the bloomberg way

How NYCHA Lead and Repairs Scams Started Under Mike Bloomberg’s Mayoral Watch

Then-Mayor Mike Bloomberg speaks in early 2013 about addressing a backlog of NYCHA repairs.
Then-Mayor Mike Bloomberg speaks in early 2013 about addressing a backlog of NYCHA repairs. Photo: Kristen Artz/New York City Mayor’s Office

In his final year as mayor of New York, Mike Bloomberg, who built his billions on a data-driven news business, ordered the city’s Housing Authority to drastically reduce a huge backlog of tenant repair requests.

But while some city and federal officials were skeptical as NYCHA claimed the number of pending requests plummeted 75%, from 420,000 to 106,000 in just one year, Bloomberg never publicly questioned the authority’s figures, an examination by THE CITY found.

The feds later charged the numbers were too good to be true — a fraud perpetrated by NYCHA managers.

Prosecutors discovered that NYCHA illegally halted required apartment inspections to reduce the number of new requests — and marked nearly 200,000 pending requests as “closed” without any work being done.

“A significant portion of NYCHA’s backlog reduction involved simply moving needed work off the books — principally by unlawfully suspending all annual apartment inspections for two years and finding other ways to manipulate its work order numbers,” prosecutors in Manhattan U.S. Attorney Geoffrey Berman’s office wrote last year.

Besides the bogus work ticket blitz, it was during Bloomberg’s tenure that, prosecutors later determined, NYCHA executives began falsely certifying they were performing required lead paint inspections — a practice that continued through 2016 under his successor, Bill de Blasio.

From 2012 through June 2018 — including the last two years of the Bloomberg administration — 1,160 children living in NYCHA apartments registered dangerous levels of lead in their blood.

‘Innovative and New Plan’

Bloomberg’s 2020 presidential campaign spokesperson Stu Loeser, who also worked for him at City Hall, declined to answer THE CITY’s questions about whether his boss ever raised any questions privately about the repair data’s credibility.

Nor would he say whether Bloomberg had any regrets about the last-minute campaign to remedy a crisis that festered during his 12-year mayoralty.

Instead, Loeser emailed a general statement about Bloomberg’s handling of NYCHA’s many issues, referencing a plan to lease NYCHA land to developers to build towers that included 80% market-rate apartments. De Blasio, who criticized that proposal at the time, has since embraced a similar plan as mayor.

“The fundamental cause of NYCHA’s problems is the massive decline in federal funding for public housing,” Loeser wrote.

“As mayor, Mike Bloomberg proposed an innovative and new plan to allow private investment on open or underused spaces to generate hundreds of millions of dollars for NYCHA,” he added. “After years of looking in vain for alternatives, the City of New York has fundamentally returned to Mike Bloomberg’s original plan and is finally moving forward with it.”

A New Campaign

Since Bloomberg announced his bid for the Democratic nomination last month, he has publicly confronted controversial hallmarks of his tenure as New York City mayor, most prominently apologizing for police stop-and-frisks.

While campaigning in California last week, Bloomberg called for a “war on poverty” that would include increased federal spending on public housing. But he has remained silent on the mismanagement and resultant cover-ups at NYCHA during his tenure that led to a dramatic deterioration of living conditions for the city’s 400,000 public housing tenants.

Mike Bloomberg campaigns for president in California in December.
Mike Bloomberg campaigns for president in California in December. Photo: @TeamMike2020/Facebook

“I’m not opposed to him getting in this race. I’m happy he’s in the mix,” said state Sen. John Liu (D-Queens), who, as city comptroller from 2010 to 2013, repeatedly pointed out NYCHA mismanagement during the Bloomberg era.

“But everyone needs to be held accountable for their record, and this was a really bad part of his record,” Liu told THE CITY.

While Bloomberg was mayor the amount NYCHA estimated it would need to fully upgrade its 175,000 apartments more than doubled from $6.9 billion in 2006 to $16.5 billion in 2011, midway through his third and final term, which ended Dec. 31, 2013. By 2017, NYCHA management raised the price tag to $32 billion.

It wasn’t until long after Bloomberg left City Hall that a detailed picture of NYCHA’s mismanagement and fraud emerged, spurring federal prosecutors to intervene and leading to the appointment of an oversight monitor.

‘Multiple Causes’ of Woe

U.S. Rep. Nydia Velazquez (D-Brooklyn/Queens/Manhattan), a longtime critic of NYCHA management, noted that some of the serious troubles the Housing Authority is now struggling with began in the Bloomberg years.

“There are multiple causes for NYCHA’s problems, including decades of federal and state disinvestment,” she said. “But we also have to remember there’s been local mismanagement of the agency throughout multiple mayoral administrations, including Mayor Bloomberg’s, which saw a mushrooming of unfulfilled repair orders and the decision to discontinue lead testing, from which we’re seeing the tragic results today.”

Rep. Nydia Velázquez (D-NY) in 2017.
Rep. Nydia Velázquez (D-NY) in 2017. Photo: @ReElectNydiaVelazquezToCongress/Facebook

For most of his dozen years at City Hall, Bloomberg rarely held NYCHA-related news conferences. He named John Rhea, a financial advisor with no housing experience, as NYCHA chairperson.

During Bloomberg’s tenure, some administration members raised concerns with City Hall about Rhea not having the right experience to get a handle on NYCHA’s management issues, according to sources familiar with NYCHA’s management at the time. Bloomberg, however, backed up Rhea and City Hall exerted minimal involvement in NYCHA oversight until the last year of the mayor’s 12-year tenure, the sources said.

On Jan. 31, 2013, Bloomberg trekked up to the Drew Hamilton Houses in Upper Manhattan and, with Rhea at his side, declared NYCHA would eliminate its backlog of 420,000 repair requests by year’s end.

Some of those work tickets were more than two years old.

Going forward, the mayor personally received reports every two weeks on the number of open requests, officials confirmed to THE CITY.

Email Reports on Numbers

Emails obtained by THE CITY spell this out. In a March 2013 email to Bloomberg with the subject line “Mayor’s Bi-Weekly Report,” NYCHA Chair Rhea attached data with “the most recent work-order backlog update” and said he was “on track to reach the April 1st targets. Should you have any questions please call me on my cell.”

Bloomberg responded, “Great.”

By June 11th, Rhea emailed Bloomberg under the subject “NYCHA Bi-Weekly Backlog Report” that NYCHA had “eliminated 182,000 work orders from the backlog.” That would have required NYCHA to have closed more than 10,700 requests every week since Bloomberg’s news conference promise.

Former NYCHA executives Cecil House, left, and John Rhea in 2012.
Former NYCHA executives Cecil House, left, and John Rhea in 2012. Photo: Leticia Barboza/NYCHA

Sources familiar with City Hall’s involvement with NYCHA at the time they say Rhea met regularly with and discussed the work ticket effort with then-Deputy Mayor Robert Steele, Bloomberg’s designated point person for NYCHA.

Rhea and Steele did not respond to questions about this from THE CITY.

Liu remembers Bloomberg’s work-ticket reduction initiative well. At the time, the comptroller had been criticizing the mayor’s appointment of Rhea and the glacial pace of NYCHA’s spending of nearly $1 billion in federal funds earmarked for building upgrades.

State Senator John Liu (D-Queens) speaks at a February, 2019 news conference.
State Senator John Liu (D-Queens) speaks at a February, 2019 news conference. Photo: Mark Hallum/Senator John Liu’s Office

“After Mayor Bloomberg said he would clear out the backlog, I was skeptical about it,” Liu said.

When federal prosecutors revealed the real reasons for the sudden reduction of the backlog, Liu realized NYCHA had lived up to his worst fears.

Bloomberg “was the mayor for 12 years. The problem kept getting worse and towards the end of his longer-than-appropriate term of office, it looked like it was getting better. But it was a house of cards built on shaky ground,” Liu said.

Inspections Suspended

Federal prosecutors also found another alarming change that occurred on Bloomberg’s watch: In late August 2012, in part to artificially reduce the number of new repair requests coming in while they chopped down the backlog, NYCHA managers suspended all annual apartment inspections.

“NYCHA specifically intended the suspension of inspections to avoid the creation of large numbers of new work orders as well as to free up personnel to work on backlog reduction projects,” prosecutors wrote in court papers. “This indefinite suspension of inspections was unlawful.”

At the time, the U.S. Department of Housing & Urban Development (HUD) allowed public housing authorities to temporarily suspend annual apartment inspections.

The problem was, HUD and local New York City law still required NYCHA to perform annual inspections for lead paint. NYCHA, however, had stopped performing those inspections as well, prosecutors said.

‘NYCHA Misled HUD’

Obama administration HUD Secretary Shaun Donovan called NYCHA officials down to Washington to explain their plan to reduce the work tickets.

At an Oct. 18, 2012, meeting with HUD, pre-dating Bloomberg’s announcement at the Drew Hamilton Houses, “NYCHA’s senior exexutives” presented their “backlog reduction plan,” prosecutors said.

At no time did they inform HUD that they’d stopped performing the apartment inspections, according to the Manhattan U.S. Attorney’s Office.

This pattern continued at subsequent HUD sessions stretching into 2013: “At the resulting meetings, NYCHA misled HUD as to its plans,” according to federal prosecutors.

A source familiar with the matter said during that time HUD was skeptical about NYCHA’s claim to have dramatically cut backlogged requests and demanded documentation to back up the numbers.

In 2012 and 2013, Bloomberg’s appointees certified in writing to HUD that NYCHA was doing what the inspection and abatement regulations required on lead paint. Those certifications — as well as others that continued under de Blasio in 2014, 2015 and 2016 — were all false, prosecutors found.

’Mistakes’ and ‘Consequence’

During a September 2016 meeting with HUD, Shola Olatoye, de Blasio’s appointee as NYCHA chairperson, tried to shift blame to the Bloomberg team for a problem that continued during her tenure.

“A mistake of the previous administration was putting too much focus on work order numbers and there were some consequences,” she wrote to HUD.

Meanwhile, the conditions of NYCHA’s buildings —- 80% of which are at least 50 years old —- are worsening. The Citizens Budget Commission recently estimated that without dramatic action, 90% of NYCHA’s units could deteriorate within the next 10 years to the point where it’s no longer cost effective to repair them.

Velazquez has proposed a bill in the House, sponsored by presidential candidate Elizabeth Warren in the Senate, to steer $70 billion federal funding to public housing nationwide.

Earlier this month, recently installed NYCHA Chairperson Greg Russ estimated the authority now needs up to $42 billion to cover all necessary fixes — a jarring spike above the $32 billion estimated two years ago.

(Bloomberg Philanthropies is a funder of THE CITY)

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