Home is Where the Harm Is: Corruption, Fraud, and Abuse in NYC’s Public Housing

Graphic by Norie Wright

Written by Julia Selby

Edited by Courtney Schneider

Introduction

Corruption, fraud, and abuse are rife within the public housing industry. The largest provider of public housing in the United States, the New York City Housing Authority (NYCHA), is no exception. Though corrupt practices have plagued the agency throughout its history, recent examples of fraud and deception display the depths of systemic and institutional issues. No-bid contracting schemes have bred bribery and waste. Over-reliance on outcome indicators have led to cover-ups and public health abuses. The following analysis will unravel how corruption has embedded itself into the seams of NYCHA and what can be done to stop it. 

NYCHA: 1930 to Present

The first public housing project in New York City opened for residents in 1935 under the supervision of Mayor Fiorello La Guardia and his newly created housing authority, NYCHA. The project was made possible through federal housing programs designed to demolish unsafe slums and provide safe, affordable living quarters for low-income people.¹ For the 122 units in the new building, NYCHA received thousands of applications. As a result, NYCHA had strict requirements for their tenants, driving concerns about government paternalism. Tenants could be evicted if they were single mothers, kept a messy home, or had substance abuse issues, among others.² Throughout the 1930s and 40s, NYCHA continued to replace slums and tenements with large public housing structures that housed the working poor and the middle class, while excluding the city’s most vulnerable residents. 

Famed New York urban planner, Robert Moses, continued this pattern of redevelopment across boroughs. Moses built heavily on the city’s coastlines—Rockaway, Coney Island, and Red Hook—creating tens of thousands of public housing units. By the 1960s, NYCHA’s public units housed nearly 500,000 people³ with most of the new construction completed between 1945 and 1965. Building maintenance became an ongoing issue, but the agency was well-funded during this period and employed a cadre of custodians, security guards, and managers.

In 1968, NYCHA made desegregation attempts under the Fair Housing Act by relaxing their strict tenant requirements. This coincided with a period of turbulence in New York City, where social, economic, and political strife drove up crime and neglect. Facing bankruptcy, the city laid off government workers. This accelerated “white flight”— the movement of white upper- and middle-class families to the surrounding suburbs—driving further inequality and higher demand for public housing for those who remained in the city.⁴ After President Ford refused a federal bail-out package for the city (prompting the infamous New York Daily News’, “Drop Dead” headline), the city continued to make service cuts. In the same period came President Nixon’s announcement about the end of federal funding for new public housing construction.

NYCHA was plagued by both austerity budget cuts as well as the addiction and AIDS epidemics of the 1980s and 90s. Housing stock aged without adequate funding for maintenance, while residents struggled with illness and incarceration. Public housing became rife with crime and disrepair. Poor outcomes in public housing justified further budget cuts.⁵ These trends continued through the turn of the century.

When Hurricane Sandy hit the city in 2012, Robert Moses’ units on the coast were especially vulnerable. 402 of NYCHA-operated buildings lost power, heat, and hot water in the storm. Without working elevators, many residents were trapped without adequate medical care.⁶ The storm highlighted NYCHA’s failures and lack of preparedness. 

Today, NYCHA manages 335 public housing developments with 350,000 tenants.⁷ Residents regularly complain about unsafe conditions: peeling paint, leaking pipes, pest infestations, molded ceilings, and more. Despite this, demand for public housing continues to grow as the housing crisis in New York City exacerbates and homes become increasingly less affordable. Through this, NYCHA has faced scandals of fraud, corruption, and abuse. Though once touted as a preeminent example of the successes of public housing, the agency has fallen victim to years of neglect, budget cuts, and mismanagement.  

Fraud and Abuse in NYCHA

Abuse and exploitation are intrinsic to NYCHA. In its inception, the agency and its administrators served only a certain type of public housing tenant, at the expense of the most vulnerable. The slum clearing of the 1930s and 1940s set the stage for redevelopment in the arena of political convenience and inequity. Far from being a savior of the city, Robert Moses’ massive housing projects were the result of brokerages of power. According to biographer Robert Caro, Moses dealt in projects “mainly [on] a single criterion: how much influence a man had and how willing he was to use that influence on Moses’ behalf.”⁸ Many stories of corruption from low-level bureaucrats to c-suite executives have likely been lost to the annals of NYCHA’s 87-year history. The rest of this investigation will focus on two contemporary examples of fraud and abuse within the agency: the no-bid contracting bribery scandal and the lead paint cover-up.  

No-Bid Contracts

Investigative reporting from journalists at THE CITY in 2019 uncovered a large-scale pattern among NYCHA employees of accepting contracts from vendors without receiving competing bids. The bidding process is central to government procurement. Competitive bids allow for service provision at market-optimal rates—thus saving tax-payer money and promoting transparency. However, to address an onslaught of maintenance requests, NYCHA administrators were permitted by city officials to suspend the bidding process for contracts under $5,000. Thus, instead of accepting bids for contracted work through an open request for proposals (RFP) process, NYCHA managers were able to award work to inside vendors.⁹ New York’s Department of Investigation warned NYCHA leaders several times about the opportunity for abuse and corruption, but the practice of waiving RFPs continued.¹⁰ 

Through a series of Freedom of Information Act Requests, journalists found that $18 million worth of contracts for projects under $5,000 went to just 17 vendors.¹¹ In many instances, large projects were submitted in multiple contracts of just under $5,000. Further, work requests were often not completed as promised. Repairs were paid to private contractors, only to be completed by internal NYCHA maintenance workers. Tenants reported that private contractors would complete jobs poorly and units would require further maintenance soon after.¹² Public housing residents suffered and NYCHA bled money, but contractors and administrators continued their scheme.

No-bid contracting within NYCHA later went from wasteful to illegal. THE CITY reported that managers had begun receiving kick-backs and taking bribes in exchange for promising jobs to private contractors. A whistleblower at the agency reported the behavior to the Department of Investigation. Undercover agents set up sting operations to catch perpetrators in the act. The agents were regularly offered bribes in the form of cash, gift cards, and bottles of alcohol.¹³ Since the scandal broke, NYCHA leadership has insisted it has made the necessary protocol changes to curb this behavior.

Lead Paint Cover-up

In 2017, the Department of Investigation released a report claiming that NYCHA had broken federal law by neglecting to regularly check public housing units for lead paint. The report went on to say that, for years, NYCHA administrators had been submitting false certifications of lead abatement to federal authorities. When the report was first made public, NYCHA and city officials denied any harm or responsibility. They first claimed that only 19 children living in their developments were at-risk of exposure. As more information on falsified documents came to light, that number rose to more than 800.¹⁴ 

Journalists continued to investigate wrong-doing at NYCHA and discovered internal reports detailing cover-up efforts dating back to 2013. Managers were aware for years that NYCHA units were not being checked for lead paint as required by law. When whistleblowers reported this up the chain of command, no action was taken. Still, former Chairman John Rhea repeatedly insisted to the press, public housing residents, and federal officials that NYCHA was in compliance with lead paint abatement. The investigation found that NYCHA had lied to administrators at the Department of Housing and Urban Development (HUD) on at least 12 occasions. New York City’s Health Department was also implicated. They are accused of downplaying the extent to which children in NYCHA housing were suffering from  dangerous blood-lead levels and lead poisoning.¹⁵

Lead paint has been illegal in residential buildings in New York City for decades. Though the city banned its use in 1960, a national law barring the use of lead paint was not passed until 1978. For years, NYCHA continued to use lead-based paint in their developments, despite documented health risks for children. As the buildings aged throughout the following decades, the paint began peeling off the walls in large flakes. Children (especially those younger than six) are vulnerable to illness when they breathe in dust or chew on fallen paint chips. With enough build-up in the body, lead poisoning occurs causing developmental delays, learning difficulties, weight loss, fatigue, and more.¹⁶ 

The scale and scope of the cover-up was vast. NYCHA had certified 84,000 public housing units as lead-free even though most of them were never tested at all.¹⁷ Further testing after the Department of Investigation’s report found presence of lead in thousands of apartments. As of last year, NYCHA reported 23,000 units with traces of lead, 9,000 of which house young children.¹⁸ Abatement can be a time-consuming process, previously undertaken only when a resident vacated their apartment. Former residents are not notified of positive findings of lead in their former apartments.¹⁹ This lead paint scandal demonstrated a systemic pattern of abuse, neglect, and cover-up within NYCHA. 

Effects on Vulnerable Communities

Corruption and fraud within NYCHA have tangible effects on the community. Public housing tenants are already marginalized: 88.34% of residents are Black or Hispanic with an average income of less than $25,000 per year. 25% are children and 22% are seniors.²⁰ Systemic racism—from the legacy of red-lining practices to restrictive zoning—has precluded non-white individuals from owning homes or building wealth at the same rates as their white counterparts.²¹ This leaves them overly-represented in government assistance programs, including public housing. Therefore, any issues that arise in public housing (unsafe living conditions, misuse of government funds, etc.) are issues of racial justice and disproportionately affect families of color.

Recent estimates report that the NYCHA housing stock requires $40 billion in capital investment to modernize aging and unsafe units.²² The current mayor of New York City, Eric Adams, recently announced a commitment of an additional $2.5 billion over the next four years to NYCHA capital developments.²³ This represents 6% of needed funds. With a need so great, any misuse or mismanagement of funds means fewer resources for vitally needed repairs.

The effects from the lead poisoning scandal will be felt by a generation of children. The latest report found 820 children under the age of five living in NYCHA housing with elevated levels of lead in their blood. This report covered only five years of health outcomes, from 2012-2016.²⁴ While the effects of the cover-up may never be fully quantified, it is clear that NYCHA has reneged on its founding mission of providing a safe and suitable home for low-income New Yorkers.

Prevention Strategies and Recommendations

Fixing the systemic issues within NYCHA will require a significant investment of time, resources, and human capital. It is critical that NYCHA elicit feedback from experts in fraud prevention as well as the residents living in the public housing units. Full participation and engagement are required from employees at NYCHA, politicians at the local, state, and federal levels, and community members in New York City. Accountability structures must be built or reformed, and the policy on fraud must be implemented at all levels of the agency and clear to all stakeholders. 

Accountability Structures

In both the no-bid contract scandal and the lead paint cover-up, accountability structures at NYCHA failed. To prevent future fraud and corruption, NYCHA must implement better practices for reporting and evaluation. Because of pressure to decrease the number of outstanding maintenance requests, NYCHA eliminated a key accountability structure that would have prevented bribery and corruption: competitive contracting. An ethical, responsive, and efficient procurement system must be implemented. Those who manage private contractors must be independent of those who decide which contractors are awarded projects. There should also be further scrutiny for companies who are awarded several or repeated contracts above a certain financial threshold. Finally, problem contractors with a history of neglecting work or performing shoddy maintenance must be terminated. 

Over-reliance on performance measures created perverse incentives to cover-up health issues in NYCHA developments. When a whistleblower attempted to bring to light issues related to lead paint, they were silenced. NYCHA must prioritize the safety and well-being of their residents over the fear of political retribution. A commitment to accountability must start at the top with the NYCHA chairperson. NYCHA must take full responsibility for the health and well-being of their residents.

Recommendations

HUD has published reports and frameworks on preventing, detecting, and reporting fraud at housing authorities. These contain best practice strategies including confidentiality for whistleblowers without fear of retribution, terminating employees who participate in unethical behavior, and educating employees on actions that constitute fraud and abuse. They also encourage the adoption of a fraud policy.²⁶ While these tools are a key part of prevention strategies and must be implemented at NYCHA, they still fail to address systemic issues within the public housing industry. 

Public housing advocates, residents, and board members of NYCHA rarely see eye-to-eye on issues related to best reform methods for the housing authority. They all agree, however, on one pivotal fact: NYCHA needs more money.²⁷ The agency has been starved of necessary resources for decades. Without proper funding, abuse, corruption, bribery, and fraud will continue at NYCHA. While political favor now leans away from government provision of housing in the form of public housing units and more towards rental subsidies for housing on the private market, legacy developments cannot be left behind. 350,000 New Yorkers depend on NYCHA for safe, reliable housing. Though scandals at NYCHA have soured both political and public opinions of the agency, any resources directed away from NYCHA harms vulnerable public housing residents. It is imperative that NYCHA receive the funding it needs to provide adequate housing and become an agency capable of proper evaluation, management, reporting, and maintenance.

Conclusion

Repeated scandals continue to plague NYCHA. Recent headlines include: “NYCHA Probes Scores of Workers for Overtime Abuse,”²⁸ “Brooklyn Leaders Call on NYCHA to Address Living Conditions,”²⁹ and “NYCHA Workers Covered Up Signs of Mold to Skirt Cleanup, Probe Shows.”³⁰ Such widespread problems beg the question: is reform even possible? For low-income New Yorkers who depend on NYCHA to keep a roof over their heads, the only answer is yes. 

The lead paint cover-up and no-bid contracting scandals demonstrate how embedded fraud and abuse are within the agency. Failed accountability structures and unethical individuals bear responsibility for promulgating corruption. But, systemic deprivation is also to blame. These recurring failures at NYCHA are also the result of a culture of government divestment. Starving public agencies of operating funds does not just breed ineffectiveness; it breeds harm and danger, especially for marginalized citizens.

Good governance is not easily achieved. For agencies to provide essential services to residents, they require significant time, investment, and human capital. This was better understood when the first public housing authorities were created in the 1930s. While the world looks vastly different than it did nearly 100 years ago, issues of inequality and housing unaffordability remain predominantly unchanged. Low-income New Yorkers deserve safe, affordable homes and to live without the harms of fraud and abuse. It is essential that NYCHA dispel corruption in all forms to meet the needs of vulnerable residents.  

1. “First Annual Report, Federal Works Agency, 1940: Fiscal Year Ended June 30, 1940.”  U.S. Government Printing Office, 1940, pp. 118-119, https://books.google.com/books?id=vDIVAAAAMAAJ&pg=PA362&source=gbs_selected_pages&cad=2#v=onepage&q&f=false.
2. Price, Richard. “The Rise and Fall of Public Housing in NYC.” Guernica, October 1, 2014, https://www.guernicamag.com/the-rise-and-fall-of-public-housing-in-nyc/.
3. Ferré-Sadurní, Luis. “The Rise and Fall of New York Public Housing: An Oral History.” The New York Times, July 9, 2018, https://www.nytimes.com/interactive/2018/06/25/nyregion/new-york-city-public-housing-history.html. 
4. “A History of the New York City Housing Authority.” Amsterdam News, April 18, 2013, https://amsterdamnews.com/news/2013/04/18/a-history-of-the-new-york-city-housing-authority/. 
5. Ferré-Sadurní, Luis. “The Rise and Fall of New York Public Housing: An Oral History.” The New York Times, July 9, 2018, https://www.nytimes.com/interactive/2018/06/25/nyregion/new-york-city-public-housing-history.html. 
6. Lipton, Eric; Moss, Michael. “Housing Agency’s Flaws Revealed by Storm.” The New York Times, December 9, 2012, https://www.nytimes.com/2012/12/10/nyregion/new-york-city-housing-agency-was-overwhelmed-after-storm.html. 
7. “Resident Data Summary 2021.” NYCHA, accessed May 11, 2022, https://www1.nyc.gov/assets/nycha/downloads/pdf/Resident-Data-Book-Summary-2021.pdf. 
8. Caro, Robert. “The Power Broker—Creatures of the State: How Robert Moses Got Things Done.” The New Yorker, August 4, 1974, https://www.newyorker.com/magazine/1974/08/12/the-power-broker-iii-how-things-get-done.  
9. Smith, Greg. “City Must Pay At Least $1 Billion to Fix NYCHA Nightmare After Feds City Daily News Reports Exposing the Agency’s Lies on Housing Conditions.” New York Daily News, June 11, 2018, https://www.nydailynews.com/new-york/ny-metro-nycha-probe-20180610-story.html. 
10. “Closing Memorandum.” New York City Department of Investigation, February 8, 2016, https://www.documentcloud.org/documents/6444664-NYCHAVENDOR1.html.
11. Smith, Greg. “City Must Pay At Least $1 Billion to Fix NYCHA Nightmare After Feds City Daily News Reports Exposing the Agency’s Lies on Housing Conditions.” New York Daily News, June 11, 2018, https://www.nydailynews.com/new-york/ny-metro-nycha-probe-20180610-story.html. 
12. Smith, Greg. “City Must Pay At Least $1 Billion to Fix NYCHA Nightmare After Feds City Daily News Reports Exposing the Agency’s Lies on Housing Conditions.” New York Daily News, June 11, 2018, https://www.nydailynews.com/new-york/ny-metro-nycha-probe-20180610-story.html. 
13. Blau, Reuven; Smith, Greg B. “NYCHA Bribe Investigation Snares Contractors Who Made Millions From No-Bid Work, Officials Say.” THE CITY, September 20, 2021, https://www.thecity.nyc/2021/9/20/22685194/nycha-bribery-investigation-contractors-millions-no-bid-jobs.
14. Smith, Greg. “NYCHA Nightmare: More Than 800 Kids Tainted By Lead, de Blasio Administration Finally Concedes.” New York Daily News, June 30, 2018, https://www.nydailynews.com/new-york/ny-metro-nycha-lead-20180621-story.html. 
15. Smith, Greg. “NYCHA Nightmare: More Than 800 Kids Tainted By Lead, de Blaise Administration Finally Concedes.” New York Daily News, June 30, 2018, https://www.nydailynews.com/new-york/ny-metro-nycha-lead-20180621-story.html. 
16. “Lead Poisoning: Overview.” Mayo Clinic. Accessed May 19, 2022. https://www.mayoclinic.org/diseases-conditions/lead-poisoning/symptoms-causes/syc-20354717. 
17. Smith, Greg. “The Toll of NYCHA’s Lead Lies: A Brooklyn Girl Poisoned as Officials Covered Up Danger.” THE CITY, November 28, 2021, https://www.thecity.nyc/2021/11/28/22806530/nycha-lead-paint-lies-brooklyn-girl-poisoned-public-housing. 
18. Smith Greg. “NYCHA’s Lead Paint Crisis Explodes as Known Number of Apartments Where Kids Risk Exposure Triples.” THE CITY, October 22, 2020, https://www.thecity.nyc/housing/2020/10/22/21528781/nycha-lead-paint-more-apartments-identified. 
19. Smith, Greg. “Fed Probing Questionable NYCHA Statistics on Lead Tainted Apartments.” New York Daily News, June 12, 2016, https://www.nydailynews.com/new-york/feds-probing-questionable-nycha-statistics-lead-tainted-apartments-article-1.2671120. 
20. “Resident Data Summary 2021.” NYCHA. Accessed May 19, 2022. https://www1.nyc.gov/assets/nycha/downloads/pdf/Resident-Data-Book-Summary-2021.pdf. 
21. Yentel, Diane. “Housing Justice is Racial Justice.” National Low Income Housing Coalition, June 8, 2020, https://nlihc.org/resource/housing-justice-racial-justice-diane-yentel-nlihc-president-and-ceo. 
22. Campion, Sean. “Testimony on NYCHA’s Capital Spending of City Funds.” Citizens Budget Commission, November 18, 2021, https://cbcny.org/advocacy/testimony-nychas-capital-spending-city-funds. 
23. Lam, Chau. “Adams’ $22B Affordable Housing Plan in Next Decade is Insufficient, Advocates Say.” Gothamist, April 30, 2022, https://gothamist.com/news/adams-22b-affordable-housing-plan-in-next-decade-is-insufficient-advocates-say. 
24. Barker, Cyril J. “More Than 800 Children Poisoned by Lead in NYCHA.” Amsterdam News, July 5, 2018, https://amsterdamnews.com/news/2018/07/05/more-800-children-poisoned-lead-nycha/. 
25. Smith, Greg. “NYCHA’s $250 Million No-Bid—and Sometimes No-Work—Repair Jobs.” THE CITY, October 7, 2019, https://www.thecity.nyc/special-report/2019/10/7/21210785/nycha-s-250-million-no-bid-and-sometimes-no-work-repair-jobs. 
26. “Fraud Prevention: Guidance for Managers of HUD Assisted Rental Housing Programs.” U.S. Department of Housing and Urban Development, Sept. 2005. Accessed May 19, 2022. https://www.hud.gov/sites/documents/DOC_10872.PDF. 
27. Vick, Rachel. “Advocates Denounce NYCHA Hearing on Public Housing Reform.” Queens Daily Eagle, July 26, 2021, https://queenseagle.com/all/its-disrespectful-advocates-denounce-nycha-hearing-on-housing-reform. 
28.   Smith, Greg. “NYCHA Probes Cores of Workers for Overtime Abuse, Fires 18.” THE CITY, January 26 2022, https://www.thecity.nyc/2022/1/26/22901896/nycha-fires-workers-overtime-abuse. 
29.   Davick, Arnold. “Brooklyn Leaders Call on NYCHA Leaders to Address ‘Uninhabitable Living Conditions.’” Spectrum News NY 1, May 14, 2022, https://www.ny1.com/nyc/all-boroughs/news/2022/05/14/brooklyn-leaders-call-on-nycha-to-address–uninhabitable–living-conditions. 
30.   Smith, Greg. “NYCHA Workers Covered Up Signs of Mold to Skirt Cleanup, Probe Shows.” THE CITY, October 31, 2021, https://www.thecity.nyc/2021/10/31/22755980/nycha-workers-covered-up-signs-of-mold. 

Julia Selby

Julia is an MPA fellow ('22) with a concentration in social policy. She is interested in issues surrounding housing, equity, and homelessness. This summer, she worked as an intern on the housing and infrastructure team at the Bipartisan Policy Center. Julia previously worked at social services and health-based nonprofits in Washington, DC. During the COVID-19 pandemic, she served her community as a contact tracer with her local health department. She graduated from Indiana University with a BA in anthropology, a certificate in management, and a minor in Spanish. In her free time, Julia enjoys reading and playing with her dog, Milk Dud.

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