WHEN HURRICANE SANDY landed in New York City in 2012, it hit public housing hard. The sprawling Red Hook Houses, on the Brooklyn waterfront, lost power for weeks. And the recovery was slow: Major renovations didn’t start until almost five years after the storm. When the federal dollars finally came in, though, they spelled a big economic opportunity — more than $500 million worth.
“I saw the money as an opportunity for the neighborhood to eat,” said Karen Blondel, a longtime resident and tenant advocate at Red Hook Houses. That promise was backed up by a law known as Section 3, which requires a portion of jobs created by federal housing funds to go to low-income local residents.
But that’s not how things played out. “When I looked out the window at the actual workers, none of them live in public housing,” Blondel said, speaking to New York Focus shortly before the 10-year anniversary of Sandy.
Data provided by the New York City Housing Authority (NYCHA) to federal authorities bear out her concern.
Annual reports NYCHA submitted to the US Department of Housing and Urban Development (HUD) from 2016 to 2020 — obtained by New York Focus through a freedom of information request — show that the authority has often missed its Section 3 targets by large margins, particularly when it comes to construction and renovation work.
“To see such a huge job and not see as many people as I thought should have been working or getting training was very disappointing,” Blondel said of the Red Hook restoration.
Until late 2020, Section 3 held that — “to the greatest extent feasible” — at least 30 percent of workers NYCHA hired should be low-income local residents, with public housing tenants getting priority. Similar benchmarks applied to outsourced work: Section 3 specified that at least 10 percent of construction contracts and three percent of non-construction contracts should go to qualifying Section 3 businesses.
A Trump administration rule change in late 2020 loosened those criteria, shifting the benchmark to 25 percent of labor hours for all projects and removing the explicit preference for public housing tenants. But for the period covered by NYCHA’s reports — the most recent the authority was able to provide — the earlier criteria were in place. And NYCHA, in many cases, failed to meet them.
From 2016 to 2020, no more than 0.3 percent of NYCHA construction contracts went to Section 3 businesses in any given year. NYCHA also fell afoul of the targets for direct hiring, despite starting off on a strong foot. In 2016 and 2017, it reported that virtually all the workers it hired for repairs qualified under Section 3. The next year — as overall hiring jumped — the Section 3 share plummeted to just 16 percent. It continued to decline through 2020.
Some tenant leaders say they’re not surprised NYCHA has missed its targets.
“I believe it to be a steady doughnut” — a zero, Manny Martinez, resident council president for South Jamaica Houses, said of the authority’s Section 3 contracting rate. NYCHA’s self-reported figures for construction contracts match that description.
Martinez, 45, has lived in the South Jamaica development nearly his whole life, and feels residents like him have been robbed of economic opportunities they were promised under Section 3. Had NYCHA met its targets, nearly $250 million more in contracts would have gone to local residents over five years, according to New York Focus analysis of the authority’s reports.
“That investment alone … would have made these communities much different than what we currently are,” Martinez said.
New York City Councilmember Alexa Avilés, chair of the council’s public housing committee, said she has heard similar concerns from many residents.
The figures NYCHA reported “are not a surprise, but they are still upsetting,” she said.
“The mandate is right,” Avilés continued. “The public dollars should be supporting the training and hiring of residents of public housing. … There should be real opportunities there that are being squandered.”
NYCHA said it is taking steps to hire more residents, despite a long list of constraints.
“NYCHA is committed to providing employment and training opportunities to public housing residents under the Section 3 initiative and have made several improvements … to meet this goal,” said spokesperson Nekoro Gomes by email. “HUD and the Federal Monitor have both recognized the effort we’ve put in to improving capital project delivery and these measures will serve to improve the capacity of this vital program.”
Gomes highlighted the Section 3 rates NYCHA reported for day-to-day operations and non-construction contracts, which usually met or exceeded the HUD benchmarks.
But “capital” work — meaning one-time renovations or repairs — was by far the biggest source of new jobs, and NYCHA’s reported numbers suggest that efforts to hire within its own community slipped down the list of priorities.
In part, NYCHA’s trouble keeping up with Section 3 reflects another urgent need: an enormous, and mounting, backlog of repairs. Entire developments have gone days or even weeks without heat or hot water; months without cooking gas; and years without remediation of hazardous lead, mold, and asbestos.
“They’re just floundering trying to do what they can to keep the buildings running,” said Iziah Thompson, senior policy analyst at the Community Service Society (CSS). “In the ideal world, you want them to be a provider of housing and a provider of job training. But [they] did the housing part first, I think, and I don’t blame them for focusing on that.”
The sharp drop in NYCHA’s Section 3 hiring rate in 2018 partly reflects a surge in hiring overall, essentially of construction and building trades workers needed to address those long overdue repairs. Between federally funded Sandy recovery efforts and general repairs required under a 2019 agreement with HUD, NYCHA hired thousands of workers.
That may have gotten more repairs done — but rarely by tenants themselves. And jobs remain an equally pressing need for many public housing residents.
NYCHA developments and their surrounding neighborhoods have some of the highest unemployment rates in the city, which in turn faces higher unemployment than the country as a whole. In sections of East New York and the South Bronx where NYCHA developments are most concentrated, census five-year estimates put unemployment at 15 percent or more. The city average is half that.
Unemployment rates within NYCHA developments may be even higher. CSS’s latest complete survey of public housing residents, conducted in 2021, found that some 22 percent were out of a job, with the highest rates among Black and Latino residents.
If Section 3 had been implemented to its full extent when big federal funds came in, the picture would look much different, said Keith Swiney, president of the Section 3 compliance firm Motivation Inc. and a national expert on the law.
“You’d have residents riding around in Bentleys right now,” Swiney said.
Section 3 had its origins in the Housing and Urban Development Act of 1968, a capstone of the civil rights era. The law sought not only to provide low-income people with decent housing, but to give them jobs building and maintaining those homes — the key goal enshrined in Section 3.
Though Section 3 has been tweaked in the decades since, its core principle stands: Housing authorities and developers that receive federal subsidies must make their best efforts to ensure that a portion of the jobs they create go to low-income local residents.
The country has never truly delivered on that principle, Swiney said. Agencies that go above and beyond the law’s mandate are a rare exception. But if anyone should be meeting their targets, he said, it should be NYCHA. As the country’s largest public housing agency, it has the power to set a national example.
Swiney cautioned that NYCHA’s self-reported numbers should be taken with a grain of salt: The 100 percent Section 3 hiring rate it submitted to HUD in 2016, for example, was likely inflated by faulty accounting. On the flip side, the authority may actually have under-reported how many of its construction contracts qualified under Section 3, because it didn’t have the means to fully track that workforce.
But the big picture remains the same: “What those folks didn’t get is actually a very palatable amount of economic lift,” Swiney said.
SANDY WAS A CASE in point. In Red Hook, the lion’s share of the work went to companies like Adam’s European Contracting Inc., a Greenpoint-based firm. According to a tracker published on NYCHA’s website, the company was awarded one of the single largest public housing contracts of the last decade — $380 million — for its restoration work in Red Hook, and more than $900 million altogether for NYCHA work since 2013.
Indeed, Section 3 is far from NYCHA’s only hiring criteria. The authority has also signed a project labor agreement (PLA) with the New York City Building and Construction Trades Council, which requires that contractors hire almost all of their workers through union hiring halls. Martinez, the Queens tenant rep, says NYCHA has used this as an “excuse” to not bring more of its own residents into the fold.
“If these unions are demanding 100 percent union requirements, then either the union or the contractor has to start making room for these unqualified persons to get trained,” he said.
Swiney, the consultant, said there has historically been “a gigantic conflict” between Section 3 and organized labor.
BCTC president Gary LaBarbera strongly disputed this characterization.
“We do not view the PLA as an impediment, but as an opportunity,” LaBarbera said by email. “While labor unions do not hire workers directly, we use the PLA to ensure every worker on the job receives the same rate of pay, the same level of benefits, and the same security and protection as any other worker performing the same craft.”
LaBarbera stressed that the building trades have worked with NYCHA to provide training and apprenticeships to residents, offering them a path to the middle class and promoting safety on the job.
But Martinez said those opportunities have been “minuscule.” Thompson, of CSS, agreed that training opportunities have been inadequate, in part because tenant reps have not gotten a seat at the table when NYCHA negotiates collective bargaining agreements.
Another hurdle arises from the way NYCHA carries out repairs: typically, piece by piece, focusing on elevators in one instance and roofs the next, for example. That need for specialized workers makes it all the more complicated to ensure that training syncs up with job openings.
That could change if NYCHA were to undertake more comprehensive retrofits, Thompson said.
“The potential for a huge jobs program is there. The workforce is obviously there. But the case has to be made,” he said.
The controversial Preservation Trust approved by state lawmakers last year could offer a test case: It promises some of the first full-scale retrofits to NYCHA’s buildings outside of the RAD-PACT system, which transfers buildings to private management. Better yet would be a direct infusion of federal funding, Thompson said — but with Build Back Better long dead and Republicans in control of the House, that can’t be counted on any time soon.
In the meantime, the city and state both need to step up to make sure that NYCHA residents get both the repairs they need and the jobs that come with them, Avilés said.
“We have to walk and chew gum at the same time,” she said. “While yes, we have to prioritize, we have limited resources — we cannot ignore one side of the ledger for the other. The residents deserve both.”