On the brick building on Saint Ann’s Avenue, under the red façade with bas-relief lions, Julio Roman has put up a board with this message: “Keep off, stupid.”
Getting title to this decaying Bronx apartment building has become an issue of life and death for Roman. “I have nine children,” he says. “Six of them were born here. It’s a part of my life.” He’s been managing the building since 1988, when the owner, a friend of his named Noel Martinez, moved to California and left the building in his care. He hasn’t heard from the landlord since. Roman thinks he might be dead.
Roman’s been fixing up the 12-unit building–repainting, making small repairs, installing a new boiler. But last year, a fire ravaged the top floor, damaging the roof and support beams. After that, the tenants moved out. Roman estimates that he needs about $150,000 to put it back in shape, install new plumbing and fix the electrical wiring. It also carries about $100,000 in back taxes.
But Roman may have to fight to keep it. Because of those debts, the city is getting ready to seize this building and turn it over to an experienced nonprofit or independent property manager. So lately Roman has become suspicious of visitors, thinking they may be sniffing out information to use against him in the title battle. He’s preparing for some serious competition.
“Nobody takes this building away from me,” he yells. “I’ll blow it up.”
There’s no keeping the trespassers out. Modest as it may be, Roman’s building represents the future of New York City’s low-income housing policy, and everybody wants a piece.
Roman’s building, along with 43 other tax-delinquent South Bronx properties, is slated for an experimental property transfer program getting underway this winter. The new program fulfills a 4-year-old push by Giuliani administration officials to get the city out of the housing management business for good. They see this new “third party transfer” system as a way to maintain debt-laden, dilapidated buildings in poor neighborhoods without getting directly involved.
The city officially dropped its policy of seizing tax-delinquent property in 1995, when a study revealed that the buildings lingered in the city’s hands an average of 19 years before being sold, costing about $2 million each in management, legal and repair fees.
Now, third party transfer is set to privatize the business of stabilizing low-income housing. The program targets run-down buildings with large liens from tax, water or emergency repair bills. If the landlord won’t set up a payment arrangement–or if the building has simply been abandoned–the city will seize it.
Then, instead of adding to the city’s stock of 19,000 apartments units, the building will be passed off to a nonprofit or private “third party,” which will take ownership and start fixing up the building. Nonprofit loan intermediaries Local Initiatives Support Corporation and the Enterprise Foundation, through a collaborative spin-off organization called Neighborhood Restore, will manage the program. Every big housing group in the city is scrambling to qualify; about 200 managers applied in January to be one of the three to five groups that will take ownership of the 44 Bronx buildings.
The Bronx cluster–all the seriously tax-delinquent buildings in two tax districts–is the programs’ trial run. If it works out, the city’s Department of Housing Preservation and Development will start funneling buildings citywide into third party transfer. The agency plans to focus on some of the city’s worst buildings: those with court-appointed 7a administrators.
The 7a program, where judges put legal custodians in charge of dangerously decrepit private buildings, is like an index of decay. These buildings are by definition the worst in the city. And they will be the real test of third party transfer.
The Bronx 44 are, on the whole, a sorry lot. But, as one administrator close to the program put it, it’s not in HPD’s interest to let the pilot project fail. The agency will likely make sure the project succeeds by providing rehab money and help.
After that, all bets are off.
The transfer process wipes out most tax and repair liens on a building, but the city won’t insure any special access to loan money for rehab–or any future tax breaks, which developers usually rely on to make their low-income housing viable. And it’s under a strict mandate: If the transfer doesn’t happen within the tight timetable of nine and a half months, the whole process has to start over.
“There are so many unknowns,” says one housing policy expert, who asked not to be identified. “There’s liability involved in taking over ownership, and people don’t know that much about the buildings. If it’s privately owned, how do you know what the actual rent roll is? Does HPD know if any of these buildings are on rent strike?”
It’s the first new development in housing in years, and right now it’s just about the only way for nonprofit housing groups to grow. It also comes with no guarantees.
Unfortunately, the new policy might finish off 7a just when it finally started to work.
In order to get into the 7a program, a building must have big problems, like a lack of heat and hot water, structural problems, resident drug dealers, torrential leaks–and a thoroughly negligent landlord. The tenants, working with an HPD or Legal Aid attorney, convince a housing court judge to appoint an independent administrator. The owner technically still holds title to the building, but the 7a collects rent and plows the money into rehabbing the building. The salary: 5 percent of the rent rolls.
It’s a simple idea, a quick way to pump cash and resources into dangerously run-down buildings.
But it has a spotty history. In past years, judges would hand big buildings over to well-meaning but inexperienced tenants, overburdened small nonprofits or to building managers just looking to make a quick buck.
Restoring bad buildings in bad neighborhoods–which usually includes dealing with long-suffering, suspicious tenants on rent strike–requires someone who can act as a general contractor, politician, accountant and lawyer all at once. The monthly reporting requirements are onerous. The buildings are often practically vacant, and a 5 percent take of nothing is no way to make a living.
Harvey McClelland, an independent 7a administrator since 1992, describes one Bushwick building he managed: “The first floor had been sold to drug dealers by my predecessor 7a. The second floor was for prostitutes. On the 3rd floor was the smoke shop–where people consumed their drugs and used prostitutes. On the 4th floor was the madam of the building. In my idiocy, I said I’d take it.” On something close to a personal crusade, he got the dealers cleaned out (he says there were 200 arrests in the building alone) and the property fixed up and sold. His initial monthly take: $32.
Lisette Mendez, a tenant organizer at the nonprofit Good Old Lower East Side, took her first 7a appointment in 1992 with the hopes of becoming a full-time property manager. After two years, she left the building with new refrigerators, new plumbing, newly pointed bricks, a gate to keep the drug dealers out and $6,000 in its bank account. She also left burnt out.
“I was so stressed out and tired,” she laughs. “I spent half my time on that building, between calls to HPD, contractors, talking to tenants, dealing with emergencies.”
Not every 7a could handle the job. A 1992 Newsday series of articles on one ravaged Brooklyn 7a building made the program a public embarrassment for the housing agency. In addition, some buildings lingered in the program for years, essentially becoming the city’s responsibility.
So in recent years, the housing agency reined the program in, accepting only sure-fire buildings and using only the most trusted administrators. The few administrators that still take on new buildings either head big, competent housing groups that bring other money and expertise to their 7a appointments, or they’re skilled, politically connected private managers who know how to work the system for rehab money.
“I do think there’s been an effort to make the unit more professional,” says Housing Conservation Coordinators’ Nancy Kyriacou, who has been a 7a for more than 10 years. “That goes hand in hand with getting rid of buildings as quickly as possible.”
And although HPD did not respond to our queries, three different sources–an agency attorney, a nonprofit housing director and a landlord who’d been through the program–said that the agency has been training a group of small landlords in the art of managing and taking over tax-delinquent buildings. The goal is to make sure each building has a dedicated godparent willing to permanently adopt the building.
It took the housing agency close to 15 years to get the 7a program to work properly. Now, it has only one year to get the third party transfer program up and running and coping with properties like 770 Faile Street, another of the Bronx buildings scheduled to go through the program this year.
In this shabby Hunts Point building, life has turned into a daily battle against rats. Jeanette Perez says they boldly trot along her kitchen counters and make themselves comfortable on the beds in her small apartment. Her five kids are all asthmatic, but Perez had to get a cat just to scare the rats away. It was little match for it. “I had rats this big,” Perez says, holding her palms about 12 inches apart. “They were bigger than my cat.
The housing agency will require the new owner to have a detailed plan of action for those rats and a multitude of other problems–including gaping holes in the walls and gas leaks.
Third party transfer is supposed to provide a permanent resolution for buildings like this one, which has been traded around for years by a succession of deadbeat owners, absentee landlords and court-appointed receivers. But HPD won’t make any guarantees that the new owners will have access to anything more than the same oversubscribed rehab loan programs available to other landlords and housing groups.
To repair the building’s most serious problems, the tenants may have to temporarily move out, and third party transfer also doesn’t promise much in this department. LISC and Enterprise say they’ll help with the logistics, but not with the money, or with the search for equivalent apartments.
The new owner might also have some trouble getting paying tenants. In Perez’s building, drug dealers and prostitutes now pay nightly visits to a vacant apartment right above hers. The apartment has all the trappings of a drug den–small packages used to store crack cocaine, a used condom floating amid ashes in the toilet bowl, a cluster of bullet holes in the window. A woman sits on the stairs leading to the attic, her face buried in her arms. A used syringe lies nearby.
But ultimately, the building might not ever make it to a third party. The mortgage is held by Houlihan-Parnes Realtors, who will probably foreclose on the property and keep it out of the city’s hands. Representative Jim Coleman says that the company has no intention of letting the city confiscate the building.
The tenants doubt that the real estate company will do much better by them. They say they don’t even care who owns the building, as long as somebody fixes it up. To that end they’ve been working with Mothers on the Move and Francisco Perez, an energetic tenant organizer who has family in the building, to figure out how to buy the building themselves. With no guarantees on third party transfer, it may be the closest thing they’ve got to a solution.
Philip Shishkin is a Manhattan-based freelance writer.