The Surreal Estate

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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Fight for affordable housing! Fight for a better deal!

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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

Crown Heights Tenants Rally for Affordable Housing

Tenants from 230 and 232 Schenectady Avenue rallied last month against Sanford Solny, a Borough Park based broker who is working with slumlord Bernard Neiderman and his friends to flip their homes for profit.

Solny, Neiderman and their friends will be unsuccessful! For the past two years, tenants have been working with established non-profit housing organization, the Mutual Housing Association of New York, on a deal that will both give tenants a say in how their buildings are managed and keep their rents affordable in perpetuity.

Thanks to JFREJ, NYCC, the Crown Heights Assembly Tenant Union, Take Back the Land, and Brooklyn Legal Services for their continued support!

State of Emergency at Stabilis-Owned 755 Jackson Ave!

Walking into 755 Jackson Ave. feels like walking into a nightmare.  The stairs which had caved in 6 months earlier remain treacherous, the sign warning tenants about asbestos on the roof remains, and tenants’ health, mental and physical,  is worsening as a result of the state of the building. Tenants, who are not being issued new leases, report a hostile and negligent management.  Tenants are fined thousands of dollars in Con-Edison bills, falsely.  It’s a mess.

The good news is tenants are organizing and they’re not giving up!  Affordable housing is a vital to New York City communities and tenants are fighting to make their homes a better place to live.  Alongside Banana Kelly and UHAB, they are petitioning the City to appoint  a 7A Administrator.  This would take the building out of Stabilis’s hands and into the hands of someone responsible.  See below for the tenants’ letter to HPD.

All too often tenants are denied their rights and unjustly evicted from their homes. Join us as we give Stabilis a taste of their own medicine and evict them!

To Whom It May Concern:

We, the tenant association members of 755 Jackson Avenue, are writing to urge an expedited approval of the 7A administrator appointment process for our building. In late November of 2013, we requested that Harry DeRienzo, the executive director of Banana Kelly Community Improvement Association, a local community development nonprofit organization, be appointed as the 7A administrator. We are grateful for your support and ask that you continue to stand with us in our struggle for safe housing.

Ever since we publicly began putting pressure on Stabilis, through a press conference on December 3rd and a series of accompanying news articles, they have made superficial fixes to our building. However, the deep structural issues that pushed us to request the 7A still remain. Our heating system does not work at the coldest hours of night. The stairs are still dangerous to walk on. In the places where Stabilis’ contractors painted, they covered over possible led paint without removing it. Many individual apartments have experienced periodic loss of water, and many have broken kitchen appliances that have not been fixed. And we know that there is asbestos on the roof that has not been removed.

Meanwhile, Stabilis has been attempting to collect rent from each apartment. However, none of the apartments have a legitimate lease, and multiple requests to receive these since the beginning of their ownership have gone unanswered. We believe that they are attempting to charge much higher than the legal rent on our rent-stabilized apartments.  All these problems take place after Stabilis ignored the building from their initial purchase in June, 2013 until the press conference in December.

Appointing a 7A administrator with all due haste would allow us, the tenants, to begin paying a fair rent and receiving the repairs that we so desperately need. We are deeply appreciative of the steps that have already been taken in the process, and we urge you to allow no further delay and begin the legal proceedings to appoint the administrator immediately.

Sincerely,

The Tenant Association of 755 Jackson Avenue

UHAB Organizers: News Round-Up

We’re firing on all cylinders here at UHAB and the media is taking notice! There has been so much going on that we thought we’d give a quick summary of the articles that we’ve been featured in.

UHAB is one of the most established institutions when it comes to affordable housing in New York City. We work citywide on housing issues that run the gambit from limited equity cooperatives to building strong tenant associations and addressing multifamily foreclosure, and we’ve been around since 1973. For that reason, we’re uniquely suited to speak to some of the myriad housing issues that low income New Yorkers face.  Last week we were quoted in two articles written about the current affordability crises.

The New York Times wrote a broad piece about housing affordability in the city, focusing on those who bought apartments decades before the neighborhoods became “desirable.” Some of the people in the story claimed succession rights, like Josh Schaffner, who pointed out the insanity behind it all:

“What other 25-year-old keeps a file box of every statement, every tax return?” Mr. Schaffner said. “I felt like I had been working toward something and I’d finally won it, which is a weird feeling to have, because it’s a place to live — it shouldn’t be something you win.”

Our Executive Director, Andy Reicher, made the broader point that those who stood by their buildings through the hard times and helped usher in a new era in their neighborhoods are now the ones who are feeling the most pressure to leave their homes.

“These were the buildings where the front lights were on, the door was locked,” said Andrew Reicher, the executive director of Urban Homesteading Assistance Board, an advocacy group. “They helped spur the redevelopment of neighborhoods, and now that the neighborhoods are gentrifying, they are the only affordable buildings that are left.”

The Nation Magazine had an analysis of whether or not Mayor de Blasio will be able to follow through with his promise of 200,000 new or preserved affordable housing units.  They made the point that much of it comes down to who the new Mayor appoints to the Rent Guidelines Board, which sets the rate of increase for rent-regulated units in the city and has the power to institute a rent freeze. Our very own department’s Assistant Director, Cea Weaver, chimed in:

“Coming off the Bloomberg years, any appointees who are committed to rent stabilization and do not simply represent real estate interests would be an improvement,” writes Celia Weaver, the assistant director of organizing and policy at the Urban Homesteaders Assistance Board, in an e-mail. She’d be happy just to see RGB hearings in the outer boroughs. And she adds: “It’d also be great if the RGB prioritized things beyond operating costs in determining increases. In the last few years rent has continued to climb while wages have stagnated, and the RGB should take that into account.”

Democratic inclusion and resident controlled housing are fundamental to UHAB’s mission. That’s why, in the Organizing and Policy department, we translate these broad policy struggles (gentrification, rising rents, etc.)  to real campaigns, where we fight alongside low income New Yorkers in distressed or otherwise at-risk housing.

As we’ve talked about on this blog before, our biggest organizing campaign right now concerns a portfolio of 42 buildings with nearly 1600 units stretching across the Bronx, Manhattan, and Brooklyn. The New York Daily News gave it a great write-up  last week, delving into the nitty-gritty details of tenant harassment by the managing company, Colonial Management and the danger of refinancing on the mortgage.

“I would like to see these landlords sell the buildings to someone who cares,” said Benjamin Warren, a 35-year resident of 1521 Seridan Ave. in Claremont [in the Bronx]. “Someone who can keep them affordable.”

If the landlords are to be believed, that doesn’t appear likely.

The firms that own Warren’s building and the others in the pool say they’re on the verge of closing a new loan that would enable them to maintain their ownership. Tenants and housing advocates say that would be a disastrous outcome.

“It’s simple: We don’t want the banks to finance a slumlord,” said Warren, 72. “We can’t force the owners to sell. What we want is to stop the banks from refinancing the current plan.”

Then on Monday, Bronx News 12 covered a Tenant Association meeting with three of those buildings on Franklin Avenue that featured their new Councilwoman, Vanessa Gibson who came out to hear from tenants about overt harassment tactics and utter neglect of the buildings. Check it out to see some great VIDEO of the meeting and tenants!

We’ve also been working closely with the Crown Heights Assembly and Pratt Area Community Council to create a Tenant Union in order to fight displacement of long-term tenants (as we’ve written about before as well!) We’ve been working alongside tenants in 1507 St. Johns Place and 1059 Bergen St since their buildings were in foreclosure last year. The two extremely distressed buildings  were purchased — while in foreclosure and against tenants’ wishes — by Barry Farkas: principal of Vasco Ventures.  Since purchasing the properties, he has aggressively tried to push existing tenants out. Vasco’s website (which opens to a quote from robber baron Andrew Carnegie) says they acquire properties with “maximum potential for growth in value.” That’s landlord-speak for “push out rent regulated tenants and destabilize the building.” The New York Daily News wrote about some of his ugly tactics in Harlem, mentioning “The landlords also own at least one of two buildings in Crown Heights, Brooklyn, where tenants have formed a coalition to fight similar conditions including a collapsed ceiling.” Its not all that surprising that  Farkas is buying housing in Harlem in addition to Crown Heights, as the neighborhoods rival each other for most rapidly gentrifying neighborhoods in New York City.

All this media coverage is a crucial aspect to putting pressure on slumlords and keeping New York City affordable. We’re going to win these fights, one article at a time!

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