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Q&A
Financial impact of RAD/PACT conversions on NYCHA
1:31:50
ยท
3 min
NYCHA officials explain the complex financial implications of RAD/PACT conversions on the agency's budget, including changes in operating subsidies, expenses, and capital needs.
- Short-term savings may occur, but long-term federal funding for Section 9 (public housing) decreases
- Operating revenue and expenses for converted properties are removed from NYCHA's budget
- Significant capital investment (estimated $6.5 billion for converted units) is shifted off NYCHA's books
- Some PACT deals continue to generate revenue for NYCHA through partnerships with PACT partners
Brian Honan
1:31:50
Sure.
1:31:50
So, yep, I'll let Sean talk about it.
1:31:54
I say short term there is some savings, but long term so our funding on the section nine side is based on the number of units we have.
1:32:04
When we convert, we have fewer units, and that does reflect our funding.
1:32:09
So short term, yes, some savings.
1:32:14
Long term, we actually lose some funding Washington for the section nine portfolio, but we have a smaller portfolio.
Chris Banks
1:32:20
So do you have any with the 62,000 units that have been converted, can you give us a dollar amount as to savings for NITRA over the last four or five years.
Annika Lescott-Martinez
1:32:33
So just to add some color to what Brian was mentioning, when you convert a unit you step down the subsidy and you actually lose public housing operating subsidy because that unit now belongs in the Section eight portfolio.
1:32:46
What we've done over the past five years reinvest in the HUD agreement and Pillar Error.
1:32:51
So you've seen an increase in NYCHA staff, you've seen an increase in skilled trades and so forth.
1:32:56
So what we've done actually is add more resources So you have that you know let's say 50 people that worked at that development, those 50 people reallocated to other properties in the portfolio to fill vacancies and provide that support.
1:33:11
And so there are no sort of large big picture savings.
1:33:14
As Brian mentioned, the budget over time is actually decreasing because you no longer get the funding for those units.
Chris Banks
1:33:20
So you've had a decrease in your budget because of the developments converted?
Annika Lescott-Martinez
1:33:25
You lose money over time, it steps down and you lose money for those units because you're funded based on the units that you have.
1:33:34
When a property converts, HUD steps down the funding over two years.
1:33:38
They give you a small sort of temporary increment and that is what we use to sort of reallocate staff and provide additional resources to the developments that remain.
Shaan Mavani
1:33:46
Maybe I can add.
1:33:47
So the operating revenue decreases because the units have moved out of the Section nine portfolio.
1:33:54
The operating expense also disappears along with that, right, because you're not NYCHA doesn't have to maintain the property anymore.
1:34:00
And then there's a significant benefit on the capital side.
1:34:03
So 62,000 units is the overall goal for the PAC program.
1:34:09
For the units that have converted to date, it's an equivalent to about a $6,500,000,000 capital investment, right, that's come off of our physical needs by those properties converting.
1:34:20
So there's both the operating budget impacts in the budget and the cost side, and then there's also a significant amount of liability that's moved off of our books and have been funded and renovated through the PAC program.
Chris Banks
1:34:30
So it's just an asset that's then to be removed off of the books of NITRA, basically?
1:34:36
Well, that particular development is then just removed off.
Lisa Bova-Hiatt
1:34:40
It's the capital repair cost.
Chris Banks
1:34:42
So the capital repair cost goes away for
Shaan Mavani
1:34:45
the Okay.
1:34:46
Capital repair cost zeroes out.
1:34:49
The operating budget revenue and cost zero out.
1:34:52
And then from a number of the PAC deals, do continue to get revenue from the property over time through the partnership with the PAC partner.