Chairman Applies Jolt to Housing Authority

Ruth Fremson/The New York Times

“The mayor gave me a mandate to fix the finances,” John B. Rhea said of his leadership of the New York City Housing Authority.

Soon after he became chairman of New York City’s public housing agency, John B. Rhea took his seat at a public meeting of its board and quickly began peppering one of his directors with questions. Tongue-tied, the director looked for help from a colleague, who blanched and conceded that he did not know the answers, either.

The agency’s board meetings had long been sluggish affairs, but Mr. Rhea was not going to tolerate the old ways, it seemed, even if that meant bruised feelings.

Mr. Rhea, 46, a former banking executive with no prior housing experience, has turned into a provocative figure since he was installed by Mayor Michael R. Bloomberg in 2009. He has been credited with shaking up the bureaucracy and securing desperately needed federal grants.

But Mr. Rhea (pronounced REE-ah) has also touched off an exodus of seasoned senior officials, stirred criticism over his hiring of expensive consultants and developed a reputation for being brusque or worse.

At stake is the future of the New York City Housing Authority, which is by far the largest local housing agency in the country and is responsible for sheltering 600,000 people. New York’s has long been considered relatively well run, especially when compared to its counterparts in other major cities, which have often faced scandals over mismanagement, corruption and other malfeasance.

But the city’s Housing Authority faces the same challenges afflicting housing agencies nationwide: deep financing shortfalls and decades-old buildings in varying states of disrepair. In New York, the authority has a $50 million operating deficit and a backlog of capital projects and other repairs that is estimated to cost $7 billion to address.

In an interview, Mr. Rhea, who has a trim goatee and a piercing stare, said he made clear to staff members from his first weeks on the job that he would undertake stark changes.

“The mayor gave me a mandate to fix the finances, to make Nycha less insular and more cooperative and partner-oriented with its sister agencies and with other entities across the city, and to improve the quality of life for residents,” Mr. Rhea said, referring to the agency by its acronym. “That’s not a mandate for ‘keep doing what you’re doing.’ That’s a mandate for transformation and change.”

Though the job is his first in public service, Mr. Rhea said he saw it, in part, as a return to his roots. He grew up in Detroit in what he described as a “very socially conscious and politically involved household,” where, he said, “much has been given and much has been required.”

After graduating from Wesleyan University, where he studied government, philosophy and economics and played football, he was hired by Paine Webber, and spent part of his earnings putting his brother through college. He thrived in banking — “I was incredibly Type A and motivated and wanted to succeed in everything I did,” he said — and then went to Harvard Business School.

He worked for a series of investment banks and consulting groups before being hired as a managing director of investment banking for Lehman Brothers in New York.

After Lehman’s bankruptcy, Mr. Rhea was considering a position in the Obama administration — he declined to disclose which position, saying only that it required Senate confirmation — when Bloomberg aides approached him with the idea of becoming chairman of the Housing Authority. At first, he resisted, he said.

“I said, ‘I’m not the right guy,’ ” he said. “But the mayor sometimes picks what he believes are strong athletes.”

The agency was in turmoil. Tino Hernandez, the longtime chairman, resigned in 2008 after controversies arose over the safety and maintenance of elevators in public housing; three months earlier, a 5-year-old boy had plummeted to his death.

From the start, several City Council members questioned Mr. Rhea’s lack of experience. But in 2010, Mr. Rhea secured federal stimulus money that would pay the agency upward of $65 million a year and cover operating costs for 21 developments.

The deal, called “federalization,” was initially deemed impossible to pull off by the authority’s staff.

City officials and housing advocates said they were impressed.

“Federalization was a stroke of real talent,” said David Jones, president of the Community Service Society of New York, a nonprofit antipoverty group. “I think he was uniquely able to take that on because of his background. I really doubt whether his predecessors would have been able to wend their way through.”

Mr. Rhea also helped secure private dollars and nonprofit resources for the agency, selling off parcels for low-income and mixed-income buildings, and drawing in schools and retail shops to create a stream of rental income.

He has said he wants the agency to sell air rights to private developers to pay for the rehabilitation of existing buildings, a plan that has alarmed some tenants’ groups, which question whether that is a kind of shadow privatization.

Mr. Rhea said the proposal was needed to keep the agency afloat. Still, his plans and personality have roiled the agency.

Mr. Rhea raised eyebrows after the agency awarded a $10 million contract to one of his former employers, the Boston Consulting Group, last year to create a blueprint to guide the authority to surer financial footing. He said outside eyes were needed to help the agency determine where pinched resources should go, and how to trim administrative costs.

Meanwhile, the authority continues to suffer management turmoil.

In 2009, it issued thousands more rental assistance vouchers than it had money for, despite warnings from federal officials, and later said that up to 10,000 low-income families could lose their vouchers as a result. Federal money later arrived, but the incident was seen by housing experts as a misstep.

Last year, the authority computerized its system for the vouchers, part of the program known as Section 8. In the process, documents went missing, scores of people wrongly received termination notices, and landlords stopped receiving payments.

Judith Goldiner, a head lawyer at the Legal Aid Society, said she voiced her concerns about the termination notices to Mr. Rhea early last year during a chance meeting in Albany, only to be rebuffed.

“He started telling me I was wrong, no one was being hurt, everybody got it wrong, and he stormed off,” she said. “Then I got taken aside by his handlers, who said, ‘We know there’s a big problem and we’re working on it.’ ”

Asked about the episode, Mr. Rhea said, “It is not factual,” adding that the system was being “stabilized.”

But in a rare agreement, both Legal Aid and the Rent Stabilization Association, which represents landlords, sued the authority over suspended payments.

By December, more than a dozen top executives had left or taken early retirement since Mr. Rhea took over.

Douglas Apple, a longtime general manager, left for another government agency, and his replacement, Michael Kelly, who had run housing authorities in San Francisco and Washington, left to run the Philadelphia Housing Authority after barely a year on the job.

In an interview, Mr. Kelly said that the Philadelphia opportunity was too good to pass up, and that Mr. Rhea was exactly what the agency needed.

“If I was in that chairman role, I would probably be forced to take the same kind of radical approach,” Mr. Kelly said. “John represented a needed and timely wake-up call for its long-term survival.”

But the departures have stirred concerns.

“It’s problematic to have that much experience walking out the door,” said Councilwoman Rosie Mendez, a Manhattan Democrat who is chairwoman of the Committee on Public Housing. “What the Housing Authority needed is someone with housing background, not banking.”

Mr. Rhea said that the turnover was to be expected and that he had assembled a “dream team world-class bench,” including a dozen graduates from top universities whom he called his “Green Berets.”

“My goal is to consistently upgrade the talent at Nycha — I want it to be substantially stronger when, you know, I leave here than when I arrived,” he said. “We have a huge influx of talent relative to the talent that’s left.”

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