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Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

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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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Ridgewood Tenants and Elected Officials Speak Out!

Denise Serrano of 1821 Cornelia Street Speaks to Speaker Quinn, CM Velazquez, CM Reyna, Assembly Member Mike Miller

Denise Serrano of 1821 Cornelia Street Speaks to Speaker Quinn, CM Velazquez, CM Reyna, Assembly Member Mike Miller, Antonio Reynoso

Congresswoman Nydia Velazquez, City Councilwoman Diana Reyna and State Assemblyman Mike Miller, attorneys and advocates joined tenants from six extremely distressed buildings in Ridgewood, Queens on Monday of this week. The elected officials came together with the tenants to demand that Stabilis Capital Management, the mortgage holder on the properties, support a plan that will keep them permanently affordable. Tenants are suffering from leaks, mold, rodent infestation, falling ceilings, and a lack of basic plumbing, will also seek emergency repairs.

In an exciting move, tenants will be appearing in bankruptcy court with the help of pro bono counsel Cleary Gottlieb Steen & Hamilton, LLP and Queens Legal Services to advocate for their right to safe and decent housing.

“As a resident of 1821 Cornelia St., I am concerned about the future of these six buildings,” said Tenant Leader Denise Serrano. “I grew up in Williamsburg, and thanks to rising rents my family was forced to move. I raised my children in this building, and on behalf of myself and my neighbors, I do not want to see that displacement happen again here.”

Stabilis’s purchase of the mortgage notes on these six buildings mirrors a recent trend wherein companies, armed with private equity money, acquire debt on regulated rental properties. The properties are often severely physically distressed due to years of foreclosure, and are often located in New York City’s gentrifying neighborhoods. Tenants and advocates fear that these acquisitions closely resemble speculation in the market before 2008, when private equity firms purchased large portfolios of rent-regulated apartment buildings, leading to foreclosure and mass deterioration of the housing stock. This week, tenants, elected officials, and organizers are calling on Stabilis Capital Management to break with this pattern and support the transfer of the properties to a non-profit developer who would provide extensive physical rehabilitation while keeping the properties affordable in perpetuity.

Tenants, who have been organizing for several months, have asked CATCH – a non-profit that practices mutual housing – to try and to take over their buildings.

“These buildings must be transferred to an owner who will rehabilitate them and keep rent affordable,” said Congresswoman Nydia Velazquez. “Tenants have suffered enough already because of poor managerial decisions.”

“I’m here today to support my constituents and neighbors who have been suffering from these horrific and unimaginable living conditions for over five years,” said Assemblymember Mike Miller. “I support the transfer of these properties to a non-profit developer who would provide the necessary repairs while keeping the rents affordable.”

“Stabilis must repair these buildings or sell them to a good developer who will” said City Council Speaker Christine C. Quinn. “Whether these homes are in foreclosure or bankruptcy court, Stabilis’ obligations to provide services to tenants remains the same.  I want to thank Congresswoman Velazquez, Councilmember Reyna, UHAB, Legal Services, HPD, and especially all of the tenants for their hard work to save these homes.”

“Today, after months of discussion, organizing, and legal advocacy, we are able to stand before Stabilis and tell them: ‘We have a plan.’,” said Councilmember Diana Reyna. “We have a plan that will put an end to five years of undignified living conditions, that will ensure that the future of these families remains in the buildings they call home, and that will not undermine Stabilis’s business model. We are calling on Stabilis to include the tenants in any agreement to ensure that these properties are up to code and in the hands of those who live in the buildings.”

We can’t keep letting these vicious cycles sent buildings deeper into distress. Whether they live in a building in foreclosure, a building in bankruptcy or not, all tenants have the right to safe, decent housing,” said Public Advocate Bill de Blasio. “When properties get this bad, we need everyone to come to the table – including banks and lenders – to put them back on sustainable tracks. Tenants deserve nothing less.”

“The blight and distress of these properties is not only hazardous to the well being of the families who live there, it also threatens the stability of the surrounding neighborhood,” said HPD Commissioner Mathew M. Wambua. “We are resolved to use our resources and enforcement tools, such as those in the Alternative Enforcement Program, to keep the pressure on negligent landlords and owners to ensure that these tenants get relief and the quality of housing that they deserve. We thank our elected officials for their partnership and support in working to end the cycle of overleveraging and distress that has plagued these buildings.”

 “The tenants in these six properties have suffered at the hands of predatory equity groups for long enough,” said Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board. “These buildings need to be transferred to a responsible developer with the capability of renovating them while keeping rents affordable for the residents. We will do anything in our power to reach this outcome, whether its demanding Stabilis work with HPD on a preservation sale, or advocating through the bankruptcy court, the tenants will keep fighting for what they deserve.”

Stand up for Rent Regulation

The adage among the economist crowd is that rent control is worse for cities than bombing. It’s a phrase repeated so often in Microeconomics 101 that its origins are obscured — but the insidious false truths it spreads are not. Opponents of rent regulation are common, and they include many economists, a supposed-progressive candidate for New York City Mayor, and Adam Davidson of the New York Times and NPR’s Planet Money. Davidson recently penned this article for the Times magazine arguing that rent regulation may have a perverse effect on the affordability of New York City.

That “progressive” candidate’s campaign is currently self imploding, so we will sit contentedly by for now and let that problem take care of itself. (After interviewing many candidates, Tenant PAC endorsed Bill de Blasio for Mayor. They never considered endorsing Anthony Weiner.) As for Adam Davidson, we’ve already explained why many of his arguments are misinformed (if not dead wrong.)  Steven Wishnia, editor of Tenant/Inquilino writes that they are “utterly clueless about New York City’s housing realities.” Read the rest of his brilliant take down below. 

Why The Push To Abolish Rent Regulation is Stupid and Irresponsible
Originally published by Steven Wishnia at Gothamist

What would happen if New York State repealed its rent-regulation laws?

New York Times Magazine economics columnist and NPR Planet Money co-founder Adam Davidson thinks it might be a good idea. In his article in this week’s magazine, “The Illusion of Control: How Rent Regulations Preserve the City We Know at the Expense of a More Affordable One,” Davidson contends that rent control and rent stabilization should be ended because they create a bifurcated market in which longtime tenants hardly ever move, and people seeking apartments compete to pay high unregulated rents.

Most people who live in rent-stabilized apartments are above the poverty level, he says, and the poor could be protected more efficiently by giving them housing subsidies.

These arguments, which are common among critics of rent controls, are utterly clueless about New York City’s housing realities.

First, rent controls are not a housing program only for the poor. They are an attempt to protect all tenants from gouging during a chronic housing shortage. The city’s rent-regulation laws, first enacted as a continuation of World War II price controls, would expire automatically if the vacancy rate for rental apartments went above 5 percent. That has never happened. It’s a simple issue of supply and demand: Without the regulations, renting an apartment here would be like buying batteries during Hurricane Sandy.

Second, the bifurcated market is largely the result of the weakening of rent stabilization in the 1990s, which primarily affected people looking for housing. In 1994, the city deregulated vacant apartments where the rent had reached $2,000 a month. The state enacted a similar law in 1997, which made it impossible for the city to repeal it.

Those laws were sold to the public as something that only affected a handful of Manhattanites who were too rich to deserve cheap rent. Anthony Weiner, who voted for deregulation as a City Councilmember, still defends it on those grounds. It hasn’t worked that way.

If you want to see what would happen if rent control and rent stabilization were eliminated, look at what has happened in the city since 1997. The combination of inflation, the housing shortage, and fraud has led to the deregulation of almost every vacant apartment in the lower half of Manhattan, and pushed up rents all over the city. Apartments over the current deregulation threshold of $2,500 are advertised in Bay Ridge, Bedford-Stuyvesant, and East New York; in Astoria, Harlem, and Washington Heights; and in Kingsbridge and on the Grand Concourse.

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New housing in “Prime Williamsburg” (via quiggyt4)

In the New York City of today, the two best ways to make housing more affordable would be to strengthen rent controls and build much more genuinely affordable housing. Both of these remedies face major political obstacles.

A 1971 state law prevents the city from enacting rent regulations stronger than the state’s, and the real estate lobby shovels lots of money into Albany. After the Republicans retook the state Senate in 2010, Rent Stabilization Association head Joseph Strasburg bragged about how landlords had “basically emptied our piggy banks” to protect their interests. One real-estate magnate, Leonard Litwin, exploited a loophole in campaign-finance laws to give almost $2 million in the 2012 election, primarily to Senate Republicans, and has already contributed $625,000 to Gov. Andrew Cuomo’s 2014 campaign.

With federal funds for new public housing eliminated, almost all new “affordable” housing here in the last 20 years has been created by complicated schemes that give luxury developers tax credits for building token amounts—20 percent, often less in practice—of below-market apartments.

Mayor Michael Bloomberg’s New Housing Marketplace program has built more apartments for people who make more than $100,000 than for people who make less than $32,000. This is due to the program’s indirect financing, and because the median income in the affluent counties of Westchester, Rockland, and Putnam is included in the formula that determines what “affordability” means.

The most intellectually honest argument against regulating rents is the naked libertarian one—that government has no business interfering with the market, and people have no right to a product they can’t afford. This reasoning is far too ruthless to fly politically, so rent-regulation foes have to find friendlier ways to package it.

One is to portray rent-stabilized tenants as affluent, aging “dowagers,” who pay $225 for a seven-room apartment on West End Avenue. This is like the Reagan-era legends of “strapping young bucks” buying T-bone steaks with food stamps. Davidson seems to buy into this myth, as did former city Rent Guidelines Board chair Edward Hochman.

Here’s the reality: In the pre-deregulation year of 1996, when there were still more than 200,000 rent-stabilized apartments that cost less than $400, 80 percent were occupied by people making less than $25,000 a year, and half by people making less than $10,000. About 200—less than 0.1 percent—were occupied by people making more than $100,000.

Today’s rent-stabilized tenants are decidedly not affluent. According to the 2011 federal Housing and Vacancy Survey, their median household income is about $37,000, and about half of them spend more than one-third of their income on rent. More than 60 percent of the 3 million low-income New Yorkers—defined as less than $35,000 for a family of three—spend more than half their income on rent, according to an April study completed by the Community Service Society.

Yet the federal survey concluded that from 2008 to 2011, the city lost more than 150,000 apartments that rented for $700 or less. The remaining low-rent units make up less than one-sixth of the total supply, and most are in public or subsidized housing.

73113rent3.jpg
(via Brunocerous)

Rent-control foes offer a way to ease our consciences by offering subsidies to the poor and the elderly. At the Rent Guidelines Board’s final vote in June, both chair Jonathan Kimmel and owner representative Steven Schleider argued that this would be fairer to landlords than restricting rents; Davidson endorses this too.

The truth is that rent subsidies for people below the poverty level—about $17,000 for a family of three—would do nothing to protect working and middle-class tenants.

Davidson admits that eliminating rent controls would likely drive everyone who makes less than $90,000 out of Manhattan, which he says would not be healthy for the city, but then he claims that it would be “great” for the middle class. This makes sense if he’s defining “middle class” as an income in the low-mid six figures, visualizing all the fantastically located apartments in Manhattan and brownstone Brooklyn occupied by rent-regulated peasants, and imagining that a mass eviction would open up many more choices on the market and might even enable him to snag a place for $3,300 instead of $3,750.)

Curiously, the real-estate lobby has yet to advocate for the tax increases necessary to adequately fund the federal Section 8 rent-subsidy program, which has been closed to new applicants here since 2009 and generally won’t help pay for a two-bedroom apartment that costs more than $1,474.

A lesser-known but important issue is that rent-controlled and rent-stabilized tenants can’t be evicted without a legal reason, while unregulated tenants have no right to renew their leases. How stable would the city’s neighborhoods be if rising rents forced residents to move every year or two? How would people raise children? How would they maintain the social relationships that sustain communities?

There is also a deeper social and moral issue. Opponents of rent regulation often argue that it forces property owners to “subsidize” tenants who pay below-market rents.

But who is really “subsidizing” whom? Real estate in New York City is valuable because of its proximity to the biggest public transportation system in the world, and because it sits at the center of a metropolitan area sustained by the labor of millions of people. Why should these millions be forced to subsidize a few thousand multimillionaires who have bought up this land?

 

Press Release: Organized Bronx Tenants Visit Housing Court to Demand Freedom From Harrassment

On Wednesday, April 17th tenants from the 1058 Southern Boulevard Tenants’ Association and their allies outside of Bronx Housing Court demanding that their landlord immediately discontinue unjustified housing court cases against the residents.  The tenants are being supported by their Councilmember, Maria del Carmen Arroyo, the Urban Homesteading Assistance Board, and the Community Development Project of the Urban Justice Center.

In January, tenants made their landlord, Miriam Shasho, aware of their plans for file a 7A action. If successful this would remove the building from the landlord’s control. Since that time, organized tenants have felt harassed at the hands of their management company, including threats of eviction, unlawful refusal to renew leases, and summons to housing court. Following the rally, tenants who have received non-payment petitions will join together to answer their cases before a judge.

In addition to bringing their landlord’s tactics into the limelight, tenants are hoping to draw attention to the systematic inequalities within the Housing Court. Tenants often lack representation and as a result are shut out of the complex and alienating Housing Court process. According to a new report released by CASA and UJC, tenants are frequently even denied their right to go before a judge, signing confusing stipulations in the hallways rather than in a courtroom.

“The tenants from 1058 Southern Boulevard have been brought to court over and over again. Our building is in terrible condition and we desperately need repairs. We didn’t have heat or hot water all winter. We feel our landlord is harassing us and we would like the court to recognize these tactics are unfair and harmful to tenants.” said Lisa Ortega, representative of the Tenants Association.  

Tenants in this 55 unit building have lived side by side with housing conditions that threaten their health and safety for years, including no heat and hot water, black mold and mildew, severe leaks, rats, and roaches. The building was recently entered into HPD’s Alternative Enforcement Program, an aggressive enforcement tool reserved for the city’s 200 most distressed properties.

“Once again, I congratulate the tenants of 1058 Southern Boulevard for their diligence and efforts to ensure the owner of 1058 Southern Boulevard provides quality and safe housing,” said Councilwoman Maria del Carmen Arroyo. “In their latest efforts, they have joined forces to answer the landlord’s claims that tenants owe rent and in most cases, they do not owe back rent.  I support the tenants in their efforts and will continue to work with them to ensure the owner is held accountable for improving the deplorable conditions of the property.”

 

“We have seen buildings where landlords employ harassment tactics to try and discourage tenants from organizing,” said Kerri White Director of Organizing and Policy at UHAB. “The tenants of 1058 Southern Boulevard know their rights. They will stand up for their homes and families, no matter what obstacles they may have to face.” 

2013 Brings No New Relief in the Rockaways

Yesterday’s big news from Washington was that the House of Representatives – despite Eric Cantor’s best efforts – decided to vote on the Senate’s bill to avoid the so-called “Fiscal Cliff.” The measure passed, leading to the first significant tax increase on the wealthy in over 20 years.

But while the House leadership was moving a vote on this bill, they were choosing NOT to vote on another: a bond measure that would speed additional relief to thousands and thousands of people in New York and New Jersey who are suffering as a result of Hurricane Sandy. With Boehner abruptly tabling this bill, which passed the Senate several weeks ago, we will have to wait until the next Congress to secure legislation for Sandy relief. This is unacceptable, as some of Boehner’s colleagues have pointed out since yesterday.

New York Communities for Change documents just how unacceptable this is in a new report released today. The report, titled “Forgotten: How the City has Failed Sandy Victims in the Rockaways,” is the result of extensive surveying in affected neighborhoods and holds a critical lens to Bloomberg’s Rapid Repair program, which has been anything but rapid even when it does provide repairs.

It’s 2013, its below freezing outside, and Sandy victims are still suffering. One particularly salient experience, reported by the NY Daily News, tells the story of Audrey Walker, who needs $35,000 to make her home inhabitable. She has received some money from her insurance company and some money from FEMA, but is still nearly $20,000 short. It’s time for the city to step up.

 

 

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