Development (HUD), in which the city committed to investing billions to make capital repairs and to address problems like mold, pests and lead paint on specific timelines. All told, tenants owe $454 million in total arrears systemwide, including money that was not paid prior to the pandemic.

“At some point if you don’t have sufficient revenue, it becomes more difficult to achieve those goals,” Lescott-Martinez said.

NYCHA officials, outlining the agency’s financial outlook at a board meeting Wednesday, pointed to dwindling rent collections over the last several years. The housing authority collected 88 percent of rent from tenants over 12 months in 2019, but only 65 percent in 2022, with arrears growing from $125 million to $454 million during the same period.

“There has been a change in attitude around paying rent,” since the start of the pandemic and the launch of the ERAP program, said NYCHA CEO Lisa Bova-Hiatt.

But it’s doubtful whether NYCHA will even receive that $120 million, since the state legislation that established ERAP prioritized funding for tenants in private-market apartments over NYCHA applicants. Demand for the relief program has long outstripped available funds, and it’s unlikely that the $800 million the state allocated this spring to replenish the program will be enough to cover the tens of thousands of applicants still waiting. The portal to apply for the program is set to close in mid-January.

“By law, this program cannot pay applications from subsidized housing unless all others are paid first,” Hazel Crampton-Hays, a spokesperson for Gov. Kathy Hochul, said in a statement. NYCHA officials said they have urged state lawmakers to make changes to ERAP, either by refunding it again or better prioritizing their applicants in light of the housing authority’s fiscal woes. A bill which would have given NYCHA the same priority for ERAP as other tenants passed the State Senate in June, but not the Assembly.

“We continue to evaluate the funds remaining in this program and how many applications will ultimately be paid once the portal closes next month, and we remain in ongoing communication about these issues with impacted parties,” Crampton-Hays added.

In the meantime, NYCHA tenants with a pending ERAP application are protected from eviction under state law until a decision is made on their case, which also makes them ineligible for other rental assistance programs.

“Both NYCHA and the tenants are very much in this holding pattern, where we can’t enforce, and they are expecting ERAP, and they are not paying,” Lescott-Martinez told board members Wednesday. “Our goal is house people so it’s really not in our prerogative to try and evict everyone, but we really do need the revenue.”

Iziah Thompson, a senior policy analyst specializing in public housing at the Community Service Society (a City Limits funder), criticized NYCHA’s framing around the arrears, but said unpaid rent is indeed a serious problem for an agency that relies on monthly payments to cover about a third of its operating budget.

“The idea that there is some sort of ‘culture change’ is an unfair characterization,” Thompson said. “But they are totally right to blame this shortfall on unpaid rent.”

He said state lawmakers chose to effectively exclude NYCHA from the rent relief fund, punishing hundreds of thousands of tenants. “They put them on the end of the list without thinking about how NYCHA needs rent to operate,” he said.

NYCHA officials told board members that without that full rent funding stream, the agency will be forced to draw $65 million from its operating reserves in 2023, after tapping additional millions from those reserves during the last two years. The housing authority said that fund will have less than a month’s reserves left at the end of this year without an infusion of cash, well below the three to four months-worth that HUD recommends.

Anticipating a $35 million year‐end deficit in 2023, NYCHA is planning additional proactive measures, such as cutting “non-essential contracts,” which top officials described as financial, legal and back-office jobs. The authority already eliminated 50 percent of vacant budgeted positions in its central office, and future reductions may still be on the table.

“The goal is to prioritize services for residents, but we wanted to telegraph that, while we have been able to manage the problem over the last three years by pulling from our reserves, you can’t continue to do that,” Bova-Hiatt told reporters.

The dire economic projections come as NYCHA continues its push for other capital funding streams, asking tenants at some 25,000 apartments to cast ballots in the year ahead for one of three money-raising models. Residents will decide if they want to turn their development over to private management through NYCHA’s existing RAD-PACT program, by entering into a newly-created public trust or by maintaining the current public housing model under Section 9.

NYCHA officials say converting complexes to RAD-PACT or the Preservation Trust will allow them to raise more money by switching to the Section 8 program, which comes with more federal funding than Section 9. But some tenants remain deeply skeptical of both proposals.

Officials say the authority needs around $40 billion in capital funds to address systemic issues with its housing stock, following decades of disinvestment and underfunding from all levels of government that have left buildings riddled with violations and more than 673,000 open work orders.

Advocates say state and federal lawmakers need to act fast to ensure NYCHA can make those desperately needed capital repairs—and that public housing tenants remain housed.

“If they don’t want to see a bunch of public housing tenants evicted, then they need to provide these funds,” Thompson said. “There’s tons of blame to go around and we don’t want to play blame game. This money just needs to come from somewhere.”