MANHATTAN — The nation's largest public housing agency will pay billions of dollars to settle claims that it used dirty tricks like building fake walls to hide problems from inspectors and lied about lead paint conditions to mask risks to low-income residents and their children, federal prosecutors said Monday.
The accusations stemmed from an investigation that found widespread mismanagement at the New York City Housing Authority, known as NYCHA, which has received thousands of complaints each year about broken elevators, insufficient heat, mold and infestations of rats and cockroaches.
"Today marks the beginning of the end of the nightmare for these residents," U.S. Attorney Geoffrey Berman said at a Manhattan news conference.
- Read the Federal Complaint and the Consent Decree filed in federal District Court for the Southern District of New York
The agency "engaged in a culture of false statements and concealment" when filing reports required to secure federal housing subsidies, he said. "The culture of NYCHA is to blame. The management of NYCHA is to blame."
The city agreed in a consent decree in Manhattan federal court to pay $1 billion over four years and an additional $200 million annually for the following six years. The deal also calls for the appointment of a monitor to oversee the housing authority during the 10-year span of the agreement.
Mayor Bill de Blasio, a Democrat, called the settlement a "dramatic step" and a "turning point for our public housing system."
The settlement came in response to a civil complaint that zeroed in on what it portrayed as the agency's indifference to the risk of lead paint poisoning children, saying, it "knows that there is lead paint within apartment units in roughly thirty percent of its developments, but has failed — and continues to fail — to protect its residents from that paint when it peels and crumbles."
Between 2010 and 2016, there were 19 confirmed cases of lead poisoning of children exposed to paint in public housing apartments, with hundreds more testing above safe levels for lead, it said.
Former agency officials from Brooklyn and the Bronx told authorities that workers would shut off an entire building's water supply just before inspections to keep them from finding leaks, the complaint said.
Other times, signs reading "Danger: Do Not Enter" were posted on basement doors to keep inspectors from discovering dangerous or unsanitary conditions, it said. A former maintenance worker reported that NYCHA staff also would build false walls out of plywood just to conceal other dilapidated conditions, it added.
The problems were the result of "management dysfunction and organizational failure, including a culture where spin is often rewarded and accountability often does not exist," it said.
The housing agency's annual operating budget is $2.3 billion for public housing where nearly 400,000 low- and moderate-income residents live. Tenants pay an average of $522 a month in rent, with the U.S. Department of Housing and Urban Development subsidizing the rest.
In April, public housing chairwoman Shola Olatoye stepped down amid increasing public scrutiny of her tenure over the lead paint and heat issues.
Berman noted that the NYCHA has new top management.
"We're hopeful with the federal monitor and the funds available that they're going to be able to right the ship," Berman said.