How Will Mayor Adams’ Cuts Affect NYC’s Housing and Buildings Agencies?

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After taking over a city workforce demoralized by the pandemic and struggling with staffing issues, New York Mayor Eric Adams slashed budgets at city agencies even further. The belt-tightening, along with a short-term hiring freeze, has raised red flags about the city’s housing, planning and building departments, which have struggled to close financing deals for developments, lease apartments and enforce building codes amid massive staff shortages.

On Sept. 12, Adams’ budget director, Jacques Jiha, sent a letter to every city agency demanding that they cut their budgets by 3 percent during the current fiscal year and by 4.75 percent during each of the following years. Agencies are forbidden from hiring anyone until their savings reduction plans are approved by the mayor’s Office of Management and Budget (OMB), Politico reported at the time.

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Stock market declines this year affected the city’s retirement funds, forcing the administration to make up the shortfall by increasing annual pension fund contributions starting in 2024. Jiha also blamed rising health care costs, surging energy prices and inflation for the cuts, as well as expired labor contracts that will require higher pay for city workers. A looming recession may dampen personal income and sales tax collections in city coffers, Jiha noted in the letter. And he pointed to a decline in federal pandemic relief funds and the need to build shelters for asylum seekers.

However, these cuts won’t necessarily impact all agencies equally. The city’s Department of Housing Preservation and Development (HPD), for example, receives significant federal and state funding, and the cuts affect only the money provided by the city. The HPD budget is $1.3 billion for this fiscal year, and, of that, $403 million comes from city coffers, according to data from the nonprofit Citizens Budget Commission. CBC researcher Ana Champeny said that she expected HPD to cut about $12 million in city funding from its budget for this year and $16 million annually for the next few years.

However, the Department of Buildings relies exclusively on city funding, and the Department of Homeless Services relies heavily on it too, with some help from federal and state funding for family shelters.

These agencies are also struggling with significant staff shortages, and the one-two punch of budget cuts and the hiring freeze may set them back even further, experts say. In June 2022, HPD had 2,240 staff on board, but were authorized for 2,698 people, according to CBC. The Department of Buildings, meanwhile, had 1,535 people on staff in June, with 1,966 budgeted positions. That’s a 22 percent vacancy rate.

Unsurprisingly, DOB’s building and construction code enforcement has suffered. The team responsible for investigating construction sites accounts for most of the agency’s unfilled jobs.

So far this year, DOB has conducted 130,000 construction inspections, compared to 160,000 during the same period last year and more than 200,000 in 2021, according to CBC’s analysis of the recent Mayor’s Management Report. The share of inspections that result in a violation has also declined to 25 percent, down from as much as 30 percent in previous years. Fines from violations are one of the largest sources of revenue for the department.

Jiha’s letter to the agencies said they should not use layoffs of existing staff or new fines to generate the necessary savings. However, agencies like DOB and HPD have so many open vacancies that they could potentially use that as their budgeted “savings.”

“I think that’s how they’ll achieve their fiscal year savings for 2022, but unless they give up those jobs long term, they’ll need to make programmatic or efficiency improvements, and I think that’s what OMB will be looking for,” said Champeny.

Her colleague and fellow CBC researcher, Sean Campion, felt that city agencies may try to learn how to become more efficient, even with fewer people on staff.

“They’ve already been trying to figure out how to become more productive — getting vouchers out the door faster, closing deals faster, being more proactive in terms of identifying inspections and responding to complaints,” Campion said. “They were already going down that path since before the [budget cut] announcement.  It’ll be interesting to see how that translates.”

In the parlance of municipal finance, the budget cuts are known as a Program to Eliminate the Gap, or PEG. Jiha’s letter to the city agency heads included this threat: “If PEG targets are not met, OMB will identify savings opportunities. Given the threat to our financial stability, every agency must participate.”

Champeny noted that the agencies should be able to fill some of their vacant jobs while achieving their savings goals. However, that may be easier said than done. City workers have been quitting in large numbers over the past year, citing low pay and an inflexible return-to-work policy that requires them to be in the office five days a week. All told, the city workforce has about 24,000 open, full-time positions. New York City’s government employs 282,498 people, and it’s budgeted for about 306,332 full-time jobs.

There are other headwinds preventing the city from staffing up. The Adams administration has chosen to keep a controversial pandemic-era policy of hiring one new staffer for every two that leave.

“Today, with this level of vacancies, having that in place doesn’t make sense,” said Champeny, who noted that agencies are allowed to advertise or recruit only for positions approved by the administration.

All of this comes as HPD struggles to close financing deals for affordable housing projects, lease subsidized apartments, and enforce the housing code at the level it did before the pandemic. In June, policy nonprofit New York Housing Conference found that it took the city agency 371 days to lease an affordable lottery apartment.

At the time, HPD was also missing about 30 project managers, who oversee affordable housing projects from start to finish. It employed about 143 project managers in June, down from 176 in March of 2020. It also had 140 vacancies on its code enforcement team, which employs 470 people to investigate complaints about housing conditions like heat, hot water, mold and pests. And the HPD website still warns applicants for low-income housing tax credits that “we currently have limited staff capacity and a significant backlog of projects. As a result, the assignment of a project manager can take up to one year.”

The Citizens Budget Commission researchers pointed out that the housing agency had only committed 68 percent of its funding for this year, compared to nearly 100 percent pre-pandemic. Less money spent means fewer apartments are being financed and built.

“The fact that they committed a smaller dollar amount than historically suggests that the lack of staff in some of these departments has hampered their ability to do deals,” said Champeny.

Brendan Cheney, director of policy and communications at the New York Housing Conference (NYHC), a nonprofit affordable housing advocate, put HPD’s problems more bluntly.

“The city’s top priority should be staffing at HPD,” he said. “They really need to get staffing back to prior levels, because current staff levels have led to much lower levels of affordable housing production. We’re worried about what will happen if that continues.”

Cheney added that HPD had lost staff since NYHC released its report in June. Spokespeople for DOB and the mayor’s office did not return requests for comment.

“We’ve heard that it’s taking a long time for project managers to get assigned, and it’s taking a long time to get projects through the pipeline,” Cheney said. “And it’s not surprising given where staffing is. I don’t think things are going to get better until they’re able to get staffing back to higher levels.”

HPD, for its part, told Commercial Observer that the cuts would not affect its hiring or operations.

“Mayor Adams’ unprecedented $22 billion 10-year capital plan is the largest housing investment in the city’s history, and puts us on track to meet our goals as we continue staffing up as quickly as possible,” said an HPD spokesperson. “The Program to Eliminate the Gap does not significantly impact our ability to hire for open vacancies.”

Finally, land use attorney Mitchell Korbey lamented how the cuts would affect the Department of City Planning. Formerly a director of the agency’s Brooklyn office, he pointed out that DCP is a small agency that’s completely funded by the city. When it loses staff, developments take longer to get through the nine-month-long pipeline of approvals.

“An agency like City Planning, with a small staff and very little overhead, should — to the maximum extent possible — not be subject to cutbacks,” Korbey said. “This is an agency that’s extremely lean, and it’s remarkable what they’re able to accomplish.”

He added that DCP is understaffed compared to planning agencies in other major cities.

“If you were to take the New York City Planning Department and compare it to Chicago, in planners per capita, it would be laughable if it weren’t so troubling and serious,” Korbey said.

“In the Brooklyn office, there are maybe a dozen professional planners, while the Chicago planning office has more than 100,” he said. “If you look at planners per thousand people, we are nowhere near where other places are.”

Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com