The de Blasio administration will need many ingredients if it’s going to put the city on track to meet the mayor’s goal of creating or preserving 300,000 units of housing by 2026. Money is a big one. Developers are another. Buildable land and unused zoning density are also on the list. But don’t forget landlords—or, to use the more polite term, property owners. They’re essential to the biggest part of the Housing New York strategy, which is the preservation of existing affordable housing. To get 180,000 units preserved, the city will have to find hundreds of landlords willing to cut a deal and accept city financial help in exchange for promising to maintain affordability.
Last May, the city and its collaborator Enterprise Community Partners launched a two-year program called Landlord Ambassadors that empowered three experienced housing nonprofits (Northwest Bronx Community and Clergy Coalition in the Bronx, Mutual Housing Association of New York in Brooklyn and RiseBoro Community Partnership in Queens) to reach out to owners of small- and medium-sized residential properties.
The program notched its first closing on June 20, with a $450,000 loan to a six-unit building at 1097 Glenmore Avenue in East New York. Two other buildings closed in the waning hours of the 2018 fiscal year, which ended June 30. Staff at the Department of Housing Preservation and Development worked right up to the midnight deadline to seal those deals, according to a spokeswoman.
Three buildings in 13 months is not a pace that will make much of a dent in the mayor’s preservation goals. Yet even though the ambassador program’s stated purpose is “helping owners navigate the process of applying for HPD financing,” HPD says its impact goes well beyond the number of units that end up tied to city preservation loans. Technical assistance to landlords—clearing code violations, help hiring managers, setting up payment plans for tax liens—helps shore up units even if city financing and affordability deals never enter the picture.
“It’s been really fascinating seeing some of the early results that have come in from this initial round of outreach,” says Molly Park, HPD’s deputy commissioner for development. “Owners without bank accounts, without a rent roll, where 25 percent of the units in a building are vacant.”
“Really what you have is an incredibly unsophisticated class of owners, so there are a lot of ways that we cam help stabilize those properties and those owners,” Park adds. “Getting it into an affordable housing program is a great outcome, but not the only thing that’s a positive there.”
According to Judi Kende of Enterprise Community Partners, the 1097 Glemore Avenue property entered the program in February 2018 after a referral to HPD’s Green Housing Program through Community Retrofit, a separate program in Central Brooklyn.
“MHANY assisted the owner in identifying contractors to bid on the work, facilitating the contractor bid process to ensure three contractor bids were submitted to HPD, identifying an asbestos testing firm, and providing general guidance and resources on property management best practices,” Kende says. “The rehabilitation includes replacement of the boiler and hot water system, window replacement, roof replacement, electrical upgrades, lead abatement, steam distribution upgrades, efficient lighting and low-flow fixtures.”
The building has 75 open housing code violations, including 14 of the most serious class C violations, which is a hefty tally for a building with just six apartments. HPD officials say that there are some buildings too distressed to qualify for the program. In this case, according to HPD, the current owner of the property was living out of state when she inherited it in 2003, then learned the property manager was not doing his job. She moved back to the city and tried to right the building’s course, but couldn’t afford the work. “She completely stepped to the plate and is trying to intervene,” says Elizabeth Rohlfing, the agency’s assistant commissioner for communications. “There’s a different path if [the owners] are not engaged and they’re not trying to do the right thing.”
One lesson learned from the first deals, according to Kende, is the importance of bringing in managerial skill. “One thing that we’ll encourage Landlord Ambassadors to do more of going forward is work with owners to understand when they need a property management company,” she says.
Landlord Ambassadors was created to target a segment of the housing market that has long eluded HPD — the smaller buildings whose owners, as individuals, don’t have the experience or bandwidth to apply for financing but who collectively control a large pool of affordable units. Not surprisingly, the pilot program has highlighted the challenges at working with that class of owners. Park says one lesson of the first year is the sheer amount of outreach effort required to engage an owner—sometimes a dozen attempts just to get things rolling. “It’s incredibly retail-oriented,” she says. “It requires an enormous amount of hand-holding.”
The outcome for 1097 Glenmore Avenue is a bespoke affordability deal. For the first five years, the owner must offer at least two apartments at rents affordable to households making no more than 50 percent of Area Median Income, or AMI (50 percent of which is $46,950 for a family of three), and at least three at 80 percent of AMI ($75,120 for a family of three). Then for the remaining 25 years of the affordability restrictions, two units must be affordable to 70 percent AMI households ($65,730) and three at 90 percent of AMI ($84,510).
Those income levels are on the high side: According to the Furman Center, median household income in East New York in 2016 was $38,620. And the two-step sequence is a very clunky. Park says that approach is not broadly typical and is “something we will look to limit going forward.” But it was what was required to make the deal for 1097 Glenmore Avenue work. “Small buildings present an unusual challenge for preservation,” she says. “You have to be a little more flexible.”