Putnam Portfolio and Stuy Town: Preservation Opportunities for Affordable Housing Once Lost to Speculation

Metro North Residents at Putnam Rally, photo courtesy of Tenants & Neighbors

In recent years, speculation in the affordable housing market is an accepted fact. Real estate investment targets the homes of low income families with the express intent to make financial profit from exploiting the residents who live in these buildings. This practice has failed. Over and over again. However, this hasn’t stopped the perception that massive profits can be gained by gambling on NYC’s affordable housing stock. The question in front of our policy makers now is how will we respond to this continuing and destabilizing crisis?

Stuyvesant Town is likely the most famous affordable housing complex that was victim to the overleveraging crisis of the early to mid-2000s. This is because both it is the largest housing complex with over 11,000 apartments and the fact that in 2006 it was purchased for an astronomical price of over $6 billion. This deal was in default within 3 years. Due to the complex nature of the financing, the buildings have been in limbo since 2009, but as was reported by the New York Times, the properties are back on their way to auction, and unfortunately, there are already willing bidders preparing to speculate on the buildings again.

Although, Stuy Town is the largest and most recognizable portfolio, it is hardly the only large complex on the edge of another critical moment. The Urban American Putnam Portfolio is a group of five former Mitchell Lama projects in upper Manhattan and Roosevelt Island that comprises nearly 4,000 units of what used to be protected, affordable housing. This portfolio is, similar to Stuy Town, at risk of being flipped again. Last week, Bloomberg News rendered an accurate and clear explanation of the history of the properties and the risk the portfolio is currently facing.

To give a brief history, in the height of the housing boom the portfolio was flipped twice under business plans to remove the affordability from the project, push out lower income residents and raise rents as high as possible. Urban American purchased the buildings for $918 million, taking out an $800 million mortgage financed by Fannie Mae. Fannie Mae also took the opportunity to invest at least $60 million in equity in the portfolio (although they won’t admit it) something which seems to be in direct conflict with their mission to protect affordable housing. It should come as no surprise that this isn’t the only time they’ve invested in these types of deals. To complicate matters further, it was discovered that the City Investment Fund partnered with Urban American in this predatory deal. The City Investment Fund includes money from the New York City and New York State retirement systems; a bitter irony considering many of the residents in these Mitchell Lama projects were public workers.

This $800 million mortgage is now due, which has inspired a flurry of activity around the portfolio. Urban American is looking for a new investment partner that would help them refinance. Brookfield Properties has expressed interest in buying a stake in a $1.1 billion refinancing. This is a $182 million increase over the last purchase price, which has stretched the rents to the highest level and allowed the conditions of the properties to decline. In the event of this refinancing both the City Investment Fund and Fannie Mae would be paid off, fulfilling their fiduciary responsibility at the expense of thousands of New Yorkers’ having an affordable place to live.

It DOESN’T have to be this way. We as a City can decide that we are going to fight to preserve these homes, as well as other buildings that are victims of this crisis. We can do this without creating diminution in value to the bondholders. Here’s what we need to do:

Fannie Mae: The mortgage was due in early May. As a deal has still not been completed, Fannie Mae is in a position as holder of the defaulted debt to push for a quicker preservation deal. Fannie Mae could also commit to finance a preservation deal that would protect the affordability and commit to improving the conditions. Additionally, Fannie Mae should take responsibility for the fact it invested in this portfolio and use its equity stake as additional leverage to push for a better outcome.

City Investment Fund/Comptroller Scott Stringer: The Comptroller should support the tenants and the preservation of affordable housing by taking a stance that doesn’t ignore the impact of his predecessor’s actions. Pension funds should never have been used in a deal that puts low and moderate income tenants at risk of losing their homes. However, there is no reason why the City Investment Fund couldn’t explore the opportunity to remain invested in these properties as long as an owner steps in who commits to affordability and decent housing.

HPD and other City Agencies: This portfolio represents a substantial amount of affordable housing in Upper Manhattan and Roosevelt island, and it should have never been allowed to lose its affordability protections. HPD and the other City Agencies should explore ways to once again tie rent restrictions to these buildings through the use of tax abatements or subsidy that would (a) provide much needed capital towards repairs and (b) add regulatory agreements that would keep the buildings affordable for the residents who call them home.

Mayor de Blasio and other Elected Officials: Mayor de Blasio, Speaker Melissa Mark-Viverito and the other Elected Officials should support the residents of these properties and the need to protect these units of affordable housing, a much needed resource of affordable housing in upper Manhattan and Roosevelt Island. They also could call all the above mentioned parties to the table with the tenants to negotiate how to preserve these properties.
This is not an easy task, in fact it will be difficult and tedious and with no assurances that we can win. However, the tenants are ready to stand up and take on this fight, the only question is who will stand with them?

This is not an easy task, in fact it will be difficult and tedious and with no assurances that we can win. However, the tenants are ready to stand up and take on this fight, the only question is who will stand beside them?


Crown Heights Tenant Union To Meet This Thursday

Photo: San Fran.'s Tenant Union
Photo: San Francisco Tenant Union

Crown Heights is gentrifying.  Everyone knows it, but how does it actually play out on the ground? When a neighborhood gentrifies, where are the people who used to live there?  (Often, those experiences are lost and made invisible.  San Francisco’s Anti-Eviction Mapping Project is working to bring this issue into the public eye through sidewalk stencils.)

Along with gentrification comes harassment and illegal activity.  When landlords project that property values will rise, they purchase a building for too much money, assuming they’ll make it back through the high rents that they’ll be able to charge.  Unfortunately, what they don’t take into account is that many New York City buildings are rent stabilized, and that rents can’t just be raised willy-nilly.  So they use other tactics: Harassment,  Major Capital Improvements,  Lack of repairs, Buy-outs.  Anything to force long term tenants out to bring in new, higher paying ones.

In order to pay back a too-big mortgage, landlords don’t stop with the illegal activity after getting a long term tenant to move out.  Instead, they illegally overcharge new tenants, often young people who are also unaware of New York City rent laws.  Some landlords (like ZT Realty) overcharge unsuspecting newbies thousands of dollars.  And the worst part is, they get away with it!  (And they continue to buy more buildings!)  This is the cycle of predatory equity when it works for landlords.  Because the debt levels on these buildings are so high, if landlords were to actually abide by rent laws and respect tenant rights, they wouldn’t be able to pay back their mortgages and the buildings (like so many that we see) would fall into foreclosure.

A group of tenants in Crown Heights have begun meeting as a Tenant Union, hoping to organize and make demands to landlords, lenders, and the City.  Many of the tenants have lived in the neighborhood for decades, and have been experiencing landlord harassment and decreased services, and want to speak up for their rights.  Others have lived in the neighborhood a year or two, and don’t like what they’ve been seeing or are personally being illegally overcharged.

UHAB has been organizing with small, distressed buildings in this neighborhood for years, and have seen this same pattern play out over and over.  We decided to team up with the Crown Heights Assembly to jump-start the Tenant Union and launch a campaign to protect tenant rights and preserve affordable housing.  Join us for the third meeting of the Crown Heights Tenant Union.  We’ll be meeting Thursday evening, 7:00 at 805 St. Marks (between Brooklyn and New York Ave).  

Mapping a Tale of Two Cities

Everyone is talking about Bill de Blasio’s “Tale of Two Cities.”  One is the rich New York, the other is the poor, working class New York.  That division can be seen on gender lines, racial lines, and political lines. But there is one uniting factor in all of BDB’s divided New York: everyone voted for him. Winning by a landslide, Mr. De Blasio will become New York City’s mayor in January and, with that, the platform of income inequality (Occupy Wall St, sound familiar?)

 Atlantic Cities published a map illustrating the two cities by percentage change in property values between 2008 and 2012.  The map essentially shows which neighborhoods were hardest hit by the housing crisis:

With a few exceptions, it’s Manhattan and adjacent sections of Brooklyn, Queens, and the Bronx that have seen assessments go up in the data from the New York Department of Finance that Walker mapped, which encompasses 958,000 properties. In many of the working-class neighborhoods of the outer boroughs, the value of real estate has actually fallen.

 This map speaks to two main issues in housing: first, that low-income tenants residing in wealthier or gentrifying areas are being forced out of their homes due to speculation and predatory equity.  It also speaks to the ways that the foreclosure crisis has hit homeowners, specifically black homeowners, in a particularly hard way. It’s clear who suffers and who profits in these scenarios. Working class and middle class New Yorkers loose homes, equity, and stability, while wealthy New Yorkers (bankers, landlords, and developers living in high income neighborhoods) profit.

 In our work, we see mostly the tenant side of the story. We see low income tenants living in buildings and neighborhoods swept up in predatory equity.  Tenants are harassed through fees added on to their rents, through lack of repairs, though illegal rent increases. We see this is the rapidly gentrifying neighborhoods of Crown Heights and Ridgewood, but also throughout the Northwest and Central Bronx.

 While speculators may be throwing huge amounts of money into gentrifying neighbors, out of town private equity companies have not done their research on the “Tale of Two Cities.”  It seems like speculators assume that they can skirt rent laws, force tenants out, and bring in higher paying tenants.  Too bad for them, many tenants, especially the ones we work with, are organized and know their rights.  Bill de Blasio has promised to fight for a a rent freeze, something we’d certainly support and that would make the Predatory Equity model even more unsustainable. While Michael Bloomberg’s administration – by the own admission – doesn’t know what to do about gentrification a rent freeze would go a long way towards keeping neighborhoods affordable and discouraging speculation.

Speaking of speculation, journalists near and far are speculating whether or not a de Blasio mayoralty will live up to it’s progressive campaign platform. We hope so. Here’s another thing we know: if he starts to waver on his housing goals, there are organized tenants all over New York City ready to hold him to his promises. We’re with them.


Organizers Meet with the Tenant Protection Unit

As the first part of its series of Fall Organizing Trainings, ANHD gathered about 20 tenants and organizers for its “Working with DHCR’s Tenant Protection Unit” session on October 8th. The conversation was led by Ericka Stallings, director of the Initiative for Neighborhood and City-Wide Organizing. Its purpose was to demystify the Tenant Protection Unit (or TPU), a New York State Division of Housing and Community Renewal sub-unit that was created in 2012. Its self-stated purpose is as follows:

 The TPU works proactively to:

  • Protect the rights of rent regulated tenants and provide information to both tenants and owners
  • Increase compliance with and enforce rent regulation laws
  • Detect landlords’ fraudulent acts and non-compliance with housing laws

The first part of the three-hour session was a discussion among the organizers about what they knew about the TPU, what they’d like to know, and any direct experience they’ve had so far with the unit. Then in the second part of the session, representatives from TPU joined us to give more information and answer questions. Here is a summary of what was discussed:

The TPU focuses on widespread patterns in landlord behavior, rather than dealing with individual tenant cases. For example, they may start by looking at trends like which neighborhoods rent is increasing the fastest in. Forensic auditing experts then conduct investigations on landlords, and can subpoena them for documents. This information is used to build cases against landlords – hence their unofficial slogan, “TPU is coming after you”.

This article illustrates some of the work the unit has done so far, including investigating a terrible slumlord in Flatbush and bringing tens of thousands of units back into the rent regulation system. Two other issues they work on are increasing the number of landlords who register the rents in their buildings, and auditing Individual Apartment Improvement (IAI) rent increases.

According to the TPU, when you submit a complaint, the more information you have the better. This can consist of photos, surveys filled out by tenants, documents given to tenants, bills, leases, court papers, and notes taken during conversations with the landlord. The complaint should relate to a larger, pervasive problem in New York City rent regulated housing. The TPU evaluates whether they will further investigate based on their capacity and their overall strategy.

Our task now is to find out how to best leverage the TPU’s resources in our organizing. Some important limits to be aware of: their staff is about 30 people, and their jurisdiction is only in rent stabilization. We look forward to working with the TPU, and we hope they will be a valuable addition to our fight against irresponsible and predatory landlords.

Speculator today, slumlord… today?

broken stairs 10.7.13 now fixed

After two years of tenant organizing, not that much shocks me anymore.  I’ve seen holes in ceilings, mold covering bedroom walls, and families living without basic amenities like fridges or stoves.  But walking into 755 Jackson Avenue in the Bronx was a shock.

A quick rundown: The building has 11 units and 215 code violations. It’s in HPD’s Alternative Enforcement Program, and on the Bill de Blasio’s Worst Landlord List.  The building has asbestos, lead paint, mold, leaks, and two tenants were injured on a collapsed staircase (pictured above).

And if that’s not enough, it’s owned by the one and only Stabilis Capital Management.  (In case you forgot, Stabilis is the lender on 836 Faile Street and six buildings in Ridgewood, all of which are in foreclosure and in deplorable condition.)

Wait! Stop the presses!  Stabilis owns buildings?  That was our question, too, given that we’ve only ever seen them acting as a mortgage holder interested in flipping debt.

That probably was their plan here as well, but things went wrong: Stabilis bought the debt at 755 Jackson Ave while the building was in foreclosure.  When the building went to auction, we assume no one bid and Stabilis took the title by default. It seems like it was all a big mistake. With a lot of consequences.

While Stabilis became owner in June, they have done nothing to step forward and claim responsibility for the building.  This has left tenants in a position where they don’t know who to call in an emergency or who to pay rent to. It leaves the City responsible for repairs. The building is effectively abandoned.

We’re now organizing at Jackson Avenue and tenants are planning to push Stabilis out of their building. And now that we know how Stabilis treats the buildings they own, we’re doubly fired up to fight against them at Faile Street and in Ridgewood, Queens.

Tenants, elected officials, and advocates are demanding that Stabilis find a responsible way to dispose of this property, and the other distressed multifamily buildings in their portfolio.  Check out Councilmember Maria del Carmen Arroyo’s letter to Stabilis Capital here, and stay tuned to our campaign!!

8th Annual West Side Tenants’ Conference

On Saturday, September 21st, tenants from many walks of life gathered with organizers, attorneys, politicians, and others in the NYC housing world to talk about issues that affect them. The 8th Annual West Side Tenants’ Conference, which is run by tenant volunteers, took place at Fordham University’s School of Law at Lincoln Center.

The day started off with a free light breakfast and twenty-one information tables run by NYC organizations and political offices. Housing Conservation Coordinators gave out free tote bags filled with information on saving energy and reducing waste, maintaining a healthy environment in the home, an educational coloring book about asthma , and flyers for local free legal clinics on immigration and other issues. There were also free on-site assistance tables for issues with rent arrears, SCRIE and DRIE application help, and a representative from NYCHA present to answer questions.

The Keynote Address was delivered by State Senator Brad M. Hoylman, who talked about how essential campaign finance reform will be to working on affordable housing legislation. Before he spoke, appearances were made by Manhattan Borough President Scott Stringer, State Assembly Member Linda Rosenthal, and City Council member Gale Brewer.

Workshops throughout the day discussed varied topics such as fighting tenant harassment, demanding repairs as a tenant association, HP actions, Major Capital Increases, fighting against illegal use of a building by landlords, what affordable housing is and how to find it, and tenants’ rights concerning bedbugs. Workshops specifically targeting seniors included estate planning, housing benefits for seniors, and succession rights, and there were also specialized workshops about NYCHA, Mitchell-Lama and HUD-subsidized housing.

The conference was hosted by eleven local organizations and seven NYC politicians. One of these organizations, the West Side Neighborhood Alliance, is made up of tenants in Chelsea, Hell’s Kitchen, and the Upper West Side. Their campaigns focus on tenant rights and protections, permanent affordable housing, increasing quality of life, and neighborhood-wide issues such as rezoning.

We applaud everyone who put energy into creating and executing this conference for the people of the West Side. It was well attended, and the tenants who came out learned useful information and were connected with valuable resources. Centering a conference around one neighborhood or group of neighborhoods can contribute to a sense of pride and unity in the tenants who live there. UHAB and Crown Heights Assembly are experimenting with this concept of neighborhood-wide organizing as we collaborate on the Crown Heights Tenant Union in Brooklyn. Here’s to the power of information, and how it can be used for positive change in our neighborhoods.

March on Washington Genesis in NYC Housing Co-op

If you know UHAB, you know the Organizing and Policy Department – behind the wheel of The Surreal Estate – is just a small part of what UHAB does. Affordable housing with the cooperative model is at the heart of UHAB. We believe that the philosophies of shared equity and resident control are radical notions that are important aspects of fights against inequality and injustice everywhere. It’s not surprising, then, that the 1963 March on Washington has its roots in a NYC affordable housing co-op. As you will see, the cooperative model has been a common setting for in many well known Civil Rights struggles (and victories.) See the below blog post from guest contributor David J. Thompson, and reach him 530-757-2233 or dthompcoop@aol.com with any questions! Thompson is writing a book entitled “Cooperatives and the Civil Rights Movement,” due for publication in 2014. He is President of the Twin Pines Cooperative Foundation, and can be reached at 530-757-2233 or dthompsoncoop@aol.com. A shorter version of this article first appeared in the Co-operative News UK. 

Velma Hill remembers the genesis of the 1963 “March on Washington” very well, even in August of 2013. “We met in Bayard Rustin’s co-op apartment at Penn South in New York City in early 1963. That night Tom Kahn and my husband Norm Hill and I, under Bayard’s guidance and leadership, crafted the concept for what soon became known as ‘The March on Washington for Jobs and Freedom’.”

Not long after, Rachelle Horowitz, another Penn South co-op member became one of the early organizers of the March. That spring and summer, Rachelle Horowitz’s one bedroom co-op apartment at Penn South became an un-official “March” headquarters. Working with Rachelle Horowitz on the “March” and staying with her in her co-op apartment that summer were; Joyce & Dorie Ladner, two sisters who were activists from SNCC (Southern Nonviolent Coordinating Committee) and Eleanor Holmes Norton, an activist friend and now Congressional member for the District of Columbia.

One evening, just days before the “March”, Civil Rights icon, John Lewis (then of SNCC and now congress member from Georgia) came over to practice his speech in full voice. On other occasions, Rachelle came home to find Dylan in her apartment practicing his songs for the “March”. Dylan had a crush on Dorie Ladner and was rehearsing with her “Only a Pawn in the Game” his new song about the June

1963 murder of Medgar Evers. Dorie was herself a great singer and had brought Dylan down to Greenwood, Mississippi to first sing the song in July of 1963. Because the four young workers on the “March” had to get some sleep, Rachelle Horowitz had the historical task of at different times kicking both Dylan and John Lewis out of her co-op apartment.

The 2,820 unit Penn South Co-op was sponsored by the International Ladies’ Garment Workers’ Union (ILGWU). Speaking at its opening in 1962 were President Kennedy, former First Lady Eleanor Roosevelt, Governor Nelson Rockefeller, NYC Mayor Robert Wagner, AFL_CIO President, George Meany, ILWGU President, David Dubinsky and others. The Penn South Co-op soon became home to many labor activists and civil rights advocates. Later, with Bayard’s help, Ernest Green of the Little Rock Nine moved into the co-op.

“During the 1960s we all lived or stayed at the Penn South Co-op. Norm and I still do,” says co-op member Velma Hill proudly. Norm and Velma Hill have committed their lives to labor and civil rights issues.

The 2013 commemoration of two events that occurred in 1963 will mark the 50th anniversary of the Civil Rights Movement in America. Yet, 1963 was both a high and a low moment in race relations in America.

The high occurred on August 28th, 1963. “The March on Washington” that Norm and Velma Hill helped to birth, brought over 250,000 people to Washington, DC to demand jobs and freedom for African Americans. The spectacle of so many Americans of all colors, peaceably gathered in front of the Lincoln Memorial, will stand forevermore. The stirring event concluded with Martin Luther King Jr’s majestic “I Have a Dream” speech. The ‘March” made an indelible imprint on America’s conscience.

The low point of the year was the September 15th killing of four young black girls attending the 16th Street Baptist Church in Birmingham, Alabama. Segregationists had planted the deadly bombs. The deaths sent the nation into shock and mourning. The two different events in 1963 demanded that America must change.

These events, and others that made up the American Civil Rights Movement, are fairly well known. But what about the everyday role of co-operatives in the Civil Rights Movement — efforts that began in the middle 1800’s and proceeded into the Civil Rights Movement and beyond? Here are just a few vignettes about the role of co-operatives in civil rights for African-Americans.

  •  Frederick Douglass spoke four times in Rochdale in 1846. Some of the founders of the Rochdale Co-op, being Chartists and Owenites would have likely gone to hear Douglass speak a 1,000 feet from their store. Douglass stayed with Rochdale resident, John Bright a Member of Parliament and co-op supporter. The first third of the money to purchase Douglass’ freedom from slavery in 1846 came from Bright, a supporter of the Rochdale Pioneers. Douglass visited a Chartist cooperative colony to learn how the vote was gained through the co-operative purchase of land. Douglass stayed with Bright in Rochdale again in
  • Many leading British co-operators, especially in the Manchester area, played key roles in the Union and Emancipation Society. That group was the main United Kingdom (UK) supporter of the anti-slavery platform of Abraham Lincoln. Following news that the Civil War had ended, figures such as John Bright and Frederick Engels set off to Toad Lane, Rochdale to sign the Rochdale Pioneer’s Visitor’s Book.
  • As chief counsel for the National Association for the Advancement of Colored People (NAACP), Thurgood Marshall and his wife supplemented their income by doing home deliveries for their local consumer co-operative in New York City.
  • In 1957, Marshall was invited to live in a NYC housing co-op (Morningside Gardens). Due to his interracial marriage he was restricted from buying most other housing in NYC. The Marshall’s took their first opportunity to become home owners and lived at the co-op for almost a decade. In 1967, Marshall became the first African-American to be appointed to the Supreme Court.
  • Many Civil Rights leaders point to their attendance at the Highlander Folk School as a key moment. Among them, Rosa Parks and Martin Luther King Jr. Highlander are modeled after the Folk Schools in Denmark that played a critical role in the development of the Danish co-operative movement. Rosa Parks chose not to give up her seat on the bus only months after attending Highlander. When asked what difference did Highlander make? Rosa Parks replied, “Everything.”
  • The arrival at Highlander of African-American activists from John’s Island, South Carolina brought about another historical impact. Septima Clark and Esau Jenkins returned from Highlander to set up the first ever “Citizenship” classes.
  • Most African-Americans had to be taught how to read and write and pass a test to get the right to vote. Held in the back room of their consumer co-op, the “Citizenship” classes were then exported to the rest of the South. The classes led to hundreds of thousands of African-Americans winning the right to vote and changing the face of the South.
  • Housing co-ops organized by integrated groups of veterans after World War II led the fight to end the Federal Housing Agency’s restriction on lending to housing co-ops that allowed African-Americans to be members. Thurgood Marshall personally intervened with President Truman to end the federal restriction on lending to integrated housing co-operatives.
  • A. Philip Randolph and Bayard Rustin, who led and organized the 1963 “March on Washington” both lived and died at Penn South, a union sponsored housing co-op in New York City. Organizers of the “March” Bayard Rustin, A Philip Randolph, Tom Kahn, Rachelle Horowitz, Norm and Velma Hill have all lived at the Penn South co-op. Down below on the ground floor of Penn South was the Chelsea Co-op, a consumers co-op. Penn South’s members are also served by their own credit union.
  • During the Civil Rights era, hundreds of co-ops were organized in the South. In 1967, a core group of those co-operatives gathered together in Atlanta, Georgia, to found the Federation of Southern Co-operatives. Today, the Federation is the leading voice representing the issues facing black farmers and black communities in the South.The Federation is at the forefront of the development of co-operatives and credit unions and the empowerment of minorities and low income populations. The Federation and other black farmers successfully won the “Pigford” suit against the United States Department of Agriculture (USDA) resulting in a billion dollar discrimination award to black farmers.
  • From 1965-1985, Charles and Shirley Sherrod led development of New Communities, Inc, a co-operative farm in Georgia. It was the largest parcel of land owned by African-American farmers and the first land trust in the nation. With funds from the “Pigford Suit” the Sherrod’s are rebuilding New Communities.
  • Congressman John Lewis, the last living speaker at the 1963 March has spent much of his life supporting co-operatives, including being the chair of New Communities and working for the National Cooperative Bank. Fifty years later, John Lewis is still marching on and championing co-ops.

It would be a long time before African Americans obtained their full legal rights as citizens. Yet, much earlier, co-operatives on both sides of the Atlantic Ocean proudly provided African-Americans with both economic power and voting rights. Today, newer co-operatives continue to fight for economic democracy and build