New NYC Comptroller Report Provides Blueprint for Improved Capacity at Department of Housing Preservation and Development

 

After historic loss of staff during pandemic, HPD has made significant strides — but “development pain points” & loss of institutional knowledge hamper agency’s ability to build & renovate affordable housing at scale required by city’s housing crisis

New York City Comptroller Brad Lander released a new report, Building Blocks of Change, detailing the state of the NYC Department of Housing Preservation and Development (HPD), its staffing shortage and turnover, and its impact on the City’s ability to deliver affordable housing to New Yorkers. While the agency has made significant progress in efforts to staff back up after historic pandemic declines, the loss of institutional knowledge has compounded pre-existing “development pain points” that delay and hamper projects. The report outlines management reforms needed to ensure that the agency can fulfill its critical mandate to build and preserve quality, affordable housing.

“HPD needs to dramatically increase the pace of affordable housing production in order to confront our city’s housing crisis,” said Comptroller Brad Lander. “But longstanding bottlenecks plus pandemic turnover of experienced staff have caused a backlog when we can least afford it. HPD needs to continue to streamline the development process, upgrade its technology, and enhance training and support for staff in order to deliver the affordable housing that New Yorkers urgently need.”

Following the outbreak of COVID-19 between April 2020 and October 2022, HPD lost nearly a third of its full-time employees, including many of its more experienced staff. In Fiscal Year 2022, the agency spent only 60% of its planned capital commitments. Despite successful efforts to staff back up in core program areas, significant challenges remain.

In order to correct for the period of low production of affordable housing, HPD would need to increase housing production by 42% in the upcoming fiscal year, just to hit its pre-existing targets – and by far more than that to help meet Mayor Adams’ “moonshot” goal of 500,000 new units of housing in NYC over the next 10 years.

With post-pandemic rents at all-time highs, housing starts at extremely low levels, homeownership far beyond the reach of most families, more tenants than ever facing high rent burdens, and historically high homelessness, HPD has an urgent role to play in combatting the crisis through financing the production and preservation of affordable housing.

The report focused on several challenges, among them:

Staffing:

• Between 2013 and 2019, the City of New York increased the workforce at HPD by over 500 full time employees and significantly scaled up housing production – quadrupling the agency’s annual capital expenditures from $414 million in 2013 to $1.68 billion in 2019. However, from April 2020 to October 2022, HPD experienced a net loss of 286 staff.
• Thanks to HPD leadership’s focus and OMB’s removal of barriers, HPD has hired an additional 863 full time employees in the past six fiscal quarters, while losing only 651 people. Likely as a result, the agency increased its spending rate from 60% of capital plan commitments in FY22 to 90% in FY23.

Backlog:

• From FY17 – FY19, HPD’s New Construction projects took an average 3.66 years to go from construction loan closing to permanent financing. The average timeline increased to 4.86 years in the three years following the onset of the pandemic, between FY21 – FY23.
• For Preservation projects, the timeline for completion for FY17 – FY19 was 3.22 years, increasing to 4.05 in FY21 – FY23.
• The number of affordable housing starts declined significantly during FY22, dropping to just 14,793 units – nearly 12,000 units less than the average number of affordable housing starts over the four previous fiscal years.
• Between FY21 and FY23, the median time to approve an applicant from the housing lottery increased from 88 days to 192 days (which means an apartment sits vacant for six months)​. For units set aside for homeless households, median time increased from 106 to 243 days.

To help identify specific challenges and chart a detailed path forward, the Comptroller’s Office analyzed staffing reports and budget data, and conducted nearly 40 interviews with former staff, developers, and not-for-profit organizations that work with HPD. Drawing from these interviews and data, the report identifies a series of management reforms to enhance HPD’s capacity:

1. Streamline processes to address development pain points. HPD made progress in improving and standardizing certain processes for greater efficiency. HPD should build on that good work to update its term sheets. Additionally, OMB should expedite approval and work to streamline their underwriting review.
2. Provide more flexibility and support for affordable housing developers. The City should expand funding for HPD’s Landlord Ambassador program to provide support for small owners, and offer flexibility to developers, especially where projects are delayed due to HPD’s staffing challenges.
3. Enhance training, support, and hybrid work options for HPD staff.
4. Upgrade HPD’s technology. HPD should create an agency-wide CRM, improve Housing Connect 2.0, and update its file management technology. The report identifies the Battery Park City Joint Purpose Fund, traditionally used for affordable housing, as a potential source of funding for these upgrades.

“We’re in the midst of an affordable housing crisis, yet the agency most directly responsible for housing in New York City isn’t getting the support it needs,” said Council Member Shahana Hanif. “I’m alarmed that the City has a backlog of affordable housing projects that are facing delay after delay, which only exacerbates housing insecurity. New Yorkers need a fully operational agency for the stability of working families.”

“Black, Brown, and working class New Yorkers are being forced out of our City at alarming rates due to a lack of deeply affordable housing. Unfortunately, the Comptroller’s damning report on HPD staffing shows that we will not reverse this trend if we do not take urgent action to address HPD’s hiring and retention practices. While this report confirms what I and many of my colleagues see in our districts as housing placements and developments stall, it will also help us fight to build our City’s housing capacity in order to meet today’s unprecedented demand. As Co-Chair of the Progressive Caucus, I will do everything in my power to push for housing solutions that help us streamline our affordable housing pipeline and support our City’s housing agencies,” said Council Member Sandy Nurse, Co-Chair of the Progressive Caucus.

“The Comptroller’s report sheds a clear light on not only the challenges that HPD has been facing, but also on the negative impacts that insufficient resources and staffing have had on nonprofit affordable housing developers, low income tenants, and the broader New York City housing ecosystem. In light of the affordability and homelessness crisis, it’s more important than ever that we have the tools and resources needed to build and preserve as much deeply affordable housing as possible,” said Emily Goldstein, Director of Organizing & Advocacy at the Association for Neighborhood and Housing Development.

“The City’s housing-related agencies have been significantly understaffed and under-resourced for at least three years, which has resulted in reduced affordable housing production and delays securing housing and preventing homelessness,” said Rachel Fee, Executive Director, New York Housing Conference. “While HPD’s headcount has now reached pre-pandemic levels, a proposed hiring freeze and budget cuts endanger that progress. Instead, HPD must be prepared to add staffing, especially if Congress increases Low-Income Housing Tax Credit resources under the proposed tax framework. We appreciate Comptroller Lander and his team for their analysis of the City’s staffing and processing issues, and we encourage the Adams administration to implement the report’s recommendations to ensure we’re doing everything we can to increase affordable housing production in New York.”

“HPD is a critical city agency which requires consistent levels of investment in its staffing, management tools, capital and the partnerships – especially with the nonprofit community development sector – needed to address NYC’s dire affordable housing crisis impacting the quality of life for all New Yorkers and our communities.  Mayor Adams has launched and laid out important initiatives to advance the preservation and development of affordable housing, but to realize those goals the City needs to invest at historic levels and recommit itself to true partnerships with CDCs,” said Michelle de la Uz, Executive Director of Fifth Avenue Committee

“We appreciate the Office of the New York City Comptroller’s efforts in creating this in-depth analysis. As a vital partner in the work of affordable homeownership development and preservation, the City’s challenges have a tremendous impact on the pipeline, projects, programs, and balance sheets of organizations like ours. We sincerely hope these findings will enable us to work collectively to streamline processes and accelerate the pace of delivering housing solutions that will better serve hardworking New York families,” said Karen Haycox, CEO, Habitat for Humanity New York City and Westchester County.

Read the full Building Blocks of Change report here.