The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

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A Picture is Worth…$133 Million?

One of the most overlooked aspects of the foreclosure process is the utter neglect that already-distressed buildings experience. There are three layers of neglect at play: when landlords and banks saddle buildings with mortgages that can’t be supported by existing rent rolls, landlords don’t have money to pay for maintenance; during foreclosure, landlords have little incentive to maintain properties, and by the time a receiver has been appointed, buildings are so distressed that receivers – with no equity or long term interest in the property – have limited ability to make positive changes in upkeep; and finally, predatory equity actors target buildings for purchase that are usually already in pretty bad shape — and maybe have already gone through a couple rounds of predatory equity already.

In the Three Borough Pool, there is growing public pressure for LNR to cut ties with the four predatory equity investors who overleveraged the buildings and are now in default and foreclosure. Tenants and advocates are organizing and demanding that LNR sell the 42 buildings to a responsible actor with the experience necessary to rehabilitate these 1600 units while keeping them affordable for current residents. The four private equity companies are are looking for new investors to refinance their $133 million loan — and to do so, they need to demonstrate that they are responsible enough landlords to get that kind of money.

But this is how tenants are living. Repairs barely scratch the surface, and tenants are suffering every day. Do Vantage Properties, Normandy Real Estate, Westbrook Partners, and David Kramer deserve a second chance?

1229 Franklin, E4, hole in wall

1229 Franklin Avenue, Bronx

1229 Franklin, E4, broken window

1229 Franklin Avenue, Bronx

 ceiling, apt 2A

1270 Ocean Avenue, Brooklyn

IMG_6986

269 East 194th Street, Bronx

265 E. 194th 2D 2.13.14

265 East 194th Street, Bronx

269 E. 194th 4D 1.8.14

269 East 194th Street, Bronx

ceiling light

709-713 Fairmount Place, Bronx

floor

709-713 Fairmount Place, Bronx

We Demand a RENT FREEZE!

There is a routine that is all-too familiar to New Yorkers living in rent stabilized apartments. Every year or two,  depending on your lease, rent goes up. Every year, the Rent Guidelines Board (RGB) sets a percentage that the landlord can raise rents by. (This year it’s 4% for a one year lease and 7.5% for a two year lease.) No one asks tenants if they got a raise that year, or if their grocery bill has mysteriously gotten lower. Crucially, no one asks what services are like in the apartment buildings. Rents can go up and up and up, based on a city wide price index, while building services go down.

This year, tenants are demanding an even more radical change – at a rally on Thursday, we are calling for a RENT FREEZE.

Over the past few years, rent has gone up way faster than income in New York City. Landlords are spending less and less on building maintenance, something that shows in building conditions. Tenants are not getting the services to justify the rental increases they are facing, and they don’t have the income to support it either. At a time of apocalyptic homelessness in New York City, we need to keep more people in their homes — we don’t need to make homes more expensive than they already are!

Tenants have historically demanded more input in the rent setting process: something that UHAB believes would lead to truer and deeper affordability. Last year, the RGB didn’t even hold public hearings in the outer boroughs, prompting tenant advocates to hold an alternative “People’s RGB,” demanding more tenant input in the rent-setting process.  Candidate Bill de Blasio met with the People’s RGB, and joined tenants in their call for a more fair process, and even said he would support a rent freeze. Now the candidate is mayor — a mayor whose administration understands that so so many rent stabilized tenants can barely afford rent as it is. The decision the rent guidelines board makes this year will either push low and moderate income tenants towards evictions, or help them stay in their homes. Join us in calling on the administration and its appointees to stand with tenants!

Thursday, at 9AM at 1 Centre Street — near City Hall — to rally outside the first RGB meeting of the new administration to demand a rent freeze! 

Council Members Ritchie Torres, Brad Lander, Antonio Reynoso, Helen Rosenthal, Inez Barron Tenants, and Advocates Stand United against Predatory Equity: Call for responsible disposition of more than 1500 apartments currently in foreclosure.

Council Members Antonio Reynoso and Ritchie Torres with UHAB Executive Director Andrew Reicher. Photo from Council Member Brad Lander.

Council Members Antonio Reynoso and Ritchie Torres with UHAB Executive Director Andrew Reicher. Photo from Council Member Brad Lander.

For Immediate Release: March 18, 2014

City Hall — Elected leaders including City Council members Ritchie Torres, Brad Lander, Antonio Reynoso, Helen Rosenthal, and Inez Barron are joining tenants from 42 affordable buildings spread across Manhattan, Brooklyn, and the Bronx and calling on the mortgage holder and the City to negotiate a deal that would end tenants’ suffering. The rent-regulated and HUD subsidized portfolio, known as the Three Borough Pool, is in foreclosure due to irresponsible financial practices called “predatory equity.” Housing advocates across the city, including Banana Kelly Community Improvement Association, CASA New Settlement Apartments, New York Communities for Change, Northwest Bronx Community and Clergy Coalition, Pratt Area Community Council, Tenants and Neighbors, and the Urban Homesteading Assistance Board are assisting residents in their fight to secure the portfolio as affordable housing.

Predatory equity is a disturbing trend that occurs when investors purchase and grossly over-leverage rent regulated housing with the expectation of huge returns. In order to realize financial gains, property owners attempt to illegally raise rents and reduce maintenance and operating costs. This harmful cycle leads to the displacement of low-income families, deterioration of buildings, and the loss of much needed affordable housing.

Advocates say that the Three Borough Pool is emblematic of the problems of predatory equity. In 2007, a private equity joint venture (Normandy Real Estate, Vantage Properties, Westbrook Partners, and David Kramer) packaged the 42 buildings into one portfolio with a $133 million loan. By 2010 the mortgage (now part of a much larger commercial mortgage backed security) was in default. LNR, the mortgage servicer for the security, began foreclosure proceedings in April of 2013. LNR has given the owners until April 2nd to come up with a refinancing plan that would take the buildings out of foreclosure. However, tenants and advocates hope to use the foreclosure as a juncture to transfer the properties to another owner entirely.

“We’re here today to urge any and all financial institutions not to refinance with David Kramer/Colonial Management, Normandy Real Estate, Vantage Properties and Westbrook Management,” said Benjamin Warren, Tenant Association President of 1511-1521 Sheridan Avenue. “Myself and the other residents of this portfolio know what we deserve, and it is not the carelessness of these self-interested corporations. We look forward to better days without these groups.”

The buildings are physically collapsing under the weight of an enormous mortgage. There are over 2,700 HPD violations in the portfolio. Three of the buildings are in City’s Alternative Enforcement Program, an initiative that targets 200 of the most distressed buildings in the City. Tenants, advocates and elected officials are calling on LNR Property to negotiate with the City and transfer the properties to a responsible developer who will bring the buildings back to safe condition and keep them affordable for the families who call them home.

“These guys took $133 million from the bank and not one dime has gone into taking care of the buildings we live in,” said Debra Cooper, a tenant leader at 711 Fairmount Place. “We live with constant leaks. I regularly don’t have heat or hot water. We have no mail boxes and can’t get our mail. Enough is enough. If David Kramer and his friends aren’t going to take care of our homes, it’s time they are sold to someone who can. It’s past time.”

Some members of the City Council used the situation in the Three Borough Pool to call on the City administration to renew its pledge to fight financial speculation on affordable housing. Elected officials believe that one way to dissuade investors from speculative behavior is through expanding City programs like the Alternative Enforcement Program and the Proactive Preservation Program. These programs allow the City to more closely monitor buildings in physical and/or financial distress. Officials are also considering legislation to create a “watch list” of property owners who engage in predatory equity.

“Affordable housing exists to ease the burden on middle and low income New Yorkers who are looking for a decent standard of living,” said Council Speaker Melissa Mark-Viverito. “This situation highlights the need for further oversight to prevent affordable housing from being undermined by speculative and predatory equity practices in the future.”

“The loss of affordable housing to the practice of predatory equity has created a crisis in our communities that will only become more severe if we fail to take action,” said Councilmember Ritchie Torres, Chair of the Committee on Public Housing. “These properties belong in the hands of new, responsible owners, committed to their preservation and long-term affordability. As a concrete step to address these abuses I have proposed legislation that would create a publically accessible watch list of property owners that engage in this negligent and abusive practice.”

“What these predatory investors are doing is simply unconscionable; everyone in this city deserves a safe, affordable, and well-maintained place to call home,” said Council Member and Bronx delegation leader Annabel Palma. “The administration must take aggressive action against these irresponsible owners and make good on its promise to preserve the city’s affordable housing stock.”

“No one should live in an apartment with mold, water damage or rusted, broken pipes in New York City. It’s time to close the gap between the rights of tenants and obligations of property owners. When homeowners across the country were facing foreclosure because the banking industry had gone rogue, the federal government stepped in to regulate the industry and offer financial assistance through the HAMP modification program. Tenants are no less important than property owners,” said Council Member Mark Levine. “It’s time for the City to step in to empower tenants and to put an end to these abuses. No one’s quality of life should be diminished because of negligent slumlords.”

“Predatory private equity is sucking the life out of our communities, leaving buildings vacant and in decay across New York City. Thousands of long time, hard working residents will be forced from their homes and this is unacceptable,” said Council Member Ydanis Rodriguez. “The city must step in to save these tenants or else this disturbing trend will continue wreaking havoc in our most vulnerable communities. Going forward, the state needs to put safeguards in place to prevent these practices because in every scenario, NYC residents and taxpayers are losing.”

“Today I’m proud to stand with the tenants of the Three Borough Pool. Predatory lending is rooted in disingenuous dealings and tenant harassment, practices that have allowed building owners to shed affordable housing in the race for greater profits, said Council Member Helen Rosenthal. “On the Upper West Side, advocates and tenant leaders have stood firm against speculators like Meyer Orbach whose portfolio includes 25 buildings located between West 106th and West 109th Street. Like the investors behind the Three Borough Pool, The Orbach group has used frivolous litigation and intimidation tactics to push long-term rent regulated tenants from their homes and strip regulated apartments of their affordability through vacancy decontrol. These actions are unconscionable and we must call on every available recourse in our city government to help tenants save their buildings, protect their homes, and preserve their quality of life.”

“Together, we have the opportunity to ensure that over 1,500 families live free from bad conditions, harassment, speculation and fear,” said Sheila Garcia, an organizer at CASA New Settlement Apartments. “Tenants across these buildings want a landlord who will follow the laws and listen to their concerns. Tenants across these buildings have raised families and built communities that we cannot let be destroyed, period, but especially not in the name of speculation.”

“Brooklyn tenants living in HUD subsidized buildings that are part of this foreclosure pool have had enough,” said Jon Furlong, Assistant Organizing Director at the Pratt Area Community Council (PACC). “PACC is proud to stand with the tenants from ALL the affected buildings to ensure they get the repairs and services they deserve. We must continue working together to prevent this type of speculation in multi-family buildings.”

“We’re pleased to see the City Council standing with Three Borough Pool tenants in their fight for a better deal,” said Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board. “However, as a City, we need to figure out ways we can stem speculation on affordable housing in the first place. Tenants shouldn’t have to suffer for years and face foreclosure, waiting for the opportunity to fight for something better.”

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Fight for affordable housing! Fight for a better deal!

Image
Forty-two buildings spread across the Bronx, Manhattan, and Brooklyn are currently in foreclosure. These buildings, home  to more than 1500 low-income families, are now at risk of being lost to the same speculative financial instruments that led to a massive housing crisis in 2008. Investors continue to gamble on these homes, while 1500 families suffer in hazardous living conditions. 
At this moment in NYC, we cannot afford to lose even one unit of housing for the poor and working class. Let alone more than 1500. That’s why tenants are organizing and fighting back. Join us on Tuesday, March 18th at 11AM on the steps of City Hall to fight back against speculation on affordable housing and for a better deal for tenants!
 
A group of four predatory equity groups (Normandy, Westbrook, Vantage, and Colonial Management) took out a $133 million mortgage in order to buy the portfolio in 2007 during the housing boom. They hoped to cut maintenance costs and force tenants out to raise rents. When people refused to leave their homes, the landlords pocketed the tenants’ rent and let the buildings deteriorate more and more until finally they defaulted on their debt causing all 42 buildings to fall into foreclosure in April 2012.

And that’s just the tip of the iceberg. Tenant have been suffering from neglect and harassment for years. No heat and hot water for days at a time. Elevators that are broken as often as they work. Ceilings that have collapsed or are missing entirely. Repairs that should take hours take months to complete — and then, they are only patchwork. One building hasn’t had gas since August. These conditions are unjust, and tenants are demanding change. 
 
On Tuesday at City Hall, we say enough is enough! We demand safe, permanent, and affordable housing. If Colonial Management won’t take care of these buildings, we demand that the bank sell them to someone who can. 
Will you stand with us on Tuesday morning?
 
For more information, or to let us know you’ll be there, contact Kerri White at 212-479-3358  or at kwhite@uhab.org

Tenants Unite To Address Gentrification

Everybody’s talking about gentrification. The term has been on the receiving end of a lot of positive press from NY Mag and NPR. On the other side of the debate, some activists in Philadelphia are trying to get the United Nations to consider gentrification a human rights violation. And just this morning, the NY Times wrote about several cities that are using progressive tax abatement programs to fight gentrification.

On Friday, February 28th, over 75 tenants from across Crown Heights  gathered outside 1059 Union Street, a building that is home to 34 families and owned by BCB Properties, to protest the cycle of displacement and rent-overcharges. The demonstration announced the creation of the Crown Heights Tenant Union (CHTU), a resident led effort to demand community control over housing in Crown Heights.

Crown Heights (along with nearby Bedford Stuyvesant and farther north Bushwick) is ground zero in the struggle over gentrification in Brooklyn. The neighborhood is rapidly changing. According to Spike Lee,

Then comes the motherfuckin’ Christopher Columbus Syndrome. You can’t discover this! We been here…I mean, they just move in the neighborhood. You just can’t come in the neighborhood. I’m for democracy and letting everybody live but you gotta have some respect. You can’t just come in when people have a culture that’s been laid down for generations and you come in and now shit gotta change because you’re here? Get the fuck outta here. Can’t do that!

Lee’s criticism is as valid as it is impassioned, and to us it demonstrates just how high emotions run when you speak about gentrification in Brooklyn. And the ensuing outrage reflects how difficult gentrification is to talk about. Obviously gentrification so painful because of it’s associations with displacement, fractured neighborhoods, and disintegration of an close knit cultural community. In lamenting the cultural disrespect that new neighbors can display, Lee neglects to make a structural criticism of the capital processes that drive gentrification, and he neglects to give listeners an idea about how neighborhoods can fight it.

That’s where the CHTU comes in. The CHTU is using an inclusive and resident driven model to identify the true drivers of gentrification (hint: brokers and real estate capitalists who use their power as landowners to re-brand neighborhoods to middle/upper class tastes), and then, to fight them.

CHTU uses the slogan “Unite and Fight” to signify the importance of long-term tenants and newer tenants coming together in solidarity against the cycle of displacement and rent-overcharges. A tenant-driven effort to get landlords across the neighborhood to agree to a list of demands, the CHTU believes that homes are for people, not for profit. Demands range from a five-year rent freeze to prioritizing repairs in old apartments over renovations in new apartments to limiting the ability of landlords to pressure tenants to leave via buyouts.

CHTU understands that the problem is systematic. As Michael Powell wrote in the NY Times a few weeks ago, “This is New York City in the age of real estate as oil wells. To speak of gentrification as a house by house renovation march is not to do this justice. This is turbo-charged, developed plotted, bank fueled, quite intentional and difficult to mediate.”  

The story of gentrification in Brooklyn is far from complete, and the good news is that there are many tenants who are working hard to write themselves into the history books. Tom Angotti, the Director of Hunter College’s Center for Community Planning and Development, recently wrote up a list of “5 Things You Can Do About Gentrification in NYC.” It boils down to two things: talk to your neighbors, and organize — the more than 75 tenants who rallied outside 1059 Union Street on Friday in the freezing cold weather can attest that the CHTU is doing both.

Donna Mossman of 1159 President St. puts it best:

Our neighborhood and buildings are undergoing major construction but the work being done is not for the long standing tenants. Our message to our landlords is clear: this is our home, we still live here and we are not leaving.  

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Join us at the next CHTU General Membership Meeting!
March 13, 7pm
727 Classon Ave (the Center for Nursing and Rehabilitation).

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