Bronx Weekend News Roundup, July 25

Weather: Finally, some heat wave relief. It's a breezy 79 degrees right now, with a chance of thunderstorms predicted for later. Temperatures will climb back up again tomorrow but won't be as brutal as this weekend's.

Story of the Day: Bronx is Booming
The cover story on this week's issue of Crain's New York Business takes a look at the number of positive economic indicators happening in the Bronx right now, and argues the borough is in better shape than it's been in years. Booms in job growth, wage increases, an influx of new immigrants and affordable housing are all marking a shift in the Bronx, Crain's Daniel Massey writes.

“There was a time when people were running away from this borough,” local developer Radame Perez told the paper. “But that's an old story.”

Quick Hits:
Same-sex marriages officially became legal in New York yesterday. We'll have an on-the-scene account of weddings at the Bronx County Courthouse for you shortly.

Charles Himple, a chef who works at Red Lobster's Bronx location in Co-Op City, will star in a commercial as part of the seafood chain's new marketing campaign that features actual employees.

Bronx BP Heavily Involved in Hunts Point Negotiations, Spokesman Says

Despite a Crain's article that does not mention his involvement, Bronx Borough President Ruben Diaz, Jr. is heavily involved in negotiations to keep the Hunts Point Market in the Bronx, said spokesman John DeSio.

In our news roundup earlier today (now updated), we made note of the conspicuous fact that Diaz was not mentioned in the Crain's article as being part of the city and state's Hunts Point Market negotiating team. It did mention Lieutenant Governor Robert Duffy, the Empire State Development Corp., the city's Economic Development Corp. and other Bloomberg officials.

Diaz has said keeping the Hunts Point Market in the Bronx is a top priority of his administration. DeSio says this remains the case and that Diaz and Duffy are in regular contact, as is Marlene Cintron, the head of the Bronx Overall Development Corp., and the city's EDC. He added that Diaz was instrumental in bringing New York's U.S. Senators, Chuck Schumer and Kirsten Gillibrand, into the negotiating fold. 

On Sunday, Crain's reported that the market cooperative is on the verge of signing a short-term lease to stay in the Bronx, at least temporarily, while they continue to negotiate a long-term lease, either in Hunts Point or New Jersey.

Milbank Buildings Sold to Scarsdale Landlord

Milbank's 10 Bronx buildings have over 4,000 housing violations among them. (File photo by J. Evelly)

 

Another chapter in the ongoing Milbank Bronx housing saga: the 10 crumbling apartment buildings were finally sold last week to a Scarsdale-based landlord after months of negotiations, according to Crain's New York.

Steve Finkelstein bought the mortgage and the deeds to the properties in a $28 million deal, the article reports, promising to start serious and immediate repairs at the violation-riddled buildings, and agreeing to report to HPD within 30 days about what work he's done.

Finkelstein, who owns 31 other buildings in the Bronx, told Crain's he expects to face an "amazing amount of work," but that he's sending eight-man crews into every building to start on repairs.

HPD Increasing its Role in the Milbank Buildings

Crain's has a new article about HPD's increased role in the 10 Milbank building portfolio out this afternoon.

While the headline, "City takes control of rehabs of 10 Bronx buildings" may exaggerate slightly, HPD is promising roof to cellar inspections and is sending out its Emergency Repair Program unit to make repairs. Equally important, they are sending a forceful message to potential buyers of the buildings that they are going to be intensely involved with the buildings for the foreseeable future.
 

To fill in a gap in the story, the building tours HPD went on earlier this week were organized by the Northwest Bronx Community and Clergy Coalition.

Finally, at least two out of three other Milbank buildings that are part of a separate financing package (originally with Dime of Williamsburgh) have gone into foreclosure. Dime had already sold the debt on the buildings to 1026-30 Woodycrest Debt LLC and 1535 Taylor Debt LLC, both with addresses listed under the law firm Kriss and Feuerstein LLP. There is no indication on ACRIS of whether the mortgages were sold at a discount.

Foreclosure actions were filed against 1030 Woodycrest Ave and 1535 Taylor Ave at the beginning of October for $1,519,229 and $1,921,345 respectively. A third building, 828 Courtlandt Ave, isn’t listed in our foreclosure listings yet, but it also had its debt sold to the same outfit.

In a bizarre move, the California Business Bank recently provided Milbank an additional nearly $2.5 million dollars of financing on these three properties on October 1st. One has to wonder if the bank knows what it is getting itself into.

Milbank Tenants Still Waiting for Repair $; HPD Plans to Take Action

Milbank's portfolio of Bronx properties have been in varying states of decline since foreclosure started in 2009.  (File photo by Jeanmarie Evelly)

It's been nearly a month since a Bronx Supreme Court Judge ordered LNR Property Corp., the servicer that oversees a now infamous, dilapidated portfolio of foreclosed Bronx buildings, to start paying for repairs on the apartments (for some background, see here, here and here.)

But while LNR's 30-day deadline for making the payment approaches this week, they haven't put any no money into repairs so far, according to advocates working on the case.

"In a lot of ways, we're waiting, which is uncomfortable," said Dina Levy of the Urban Homesteading Assistance Board (UHAB). LNR's lawyers are preparing to appeal the judge's payment order, she said. 

LNR was told they had 30 days to fork over $2.5 million toward renovations--much less than what experts say the actual repairs will cost, but still a milestone victory for the tenants and housing advocates who had been fighting for months to get something done.

Meanwhile, a proposed deal to transfer the mortgage on ten of the properties to a mystery buyer--which Crain's identified as Riverdale-based Chestnut Holdings--has yet to close.

Bronx Housing Roundup: the mess of foreclosures

It’s been another active week in the world of housing news, in the Bronx and nationally. The one common theme shouldn’t be too surprising: foreclosures.

Let’s start locally with a couple of stories that exemplify larger trends in Bronx multifamily housing.

Response to 'Who Will Save the Bronx?'

BxNN guest blogger Gregory Lobo-Jost posted this comment to our news roundup earlier today. It's in response to an article in Crain's, called "Who Will Save the Bronx?" I thought it was worth re-posting here.  -Jordan Moss
 
I had just finished reading the current issue of Crain's on my lunch break when I saw this link to Greg David's story. Here is the somewhat lengthy comment I posted in response:

First off, the data Crain's uses in their most recent issue for 2010 is based on a book from last year. I think it may be more prudent to wait for real data before jumping to some of your conclusions.

In terms of the lack of a rebound in population, one must look at the number of properties destroyed in the Bronx during the 1970s, and the earliest attempts to rebuild devastated neighborhoods. Perhaps if we bulldozed the Charlotte Street single family ranch style home developments of the 1980s and replaced them with five and six floor apartment buildings like were there before their destruction, we might get back to the same population. It's not as if there are many vacant lots waiting to be developed in the Bronx -- just ride the 4 train up Jerome Ave and see how many new developments there are. No other borough had even close to the same level of destruction, so the rebound should be applauded, not criticized.

Often I feel down about the Bronx ranking last in a number of categories such as income and low wage workers, but this is not surprising at all. Many of the neighborhoods in the other boroughs where low wage workers used to live have become too expensive for them. If it weren't for relatively low rents in the Bronx, NYC would already be something of a boutique/resort city (think Jackson Hole, Aspen or the Hamptons) where low wage workers have long commutes because they can't afford to live near their service economy jobs. Is it the fault of the Bronx that Manhattan and Brooklyn have become too expensive for low wage workers to live there? Of course not. Thank God for the Bronx, or more of these workers would be living in New Jersey!

As for the "Shops at the Armory" proposal, it would have added more jobs (though the net increase might have been lower than expected after stores on Kingsbridge and Fordham Road closed in competition) but wouldn't help improve on stats like median income, percent of households paying 50% of their income on rent, or percent of families living in poverty. The median income in Bronx hasn't moved between 1999 and 2008, meaning an inflation adjusted drop of more than 20%! There are smarter job investments to be made in a borough that desperately needs them.

In conclusion, there are a number of good stats to look at in relation the Bronx, but Crain's did not consider them in their report. For instance, we have become something of a Mecca for immigrants from West Africa, and our overall percent of foreign born residents is going up faster than any other borough -- also likely due to cheaper rents. We are the only non-border county in the nation with more than 50% Latino population, and are probably the second most diverse county in the City after Queens. We've also probably added more mosques per capita in the past decade -- and none of them have drawn a protest!

Crain's on Over-Leveraged Bronx Apartment Buildings

Last week's Crain's New York Business had a couple articles related to multifamily foreclosures. The best of these is by Daniel Massey, who covers the issue of over-leveraged Bronx apartment buildings falling into disrepair and eventually foreclosure in the article, Bronx is Burning Over Failed Deals.

He begins by focusing on Robert Fulton Terrace and Fordham Towers, where the owner, Mark Karasick, overpaid for the buildings at the height of the housing boom, immediately cut back dramatically on services and eventually still ended up in foreclosure.

"CIBC lent Mr. Karasick $36.5 million for the deal in 2007 and recently insisted the purchase price was “well justified,” even though a securities filing shows the mortgage approval was based on a monthly operating cost of ...less than half of what the former owners spent... Cuts in service—maintenance staff was slashed from nine to three—had immediately followed the sale."

Massey then discusses how this type of activity is part of larger trend in the Bronx and NYC. For instance, Los Angeles-based Milbank Properties has a portfolio of 10 Bronx buildings, also bought at the peak of the market in 2007, that have gone into foreclosure.

"On its Web site, Milbank says it thought the Bronx buildings were a good investment because of the borough's potential 'to undergo significant gentrification' and the prospect of an 'improved tenant base.'"

Massey cites research and reports by affordable housing nonprofits UHAB and ANHD regarding the scope of the problem. Additionally, he references a report by Deutsche Bank that the crisis may not peak until 2013 when "loans that were made during the boom in 2005, 2006 and 2007 mature and are unlikely to qualify for refinancing without substantial infusions of equity."

Based on our own ACRIS research here at University Neighborhood Housing Program, a large number of buildings that will run into problems with refinancing currently have mortgages with New York Community Bank. The same issue of Crain's has a separate article about NYCB and how it is led by New York's "most conservative banker," Joseph Ficalora. While the article, A Tank of a Bank Hits a Rough Patch, focuses on the internal financial health and stock value of the bank, much of this relates to how well NYCB's multifamily loan portfolio is performing (not as good as it's been in the past).

The article describes this type of lending as historically conservative and New York Community's "bread and butter." Yet many of these loans were made during the recent boom years of 2005-2007, and many of these loans have interest-only periods of 3 or 5 years at the outset of the mortgage. As these mortgages convert to a fully amortizing schedule (meaning the owners will have to pay principal and interest), NYCB's default rate may skyrocket if the owners can't refinance and we may see a spike in multifamily foreclosures in the Bronx.

For instance, Hudson Realty Capital's portfolio of Bronx buildings (which include Botanical Square) all have interest-only periods which end in July 2010. By the fall of next year we may know better about how "conservative" NYCB's lending has actually been by what happens at properties like these.

Mitchell-Lama Task Force to Meet Tomorrow at Fordham University

The Bronx Borough President's Office, Tenants and Neighbors, and the Mitchell-Lama Residents Coalition will host an educational session for Mitchell-Lama residents tomorrow (Saturday Septmber 29) at Fordham University. The event will be held in the McGinley Center from 10 a.m. to 1 p.m.

According to the Bill Egbert's article in the Daily News, "The talks will center on how to organize building residents, how to stop a buyout and how residents can make their voices heard in the legislative process now surrounding the Mitchell-Lama Housing crisis."

A similar event was held back in May.


UPDATE:

Crain's is reporting that the New York State Housing Financing Agency (HFA) will

"offer low-cost financing to owners of Mitchell Lama developments, in an effort to keep them in the affordable-housing program. HFA also said it plans to offer up to $15 million of zero-interest repair loans to Mitchell Lama developments in need of immediate improvement."

This move by Spitzer may keep some buildings in the program and improve conditions in others, both of which are good things.