oversight

Inquiry Into the Low-Rent Housing Project at 108th Street--62nd Drive, Queens, New York, Proposed by the New York City Housing Authority

Published by the Government Accountability Office on 1971-12-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

inquiry Into The
Low-Rent ousing             /ci
At 108th Street--62n        a/
Queens, New York
Proposed By The
New York City Housi
Department of Housing and
  Urban Development
                               COMPTROLLER     GENERAL     OF   THE      UNITED   STATES
                                             WASHINGTON.    D.C.      20348




                B-118718




                Dear Mr. Rosenthal:
         -'I_
                    This is our report on the low-rent housing project at 108th
              Street and 62nd Drive, Queens, New York, proposed by the New York
            ! City Housing Authority.   Our review was made pursuant to your re-           3 3.1-$$
              quest of May 26, 1971.

                        As agreed, copies of this report are being submitted to
;'.<--
   _            Congressmen Joseph I?. Addabbo; Herman Badillo,     James J. Delaney;
                Seymour Halpernc and Lester L. Wolff.       We plan no further dis-
                tribution    of this report unless copies are specifically    requested,
                and then we shall make distribution     only after agreement has been
                obtained or public announcement has been made concerning the
                report.
           ,-
           P          The Department of Housing and Urban Development and the
                New York City Housing Authority  have not been given an opportunity
                to formally examine and comment on the report.    This fact should
                be considered in any use made of the information   presented.




                                                           Comptroller General
                                                           of the United States


                The Honorable Benjamin S. Rosenthal
                House of Representatives




                                       50TH ANNIVERSARY 1921- 1971
                          Contents
                                                                 Page

DIGEST                                                             1

CHAPTER

  1        INTRODUCTIONAND SCOPEOF REVIEW                          4
               Low-rent housing program                            4
               Scope                                               5

  2        SUITABILITY OF THE SITE                                 6
               Reasonableness of site cost                         6
               Proximity to a highway                              8
               Adequacy of community services and
                 facilities                                        8
                    Schools                                        8
                    Hospitals                                     10
                    Transportation and shopping                   10
               Conclusions                                        11

   3       REASONABLENESS    OF COST ESTIMATES                    12
               Increase in estimated development cost             12
              Basis of cost estimates                             14
               Cost limitation                                    14
               Conclusions                                        14

   4       LEGAL PROHIBITION AGAINST HIGH-RISE CONSTRUCTION       15


EXHIBITS                                                          16

   A       General site   plan for the proposed project           17

   B       Location   of schools     in area of project   site    18


APPENDIX                                                          19

   I       Status of existing neighborhood schools,
             existing schools designated to serve the
             project, and proposed schools                        20


                           ABBREVIATIONS

 GAO       General Accounting Office
 IWD       Department of Housing and Urban Development
 NYCHA     New York City Housing Authority
    COMPTROLLER GENERAL'S REPORT TO                                          INQUIRY INTO THE LOW-RENT
    THE HONORABLE BENJAMIN S. ROSENTHAL                                      HOUSING PROJECT AT 108TH
    HOUSE OF REPRESENTATIVES                                                 STREET--62ND DRIVE, QUEENS,
                                                                             NEW YORK, PROPOSED BY THE
                                                                             NEW YORK CITY HOUSING
                                                                             AUTHORITY
                                                                             Department   of Housing and
                                                                             Urban Development
                                                                             B-118718
b



    DIGEST
    ------


    WHY THE INQUIRY         WAS MADE

          At the request         of Congressman           Benjamin       S. Rosenthal,        the General
          Accounting      Office      (GAO) examined
                                                c_--.          into    certain     aspects      of the
          108th Street        low-rent      housing       project      proposed      by the New York
        ! City Housing Authority.                The Depart&t              of Housing      and Urban De-
      ,-  velopment     (HUD)      has   entered      into     a   contract     with   the   Authority    to
          provide    finmfial         assistance        for this       project.       Our examination
                                                                                             _---
          covered
           --
              --the  suitability         of the site,

               --the    reasonableness           of    the   cost    estimates,    and

               --whether    the     project       would      be in     violation   of    section   207 of
                  the Housing       Act of       1968.


    FINDINGS      AND CONCLUSIONS

          Suitability        of    the   site

                  Reasonableness         of     cost    of   the    site

                  The Authority      has estimated     that    the ready-to-build         cost of the
                  site will     amount to $3.8 million--$2.3            million    for the land
                  and $1.5 million        for abnormal    foundation        costs  caused by the
                  existing    soil   conditions   --or   about    $10.33      per square foot.   This
                  cost compares      favorably    with previous        sales prices     of compara-
                  ble land parcels        in the area.      (See p. 7.1

                  In 1968 HUD approved        the purchase      of the site       with     the under-
                  standing    that    it would not fund more than $1.7 million                   for
                  abnormal    foundation     costs.      HUD has no written        assurance         that
                  the Authority       will bear any additional          abnormal      foundation
                  costs.    GAO believes      that HUD should        obtain     a written      agree-
                  ment with the Authority           on this  matter.        (See p. 7.1
Until    selected     piles     are placed     and load tested--to            determine
the depth      to which the piles         must be driven        to support          the
weight     of the buildings--         the required     length     of   the    piles      will
remain unknown.           Furthermore,      the   number    of  piles      that     will      be
required     because      of rejected     or broken piles         will    not be known
until    all piles      have been put into place.              Therefore        the cost
of the piling       is uncertain.         (See p. 6.1

Proximity         to a highway

The site     of the housing      project     borders      on the six-lane   Long
Island    Expressway,    a limited       access,     elevated,    Federal inter-
state   route.     HUD regulations        provided      that,   so far as local
choice    would reasonably       permit,     the selection       of sites near
hazards    such as expressways         was to be avoided.

I-IUD, however,   approved  the project    because    it believed   that
the expressway     would not constitute     a hazard     to project   pedes-
trians    because  the site   plan directs    the flow of pedestrian
traffic    away from the expressway.       (See p. 8.1

Adequacy         of    community         services        and     facilities

The existing     schools   designated                      by the New York City Board of
Education     may not have sufficient                        capacity to serve the proj-
ect's    school  age population.

Should the Board fail       to provide        the planned      additional      school
facilities,     the project     pupils     may cause an overload          in the
designated    elementary    schools       and may aggravate         the existing
overload    in the designated        intermediate      schools      and in the
high school.       (See p.    9.1

Five hospitals      are located     in the general    area of the site       of
the project     and are reasonably       accessible   by public    transpor-
tation.     Average    utilization     of these hospitals     ranges from
86 to 92 percent.           (See p. 10.1

Transportation               and shopping           facilities          are   accessible       from
the site.             (See    p. 10.1

Reasonableness               of   cost    estimates

The estimated        total    development       cost of the housing                         project,
which has increased           from $17.2 million         in November                       1967 to
about   $30 million        in August     1971 ($35,690        a dwelling                      unit),
falls   within     the construction          cost limitations       for                    public
housing    prescribed        by HUD.      (See p. 12.)




                                           2
The August 1971 estimated development cost includes a con-
tingency provision  of $778,000 but does not include a provi-
sion for possible additional  piling costs which may be
required because of uncertain soil conditions.

Most of the increase   in the estimated development cost was
caused by projecting   sharply escalating labor rates and other
costs.

GAO believes that all increases in estimated development cost
are adequately justified,  and that the Authority's estimates
are based on the most current and complete data available.

Legal prohibition   against   hiph-rise   construction

Section 207 of the Housing Act of 1968 prohibits     the approval
of high-rise    buildings for low-income families with children
unless the Secretary, HUD, determines that there is no prac-
tical alternative.

In the opinion of HUD's legal counsel and in GAO's opinion
no such determination was required for this project because
it was approved prior to the enactment of the act.




                          3
                                               CHAPTER 1


                           INTRODUCTION          AND SCOPE OF REVIEW

LOW-RENT HOUSING PROGRAM

        The New York City Housing         Authority   (NYCHA) administers        the low-
rent housing       program     in New York City.    At December 31, 1970, NYCHA
was operating         177 projects,   of which 100 are federally       assisted.
Sixteen    additional      projects   were under construction     and 17 more, in-
cluding    the project       for the 108th Street    - 62nd Drive area,        were in
the planning       stages.

        Federal       participation            in the low-rent         housing      program     is admin-
istered      by the Department               of Housing      and Urban Development              under the
United      States      Housing      Act of 1937,         as amended (42 U.S.C.              1401).      The
law authorizes           HUD to enter            into an annual        contributions        contract
with a local          housing       authority.          Under the terms of th:s             contract,
the Federal          contributions,            at their    maximum allowable            amounts,      are
intended       to be sufficient             to pay both principal              and interest        on the
long-term        financing        when construction            is completed.           As part     of its
administrative           responsibilities,              HUD provides       technical       assistance
and reviews          and evaluates           the local     authority's         plans     and proposals
for conformance            with HUD guidelines.

      The 108th Street        project  was proposed        in 1966 as one of a num-
ber of developments        comprising   the city's       q'Scattered-Site       Program."
Under the program,       low-income    housing     was to be located          on vacant
sites   in outlying,     nonsegregated     areas of the city.              The objective
of the program       was to provide    housing     opportunities         in sound, pre-
dominantly    white,    middle-income     neighborhoods         for those     confined    to
the city's    ghettos.      This program     conforms      to HUD guidelines.

        In January         1967, NYCHA submitted                a development      program        to HUD
for the 108th Street                project      showing      the plan and exhibits              contain-
ing information            relating        to the development            of the project.            In
November       1967, HUD approved              the development           program   and executed             the
annual      contributions           contract.         In November        1971, HUD approved             the
project      after     several        changes had been made in its design.                        The ap-
proved     design      provides        for three        24story      buildings     consisting           of
840 dwelling          units --341        for the elderly          and 499 for other            families--
expected       to house an estimated                2,700 tenants.           The development           pro-
gram also provided              for the construction              of a community        center        and an
early     childhood        center      but that       the cost of the early            childhood          cen-
ter will       not be funded           by HUD. The structures                 will cover       14.56 per-
cent of the 8.46 acre site.                      The remainder         of the land will           be used
for 294 parking            spaces,       various      outdoor     recreational       facilities,           and
other     open space.            (See exhibit        A.)



                                                    4
          NYCHA submitted  final   revised   plans and specifications               for the
project      to HUD in July 1971.       In November  1971, HUD approved               the
project      and NYCHA awarded   the construction     contracts.

SCOPE

         The information        contained    in this      report  was obtained      from
(1) a review       of records        at HUD's New York regional            and area offices
and at NYCHA, (2) discussions               with HUD and NYCHA representatives,
former      HUD representatives          and other    individuals       involved   with the
project,      community      groups,     and representatives        of various     New York
City agencies,         and (3) a visit       to the project       site.




                                            5
                                            CHAPTER2


                                 SUITABILITY OF THE SITE

       In  examining   into    the suitability        of the site       we concentrated
on (1) the reasonableness          of the site       cost,     (2) HUD regulations      with
respect    to the site's     proximity      to a highway,         (3) the existing
schools'     capacity  to serve the project's              school    age population,
(4) the sufficiency        of hospitals        in the area,       and (5) the adequacy
of transportation      and shopping      facilities.

REASONABLENESS
             OF SITE COST

        HUD guidelines      provide    that the physical         characteristics        of a
project    site    should   permit   orderly      and appropriate       arrangement       of the
project    and make economical         construction     and management           costs possi-
ble, and that        sites   shall  not be selected       where surface          or subsurface
conditions      prevent    such development.

        Certain    questions      concerning         the suitability         of the 108th Street
site    are unresolved        because     the piling       requirements        for the foundations
of the buildings          have not been definitely              determined.         Until      selected
piles    are placed       and load-tested          to determine       the depth to which the
piles    must be driven        to support        the weight       of the buildings,            the re-
quired     length    of the piles        will   not be known.           Furthermore,         the total
number of piles         that will       be required      because of piles           broken       or re-
jected     during    placement     will      not be known until          all piles        for the
foundations       have been put into place.

       The project       site  is a vacant       8.46 acre parcel          of filled     land which
was formerly      low-lying      and marshy terrain          traversed       by a stream      known
as "Horse Brook . I' From 1961 to 1964, a commercial                       developer     had plans
to build     two 23-story     FHA insured        apartment       buildings      on the site.
Load-testing     of selected       piles    indicated      that piles        averaging     110 feet
would probably       be required.        Plans to construct             the apartment      buildings
were abandoned       in 1964 when FHA questioned               the marketability         of a proj-
ect with the high foundation             costs occasioned           by the piling      requirement.

        After     reviewing    NYCHA's project        development        program      in January
1967, HUD appraisers           recommended     rejection       of the site        because    they
believed      that     the cost of the abnormal          foundations        would be too high.
After    reviews       by HUD technical     personnel,       discussions         between    HUD and
NYCHA, and test borings            and reports      by NYCHA's soil           consultant,      HUD
approved      the development       program    in November         1967.

       NYCHAls architect          estimated    on July 16, 1971, that         1,800 piles
averaging      75 feet     long , and 300 piles        averaging    45 feet   long--a    total
of 148,000      linear     feet --would     be required      for the project.       This



                                                6
estimate       was based on the design of the project               which was submitted
to HUD on July 31, 1971.               In August 1971, NYCHA estimated           the re-
quired     piling      would cost $1.45 million          and that the fill     required
for the site         would cost $36,000--a        total     of $1.48 million     for the
abnormal       foundations.       This estimated        cost did not include       a provi-
sion for breakage           or rejection     of piles      and was not based on a con-
sideration        of the possibility       that   load-testing      might disclose      that
longer     piles     would be required.

      NYCHA's soil      consultant's  report   stated    that                load-tests       should
be conducted      and that these tests     may demonstrate                   that    the   required
pile  penetration     may be greater    than the estimate                    reported.

        A consultant's        February       1971 report         to the Queens Civic             Confer-
ence showed that         cost of the foundations                 for the project           was esti-
mated to be $4.46 million,               including       a 20 percent           provision      for pile
breakage     and rejection.           This consultant's              report     was submitted        be-
fore the project         had been redesigned              to reduce the weight               of the
buildings     and to reduce the fill               requirements.             The consultant's
estimate,      if adjusted       for the reduced            building        weights     and fill     re-
quirements,       would indicate         that,     including        the breakage          and rejection
factor,     163,000    linear      feet of piling           would be required             compared     to
NYCHA's estimated          148,000     linear      feet without          any allowance         for break-
age and rejection.

         In April    1968, NYCHA's contract       real  estate     appraiser       valued
the land at $2,145,000,            or $5.82 per square foot.           The valuation      was
based primarily         on the value of comparable       properties        and on a con-
sideration        of the location,     zoning,  general    desirability,         and subsoil
conditions.         The appraiser's      report stated   that smaller         but compara-
ble sites      in the area had been sold 4 to 5 years              earlier     for slightly
more than $12 per square foot.

         HUD reviewed       and approved    the appraiser's               report   and on July 1,
1968, approved          the purchase     of the land for            $2.3 million,         subject     to
the provision         that HUD would not fund more                than $1.7 million           for ab-
normal     foundation       costs.    However,  HUD has           obtained       no written       assur-
ance from NYCHA that it would bear any costs                         in excess of the $1.7
million.       NYCHA purchased        the land for $2.3             million.

       The site      acquisition        cost of $2.3 million         and the estimated
cost of $1.48 million            for the abnormal        foundations      indicate     that   the
site's    ready-to-build         cost will     be about $3.8 million           or $10.33    a
square    foot.      This compares favorably            with the sales prices         at which
the appraiser's          report    stated    comparable     parcels     in the area had been
sold during       the period       1960-1964.
PROXIMITY      TO A HIGHWAY_

       HUD regulations       provided     that  so far as local       choice    would rea-
sonably   permit,      sites   for low-income     housing  near or adjacent            to ex-
pressways    and similar      hazards     were to be avoided.        The site       of the
108th Street      project    borders     on the six-lane   Long Island         Expressway
which is a limited-access,            elevated,   Federal  interstate        route.

        HUD files       did not contain            evidence       that   this     regulation         had
been considered           when it approved            the project.          HUD's former           Assistant
Regional      Administrator,            Housing Assistance             Administration,           informed
us, however,         that he had considered                the project's          proximity        to the
expressway        before     HUD approved          the development           program       for the proj-
ect and had assured              himself      that     the highway       would not pose a hazard
to project        pedestrians.           He informed         us that approval           was based on a
change in the site             plan which directed              the flow of project              pedestrian
traffic      away from the expressway                 and thus minimized             its danger.           The
current      project      design      retains      this    feature.        He inforr;.ed       us also that
other    factors       which,      in his opinion,           indicated       that the expressway
did not present           a hazard        to project      pedestrians          were (1) the limited
access     to the expressway              which is elevated            at the point          where it
passes     the site ) and (21 the expressway                      did not present            a hazard      to
the elementary           school      adjacent      to the site.

ADEQUACY OF COMMUNITY
SERVICES AND FACILITIES

        HUD regulations       provide        that  the site      of a low-income      housing
project    shall    be well-related            to public    transportation,       schools,
shopping , and all other           facilities        necessary      to the health,      safety,
and general      welfare    of the tenants.

Schools

        The site    of the 108th Street     project  lies in the north                          east
corner     of the area designated     by the New York City Board of                             Educa-
tion as the Forest        Hills-Rego  Park neighborhood     (see exhibit                         B) and
borders      on the Corona school    neighborhood.

        NYCHA's development            program      indicated      that      five     existing     elemen-
tary    schools      and two existing          intermediate        schools        had been designated
by the city's          Board of Education           to serve the project's                  school  age
population        but that      these schools         were not adequate.               The development
program      indicated      further      that additional         facilities,           including      two
intermediate         schools,      would be provided           by the city          in time to meet
the project         needs.      HUD's former        Assistant      Regional        Administrator
told us that when the development                     program    for the project               was approved
he had relied          on the city's        assurance       that additional            schools     would
be provided.           We noted,     however,       that    as of September            1971, the site


                                                   8
for one of these schools     has not been selected    and that although       the
 site for the other  school   had been selected,   construction      had not
been started.    The site   of this  school  is 39 blocks     from the project
site.

         At October        30, 1970, the latest                date for which Board of Educa-
tion     school     population         data was available,              the five     elementary       schools
designated        to serve the project                had an underload           of 230 pupils,         and
the two intermediate                schools      had an overload            of 510 students.          If the
estimated       increase         in student       enrollment         of 375 elementary         pupils        and
200 intermediate             school     pupils       materializes         as a result      of construct-
 .       1 project,
ing    fne                   all designated            schools     will     have an overload.           It
should      be noted,        however,       that one of the designated                 elementary       schools
has six rooms, with a capacity                       of about       180 pupils,      which are being
used by the district                superintendent           of schools.         If these     rooms were
used for teaching              purposes,       the elementary            schools    would not be over-
loaded.       Further,         the Forest        Hills-Rego        Park neighborhood          contains
six elementary            schools      which are situated              within     11 to 32 blocks          from
the project         site.        These elementary             schools,      which had not been desig-
nated by the Board of Education                        to serve the project's             school    age pop-
ulation,      had an underload              of 859 pupils          at October       30, 1970.

       Although           the    city's     Board of Education           has promised      that adequate
school     facilities            will     be provided    for the project's           school     age popu-
lation     and has          designated       the schools       that will       be used,    there     is no
evidence      that        the capacity         of the schools       will      be adequate     to serve
the project          or     that      they will    be well-related          to the project        (see
appendix      I).

        The high school      nearest    to the project        site   is Forest      Hills    High
School which,        as of October     30, 1970, had an overload            of 918 students
and was operating         on triple    sessions.       No estimate      of the number of
project     high school     pupils   is available.         The current      overload      of
the school       may be alleviated      by a recent       school   rezoning      under which
many pupils       in the area of the project           who would normally          attend
Forest     Hills    High School are being        required     to attend     Hillcrest       High
School.

        NYU-U's development         program      indicated        further   that    the city
Board of Education        planned      to build        the New Queens High School which
would be available         to meet the needs of the project.                     The New Queens
High School has a planned             capacity       of 4,091 pupils.          A site     for the
school     has been selected        at Radcliff          Avenue and 1Olst Street,            Corona,
and funds have been appropriated                 for its construction.              However,      be-
cause of litigation          concerning       the city's        proposed    removal     of 69 homes
located      on the site,     representatives            of the school      planning     and re-
search     division    of the Board of Education                indicated     to us that      the
construction        of the school      would not be completed             for at least        5 years.
NYCHA, in May 1971, had indicated                  that     the project   would be available
in 1973.


                                                    9
     The development program provides for an early childhood                  center
with an estimated capacity of 200; NYCHAplans to lease this                   center
to the city Board of Education.

Hospitals

      The following   five   hospitals        are available   to serve the housing
project:
                                                                    Distance from
      Hospital                            Trpe                     project (Miles)

Parkway                              Proprietary                          1
City Hospital Center
   of Elmhurst                       Public                               2-l/2
St. John's Queens                    Voluntary                            1
LaGuardia                            Voluntary                            l/2
Booth Memorial                       Voluntary                            l-1/2

      The hospitals  are reasonably accessible from the site of the
housing project by public transportation.      All accept patients under
governmental medical assistance plans.     All have emergency facilities
and two have outpatient   facilities.

     The hospitals have a total of 2,010 beds. LaGuardia Hospital is
in the process of adding 125 beds. Construction of this addition is
expected to be completed by the end of 1973. Booth Memorial Hospital
has recently constructed four new floors and will add 29 beds by the
end of 1972 and has space available  for additional beds.

      The average utilization    of these hospitals ranges from 86 percent
to 92 percent.   LaGuardia Hospital gives priority     to members of a
health insurance plan.      An average of about 10 percent of its patients
are community residents.
        The Corona-Flushing District          Health Center, located 2 miles from
the   project site, offers a number           of health services.   The Corona
Child Health Station,      located less        than 1 mile from the site, has
clinics    for infants and preschool          children.

Transportation   and shopping

      A subway station is located nine blocks west of the site.   Two
bus lines  run adjacent to the site and pass near this station  and two
other subway stations.

       Various shopping facilities, located within            six blocks of the
site, include supermarkets; banks; and clothing,              drug, hardware, and
variety    stores.



                                         10
          HUD's    former   Assistant      Regional   Administrator        told us that        the
availability          of transportation        and shopping,       as well as health         facil-
ities,       was   reviewed    by his staff       and himself      through     personal    site
visits       and   a knowledge       of the area and that        they considered        these
facilities         to be adequate.

CONCLUSIONS

        The land acquisition        cost of $2.3 million      and the abnormal      foun-
dation     cost limitation    of $1.7 million      acceptable    to HUD would indi-
cate a maximum ready-to-build            site cost of $4 million,       or $10.85     a
square foot.        This compares favorably       with the prices     of other    sites
previously      sold in the area and identified          by the appraiser     as com-
parable     to the project    site.

         Although       HUD approved      the purchase      of the site       subject     to the
limitation          on its participation       in abnormal         foundation      costs    to $1.7
million,        it obtained      no written    assurance       from NYCHA that         it will
bear the additional            costs if longer       piles     are required       or the cost
of rejected          and broken piling.        We believe        that HUD, to limit           its
funding       of abnormal      foundation     costs,     should      obtain   NYCHA's written
agreement         that it will      bear any costs in excess of the $1.7 million.

         Further,       should        the Board of Education              fail to provide       additional
school      facilities,          it     appears    that project         pupils   may cause      an over-
load in the designated                   elementary     schools        and may aggravate        the
existing       overload       in      the designated         intermediate      schools    and     in the
high school.            However,         an overload       in the elementary         schools      could
be alleviated           by using         for instructional           purposes    six rooms      that are
currently         being used          by the district          superintendent.




                                                     11
                                               CHAPTER 3


                             REASONABLENESS OF COST ESTIMATES

        HUD regulations      provide     that  local               housing    authorities           submit
budget    and cost estimates         for low-income                 housing     projects         to HUD
for review     and approval.         These required                 submissions        for      a project
include:

      --the     initial       development       cost budget to accompany  the
          development         program     and serve as the basis    for HUD's
          annual      contributions        contract,

       --the       preliminary        drawing     budget        to be submitted          with
           the     preliminary        drawings,

       --the     prebid estimate   of construction       costs to bt pre-
           pared before    the receipt   of construction       bids;   the esti-
           mate to be used to measure       the reasonableness       of the
           bids,

       --the      contract      award      budget   to be submitted    when HUD's ap-
           proval     of contract          awards is requested      and is to include
           the total       estimated        development   costs,

       --revised           budgets    if   changed        conditions       warrant,      and

       --the       final     cost    budget.

      In August  1971, NYCHA submitted                        its prebid    estimate          of construc-
tion  costs to HUD. NYCHA has also                         submitted     a contract          award budget
which was approved    by HUD.

INCREASE IN ESTIMATED DEVELOPMENT COST

      As of August      1971, NYCHA estimated     that   the cost of developing
the project    would amount to $29,980,000,         or $35,690    per dwelling
unit.    This estimate,      which does not provide      for the possible       added
cost of piling     that may be required      as discussed      in Chapter    2, repre-
sents an increase       of $12,825,000   over the cost estimate        approved     by
HUD in November      1967.

         In January    1967, NYCHA submitted       its initial       development    cost
budget      to HUD. The budget      was based on a design          of four 15-story
buildings       and two 14-story    buildings     and totaled      $16,580,000.      HUD's
review      resulted   in NYCHA revising      the budget     upward to $17,155,000,
most of the increase         being  in estimated      costs    for the abnormal      foun-
dations.        In November   1967, HUD approved       the revised       budget  which


                                                     12
formed   the basis for the annual     contributions         contract.       Since that
time,  there   have been numerous    design     changes and several          informal
cost estimates     reflecting a continually        increasing       development      cost.

         After   receipt     of construction        contract     bids in August    1971,
NYCHA submitted          its proposed      contract      award budget     to HUD. The
budget      showed a total      estimated      development       cost of $29,980,000,                                      an
increase       of $12,825,000,       or 74.8 percent,         over the cost shown in
its November        1967 budget.l_/        The increase       is accounted    for as
follows:

                                      Estimated                     Estimated
                                    development                    development
                                      costs in                      costs    in
 Cost    category                  November     1967               August    1971                         Increase

Construction         and            $12,405,000                        $23,636,167                   $11,231,167
    equipment
Administration                            465,000                            785,000                           320,000
Interest                                  570,000                         1,168,OOO                            598,000
Initial      operating
    deficit                                21,200                           168,000                            146,800
Planning                                  803,800                        1,104,652                             300,852
Site acquisition                       2,073,OOO                         2,340,181                             267,181
Contingency                               817,000                           778,000                            (39,000)

      Totals                       - $17,155,000                       $29,980,000?!                  $12,825,000


"Includes        $3,256,749          incurred        through           June     30,     1971,       principally
    for site     acquisition.

         Increases     in construction    and equipment       account      for almost       90
percent       of the total    increase  in estimated       development        costs.      Of
the increase        of $11.2 million    in this    category,      about      $8 million      is
attributable        to a sharp increase      in labor    rates    from January          1967
projected        to January   1973; most of the remainder           resulted       from de-
sign changes.

       The increases      in         other    cost      categories               resulted          primarily          from
increases    in salaries,              overhead,        and interest                rates.

       In November         1971,      HUD approved             total          funding        for    the     project          of
$29,980,000.


1’   Neither    budget      includes        the estimated                cost of $766,000  for                       the
     early   childhood        center       which is not                to be funded  by HUD.



                                                      13
BASIS OF COST ESTIMATES

        Of the estimated         costs of $23.6 million             for construction         and
equipment,       about $22.7 million            is based on the total           of the lowest
bids received         by NYCHA for five           construction      contracts--general          con-
struction,       heating,     electrical,         plumbing,    and elevators.          NYCHA' s
prebid     estimate       for these contracts           also totaled      about    $22.7 million.
The remaining         $0.9 million        represents       the estimated       cost of site       im-
provements       and equipment        for which bids will           be solicited       after    the
construction        contracts      are awarded.

        The estimated        development          costs for categories         other   than con-
struction    and equipment           are based on (1) NYCHA's estimates                  of the
project    administrative           costs,      12) standard        costs and rates      sufficient
to cover initial          operating        deficits        and interest,    (3) actual      costs
incurred,    and (4) a contingency                  factor    of 3 percent     of costs     not yet
incurred.

COST LIMITATION

        In April     1971, HUD prescribed        new construction         cost limitations
for public       housing.     These limitations       established        a ceiling    on con-
struction    and equipment        costs for the dwelling          portion     of a proposed
project    and are retroactive         to projects     for which an annual           contri-
butions    contract       had been executed     prior    to April      30, 1971.

        The costs         of $23.6 million        included      in the contract       award budget
for construction            and equipment       includes      costs of dwelling        and non-
dwelling       structures       and of site       improvements.       Although      an exact de-
termination         of the dwelling       portion       of such costs      cannot     be made un-
til    contracts       are awarded     and the total          of the contract       bids is broken
down by line         item,    NYCHA's latest         estimate     of these costs,        plus con-
tingency,        is $20,025,514.        According         to HUD guidelines,        the cost of
dwelling       construction       and equipment         plus a proportionate          share of the
contingency         shall    not exceed $22,418,130            for this    project.

CONCLUSIONS

        Although      NYCHA's August             1971 estimated    development     costs includes
$778,000      for contingencies,               this amount represents       a standard   allow-
ance for public           housing       projects     and therefore     does not provide      for
possible      additional         piling      costs which may be required         because   of the
uncertain       soil     conditions.

        We believe     that all      increases    in estimated      development      costs have
been adequately        justified,       NYCHA's estimates      are based on the most
current    and complete         data available,     and the latest       estimated    project
cost falls      within    applicable       cost limitations     prescribed        by HUD.




                                               14
                                 CHAPTER4


          LEGAL PROHIBITION
                         - AGAINST HIGH-RISE CONSTRUCTION
                                                     -
       Section 207 of the Housing Act of 1968 (42 U.S.C. 1415) prohibits
the approval of high-rise      buildings for low-income families    with
children unless the Secretary, HUD, makes a determination        that there
is no practical   alternative.

      In the opinions of the Regional Counsel of HUD's New York re-
gional office and, in our opinion, the act is not retroactive.     Ac-
cordingly,   the Secretary was not required to make such a determination
for the housing project at 108th Street, Queens, New York, because it
was provided for under a development program approved in 1967 prior
to the enactment of the act.




                                    15
EXHIBITS




       16
                                 EXHlBlT A




              w
              -   !




.

    ..




                      - ._



         17
                             I
                                                                           EXHIBIT   B

                        LOCATION OF SCHOOLS IN AREA OF PROJECT SITE



                                                           ‘.‘\       /1    Ii
                                                  \\




NOTE:   Dark line represents        bnm-.A~rw
        of Forest Hills-Rego       P-_.. .__
        borhood.     Proposed school I--.-
        vi11   be located    in this neigh-
        borhood.




                                            18
APPENDIX




           19
                                                                          STATLS OF EXISTING NEIGHBOAHGGD SCHUOLS, EXISTING SCHOOLS
                                                                            DESIGNATED TG SERVZ THE l'RUll2CT. AND PROPOSED SCllDOLS


                                                                                                                                     As of      October      30.    1970
                                                                                Xumber of                                                                                          Ovcrload(Undcrlond)                             Estimated
                                                                              blocks   from                                                         Percentage         of               All      DI?signated                       number of
                      schoo 1                               Grades              vrolcct              hQaCi      ty        Enrollment                 utilization                   --schools       schools                     proiect      pu~i 1s

Existfng:
   In neighbyrhood:
          P-3 1!                                              K-6                      16                315                    219                           70                            96)                 .
          P-101                                               K-6                      30                834                    605                           73                    :      229)                 -
          P-139                                               K-6                      11                853                    705                           63                    (      148)                 -
          P. 144                                              K-6                .     32                906                    649                           72                    (      257)                 l

          P-174                                               K-6                      27                748                    720                           96
          P. 196                                              K-6                      23                750                    649                           87
          P-175                                               K-6                        8            1,104                     946                           86                    (      158)            (1581
              P-206                                           K-6                        5               870                    762                           08                    (      loa,!?          (108)
              P-220                                           K-6                        1               834                    772                           93                    (       62)            ( 62)

     Other       schools        designated:
              P-13                                            K-5                      15              1,065                 1,115                           105                            50                  50
              P. 14                                           K-5                       4              1.110                 1,158                           104                            4PS.1               48

                      Totals      for       elementary     schools                                    9,389                  8.300                             80                   (1,089)                (230)                     375   (K-5)
                                                                                                                                                                                                                                     -
     In neighborhood:
          I. 190                                              7.9                        19            1,294                 1,418                           110                           124                .
          I.157                                               7.9                         6            1,699                 1,587                            93                    (      112)            (112)

     Other        schools       designated:
              I.61                                            6.8                        10            1,446                 2.068                           143                           622              622

                      Totals      for       intermediate      schools                                 4,439          _       5.073                           114                           634              510                      200   (6.8)

     Forest        ULlls       liigh       School             9.12                       12          2,830                   3.748                           132                           918                  -              Not available


Prooosod :
   In neinhborhood:
        E&ly    chf ldhood                    center                           On-site                    200                ----Pending           invitation          of construction              bids-----
        1.241                                                                  Unknown                 1,800                 . . ..Location          undeter~~ned...------~~~~-~--------

     Other       schools        designated:
              I-227                                                                      39            1,800                 --.-Proposed           for    construction           in 1972.73.-------
              New ($eens           tligh      School                                      9           4.09).                 ----Construction              funds      appropriated-------------

El    IS an       annex to P-196
bl    Does       not include  five    classes                (Register-1261             and t*o kindergartcrw         (Register-61)        housed in           Lefrok   City.
c/    Does       not include  four    classes                (Register-123)             and two kindergartonn         (Register-91)        housed nt           98.38 57th Avenue;         does              not      include   six     rooms
      used       by district  superintendent                    (estimated           capacity  of 100) which         may be used       for teaching            purposes     if necessary.




                                                                                                                                                                                    II                 ,