Three Ways to Improve the AEP Program

The Alternative Enforcement Program (AEP) is an extensive NYC project established to improve landlord compliance with the housing maintenance code. Each year, 200 buildings are enter into the program, which increases oversight from HPD and levies costly fines against landlords who allow their buildings to fall into disrepair. While the program has been effective in forcing repairs, we have also identified several ways in which it can be improved to greater serve New York City tenants.

  1. DHCR should approve an automatic rent reduction for tenants whose homes enter the alternative enforcement program.
    DHCR, the NYS Department of Housing and Community Renewal, administers rent regulations and has the power to provide tenants with legal rent reductions when negligent landlords refuse to make necessary repairs in their homes. If a building enters the Alternative Enforcement Program, it is clearly one of the most physically distressed buildings in New York City, and tenants have likely been paying rent without receiving anything in return for a very long time. In order to decrease the burden of bad housing on working families as well as increase the pressure on property owners to make repairs, DHCR should grant automatic rent reductions to any tenant who lives in a building that enters the Alternative Enforcement Program.
  2. Remove AEP buildings from the lien sale list.
    Each year, the NYC Department of Finance sells off uncollected tax, water, and emergency repair liens to raise money. This process gives a third party (usually a bank or a trust) the right to foreclose on these debts. Buildings in AEP are often included in the lien sale list: it stands to reason that landlords who are negligent about repairs may also be negligent about paying their bills, and these buildings are often candidates for emergency repairs done and billed by the city.When a building is in severe physical distress, it does not make sense to bring in a speculative actor whose only interest is in sucking more money out of the property. It does make sense, however, for the city to hang onto these liens: they are secured debt, and can be used by the tenants and the city as leverage to fight for a deal that preserves the building’s affordability. AEP buildings should be automatically removed from the city’s lien sale list in order save the city’s most vulnerable housing stock.
  3. Hold the bank accountable when a building is in foreclosure.
    As we’ve discussed on this blog before, the Alternative Enforcement Program is not nearly as effective as it could be when a building is in foreclosure. The heart of the program is that it puts financial pressure on building owners to make necessary repairs. But what if the owner is legally forbidden from intervening in building management, as is the case in most multifamily foreclosures? The AEP program has no way to hold receivers responsible for making repairs. Moreover, the fines levied while the building is in the program (unpaid during foreclosure) are not enough to deter a predatory buyer, but they are enough to throw off a non-profit landlord or a tenant group who is looking to reclaim the building in a cost effective manner.

    As foreclosure proves to be a persistent problem in New York City, we need a program that ensures tenants living in multifamily buildings receive decent housing. A foreclosure can last for up to five years, and that is FAR TOO LONG for tenants to live in AEP conditions. In the landmark Milbank case, courts have ruled that when buildings are in foreclosure, banks have a responsibility to maintain the asset: i.e., pay for repairs. In foreclosure cases, the AEP program must demand accountability from lenders as well.

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