Private company running Brooklyn public housing complex fired for repeated failures

A private company managing a Brooklyn public housing complex was quietly fired late last year after the developer who hired the firm said it put tenant subsidies at risk, struggled to complete work on time and failed to get a handle on “ballooning” costs at the 1,300-unit campus.

The claims against property manager Pinnacle City Living echo complaints of mismanagement and out-of-control costs frequently leveled against the New York City Housing Authority but with a key distinction: The private companies running public housing campuses are subject to far less oversight than the city agency, prompting accountability concerns from elected officials.

Conversions to private management are supposed to unlock new funding for upgrades and relieve the cash-strapped public housing agency, but the previously unreported complaints against Pinnacle show that the companies tapped to take over can have their own set of problems. NYCHA administrators testify before the City Council at regular hearings and the agency is subject to disclosure laws, while the private-sector firms avoid the same level of scrutiny, according to local leaders and watchdog groups.

“It’s an uphill battle to get oversight if any of these companies decide to not meet expectations,” said Councilmember Sandy Nurse, whose district includes Bushwick’s Hope Gardens complex.

U.S. Rep. Nydia Velázquez said she was caught off guard when the developer, Pennrose, replaced Pinnacle with another management company to handle day-to-day operations at Hope Gardens.

“This decision is surprising and unexpected,” Velázquez wrote in a December 2023 letter to Pennrose and NYCHA seeking more information about the “red flags” that led to the switch.

In response, Pennrose Director of Asset Management Jason Newman ripped Pinnacle’s management record and said the company jeopardized housing vouchers needed to run the property, failed to implement “cost-saving measures to curb ballooning controllable operating expenses” and alienated tenants.

“Throughout the course of these last four years, under the Pinnacle’s administration, the property has struggled to maintain consistency in its operations,” Newman said in a December letter shared with Gothamist.

Pinnacle spokesperson Erin Holin disputed the criticisms from Pennrose.

“We strongly disagree with the assertions and characterizations of the letter,” Holin said. “We have directly addressed these issues with Pennrose and other stakeholders several months ago. Nonetheless, we were honored to have worked with the Hope Gardens community and are proud of the accomplishments that we made during our tenure.”

The unique complex spans multiple blocks in Bushwick and comprises three high-rise towers and more than four dozen squat, three-story townhouses.

Pennrose took control of the campus and hired Pinnacle in 2019 through a program that shifts management of public housing to private firms and changes the source of federal funding to the more lucrative Section 8 stream. Hope Gardens was one of the earliest conversions to the program, known as Rental Assistance Demonstration- Permanent Affordability Commitment Together, or RAD-PACT.

The move toward private management came after NYCHA’s 2017 physical needs assessment revealed the buildings included in the Hope Gardens portfolio required more than $400 million in repairs and renovations over 20 years.

NYCHA’s 2023 physical needs assessment showed that the estimated cost of repairs had increased to around $650 million.

Newly released NYCHA data suggests the management company struggled to keep up with maintenance and repairs at Hope Gardens before making improvements late last year. On-time work order responses plummeted from 98% in the first quarter of 2022 to just around 70% for the rest of the year before rebounding to 98% in the fall of 2023.

In contrast, over 90% of work orders were completed on time in that period at all other campuses converted to private management, according to the database.

Pinnacle was selected last year to manage two other NYCHA complexes that were converted to private management: the 984-unit Rangel Houses in Harlem and the 634-unit West Brighton Houses on Staten Island.

Pennrose did not respond to specific questions about concerns at the Bushwick complex, such as what “cost-saving measures” Pinnacle failed to implement and how the company mishandled certifications and inspections.

Pennrose spokesperson Lee Reedy instead complimented Pinnacle’s management in a response that starkly contrasted with the letter sent by Pennrose’s director of asset management.

“Pinnacle supported and guided us well through the acquisition of the property,” Reedy said. “As we do with any third-party managed asset, we periodically consider other management options. We engaged with all appropriate parties and collectively decided to make a change.”

The letter’s claims didn’t surprise Anthony Sanchez, a public school teacher who said he recently moved out of Hope Gardens after living there for eight years.

Sanchez, 41, said that under Pinnacle, he and his wife were forced to repeatedly complete paperwork to keep their Section 8 subsidy and renew their lease. He said resubmitting paperwork was a common problem for other tenants in the building.

“It takes time to fill out all those documents, and then there’s paperwork saying we have to recertify and if we don’t we’d be evicted,” Sanchez said. “I can’t think of any reason why they’d ask for the same documentation repeatedly from the same people.”

Pennrose selected a new property manager with a history of running other public housing complexes, Newman told Velázquez. The company, Wavecrest, is one of the city’s biggest property managers and handles operations at the nearby Williamsburg Houses.

The U.S. Department of Housing and Urban Development said Pennrose did not need their permission to pick a new management company. NYCHA said it approved the decision.

Newman’s letter also hints at deeper financial problems facing the complex, including a 268% increase in insurance premiums following flooding last September.

“Management agent performance aside, Hope Gardens and Bushwick Gardens have encountered numerous uncontrollable operating challenges that threaten both the short and long-term financial viability of these properties,” Newman said.

In a statement, Velázquez said she’s “hopeful the change in property management will help address tenants’ concerns and improve living conditions and services.”

But she isn’t the only local elected official questioning the problems that led to Pinnacle’s ouster.

State Sen. Julia Salazar, whose district includes Hope Gardens, called Pennrose’s grim assessment of Pinnacle and the financial threats to the property “astonishing.”

“The whole point of having a development enter the RAD-PACT program is to address NYCHA’s deficit and the unsustainable finances,” Salazar said.

Salazar said her staff and representatives for other elected officials meet monthly with Hope Gardens management but did not know about the plan to replace Pinnacle until the decision was already made last year.

“It’s even less accountability when it’s private management than the public housing authority, and apparently the same problems RAD-PACT was supposed to address,” she said.

NYCHA Executive Vice President Jonathan Gouveia fired back at her assessment, saying the change demonstrates how inadequate private firms can be removed.

“This is about making sure we have a top performer in terms of the property manager in place complying with all the rules,” Gouveia said. “People always ask, ‘What remedies do you have with PACT partners? Can you remove them?’ It’s interesting that when we do the thing they say they want us to do, they criticize it.”

Tenants, meanwhile, have had a mixed response — if they know about the change in management at all.

Alfonso Acevedo, 80, said he moved into one of the high-rise apartment buildings with his wife 11 years ago. He said conditions had improved since then but he lately struggled to get a response to needed repairs.

“It looks like Pinnacle didn’t do the work the way it was supposed to be done so they got rid of them,” Acevedo said. “They put in everything new, but then I don’t think they finished the work.”

But another tenant, Luis Rosa, said he thought things were going pretty well.

They were doing a good job,” he said. “I don’t know why they changed it.”

Correction: A previous version of this story misstated the approval process to select a new management company. Pennrose required NYCHA approval to change the management company.

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