553 E. 169th Tenants Deserve Better!

Photo taken March, 2012 at 553 E. 169th St.
Photo taken March, 2012 at 553 E. 169th St.

553 E. 169th Street is a 18 unit building located right in the middle of the Bronx. It’s not necessarily easy to recognize — it lacks a building number, and is smashed between another building and a restaurant. But, right now, the building is the source of a tense argument between Valley National Bank and housing advocates, including UHAB.

The property was in foreclosure for many years, and during that time it fell into extreme disrepair. Right now, it’s listed as one of the 200 worst buildings in New York City. We’ve written about the building many times before on The Surreal Estate, and it was also featured in an article on The Atlantic Cities.

More recently, an HPD approved affordable housing developer – one with the skills to stabilize extremely distressed housing at no cost to tenants – put in a bid for the property. Hoping to correct the severe financial distress, the bid requires that bank to swallow a significant loss. Valley National Bank is unsurprisingly reluctant — they did not originate this loan, and they don’t want to pay for another bank’s mistake.

The catch is that Valley National Bank has a loss share agreement with the FDIC. Following the financial crisis, the FDIC compelled VNB to take over Liberty Pointe Bank. In exchange for absorbing Liberty’s bad assets, the FDIC agreed to take on 80% of the losses VNB suffered as a result. The FDIC, a government entity, supposedly answers to tax payers — i.e., tenants. Even though VNB will only be responsible for 20% of the discount given the bank remains reluctant.

Up until this point, Valley National Bank has been open to working with tenants, organizers and advocates at this building. While tenants certainly appreciate this, all the good-faith negotiating that VNB has done up to this point won’t matter very much if 553 E. 169th Street is simply sold to the highest bidder. As they say — the road to hell is paved with good intentions.

Valley National is a small bank, but they still hold $16 billion in assets, have a market value of $1.9 billion, and in 2012 boasted a net income of $143.5 million. $125,000 is a drop of the bucket to the bank, but it will improve the lives of the 18 families who live at 553 E. 169th Street exponentially.

We have been working with elected officials to express to both the bank and the FDIC the importance of not repeating the mistakes of the past by overleveraging this building again. We hope they listen.


Tenants at 553 E. 169th St. Continue to Organize as Building Goes to Auction

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Bathroom Mold, March 2012

Last night, tenants at 553 E. 169th St. had an important meeting to talk about the fact that their building will be going to auction on April 15th.  Auctions are breeding grounds for speculation – the whole style of an auction is designed to drive up price – and they are pretty much worst thing for distressed affordable housing.  Rather than take time to look at a building, calculate its repair needs and meet with tenants, auction-goers are usually looking to buy up housing and make a quick buck.

The tenants at 553 E. 169th St. have been organizing for almost two years to improve conditions in their apartments and find a preservation outcome for their building.  They met with their receiver, Miriam Breier, to address immediate health concerns, including heat and hot water.  They tirelessly called 3-11.  They opened their doors to good developers, none of whom were able to meet Valley National Bank’s inflated asking price. (The bank refused to lower it.) They met with Councilwoman Helen Foster’s office, and they attended tenant meeting after tenant meeting.

This year, the building was entered into HPD’s Alternative Enforcement Program, and the city so has more power to control the repairs in the property. While the management company has made many repairs, the building continues to have over 150 violations in 18 units.

A key component of the Alternative Enforcement Program is the costly liens that are assigned to the property by HPD. These liens will not go away when the building is sold, and any purchaser must incorporate the cost of correcting violations and removing the building from the AEP program into the cost of acquisition. We suspect that most auction-goers on April 15th will not be prepared to do this for 553 E. 169th Street, of if they are even aware of the program at all.

Tenants will be at the auction on April 15th to show speculators that they are organized, that they know their rights, and that they won’t back down!

The Real Deal: “Bluestone sells former Ocelot Bronx portfolio for $17.6M”

The real estate investment firm the Bluestone Group, which denied for months it would unload a six-building portfolio of once severely distressed Bronx properties, sold the package for $17.6 million, a source close to the deal said.

The sale closed yesterday as part of a bankruptcy case filed by the former ownership company BXP 1, controlled by investor Susumu Endo. The buyer was Anthony Gazivoda, owner of Gazivoda Realty, a prominent landlord in the Bronx Albanian community, an employee at Gazivoda said. Gazivoda himself was not immediately available for comment.

Bluestone, led by principals Eli Tabak, Ari Bromberg and Marc Mendelsohn, purchased the defaulted notes on the six properties, with a face value of $13.15 million, for about $10 million in June 2010, according to city property records.

Tabak, speaking for Bluestone, declined to comment on the sale.

Bluestone, formed in 2006, has been an active player in the distressed real estate market, especially through note purchases.

The Bronx units were in terrible condition in 2010, with Crain’s reporting in July last year that there were 2,936 housing code violations on the buildings’ 260 units, or 11.3 violations per unit. Yesterday there were 334 housing code violations, or 1.3 per unit, the city’s Department of Housing Preservation and Development website shows.

Read more at The Real Deal.

Crain’s New York: “Bronx apartment buildings flipped again”

A little more than a year ago, the Manhattan-based real estate investment group, the Bluestone Group, purchased the foreclosed debt on six run-down buildings in the Bronx for $10 million, promising tenants they were in it for the long haul and pledging to make substantial repairs.

But city officials and housing advocates were skeptical that the little-known Bluestone had the experience to rehabilitate such dilapidated housing, and worried they were seeking a quick pay day.

Read more at Crain’s New York.