Lower East Side — The New York City Housing Authority, which provides some of the city's most inexpensive housing to a full 5 percent of residents, is facing a $170 million budget deficit this calendar year. Next year looks even worse: Another deficit of an additional $198.4 million is anticipated.

The dire effects of NYCHA's budget shortfall – including closing dozens of community centers, cutting Authority staff, raising residents' rents and deferring building maintenance – have been predicted, dissected and fretted over for months, as the city budget was shaped, then adopted. In a current annual budget of about $2.8 billion, the city ended up contributing $18 million. Since the protests of public housing residents, elected officials and others did not cause the federal government to reverse years of disinvestment – nor the city and state to kick in additional tens of millions they arguably owe to NYCHA for a number of complexes they and not the feds built years ago – public housing stakeholders find themselves asking, what now?

On a practical level many residents are anguished over what they fear will be continued sub-par physical conditions even as rents increase and "non-core" services are cut, with everything from seniors' centers to education, sports, arts and other enrichment programming in imminent danger of disappearing. Panning out into the future, however, some housing analysts sound almost optimistic about the future of public housing in New York – widely considered the nation's most successful large public housing operation – and around the country. The reason, they say, is that it simply must continue. And not just carry on, but thrive and serve even more Americans in need of affordable housing.

"There's very much a realization that the current generation of public housing needs to be funded, needs to be preserved," says Jeffrey Otto, a senior policy analyst at the Citizens' Housing and Planning Council, a New York City nonprofit involved in public housing policy since the 1930s. The group will soon issue a report making recommendations for public housing's future, based on a roundtable discussion among local and national public housing leaders convened by CHPC in December. "We hope that the next generation of public housing – a production program for a new public housing – could really help to preserve the existing stock."

"Public housing is a viable model for delivery of affordable housing," says Otto. "It's the most basic model of affordable housing: Something that's permanently affordable and publicly sanctioned, with the understanding that it's held in the public trust."

But the prescription coming from the roundtable – which included high-level New Yorkers such as NYCHA Chairman Tino Hernandez and General Manager Doug Apple, in addition to housing authority chiefs from St. Paul, Philadelphia and Fort Worth – will insist future efforts must be "significantly different" than the status quo, he says. The group sees public housing succeeding if it has more regulatory freedom, leverages existing assets to create new ones, initiates more partnerships with nonprofits and other private companies or organizations, and embraces competition and rewards higher-performing approaches.

Some of these ideas are already in use at NYCHA. In terms of leveraging existing assets, for example, open spaces are being filled in at some complexes with new housing construction, and the Authority is using new funding models to create several new developments.