The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: L&M

Life After Sandy: Will NYC Finally Invest in Affordable Housing?

Today, the Wall Street Journal reported that Sandy victims will be given priority for about 2,500 vacant apartments owned by private landlords across New York City. Participating companies vary from Two Trees Management (arguably a predatory developer associated with the controversial Domino Sugar project) to L+M Development Partners (a respected affordable housing developer that recently purchased the Ocean Village project in Far Rockaway.)

According to FEMA, nearly 96,000 households in the region are eligible for housing aid.  This still-developing agreement between the city and private landlords may only provide 2,500 units but is a significant first step in a long battle to ease this housing burden. The public-private coalition has overcome some significant barriers, including length of lease: federal and state law typically requires at least a 12 month terms for rent to be offered below market, but this housing situation may be temporary for some tenants. The plan raises some significant questions about recent trends in the New York City housing market and how we can move forward to ensure it meets the needs of ALL New York City residents.

As any New Yorker can tell you, the rent in this city is “too damn high.” The city has a historically low vacancy rate, hovering around 3%. Rent regulation laws are extended by law makers every year depending on the vacancy rate — typically contingent on whether or not there is a housing “shortage,” generally defined as a vacancy rate lower than 5%. New York City hasn’t had a vacancy rate lower than 5% since the rent regulation laws were first enacted nearly five decades ago. In one fell swoop, Sandy diminished the supply of affordable housing in New York, while increasing an already outsized demand. The market is tight, and the need is urgent. Giving priority to Sandy victims (who certainly do need it) will likely exacerbate this existing housing shortage, as there is a huge demand for overpriced apartments in this city even in the best of times.

Not only has Sandy made the housing situation in New York City much, much worse, it has thrown into the spotlight the fact that affordable and low income housing has not been a legislative priority for some time. In the post-Sandy housing crisis, we are calling on our New York elected officials to prioritize rehabilitation of existing housing stock over new developments. While we continue to invest in new developments and affordable housing that espouses gentrification over long-term affordability, tenants in NYCHA and low income rent regulated buildings suffer. While the city has invested millions into projects like the Barclays Center (still waiting for affordable housing to break ground here), Section 8 is frozen, and NYCHA’s waiting list is 16,000 families long. Sandy made this long-relevant problem more visible than ever.

Today, the New York Times editorial board published an opinion piece, “The Affordable Housing Crisis,” which calls on elected officials from President Obama on down to take new proposals to make rental housing affordable seriously.

[Low-income] families skimp on food and medical care to make the rent and tend to move often, making it difficult for their children to be successful at school. They are also more prone to homelessness, which is traumatic for them and extremely costly for the municipalities that run shelters.

Yet even as the need for affordable housing has grown, such units have disappeared. Over the last two decades, for example, private landlords have removed more than 200,000 apartments from subsidy programs so that they could raise rents. And, faced with weak federal support and no money for repairs, the local housing authorities that manage federally supported developments have boarded up or torn down more than 150,000 units.

This piece is distressing in the context of the national low income housing crisis. In New York City, with a choked market and a demand that increases daily, the situation is much more dire. It’s time for a change, for a real investment in affordable housing. If you didn’t already know so, Sandy just told us.

Friday News Round-Up

Happy day-after-Thanksgiving. Here’s a Friday round-up, which is, again, Sandy-heavy.

  1. Unsurprisingly, as we related last week, the stom worsened the increasingly dire shelter shortage in New York City. This week, officials closed all evacuation centers save two on Staten Island.
  2. A few weeks old now, but still important: Housing officials are working with New York City landlords to address the housing shortage in the wake of Hurricane Sandy. This is an interesting idea that we will pay close attention to. Obviously, it introduces questions to the issues of rent regulation and income restricted housing. How long will Sandy victims stay in temporary housing, what can landlords reasonably charge for rents (how can we insure it is affordable?), and how can we insure that these temporary tenants have the same rights as any tenant living in an apartment?
  3. The post-Sandy housing problem continues to magnify, with officials this week announcing that at least 200 homes will be need to be demolished as a result of the storm. This is in addition to the 100s of homes that have already been destroyed, and with at least 500 partially damaged houses still requiring inspection. According to the NY Times, no decisions have been made about rebuilding in the storm-battered areas, a question that is further complicated by the fact that current building codes will likely prohibit rebuilding of some of the half-century old bungalows.
  4. Ocean Village, a long-distressed housing complex in the Rockaways, has been purchased by L+M Development Partners. This is good news for a complex that City Limits describes as “reeling even before the storm.” Of course, the storm has made things in O.V. much worse, and a takeover by a responsible affordable housing developer such as L+M could not have come at a better time for the much beleaguered residents of the complex, which consists of 11 high-rise buildings. In August, L+M outlined plans to acquire and renovate the complex with a construction loan from NYC’s Housing Development Corp. for $110,000,000. The units will remain 100% affordable for low-to-moderate income New Yorkers and the buildings will retain project based Sec. 8 contracts.
  5. And our only non-Sandy news: according to a recently released study from The Furman Center for Real Estate and Urban Policy at NYU, a rise in foreclosures could contribute to a rise in crime after all. This information is coming after an earlier study, released in August, which found no correlation between the two things.

We hope that our readers had a great Thanksgiving in safe and affordable housing! We’ll be back on Monday.

What Will Happen to 9 Thayer?

Yesterday, El Diario published an exciting article about 9 Thayer, a building we’ve been organizing as part of our latest Vantage/ Lone Star campaign!  Just to remind you, Vantage Properties, the notorious landlord and private equity group with over 5,000 apartment units in New York City (mostly upper Manhattan and Queens), has defaulted on several mortgage portfolios.  Lone Star Funds, another private equity group based in Dallas, Texas, has purchased the debt on sixteen of these buildings in Upper Manhattan.  Among these buildings is 9 Thayer.

Ana Cruz, a tenant of the 9 Thayer, told the El Diario reporter in Spanish that no one knows what will happen to her and the other tenants, but they will fight to stay in their apartments.  She hopes that whoever buys the building will be a better landlord than Vantage.

Working with tenants in the Vantage/ Lone Star portfolios has been an exhilarating experience for us because of how much energy and fuerza the tenants bring to  fighting for their homes.  There is a great sense of community within the buildings, in part because the tenants have developed it for the thirty or forty years they’ve lived there.  The majority of tenants in the Washington Heights/ Inwood neighborhoods we’re working in are Dominican, which means they share a language, a culture, and a common experience.  Like other predatory equity groups, Vantage bought these buildings for too much money, proceeding to aggressively harass rent-stabilized tenants in attempts to force them out and raise the rents. Many of the tenants we have recently met suffered alongside one another when harassment was at its peak.  Our experience organizing in buildings with such community and determination to fight has allowed our campaign to take off.

We hope that the 16 buildings in foreclosure with Lone Star Funds will see a similar outcome to another Vantage property that is in the news today. Savoy Park, an 1,800 unit complex in Upper Manhattan was recently sold by Vantage and AREA Partners to through a joint fund between Citibank and affordable housing developers, L&M Development Partners.  The story is similar – Vantage overpaid for the buildings during the housing boom, and was unable to carry out its plans to force tenants out and raise rents. At the time of purchase, Savoy Park’s mortgage had been in default for nearly a year, though foreclosure proceedings had not officially begun. David Dishy, president of L&M said in a statement published by Crain’s NY that

We are committed to preserving affordability and upholding the unique culture and vibrancy of the Savoy Park community.

We hope that the Vantage foreclosure buildings with Lone Star Fund mortgages (like 9 Thayer) are also able to see a bright future and permanent affordability. Whether or not the buildings experience a good outcome with the foreclosure depends on what Lone Star Funds is planning to do with them.  Will they keep them? Will they sell them, and if so – to who?  This is what tenants want to find out, and they are determined to have a voice in the process!

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