Advocates: Deal prolongs housing crisis for NYers
Buckling floors. Collapsing ceilings. Leaking pipes.
In buildings around the country where landlords found themselves owing more than their properties were worth — the mistakes of the housing bubble have left visible scars as properties have fallen into foreclosure.
On Tuesday, city officials and tenant advocates warned that they believe 10 Bronx apartment buildings are falling victim to the same errors all over again.
At a tenant rally, City Council Speaker Christine Quinn warned that an unnamed buyer planning to step in and take over the 10 disintegrating properties is agreeing to a deal that could only lead to profit if tenants are left in abhorrent conditions.
"None of the debt on these buildings is being reduced in this sale," Quinn said. "Unless the purchaser is some philanthropic billionaire who is going to put his or her last penny into these buildings, I don't see how we can have any hope ... that the buildings are going to get any better."
The deal, which Quinn said is far overvalued and worth more than $35 million, would require the new landlord to make such large interest payments that there's no way it could afford to make the necessary repairs on the crumbling properties, she said.
That's unwelcome news for 81-year-old Marie Nixon, whose doorbell falls off her door when visitors enter her apartment, one flight up from the commotion of Tuesday's rally.
Three decades ago, her bathroom had a stained-glass window, she says. Now she has seen the room flooded repeatedly, and the tiles along the floor are cracked and buckling. Downstairs, huge chunks of plaster fall to the ground every time it rains.
With more than 3,200 outstanding housing violations in the 548 apartment units once managed by Milbank Real Estate, bringing the properties up to code would cost an estimated $10 to $15 million, said Joe Cicciu, the receiver appointed in foreclosure proceedings to collect rents and use that money to make repairs to the buildings.
As it is, Cicciu says he is spending rent payments of roughly $250,000 per month on repairs to the buildings, but fixing the underlying decay causing many of the problems is out of his reach. In addition, one-quarter of the apartment units are now vacant and many more tenants aren't paying their rent, he said.
The litany of damage to the buildings is daunting: "Apartment after apartment after apartment of ... lead-based paint and collapsing ceilings and bathrooms that had to be shored up from literally collapsing upon themselves," said Cicciu. "And there's still tons and tons of work to be done."
LNR Partners, the special servicer that holds the mortgage on the properties, has refused city requests to identify the buyer but has notified the city the buyer will take on responsibility for the entire $35 million owed, said Brendan Cheney, a City Council policy analyst.
Under those terms, it's unlikely the buyer would invest upward of $10 million to bring the properties up to code, said Ben Carlos Thypin, a senior market analyst for research and consulting firm Real Capital Analytics, after looking at profit projections that the city said were provided by LNR.
The company, which must approve any deal before it wins a judge's OK, would not confirm the city's account and declined to comment. Court approval could occur as early as Wednesday.
Across the country, multifamily mortgages covering 401,000 apartment units and worth an estimated $35.6 billion were delinquent or in foreclosure as of this week, Thypin said. More than one-quarter fell into that status this year.
The Bronx sale, if it goes through, would put an end to a court action brought in April on behalf of Milbank tenants in an effort to force LNR and other creditors to pay to repair the properties. But housing lawyer Jonathan Levy says that's not the reason he and the others involved in the court case are opposing the sale.
On Tuesday, Quinn promised the city's housing authorities would make inaction difficult for a new landlord.
That's a vow that may not bring much comfort to Nixon, who has seen housing inspectors come in and out of her apartment repeatedly over the years, often giving her apartment a failing grade.
"Then they walk out the door and everything's left up to me," she said.
At her age, on a fixed income, she says moving isn't an option.
She still has to live in the apartment. And she still has to pay her rent.
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