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Judge Rejects $2.2 Billion NYCHA Settlement With Federal Government

NEW YORK (CBSNewYork/AP) -- A judge shot down a deal Wednesday that was viewed as a possible fix for the nation's largest public housing agency.

Back in June, the federal government moved to force NYCHA to 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.

WEB EXTRA: Read The Judge's Decision (.pdf)

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.

Speaking in June when the deal was announced, U.S. Attorney Geoffrey Berman said the agency "engaged in a culture of false statements and concealment" when filing reports required to secure federal housing subsidies. "The culture of NYCHA is to blame. The management of NYCHA is to blame."

"For too long these residents have lived in deplorable conditions," Berman said.

The city agreed in the June consent decree to pay $1 billion over four years and an additional $200 million annually for the following six years. The deal also called for the appointment of a monitor to oversee the housing authority during the 10-year span of the agreement.

On Wednesday, a judge nixed the deal.

"This court does not reject the Proposed Consent Decree lightly. The rejection of this decree will likely delay sorely needed relief for NYCHA tenants while the parties decide whether to renegotiate, seek administrative remedies, litigate, or appeal," wrote Judge William H. Pauley. "But, as it stands, the proposed decree suffers from fatal procedural flaws, including its formless injunctive relief and enforcement mechanisms."

"Any judicial decree entered in this action will have a direct, tangible, and longlasting impact not only on the parties, but most importantly on NYCHA's tenants. Because the Proposed Consent Decree is not fair and reasonable, and because its entry would disserve the public interest, the Government's motion for approval is denied," he concluded.

Pauley ruled that the various parties have until Dec. 14 to respond with how they want to go forward.

"We are reviewing the decision of the court and will respond within the time frame set forth by Judge Pauley.  The well-being of the over 400,000 NYCHA residents continues to be our paramount concern," Berman said.

The proposed 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. 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, according to the complaint.

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.

(© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)

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