It’s been a whirlwind few weeks for tenants of the Three Borough Pool — a group of 42 rent-regulated and Project Based Section 8 buildings containing nearly 1600 units in the Bronx, Brooklyn, and Manhattan. The Three Borough Pool is emblematic of the crisis of predatory equity as it was purchased in the height of the housing boom and saddled with an unsupportable mortgage. Like many affordable portfolios affected by predatory equity, this risky financing lead to deteriorating conditions, harassment and foreclosure. Just last week, Three Borough Pool tenant leader Benjamin Warren was featured on Democracy Now to discuss this very issue! (See above.) Ben was joined in his interview by Laura Gottesdiener, who spoke about the impact that predatory equity has on New York City housing:
What’s important to see, both in this case right now that Benjamin is living through and that 1,600 other families are living through and in a slew of other past very high-profile deals, is that this has been something of a disaster not just for tenants, but also from a financial perspective. These are deals that they were betting big—these private equity firms were betting big that they could turn these buildings around by pushing out hundreds of thousands of families. They weren’t able to push out families, because families organized. And as a result of that organizing, these deals failed, and it made a situation where the broader housing market in New York City got hit and these tenants had to live in completely inhumane conditions.
UHAB joined a coalition of housing groups across New York City (New Settlement Apartments’ Community Action for Safe Apartments (CASA), Banana Kelly, Mothers on the Move, New York Communities for Change, Northwest Bronx Community and Clergy Coalition, Tenants and Neighbors, and the Pratt Area Community Council) to fight alongside tenants for affordable housing in each of the 42 buildings in the portfolio. With the goal of forcing the buildings into the hands of a better, more responsible landlord, tenants began organizing. Leaders collected a petition with over 300 signatures demanding the mortgage holder consider a preservation outcome for the buildings, and worked with Councilmember Ritchie Torres and others to hold a rally on the steps of City Hall. Attorney General Eric Schneiderman opened an investigation into the portfolio, and began collecting interviews from tenants about their experience with harassment and bad living conditions.
So, when predatory equity owners Normandy and Westbrook began to circulating information that they secured a refinance and that the portfolio would come out of foreclosure, Attorney General Eric Schneiderman moved quickly. Using stories collected from the on-going investigation, the Attorney General forced the owners into an agreement that makes sure the negative effects of predatory equity will fall squarely on those responsible for it: the lenders and landlords who make absurd financial deals.
But the fight is far from over. As the housing market heats back up, the cycle of predatory equity is returning to the rent regulated housing market. (Read about it in The Nation.) The ridiculous refinance of the Three Borough Pool demonstrates this. Ladder Capital bailed out Normandy and Westbrook to the tune of $146 million in a three year loan. While we don’t know the terms of the mortgage, it is clear that this rescue mortgage bails out the private equity companies in the short term, but doesn’t provide the tenants with the solid underwriting needed for the buildings to provide long term affordable housing. Tenants are going to keep organizing, monitoring the agreements, and if (or when) the buildings go into foreclosure again, they’ll be ready.
Tenants from the Three Borough Pool, and this same coalition of advocates, will continue to work with the City Council, HPD, and DHCR to push for progressive policy reforms that discourage speculation on some of New York City’s most vital infrastructure. For too long, predatory equity landlords have been able to thwart existing regulations to make their profits; by strengthening existing laws and closing loopholes that favor landlords, we can change the predatory atmosphere that surrounds the New York City housing market. Unless we can stem speculation, our neighborhoods will continue to be sold to the highest bidder — driving gentrification, undermining rent regulation laws, and diminishing tenants’ quality of life.
For more information, check out UHAB’s policy platform.