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Mildred Colon’s home in the Hunts Point I buildings on Coster Street in the Bronx – a privately owned complex subsidized by the Department of Housing and Urban Development (HUD) – was “heavenly” when she moved in 24 years ago. But after five years of neglect from the owner and management company the building has deteriorated drastically, said Colon, president of the new tenants’ association.

“We have broken ceilings, cracking doors and floors and walls,” she told the roughly 150 attendees at a conference on distressed HUD housing hosted last week by the Partnership to Preserve Affordable Housing. Colon added that heat and hot water for the buildings’ 125 tenants is intermittent and unreliable, and security is non-existent. “We have a failing building with a lot of violations,” she said.

In response to these conditions, HUD sent the owner of Hunts Point I a notice of foreclosure last month. Colon worries that, as often happens in HUD foreclosures, the buildings will be sold in a public auction and lose their Section 8 status, which caps rent at 30 percent of a family’s household income. To Colon, that outcome might be just as bad as the original problem.

“We have bedridden people, mentally disturbed people in our buildings,” Colon said. “If we lose our Section 8 housing, where will we turn to?”

Fortunately for residents like Colon, in recent years the city has had some success at working with HUD, tenants, housing advocates and developers to transfer distressed buildings like Hunts Point I to responsible owners, thus keeping buildings affordable for low-income New Yorkers. The city has used this approach since 2002, relying on tenants to take an active role in preserving their buildings and maintaining affordability in 11 “distressed” – meaning in poor physical and/or financial condition – HUD properties that had gone into foreclosure.

Now the housing activists, advocates, lawyers and developers working under the Partnership to Preserve Affordable Housing’s umbrella are trying to expand the current ad-hoc approach into a systematic, citywide process. The conference presented what the housing preservation community has learned about rescuing distressed HUD housing over the past five years.

Shaun Donovan, commissioner of the Department of Housing Preservation and Development, told the panel that “the uncertainty involved because there wasn’t a clear path out of this foreclosure process has been a real problem” and created unnecessary fear for tenants. He wants HUD to continue to get tough with bad landlords, but to also help create a more “programmatic” approach to finding new, responsible owners that would ease tenants’ minds.

“One of the things we want to be able do is move from this retail, one-by-one approach to a wholesale approach that is more predictable,” Donovan told the group. Part of his recommended “wholesale” approach includes a proposed “demonstration project” in which HPD would purchase a portfolio of HUD-owned mortgages.

Advocates at the Partnership’s panel claimed that as many as 58 other HUD-assisted buildings in the city, containing more than 6,600 apartments, are distressed and could face foreclosure soon. All 58 buildings cited received failing marks on their most recent Real Estate Assessment Center (REAC) score, HUD’s test for evaluating its buildings. REAC scores run from 1-100, with anything under 60 failing. After two consecutive failing scores, HUD can begin foreclosure proceedings. The most recent REAC score at Hunt’s Point 1 was 39.

Although Adam Glantz, HUD’s local spokesperson, disputed the Partnership’s tally of distressed HUD projects in the city, he said, “we have been successful in a number of instances of working with HPD and the city and hopefully that’s a path we’ll continue down.” Glantz had been unaware of the conference, and organizers said that no one from HUD was invited.

To make HPD’s demonstration project a reality, which current reports estimate will include about 30 HUD properties, Donovan and housing advocates agree that HUD’s regulations need to be changed along the lines that U.S. Rep. Nydia Velazquez proposes in new legislation.

Velazquez’s bill, H.R. 44, would restore “up-front grants” for rehabilitating distressed buildings, require HUD to account for rehabilitation costs when appraising buildings, and require HUD to make public all REAC scores used to determine the condition of all HUD buildings, among other stipulations. Advocates say that despite regulations calling for the scores to be posted in the lobby of buildings, few ever are. The bill has been referred to the House financial services committee.

With Velazquez’s HUD reform and HPD’s demonstration project, housing advocates believe that much of the city’s distressed affordable housing stock can be saved and rehabilitated. They also don’t see the transfer from HUD to HPD as simply passing a hot potato from one government bureaucracy to another.

Dina Levy, director of organizing and policy at the Urban Homesteading Assistance Board, a main organizer of Friday’s panel (and City Limits’ landlord), believes that local government will be more responsive than the Washington-based agency. She said that, despite the city’s faults in protecting healthy affordable housing, “it has proven to be a far more reasonable and flexible partner in preservation than HUD.”

Mildred Colon, for one, would welcome a more responsive partner to help rehabilitate Hunt’s Point I and keep it affordable. “Our buildings have failed over and over,” she said. “No one’s there to hear us or to work with us.”

A related report, Cause for Distress, was released by the Center for an Urban Future on Feb. 23.

– Matt Sollars

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