Toward A Comprehensive Response To Housing Needs

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As New Yorkers continue to face a shortage of affordable housing, they look not just to the city, but to the state for solutions. The Division of Housing and Community Renewal (DHCR) is the state agency responsible for the supervision, maintenance and development of affordable housing. Following years of what many in the affordable housing arena call lackluster performance by the agency, those observers now see energy and focus. They voice a cautious new hope that Deborah VanAmerongen, the agency’s new commissioner, will turn some of that around.

VanAmerongen came to DHCR from HUD, where she served as director of multi-family housing for the New York Region. She began her career in housing in the state legislature as a staffer under Assembly Speakers Mel Miller, Saul Weprin and Sheldon Silver, and served as senior analyst for the Standing Committee on Housing. VanAmerongen became the commissioner of DHCR under then-Gov. Spitzer in February of 2007, and advocates have so far applauded many of her efforts. She has reached out to tenants and tenant groups, and closed a loophole that allowed buyers of Mitchell-Lama buildings to bring apartments up to market rate. She has undertaken a statewide housing study, opened a policy shop at the agency and initiated numerous changes to the way DHCR operates.

In the latest of City Limits’ comprehensive interviews with leading policymakers, reporter Kate Pastor sat down with VanAmerongen at her office in Manhattan to discuss how the commissioner is facing the challenges of a new gubernatorial administration, a new budget and a new fiscal year on the horizon. These are highlights from that conversation.

Given your years working in housing, what vision do you bring to this job? Do you have specific goals for the agency?

Absolutely. I first of all feel like housing is an incredibly important issue and one that has not received enough attention. While the mayor has made it a big issue here in the city of New York and has made a concerted effort through the efforts of groups like Housing First! to have it be a prominent issue, I don’t think it has received enough attention at the statewide level. I think a lot of people in the state capital and a lot of people in previous administrations, or people that are still with the state legislature, looked at affordable housing as a social service kind of program. And while we certainly serve important needs for persons who need affordable housing, I also feel very strongly that it is economic development, and it is community revitalization, and that that message in combination with the social service needs that we are serving is a winning argument for affordable housing.

New York State was at one time a real leader in the field of affordable housing. The first public housing in the nation was here in New York City. The Mitchell-Lama program was created by the New York state legislature. It was a model for other programs done around the country and never has been completely replicated anywhere else. We were the first state and one of the leaders in utilization of federal resources when the federal government was investing a lot in affordable housing. A lot of work was done here in New York and I feel like we had somewhat slipped in recent years. And I thought: I want to take us back to that time where we are a leader in affordable housing.

Do you think you bring a more bottom-up approach to DCHR than it has had in the past?

To be perfectly frank, I don’t know that there was a strategy in the past. It wasn’t that they had one that was top-down; I just didn’t see any sort of comprehensive response to housing needs around the state whether it be top-down or bottom-up. What our agency did for many, many years was every year we would put out a notice of funding availability, every year we would receive applications, we would evaluate those applications and select among the best of those applications and fund them. They had to be justified in terms of a market study but then every year it was as if nothing had ever been done before. They did not look at: What investments have been made here in the past? Does it make sense the way that our programs are coordinating with other agency’s programs in this area? Are we making strategic investments? Does it make sense to build a new building, even if your market study justifies it, when you’ve got a lot of older properties that are sitting there that really need rehabilitation?

I’ll give you a perfect example in my mind of the way that we function versus where I’m trying to take the agency: public housing modernization. There’s a lot of public housing in the state of New York that is in a very bad condition, here in New York City and outside the city. In some cases private developers have wanted to do a revitalization of that public housing and they make new investments in it. It’s maintained as affordable housing – still serving the same customers and clients of that public housing – but it’s been revitalized. Every one of those was driven by the private sector as opposed to us taking a look at the public housing around the state and saying, ‘Where do we most need to be making investments?’

We would put money into those deals. We would be financing the revitalization of the public housing, which is great for the residents who lived in those buildings because they got new rehabilitated apartments, and I hope it made a positive impact on their lives. But the private sector is going to choose the ones that are most attractive, where they’re going to make the most off of their investment. So by the nature of the deal, it means that we are left with, and residents are left with, the worst of the stock – the least attractive and the least likely to generate a lot of income by doing a revitalization. I think we need to be thinking about: Where do we want to make our investments and put money where it is most needed, as opposed to, where it is most attractive to a developer to do a deal?

As one of your first orders of business you closed the “unique and peculiar” loophole. Why did you do that? [Previous interpretations of this regulation gave landlords a way to bring rents in former Mitchell-Lama buildings up to market rate.]

“Unique and peculiar” was something that frankly I’m surprised this agency was able to refrain from taking a position on for as long as it had. I felt like it was fundamentally unfair to both the owners and the tenants. Owners of properties, or a person who was interested in purchasing a property, was making an investment with an assumption about what they thought they might get in rents, which I think was a false assumption. It was a misinterpretation of what the “unique and peculiar” regulation was ever intended to be. But because the agency had never said, ‘no that’s not correct,’ some people took that gamble and paid more for properties than could be supported by what the rents were actually going to be.

It was a much worse situation for tenants, because a lot of them were actually in danger of losing their homes. So I think it was fundamentally inappropriate for us as an agency to not articulate the fact that these buyouts or opt-outs of either Mitchell Lama or other government programs did not in any way look or sound like a unique and peculiar application. I think it’s appropriate for a government agency to say what their regulations mean, and not to sit back and say ‘well, you know, you can continue operating in the dark and it’s okay.’ We’re going to try to deal fairly with people and be honest about what we think our own regulations mean.

When reviewing the sale of Mitchell-Lama buildings, what do you look at?

It’s basically a review of the transaction itself. We also have put forward new regulations to deal with how we will review them, because we didn’t think we had enough regulatory authority to look into, for instance, the track record of an owner in owning properties outside of our portfolio. So we want to know about what they’ve done in other buildings that are not in our portfolio, that sort of thing. We call them “the partnership regulations,” and it’s been published in the state register. That’s specific to Mitchell-Lamas.

If someone is making a bad investment but not breaking any of the rules of the program, we don’t have any authority to stop that. I could try to advise them and say, ‘I think you’re overbidding for this property,’ but at the end of the day it’s a private real estate transaction between a purchaser and a seller. Only certain aspects of it are subject to our review. I can’t say that because somebody’s spending too much on a property we’re not going to approve it.

Do you adhere to a checklist?

Yeah, but I’m going to be frank with you though, it’s not what the tenant advocates are asking us to do. The checklist is not relative to reviewing the price per unit or how much the rents are vis-à-vis the purchase price and whether that makes sense. What we can look at is, if they’re putting debt on the property and that debt has to be covered within existing rent levels…that we can do. But if they’re not putting debt on the property and they’re acquiring the property without a mortgage – and there are people who are able to do that and get their financing and back it with other assets – we don’t have the ability to say, you’re paying too much for the building so we’re not going to approve the sale.

Should tenants be given the right of first refusal, especially in Mitchell-Lama buildings?

My own personal opinion on this – and I’ve certainly never discussed the issue with Governor Paterson so I don’t know his stand on it – is I think the tenant right of first refusal is a difficult idea to implement. Not every tenant group within a building would either be interested to – or even if they are interested, have the capacity to – own their property, particularly a property that needs a lot of rehabilitation. And they don’t necessarily have any experience with owning real estate or doing construction or things like that. So it’s difficult to say that it’s the appropriate answer in every single case. That’s the problem with creating a legislative solution, is that you end up with something that applies across the board whether it works in a particular building or not.

I’ve worked with a number of buildings where we ended up having tenant ownership always in partnership with someone else, though. It was usually Acorn or UHAB [the Urban Homesteading Assistance Board] that would come in and work with the residents and bring some capacity to the table. And I’m very supportive of those deals. I just have a concern about it being an across-the-board answer, that in every single building that they have the absolute right. They may or may not have the willingness or capacity to make that deal actually happen.

What more can be done, or is being done, to improve oversight of Mitchell-Lama buildings?

We had a very critical Inspector General report and all the review under that report had taken place long before I got here, but it was incumbent upon me to try to work to address those issues. So we’ve been very aggressive about it. We’ve engaged an outside accounting firm to go in and audit the waiting lists in many buildings and we have followed up on the individual findings that were in that report and reported back to the inspector general’s office since that time. We did a six-month follow up and we’re still working on it.

I also wanted to take a look at how we do our asset management. What we had done as an agency for a long time is looked at every building the same way and in the interest of fairness and impartiality that makes sense if you think about it that way. But in the interest of looking at how you’re using your resources and where you need to be applying your resources, maybe it’s not the right way to do it.

We first of all have a departmental bill to change some things around. [A.10997 / S.7363] Very few things were in statute; most of the issues are in our regulations. But we had a few things in statute that we wanted to change. The bill is moving in both the Senate and Assembly up in Albany now. We’re talking to the staffs up there and we hope to get that done this year as part of our legislative package.

On the regulatory side of things, we reached out to both owners and managers and residents. There is a group, PIE, the Preservation Incentives and Enforcement Campaign, and they’re very focused on this issue so we’ve talked to them about it a lot. We also reached out to the New York State Bar Association. We asked both tenant attorneys and owner attorneys to take a look at our regulations and tell us where they thought we could do some streamlining to adapt these regulations. What is most important is that the buildings be well maintained, that people who are income eligible are living there, waiting lists are being maintained, and the rents are being kept at an affordable level. If we have a building that has never failed a physical inspection, we’ve never had a tenant complaint, and its finances are in good order and the rents are at a very affordable level, we don’t need to spend a lot of time on that property. If we have another building at the other end of the scale that has all those issues, we need to be putting more of a focus on it.
Would you, or do you, support legislation that would lower the amount landlords could raise rent on vacancies? [The Rent Board Reform Bill]

I haven’t even heard anybody talk about changing the vacancy allowance. … When it gets to things like this that I’ve not had the opportunity to talk to the governor about, I think it’s somewhat inappropriate for me to articulate personal opinions about things when he may or may not agree with me. And at the end of the day I’m a gubernatorial appointee and I will advance the position that the governor takes on these matters. So that one was not one that I had spent anytime looking at. I was not even aware there was legislation to lower it so I haven’t even had a chance to think through whether it makes sense to do that.

Same answer to repealing high-rent vacancy decontrol?

Well, the Governor’s Program Bill that we have advanced does not repeal it. It would increase the levels to $2,800. And we’ve continued to support that legislation this year. I don’t expect the Senate’s going to take up any of the rent regulation reform package this year. I guess they could surprise us and take something up but I’d be more than slightly surprised. We will have the opportunity because there will be a new legislature in 2009 and we’ll have a decision to make about whether to do the same Governor’s Program Bill or to do something else.

What is DHCR doing now to crack down on harassment of tenants, illegal major capital improvement increases, and a variety of other schemes that are being used to bring apartments up to market rate?

We brought in Leslie [Torres] who is a tremendous leader of [the Office of Rent Administration.] We have had our own office of internal audit out there looking at processes and if there is any reality to the allegation that owners cases were processed faster than tenant cases and if tenants have more hoops that they have to jump through, versus tenants.

We looked at service complaints and saw over 50 percent by residents are being rejected. They’re never accepted for filing because they weren’t filed correctly. And I said, ‘that sounds like an awfully high number.’ Now some people just don’t give you enough information and you can’t accept the filing. But I said, ‘there’s got to be something going on there.’ Well, we took a look at it, and it did seem as if they were being rejected on technicalities in many cases.

So we have instructed staff and we have reviewed our procedures and processes and now we’re down to approximately 28 percent that are rejected. It’s still a somewhat high number, but I’m much more comfortable that they’re being rejected on reasonable grounds as opposed to in the past.

We hired some more inspectors, we’ve added to the legal staff on the enforcement unit and also the number of inspectors who go out. I don’t think we’ve ever proactively undertaken inspections. We’ve always waited for a tenant complaint and then in recent years it’s been made more difficult for tenants to file complaints. … So we’re actually doing some of that now: spot-checking. We’re doing it when there is a trigger or a flag for us. Same thing on harassment cases.

What about rent overcharges other than major capital improvement (MCI) increases? Is there anything new on that front?

We’ve dealt with the issue of preferential rents which can come into overcharges. We’re obviously aware of the fact that there are ownership groups where we tend to get more complaints and so more concern is raised about them. So while being conscious that we’re not trying to target a particular owner because of rumors about them or something, where there are instances and there’s been a pattern of complaint or concern raised, we try to look at those very closely.

… We’re looking very closely at the issue of preferential rents. We’re trying to figure out if there are ways, through regulation, to make some changes to the way that we would look at preferential rents that would address some of the concerns raised. And I will say, just being perfectly candid, we were further along in that conversation with Governor Spitzer and some of his folks than we now have had the opportunity to be. So I’m hoping that after this legislative session concludes we can restart some of those conversations, and I think we will put forward some more regulations to deal with some of these issues. I’m hoping that by the fall we’ll be able to come out with a package of regulatory reform in some of these areas.

State-owned public housing was defunded many years ago and little has changed since the administration has shifted. What is DHCR doing to get back public housing operating subsidies from the state?

Here’s where I think the problem is on that front. There is a formula in statute that provides for what the operating subsidy [from the state] could be. If you look at that formula, the amount of money that would come out of the state is really not even a drop in the bucket in terms of the New York City Housing Authority’s (NYCHA) overall operating deficit [of $195 million]. …So there were a lot of things working against the housing authority in that discussion. With that said, I care very deeply about the housing authority and about its needs. We worked aggressively last year, we did the Shelter Allowance Bill and this agency was very aggressive about our support for it. We also got an increase in public housing modernization funding this year.

So I don’t have an easy, ready answer to the operating subsidy question. I think everyone in the world is aware that it’s more a federal issue than it is a state issue. We have lobbied on this in Washington. I’ve been there, particularly with Senator Schumer and Congresswoman Velázquez, who have been great leaders on public housing issues. We’ve supported the bill to federalize the remaining state public housing and anything we can do to be of assistance to them. I don’t in these fiscal times see us saying we’re going to address NYCHA’s operating deficit.

Are there plans in place to privatize existing public housing in New York City in particular?

That would be up to the New York City Housing Authority.

Even of state-owned housing?

They still control it. No revitalization of public housing can happen unless the local housing authority wants it to happen. To the best of my knowledge New York City Housing Authority has not expressed any willingness or desire to have that happen. As far as I know there are no plans in the works.

This year’s state budget increased the allocation for affordable housing significantly. How will this money be spent?

There is a listing of what all our programs are. It’s on our website and we have to abide by the way the legislature allocated of course. But we have a couple of things. First of all, if you look at what we have received in previous years in terms of applications versus what we’ve been able to fund, clearly we can move more money out the door. The way our process works, we put a notice of funding availability out called unified funding, in late November or early December each year. So that went out this past year, without us knowing how much money we would have available. So we are hoping to make awards under unified funding this year by the end of June. If not the end of June than very early July, and I think we will make more awards than we have been able to make in the past. So that will be some portion of the money.

When will the money be allocated?

We’re also looking at a possibility of doing a second funding round. We didn’t know how much would be available when we put it out in December. So some applicants— because why would they waste their time applying for something they think have no chance of getting?—didn’t apply, or only applied for small amounts. I think some people would come in for more funding if there were a second funding round available this year.

What I don’t want to do is to wait until unified funding next year and put it out and not spend this money until a year from now, not spend any of it. Because I think what we have to do is demonstrate to the Division of the Budget, to the legislature, to everyone in government, that there was overwhelming demand and need for this. If we can’t spend the money, then it’s not going to put me in very good stead to argue for more resources next year, which is of course what I want to do.

On which programs will the money be spent?

We’re really reaching out across the board to other partners. So for instance, we’ve had conversations with the Office of Temporary Disability Assistance and they work on the homeless housing programs. They received a smaller level of increase in their funding than we received in ours. So we’re talking about perhaps jointly funding some programs so that we could wed our subsidy with theirs and move some of our money.

We have a departmental bill pending before the legislature to make some changes to our statute. When it comes to preservation, we have what we’ve done with the Housing Trust Fund Program in recent years which is new construction or substantial rehabilitation. We’d like to be able to do a moderate rehabilitation program, but our statute doesn’t really fit for doing that right now. So we’re asking the legislature to work with us to make some changes to the statute to give us some more flexibility to get some more money out the door. In the second funding round one of the targets would be moderate rehabilitation.

We’re sitting down with HPD [the city’s Department of Housing Preservation and Development] to talk to them about needs and what we have funded in the past in the city, but also where they see some other needs. Because of the slide in the economy overall, it’s had a negative impact on the private investment coming into affordable housing deals. So we’re making some more subsidy available to make sure those deals are able to be salvaged even though they have less private investment coming in.

What Mitchell-Lama preservation programs are included in the plan?

There was a specific $54 million appropriation to both Mitchell Lama and what’s called “100 percent affordable.” HFA [the Housing Finance Agency] had in the past focused almost exclusively on 80/20 developments here in Manhattan and I have to give credit to Priscilla Almodovar, the new president and CEO of HFA, because she has really changed the course of the agency. She did 100 percent affordable deals outside the city, as well as inside the city, as well as Mitchell-Lama rehabilitation last year with internal corporate resources. She had essentially used all of those. She put about $40 million into additional subsidy. So she used corporate resources for that. This year very fortunately she’s been given $54 million in the state budget to do exactly that. So we work very closely with them on the Mitchell-Lama rehabilitation program. We looked at the portfolio, at where there are some preservation opportunities, either owners who we think we know like dealing with us and might be willing to do this if we were able to put together a good financial package for them, buildings we knew were in need of a lot of rehabilitation. So we did an assessment of the portfolio ourselves and did proactive outreach to them, saying, ‘We’d like to talk to you about a preservation transaction.’ But it was the first time they’d ever gotten a call like that. Our agency had been involved in some preservation transactions in the past but it was typically reactive.

Tell me about the housing study that DHCR has undertaken.

When Governor Spitzer was interviewing me he said to me: ‘The mayor has a housing plan and it’s 165,000 units. What do you think our number should be?’ And I said to him, ‘I’m not even sure how to answer that question, and I think it’s a real statement about the fact that we don’t know what the need is here.’ And I’m not suggesting that 165,000 is enough for the city either, but at least they quantified a number that they were trying to attain. And I said, ‘I don’t even know if it’s the right question. Maybe we don’t need more units, what we need are investments in the existing units and maybe we need to be providing more services.’

So we formed a policy shop. There had not been a policy function per se at DHCR in the past and this was one of the first things that I charged them to do. One of their primary assignments was to get out to communities around the state and talk to them about what their housing needs were. Over the past year they’ve traveled to communities, they have pulled together meetings with local planning officials, local non-profits, for-profit developers, public housing authorities, Section 8 administrators – really doing outreach and doing some forums as well as site visits and tours. We wanted to hear from them: What did they see going on? And then to try to compile that into a narrative of what is happening in a particular region of the state. We broke it out regionally because to try to cover the whole state in one report—we didn’t think it was the most effective way to get at it. We’ve completed two – the North Country report came out and we just released the Finger Lakes report on May 16.

Is there anything else, any other programs or initiatives that you’d like to discuss?

Yes. I debuted this at the New York State Association for Affordable Housing conference a couple of weeks ago. It’s not entirely public yet, but we’ve talked with 1,200 people about it, so it’s pretty much out there. One of the issues that disturbs me greatly is NIMBYism [“not in my backyard”]. I see the kind of housing we finance and I see the difference it makes in neighborhoods and it’s just so distressing to me that we fight NIMBYism all over the state. So we had a lot of discussions over the past year about how you change people’s attitudes. I think that a lot of the reason that people are opposed to affordable housing is because of what they think it is. They have a visual in their mind of some big monolithic brick tower with thousands of windows and garbage around it and concerns about their property values and crime and all that kind of stuff. And I said, ‘You know, it’s just not the reality of the vast majority of what we deal with. Even here in the city that’s not what most of our housing looks like. So wouldn’t it be great if we could try to show people what affordable housing actually looks like?’

So we have undertaken a public service announcement campaign. Tiki Barber, from the New York Giants, has gotten involved in community redevelopment and affordable housing work, so I got a chance to meet him and I asked him if he would be willing to do a PSA with us. And to his credit he instantly said yes and he made himself available. We now have a 30-second spot with Tiki Barber that is going to be on TV and we’re doing one with Edward Norton who is involved with Enterprise Foundation because his grandfather actually founded it, and Mo Vaughn [the former Mets player who co-owns the housing redevelopment corporation Omni New York LLC], who is also doing a lot of stuff. By mid- to-late June we expect to be airing these public service announcement campaigns. Basically Tiki, in the one that we’ve done thus far, talks about how affordable housing is about housing nurses and firefighters and school teachers, and it fits right in the community. You wouldn’t know it from other housing. And the tagline is, “This is affordable housing. Take another look.” So I’m very excited about our PSA campaign. Unfortunately because media rates are so high in the city we have not done a buy in the city. It’s going to be everywhere outside of the city for five weeks.

– Kate Pastor

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