The New York City Housing Authority plans to "federalize" the 21 of its 336 housing complexes that receive zero federal subsidies through a little-known provision in the economic stimulus package Congress passed earlier this year, according to an article by Manny Fernandez in today's edition of The New York Times, that using the stimulus funds as well as private money in what is called a "mixed-finance modernization."

"The 21 complexes are a peculiarity of the city's public housing - orphans, in a sense, that are being cared for by the rest of the system. Because they were built by the city or the state, the federal government provides no financing for them. The city and the state have not been much help either: Neither regularly contributes operating money to keep the 21 sites afloat. Since 1998, the New York City Housing Authority has diverted nearly $1 billion from its federally subsidized, federally built complexes to its unsubsidized, city-built and state-built developments," Mr. Fernandez wrote.

Senator Charles E. Schumer and City Council Speaker Christine C. Quinn have expressed support for the plan, but the article said that "others say they are concerned about aspects of the plan, which for the first time in the 75-year history of the authority allows a private bank to have an ownership stake in dozens of New York City public housing buildings."

The article quoted Councilwoman Rosie Mendez, the chair of the Council's Subcommittee on Public Housing, as saying that he is supporting it, but "cautious," adding "that is what all the tenants are trying to wrap their heads around: 'Is this the possibility of privatization down the road?'"

The plan has be approved by March 17, 2010 by the federal Department of Housing and Urban Development, which oversees public housing authorities, and a public hearing is scheduled for Thursday evening at the Manhattan Center, 311 West 34th Street in Manhattan.

The provision in the stimulus package that the authority has seized on, Mr. Fernandez wrote, "involves the Faircloth Amendment, which limits the number of new, federally financed units a public housing authority can build. HUD has said the language of the provision lifts the restriction if stimulus money is used. The housing authority has essentially used that opening to come up with a way to repurchase the units at the 21 sites and put them in the federal inventory. Under the plan, the authority would lease the land at the 21 complexes to a private entity - a newly created limited partnership or limited liability company."

"The authority," the article continued, "would be the general partner of the private entity, which would also include a nonprofit partner and an investment bank. The private entity would rehab the buildings through a financing arrangement that includes stimulus money and the issuing of tax-exempt bonds. It would also seek federal low-income housing tax credits, which are allocated by New York State. The authority will continue to manage the complexes and own the land, but the private entity would own the buildings. Agency officials said the plan allows them to start receiving federal operating and capital monies for the 21 sites, to preserve the tenancy of existing residents and to improve the buildings."

Manhattan Borough President Scott M. Stringer said in the article that the plan was "a creative approach" to the budget shortfalls, but added that he had concerns about the "transparency" of the new entity.

The incentive for banks is likely to come from proceeds on the bonds and tax benefits, as well as giving them a way to earn credits under the federal Community Reinvestment Act, which requires lenders to support low-income neighborhoods.

All of the 20,000 or so 20,000 apartments at the 21 complexes need to be renovated to meet federal standards under the new plan, the agency said, adding that six were built by the city, and 15 by the state.