Alternative Enforcement: Great…when it works

232 Schenectady is in the AEP Program for the 3rd Year

HPD recently released the 2012 list of buildings in the Alternative Enforcement Program. At the same time, the agency announced new criteria for identifying the city’s “200 worst” buildings, and figures detailing the program’s 5-year history. Crain’s NY Business reported on this in “Many of city’s worst apartment buildings fixed.”

AEP, in its 5th year, aims to improve conditions in the city’s worst residential properties. 200 new buildings enter the program every year and 390 buildings have not yet been discharged. In AEP-identified properties, HPD conducts what they call “aggressive enforcement.” This intentionally-vague term seems to mean a range of things, from regular inspections to lawsuits and emergency repairs. In order to be removed from the program, Crain’s reports, “building owners must have corrected at least 80% of their property’s violations, submitted a pest management plan to the Department of Health and Mental Hygiene if there is an infestation, and repaid all outstanding charges or liens for emergency repair work.” So far, 410 buildings have been discharged from program.

Generally, AEP has been successful in creating an incentive to maintain properties: fines accrue so quickly in the program that it can be less expensive to make repairs than to neglect a building. HPD Commissioner Matthew Wambua says of AEP “[it] has been an effective way to corral these bad buildings and deal with them in a comprehensive manner.” With the prospect of an amended housing code on the horizon, programs like AEP and its cousin Proactive Preservation (PPI) will become even more effective. However, there is one class of buildings that these programs do not reach: distressed multi-family buildings that languish in foreclosure.

As loyal readers of The Surreal Estate know, buildings in foreclosure are managed by a temporary receiver who is appointed by the court. Receivers whose buildings are in the AEP program cannot be held accountable for conditions by threat of financial repercussions the way that property owners are. While HPD is still able to make emergency repairs and place liens on the property the chance of those liens being repaid is significantly lower. In our work on the ground, we have observed that in foreclosure buildings programs like AEP and PPI are much less effective than they are otherwise.

On the other hand, emergency repairs through AEP may be the only chance for maintenance that buildings in foreclosure can hope for. Most receivers have no real incentive to repair properties; even the best-intentioned ones often cannot afford to. AEP liens, which have to be repaid eventually, are also good at de-incentivizing speculators from buying up distressed affordable housing. But no matter how effective AEP can be, the essential problem of predatory equity remains. We believe code-enforcement alone cannot protect tenants. Until the cycle of over-mortgaging, harassment, neglect and foreclosure is broken, affordable multi-family buildings are vulnerable.

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