New York City Housing Authority Update

I keep returning to the case of the New York City Housing Authority (NYCHA) because it is such a perfect illustration of the socialist economic model in practice. There about 170,000 NYCHA apartments, housing around 400,000 people. Most of the apartments were built from about the late 1940s to the 1970s, to be technically “owned” by the City of New York, although nobody expects any return on the investment. Maintenance and upkeep are in the hands of a unionized bureaucracy, headed by a Commissioner reporting to the Mayor. The unionized staff gets paid for going through the motions, rather than for assuring that the residents are receiving a good-quality housing product. Nobody ever gets an extra dollar of pay for getting the buildings ready to go for the next ten years, or for the next generation.

Actually, it’s far worse than that. The commissioners turn over every few years, and their only interest is in not having the buildings fall apart on their watch. The employees have union contracts that perversely reward inefficiency. For example, NYCHA’s plumbers have negotiated themselves a deal where all shifts are Monday through Friday, 8 AM to 4:30 PM, and any work outside those hours gets paid at “overtime” rates. Clearly, the plumbers maximize their income when the plumbing is old and prone to regular breaks, requiring emergency calls during the nights and weekends when the pay is time-and-a-half or even double. Fortunately for them, the genius economic planners who put this NYCHA thing together some 40 to 70 years ago never considered the possibility that after such a period of time the buildings would need major capital upgrades. No plan was ever put in place to provide for such upgrades. As the buildings get older, the breakdowns become more frequent and worse. The living conditions get worse and worse, while the employees make more and more money.

Mostly, NYCHA has been out of the news lately. But thank the Lord for the New York Post, which will not let go. On August 13 the Post reported on NYCHA’s ballooning overtime budget:

Overtime spending at the city’s embattled Housing Authority ballooned to $95.5 million last year, as employees labored to correct the scandalous living conditions that led to a partial federal takeover of the agency, new payroll figures from the Empire Center think tank show. . . . NYCHA’s overtime spending has risen in recent years, growing 58 percent from the $60.6 million it spent during the city’s 2015 budget year.

The plumbers were perfectly positioned to collect the lion’s share of the gravy:

Some of the biggest payouts went to NYCHA’s plumbers — one of whom took home more than a quarter of a million dollars in total pay thanks to massive overtime. Robert Procida racked up $181,422 after working 1,668 hours in extra shifts. That’s an average of 32 hours of overtime a week. It brought his total take-home pay to $286,246 for the year. . . . The authority’s 19 plumbing supervisors scored the biggest average overtime payments, earning on average $71,505 from extra shifts. . . . In addition to Procida, who has worked for NYCHA since 1987 and who could not be reached for comment, the other biggest plumbers on the overtime list included Daniel Hock Jr., who got $130,901.16 in overtime, and José Ortiz, who got $124,343.01.

Surely, for this explosion of overtime, the plumbers must finally be getting NYCHA’s problem of sporadic heat and hot water under control? Of course, it’s the opposite. From the Post on August 11:

NYCHA developments suffered heat and hot-water outages more than 3,500 times this past winter, leaving 339,000 public-housing residents — or four out of five — in the cold, troubling new statistics show. The outages struck 259 of the embattled New York City Housing Authority’s 326 developments between Oct. 1, 2018, and May 31, 2019, according to data obtained through a Freedom of Information Law request. Nearly 400,000 New Yorkers live in NYCHA’s 174,000 apartments and more than 150,000 of those homes — or 87% — lost heat or hot water at some point during the winter season.

Reportedly, the City is asking the plumbers for work rule reforms, including reform of overtime rules, in ongoing negotiations for a new contract. The union is resisting, of course. Why wouldn’t it?

I’m not saying I blame the plumbers for the terrible conditions at NYCHA. They are not responsible for putting the disaster of collective ownership in place, and are just doing their jobs under the conditions that have been negotiated. But in the absence of any possibility of a return on a massive new investment to upgrade the NYCHA buildings, the buildings suffer the inevitable fate of collective ownership, which is gradual decline and degradation. Forty to seventy years after construction, most of them should be emptied out and rebuilt from the inside out.

If you look around Manhattan, you can easily observe that hundreds of buildings in private ownership that are of the age of the NYCHA projects are getting the total re-builds that the NYCHA buildings need. This process includes both office buildings and residential buildings outside the rent-regulation system. The expectation is that new tenants or owners will reward the developer for the investment. As to NYCHA, all I can think is that they are hoping that a new Democratic President and Congress are going to swoop in and hand them some $30 billion or so.