Sour Disposition

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Just a block from Harlem’s nouveau-chic 125th Street, where wig shops and soul food joints now share the sidewalk with MAC cosmetics and H&M, Ennis Francis Houses stands as testament to an earlier time. Unfortunately, it shows.

Apartment walls are stained with mold, ceilings are leaking, water bugs and mice lurk beneath radiators. But its tenants, many of whom moved in when the 11-story brick complex opened in 1985, aren’t giving up just yet. “We lived through the slum era,” says tenant leader Kim Smith. “We ought to be able to live through the renaissance.”

Tired of waiting for their landlord, Herbert Wright, to make repairs, tenants recently asked the U.S. Department of Housing and Urban Development, which subsidizes their rent, to intervene. Because the building has failed two physical inspections, the agency is now considering foreclosure–welcome news for the frustrated residents.

“An enforcement action like foreclosure is great,” says Anne Lessy, an organizer with the nonprofit Tenants and Neighbors. “But we’re talking about tenants who have been failed. Unless they have a role, a say, in the building’s future, where is the protection for them?”

For the past decade, buildings like Ennis Francis have been moving out of HUD’s domain. They were part of a massive wave of construction between the 1960s and 1980s, in which developers received federal subsidies in exchange for keeping rents affordable for 20 years. But when a landlord neglects a property or mismanages its finances, HUD doesn’t wait for the contract to expire. It ends the subsidy and gives tenants individual Section 8 vouchers instead.

The question is, what comes next? If HUD takes title to the property, it can transfer ownership to someone it deems more qualified. Or, if the property is in decent shape, the federal agency can simply foreclose and auction it off to the highest bidder.

Since 1993, 37 New York City HUD-insured properties have been foreclosed on, 11 of which were sold to private owners at auction. But that number may start to grow as HUD steps up oversight of delinquent owners. “Landlords have to clean up their act if they want to stay in the program,” said local HUD spokesperson Adam Glantz. As of June, 48 HUD-assisted buildings had failed two recent annual inspections, moving them onto a troubled properties list–and potentially onto the auction block.

While some landlords who buy at auction will work to improve the value of their investment and make it attractive to future tenants, others may be looking for a quick profit. “In a tight market situation like you have in New York, people will be tempted to bid high,” explains Michael Kane, executive director of the National Alliance of HUD Tenants. “If they bid high, they won’t have the capital to make needed repairs. Their financial incentive is to run the properties into the ground and wait till the tenants move out or die. That’s just economics.”

Yet despite pressure from tenants and from New York City housing officials, HUD has no plans to give up auctions or change its policy around foreclosure. So tenants like those at Ennis Francis are going to have to fight for the future of their homes.

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Carmella Smith was one of those tenants back in 2000, when HUD foreclosed on her dilapidated Bed-Study building complex, Willard J. Price Houses, and sold the building to Bronx-based Proto Property Services for $1.

Developers Demetrios Moragianis and John Lankenau had just renovated a 54-unit building in the Bronx. But Willard J. Price, which encompasses 192 apartments in four buildings, was another story entirely. The day they closed on the deal, the property’s newly fired security and maintenance staff went on an angry rampage, setting fires and flooding pipes. “On my way there, I saw three fire engines,” remembers Moragianis. “I thought, ‘I bet they’re heading to Willard Price.'” Sure enough, they were.

These days, the buildings look a lot better, but serious problems persist. “The outside is all well and good,” explains Smith. “But we don’t live outside–we live inside.” She says the tenants had to beg for a face-to-face meeting with owners, sending repeated letters to the city’s housing authority, local politicians and HUD. At the October 12 gathering, the first in a year, an overheated, standing-room-only crowd bombarded Moragianis and his co-owners with complaints about rats and poor security.

The landlords tried for expressions of patient concern, but they often looked like they wanted to disappear. “It’s been a hard way going,” Moragianis explained later over the phone. “We want to make money, don’t get me wrong. But we want to make money from a fine-tuned machine. We sink or swim with the building.”

While Proto may be trying its best, not all of HUD’s new landlords are as conscientious. This past summer, the agency unloaded Pueblo de Mayaguez, a 76-unit Melrose development, at a speedy auction on the steps of the Bronx Courthouse. The tenants, whose plan to turn the complex into a co-op had the backing of the city’s housing department and housing authority, were heartbroken. And that was before they found out who their new landlord actually was.

The mysterious buyer, represented by proxy at the auction, was Emmanuel Ku, a Queens-based landlord with more than 1,400 pending code violations in just 11 buildings. With the help of the Legal Aid Society, the tenants have now filed a lawsuit to reverse the sale.

Glantz maintains that the tenants’ plan came too late; the building was already scheduled for auction. But advocates hope the bad publicity that followed could change HUD’s approach. “Pueblo was a wake-up call,” says Lessy. “It demonstrated that the process being used to screen potential landlords is inadequate.”

There are already some signs of improvement. The tenants at Ennis Francis and at Nueva Era Apartments in Washington Heights, another complex at risk of foreclosure, recently held meetings with local HUD reps where they articulated their concerns. Kim Smith, of Ennis Francis, considers her meeting a success. “They were very attentive,” she says, “They’re definitely interested in assisting us.”

But, at this stage, it’s hard to know what form that assistance will take, and a public auction is still a distinct possibility. Even if New York HUD officials wanted to rule it out, explains Victor Bach, senior housing policy analyst for the Community Service Society, they wouldn’t necessarily have the authority to do so. “Washington wants to shed its interests and get out of the real estate business–it’s part of the whole federal mindset on housing policy,” he says. “There’s clearly no movement by Washington on this score.”

That’s disappointing for advocates like Kane, who have spent years pleading for more sensitive disposition of these troubled buildings. Kane points out that far better models are already in play. This spring, a nonprofit consortium led by the Community Service Society and including the buildings’ tenants, took over ownership of Medgar Evers Houses and the Dr. Betty Shabazz Complex–a total of 475 units–along Bed-Stuy’s Gates Avenue corridor. While nonprofit owners are no guarantee of success, they are more likely to involve tenants and keep the buildings affordable long-term.

“Does it take a long time? Does it cost a lot of money?” asks Kane. “Sure. But what’s the alternative?”