As the de Blasio administration contemplates reforming citywide rules that govern co-ops intended for people of modest incomes, the City Council is preparing to allow transferred ownership of 95 co-ops and rental buildings Wednesday.
The process, the tenth transfer since the program began in 1997, has been subject to heightened controversy as a coalition that organized to block Mayor Bill de Blasio’s broader reform plans is raising concerns anew. Coalition members say this round of transfers is the latest example of the administration taking away equity from struggling residents and enriching developers. The coalition has also gotten the attention of members of the Council, who worked with the city to set up payment plans for certain buildings to maintain current ownership.
The properties are part of what is known as a “third-party transfer” — a recurring process that moves multifamily buildings with outstanding municipal debt from their current ownership, by either co-op shareholders or private landlords, to developers the city chooses through a competitive bidding process.
The city’s housing department says these 95 buildings — 56 rentals and 39 co-ops spread across Brooklyn, Queens and the Bronx — are behind on water and tax bills and in substantial disrepair. Agency officials say the shareholders and building owners can no longer afford the necessary upkeep, and they promise the private buyers will be required to keep the homes affordable to the existing residents.
De Blasio’s proposal for co-ops that qualify as Housing Development Fund Corporations — a designation based on residents’ incomes and tax breaks — is on ice as the administration contemplates a plan that would not ignite the same level of outrage as his initial proposal. After catching wind of the idea last year, the New York Post panned it as “a Soviet-style takeover of 1,200 privately-owned co-op buildings” to boost the production of his affordable housing plan.
The HDFC coalition then followed the mayor to town hall meetings throughout the city and called into “The Brian Lehrer Show” on WNYC for his weekly Friday appearance to press him on the issue.
“What we don’t want to see is these buildings collapse financially, and we don’t want to see them privatized and become [market-rate] housing. So we’ve invested a lot over the years,” de Blasio said in January on the radio show. “But to be clear, the folks who live there now in affordable housing will get to keep that affordable housing under our vision.”
He also cautioned against the word “foreclosure,” saying, “It suggests that somehow that things are going to be taken away from people.”
The coalition argues that is exactly what is happening.
“These poor people who didn’t get a chance — I mean, how many generations of families lost equity because HPD [the Department of Housing Preservation and Development] was foreclosing quietly the past few decades? They have to look at their children and grandchildren and apologize, I feel,” said coalition member Anita Cheng.
She and her husband bought and merged two co-ops on West 143rd Street in Manhattan more than 10 years ago, when they were looking to start a family and couldn’t afford to buy much else.
Her 38-unit building was threatened with a transfer because it owed $3.5 million to the Department of Environmental Protection for water bills and related fees and interest. With the intervention of City Council Member Mark Levine, the property is now on a 25-year payment plan and some of the interest was waived. The building has since made a $1 million down payment, according to information Levine’s office provided.
The building also owed more than $550,000 in taxes to the Department of Finance, which will be cleared by a tax break, according to Levine’s office.
“These were designed to be home ownership for low-income and working-class people, and if they are foreclosed upon, they become affordable rentals. Sure, that’s at least a relief that no one is going to lose their apartments and there’s still an affordable cost of living there, but you lose your ownership, which is so powerful,” Levine said. “We think it should be the absolute last resort.”
Cheng described learning of the potential transfer of her building several years ago as “a shock to everyone.”
“We thought since we bought that, even though there were problems, we would work through them like a regular co-op, but this was way beyond anything that could be worked through,” she said. “We feel like we’re still struggling. We’re in a better place than we were before, but it’s really taken over our entire lives.”
“It’s like every other part of our life has stopped,” she added.
By not intervening for specific buildings Wednesday, the Council is tacitly allowing the transfers to take place. The Manhattan round of transfers is expected to take place in the next few months. Currently, there are 26 eligible properties, housing department spokeswoman Libby Rohlfing said.
“Third Party Transfer is a tool of last resort,” she said in an email. “The city has done extensive outreach to owners and residents over the past three years, offering various forms of assistance that resulted in nearly 70 percent of buildings coming out of the round. For the remaining buildings, we can’t just let them languish. This is the best path forward to improve conditions in these buildings, stabilize their future health and ensure their long-term affordability for residents.”
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