Home and Business Fair tonight in Norwood will speak three languages

A number of nonprofit groups are coming together to host a resource fair for homeowners and small business owners this evening at the Mosholu Branch of the New York Public Library. In an effort to support the growing Bangladeshi population in Norwood, information will be provided in Bangla as well as English and Spanish.

Organized by University Neighborhood Housing Program, the resource fair will bring Queens-based Chhaya CDC and citywide groups such as the Legal Aid Society, the Parodneck Foundation and NYC Business Solutions together with local groups including the Northwest Bronx Community and Clergy Coalition's Weatherization Assistance Program and the West Bronx Housing and Neighborhood Resource Center.

Homeowners who attend the resource fair which runs from 5:30 to 7:30 pm, will be able to learn about foreclosure prevention options including loan modifications, find out about free legal assistance that may be available, and receive a free weatherization kit while learning how to cut energy costs. Additionally, attendees can find out about assistance with immigration and get help starting or expanding a small business, including getting certified as a minority or women owned business (MWBE). Resources will also be available for first time home buyers, as well as information on credit workshops and free tax preparation services.

The event will be held in the basement of the Mosholu branch of the New York Public Library (285 East 205 Street between Bainbridge and Perry Avenues). More information is available on UNHP's website, or by calling 718-933-2539.

UNHP Awarded Neighborhood Grant

Congratulations to the University Neighborhood Housing Program, which was just awarded a $40,000 Neighborhood Revitalization grant to expand its housing and homeowners assistance programs, foreclosure prevention databases, free tax-preparation services and financial literacy workshops. The money is part of $520,000 in grants given out by the the New York Community Trust; UNHP is the only Bronx group to receive one of the awards.

Check out their website for more information, and a number of housing-related resources.

Help for Homeowners in Council District 14

Last week’s Homeowner Resource Fair attracted more than 40 households to community space at 2270 Walton Avenue near East 183^rd Street.  Co-sponsored by University Neighborhood Housing Program (UNHP) and City Councilman Fernando Cabrera, the fair targeted neighborhoods that have not received much attention during the recent foreclosure crisis.

While apartment buildings dominate the landscape of City Council District 14, there are more than 2,000 one-to-four family homes spread throughout its neighborhoods.  These neighborhoods had some of the highest rates of subprime lending in the City during the last decade, and there have been about 170 foreclosure filings within the district since July of 2008 (about one in every 12.5 private homes).  

Despite the torrential downpour that plowed through the Bronx at around 5:30 that evening (and leveled trees in parts of Brooklyn and Queens), turnout and feedback were impressive for a homeowner event in the west Bronx. 

Attendees were able to speak directly with staff from the Department of Environmental Protection regarding water billing issues, while foreclosure prevention counselors from the West Bronx Housing and Neighborhood Resource Center and the Parodneck Foundation also met individually with homeowners.  Free weatherization kits and information were handed out by the Weatherization Assistance Program of the Northwest Bronx Community and Clergy Coalition.

Customer Representatives from DEP had their computers with them and were able to access and review the accounts of 26 homeowners that evening.  Attendees received assistance with usage clarification, payment plans, and metering and leakage problems.

Councilman Cabrera was on hand for the duration of the event and heard from homeowners on a number of issues. “Homeowners in the district face unique challenges such as high water bills and foreclosure issues; just to name a few,” stated the Councilman.  “When I get the chance to partner with organizations like University Neighborhood Housing Program that help remedy some of these issues, I welcome the opportunity.”

Homeowners that were unable to attend the fair but have issues regarding foreclosure, water billing, or are interested in weatherization are urged to call the UNHP outreach line at 718-933-2539 for assistance and referrals.

NBC News: Meet New York's Worst Buildings

NBC News interviewed me about University Neighborhood Housing Program's Building Indicator Project database, and took a look at a number of buildings, including 2710 Bainbridge Ave. You can read more about it here.

Bronx Homeowner Help

Bronx Homeowners have at least two opportunities to get some help if they are struggling with mortgage payments, need to straighten out water billing issues, or are looking for help with improvements and weatherization.

Tomorrow (Thursday) evening at Fordham University, a panel of experts will be on hand to offer legal advice to homeowners with their mortgages as part of Bronx Week. One-on-one counseling will also be available to help homeowners. It's a great resource for homeowners who are in foreclosure or are in danger of falling behind on payments and need help dealing with their lender regarding loan modifications or reductions in principal. The fair is on the 2nd floor of the McGinley Center and runs from 6:30 to 9:00 PM. For more information, call 718-590-8088.

Next week Tuesday, May 18, will be another homeowner fair, featuring DEP staff who will be on hand to help straighten out water billing issues with Bronx homeowners. This event will take place at Concourse House, 2751 Grand Concourse from 5:30 to 7:30. Homeowner counselors and weatherization staff will also be on hand, and homeowners will receive a free weatherization kit. For more information, contact UNHP at 718-933-2539.

Speaking of water bills, City Limits has an article out on what happens to delinquent homeowners who end up in the lien sale process. While the City Council is looking to exempt more seniors from the lien sale process (the 2010 lien sale just went through this week), DEP Commissioner Holloway wants to change the enforcement mechanism for delinquent single family homeowners from shutoff of service (which costs about $3,000) to adding them to the lien sale list.

Bronx News Roundup, May 3

First news roundup of May. Some good, some bad.

The Building Indicator Project database -- created and compiled by our friends at the University Neighborhood Housing Program (UNHP) -- is being hailed by city officials and advocates as a huge step in helping housing agencies identify problem buildings. According to the database, the number of financially and/or physically distressed buildings is up 19% from last year. Subscriptions to the database should be available in June.

A nice story by the Daily News' Wayne Coffey about a 25-year-old Lehman College baseball player, named Alberto Alicea, who has endured through a rough upbringing and the battlefields in Iraq to find peace on the ball field.

The Bronx's Bangladeshi community is banding together to combat what they say is becoming a wave of hate crimes against them.

The contest to name the Bronx Zoo's new lion cubs is turning a "battle of the boroughs." 

A Mott Haven father who was shot in twice in the chest, allegedly by his wife's former lover, is going to live. 

In six city school districts with minority populations, including one in the south Bronx, not enough local kids are qualifying for the gifted and talented programs. Advocates say this highlights the city's achievement gap.

The state appeals court threw out a $10 million verdict against the city. The lawsuit was awarded to a Bronx woman was was shot in the face by her ex-boyfriend in 1996 after police told her she would be safe.

Usurious Tax-Time Loans Drained $22.5 Million from the Bronx in Just One Year

Tax refund anticipation loans (RALs) siphoned $54.7 million from the pockets of low income New Yorkers in just one year, according to a report issued last week by the Neighborhood Economic Development Advocacy Project (NEDAP), a New York City-based financial justice group (disclosure: I sit on the organization's board). More than 40% of this amount came from the pockets of Bronx residents, at an estimated cost of nearly $22.5 million.

Based on its analysis of recently-released IRS data for tax filing year 2007, NEDAP found that RALs were overwhelmingly concentrated in New York City's low- and moderate-income neighborhoods of color, especially in the West Bronx. RALs drained millions of dollars from neighborhoods throughout the Bronx, Upper Manhattan, and Central and Northeast Brooklyn.

While the number of RALs made citywide dropped between 2006 and 2007, both the number of RALs and money spent on RALs went up in the Bronx; our borough’s share of NYC dollars spent on RALs jumped from 33% to 41%.

The four top zip codes for money lost to RALs were all in the Bronx, including 10453 which was first in the City at $1.74 million. 10456, 10452 and 10457 rounded out spots two through four.  Also in the top ten citywide were zip codes 10458, 10468 and 10467, each of which saw more than $1 million going towards RALs in 2007.

RALs are high-cost loans, secured by taxpayers’ projected tax refunds and Earned Income Tax Credits (EITC). Aggressively marketed to lower income taxpayers as a way to obtain fast cash, RALs carry interest rates from 50% to 500%, according to the National Consumer Law Center and Consumer Federation of America.

Housing Expert and BxNN Blogger Greg Jost on BronxTalk Tonight

Gregory Lobo-Jost, a frequent contributor to this site who is deputy director of University Neighborhood Housing Program, will be interviewed tonight at 9. a.m. on BronxTalk (Cablevision channel 67) with Gary Axelbank.
They're sure to discuss critical Bronx housing issues such as foreclosures and the looming crisis with over-leveraged buildings purchased at unsustainable inflated prices with private equity.
I should also note that Greg and the folks at UNHP deserve a lot more credit and attention for the important work they're doing and have done since the 80s. Jim Buckley, the groups's executive director, was an organizer with the NWBCCC in the 1970s, and has been working for better housing in the Bronx ever since.
No other organization keeps such a close eye on the health of the borough's housing stock, and raises alarm bells when necessary.
These folks do the tough research and know what they're talking about. More of us should listen and make certain elected officials, bankers and other decision makers do the same. And citywide reporters should check in with them more often, rather than just the usual Manhattan suspects.
Watch Greg tonight if you can. The show will re-air at the same time all week long. We'll post the show on the blog when it's up on-line.
Oh, here's a recent op-ed by Greg in Norwood News on vacancy decontrol.

More on Foreclosures

Freelance reporter Eileen Markey has an informative piece on the Ocelot buildings in foreclosure for City Limits. The combination of large amount of debt and need for major repairs in the properties makes the situation difficult to resolve without Fannie Mae writing down the debt.

The Daily News also covers the story here.

UNHP has mapped out the Ocelot properties, all of which are either in some stage of foreclosure or bankruptcy proceedings.

With regards to the larger foreclosure crisis affecting private homes nationwide, former City Limits editor Alyssa Katz has a new book out, entitled Our Lot: How Real Estate Came to Own Us. The weekly edition of City Limits sits down for a Q&A with her about the book.

Finally, two scam artists who ripped off homeowners in foreclosure in the Bronx and Brooklyn were sentenced to five years in federal prison. Homeowners, remember that any and all foreclosure assistance is free, and anything else is a scam!

On the Housing Front

Here are a few Bronx-related housing stories for the beginning of summer:

The main topic for 2009 that will likely continue on for the foreseeable future is the issue of foreclosures in apartment buildings, especially those owned by private equity investors who gambled on increasing rents dramatically.

In the Gotham Gazette, Bronx-based freelance reporter Eileen Markey documents the Foreclosure Threat that Looms Over Thousands of City Apartments, including many in the Bronx.

Included in her piece is the worst-case scenario being played out a number of Bronx buildings owned by private equity investor Ocelot Properties, where the owners have walked away, the buildings are in complete disarray and a number of them have gone vacant.

Earlier this month, City Limits reported on the situation in these buildings and the efforts by the City and housing advocates to get the lender, Fannie Mae, to "take a more active role in ensuring upkeep of the properties."

University Neighborhood Housing Program has warned about these types of scenarios for years at our affordable housing forums. Two years ago at our forum on Shrinking Affordability, panelist Frank Anelante of Lemle & Wolff warned about the condition of much of the City's housing stock and that we would be seeing more and more buildings falling down, such as what happened in Brooklyn yesterday.

(The report from this year's forum on Envisioning the Future of the Red Zone contains an extensive collection of maps and charts focusing on the west Bronx including new housing, demographic, economic and real estate data.)

Finally, NY1 has a segment on how the City's housing department (HPD) is buying foreclosed homes to rehab and sell them at below-market prices.

Envisioning the Future of the Red Zone

University Neighborhood Housing Program's

2009 Affordable Housing Forum

Tuesday, June 9, 2009

8:30 - 11:00 a.m.

Fordham University’s Rose Hill Campus, The Bronx

Faculty Lounge, McGinley Center

The same west Bronx neighborhoods that were at the epicenter of community organizing, community development and preservation activities during the past thirty years now provide much of the City’s affordable housing in the form of privately owned, rent stabilized properties with relatively low rents. While maintaining affordable neighborhoods in New York City is good news, there is a convergence of other statistical indicators for the same geographic area that demonstrates signs of distress. The frequency with which our neighborhoods here in the west Bronx color red on maps indicating various forms of housing, social and economic distress gave us the idea of this forum, Envisioning the Future of the Red Zone, where we will address this convergence of negative indicators and offer a framework for discussing what it means for these neighborhoods going forward.

Following a presentation of neighborhood and borough level data and maps (including brand new neighborhood data from the 2008 Housing and Vacancy Survey), University Neighborhood Housing Program will host an interactive panel and audience discussion that will focus on the ways that the institutions, lenders, public agencies and community groups that are responsible for the successful community development efforts of the past three decades can work together to envision a future that builds upon that success for the Red Zone.

Panel:
• Roger Hayes, UNHP Board (Moderator)
• Raquel Batista, Northern Manhattan Coalition for Immigrant Rights
• Nancy Biberman, WHEDCo
• Peter Mosbacher, Amalgamated Bank
• Xavier Rodriguez, Bronx Community Board 5 District Manager

Please respond to UNHP by June 8. The forum is free, but space is limited. You can fax this form to us at (718) 933-3624, email your response to mail [at] unhp.org, or call us at (718) 933-3101.

Bronxites make a stink about water rates but wonder if the Water Board is really listening

Reporting and Opinion by Gregory Lobo Jost

Two members of Mayor Bloomberg's Water Board sat mostly silent in the auditorium of the Bronx Library Center on Kingsbridge Road yesterday afternoon. Their executive director (and acting DEP Commissioner) had left before even the first testimony was heard to attend to something that must have been very important upstate. (One wonders if they planned the hearing in the Bronx for that time so Mr. Lawitts could be a bit closer to his meeting 100 miles north of the City). The impending 14% water rate increase kept those in attendance agitated and the two board members mostly silent, save the new board chair Alan Moss's (in photo at center) recollections of growing up on Pelham Parkway to open up the hearing. Most of the talking by anyone on stage was done by the hearing officer (in photo at left).

Meanwhile, the same two City Council members from the Bronx once again attended the hearing. Councilman Koppell focused his testimony on how DEP could shrink the size of the hike by assuming a better collection rate, given the powers bestowed upon the agency by the City Council to sell water liens on multifamily properties and turn off service for delinquent single family homeowners. Councilmembers, of course, feel duped into giving DEP such powers since it is hasn't resulted in lower rate hikes like they were told. And since we are in a deep recession with the City's jobless rate spiking and foreclosures continuing to stay at or near all-time highs, collections will likely not improve; with each new double-digit water rate hike and the worsening of the City's economy comes the realization that many are unable to pay any of their bills, or must at least make the difficult decision between paying the mortgage, property taxes, heating oil, Con Edison, or water bill -- which would you choose? (UNHP's analysis last year showed 15-20% of homeowners at least one year delinquent on their water bills were already in foreclosure.)

Councilman Vacca made his points about how ironically conservation of water leads to higher water rates, and how the rates are really a hidden regressive tax that subsidize the City coffers. He focused on how DEP's budget continues to grow, while every other City agency must make drastic cuts. He implied that the Mayor may even encourage DEP spending increases because the more the agency pays in debt service on capital projects, the more money goes into the City's budget in the form of a rental payment.

Testimony was also heard from environmental groups who (rightfully) continue to harp on the poor decision making regarding the filtration plant, and from a private affordable housing owner and manager who warned of the toll these repeated increases will have on low income renters in the form of reduced services.

Three members of University Neighborhood Housing Program (including myself) testified as well. Included in my testimony was the suggestion for the Water Board to get a proportional cut of alternate side parking ticket revenue since, according to the Independent Budget Office, water rates subsidized street cleaning to the tune of $30 million last year. While somewhat in jest, I used this point to illustrate how the Mayor avoids raising taxes by bilking water rate payers to pay for City services.

UNHP's outreach coordinator, Jumelia Abrahamson, pointed out to the two present members of the Water Board that "the only thing that has gone up faster than the water rate over the past few years is the foreclosure rate." When this rate increase goes into effect, water rates will have gone up 60% in just four years, and will have more than doubled since 2001. To make matters worse, Councilmember Vacca pointed out that DEP is projecting double digit rate hikes for the next few years as well.

While legitimate suggestions were made on how to shrink the size of this year's increase, it is unlikely the Water Board will take any immediate action. Members who took the Mayor to task on the increase last year are no longer on the board.

Meanwhile, the results of the rate study commissioned last year are yet to arrive, meaning the Water Board does not have any recommendations about improving the structuring of the rate system that it will likely take seriously. If that's really the case, then the most useful suggestion of the afternoon may have come from Community Board 7 District Manager Fernando Tirado, who in the last testimony of the afternoon urged those in the audience to remember this rate increase when it comes time to vote in the fall.

The Daily News also covered the hearing.

Help for Bronx Homeowners this Thursday

Bronx Homeowners struggling to stay in their homes or just fighting to keep the costs of ownership down will find some much needed help this Thursday at the Northwest Bronx Homeowner Resource Fair.

With foreclosures at an all time high, property values dropping, unemployment in the double digits, and another double-digit water rate increase on its way, the resource fair will focus on lowering ownership costs through weatherization and energy-efficiency programs, in addition to foreclosure prevention counseling and legal services.

Registration and free dinner begin at 6:00 PM this Thursday at the Our Lady of Refuge Parish Center, 290 East 196th Street between Bainbridge and Briggs Avenues. All homeowners in attendance will will benefit from energy savings tips, a free weatherization kit, and a free rat-proof garbage can.

Homeowners facing financial hardship can learn about foreclosure prevention options, get help modifying their mortgage and receive free legal assistance. Representatives will be on hand from local organizations to explain services offered year-round.

This Homeowner Resource Fair is sponsored by University Neighborhood Housing Program, the Northwest Bronx Community and Clergy Coalition, the West Bronx Housing and Neighborhood Resource Center and Fordham Bedford Housing Corporation. Other participating groups include the Association for Energy Affordability (providing the garbage cans), New York Legal Assistance Group, the Parodneck Foundation, and NYSERDA’s Energy $mart Communities program.

For more information or to RSVP, contact UNHP at 718-933-2539.

Free Tax Preparation Services Offered for Bronx Residents

Neighborhood and citywide nonprofits and financial institutions are joining forces to provide free tax preparation services to Bronx residents, hoping to keep more money in our neighborhoods. Every year, Bronx neighborhoods lose millions of dollars in tax preparation fees and refund anticipation loan interest – much of this coming out of the federal Earned Income Tax Credit. Through this initiative, Bronxites making less than $72,000 will be able to file their federal and state returns without any fees.

In 2006, about one-third of all applications for Refund Anticipation Loans in New York City (more than 71,000 filers) were made by Bronx residents. The total fees paid by these filers for tax preparation, the loans themselves and any other miscellaneous fees totaled approximately $19.5 million dollars, based on calculations made by the Neighborhood Economic Development Advocacy Project using the Consumer Federation of America’s estimate of $273 for an average filer. More than 80% of these Refund Anticipation Loan applications were made by low income Bronxites, who paid more than $16 million for these services. Two-thirds of applications came from households who received the Earned Income Tax Credit, one of the largest federal anti-poverty programs.

Even at the neighborhood level, the amount of money paid for tax preparation and Refund Anticipation Loans exceeds $1 million in many northwest Bronx zip codes. For instance, more than 5,600 filers in 10453 spent more than $1.5 million on tax preparation and Refund Anticipation Loans.

By providing free tax preparation services in these same neighborhoods, much needed money will stay in the pockets of Bronxites. Services began this Saturday, January 24th at the Heiskell Enterprise Technology Center in Refuge House, 2715 Bainbridge Avenue, and run through March 28th. Services will also be offered at Mosholu Preservation Corporation, 3400 Reservoir Oval East, and Ridgewood Savings Bank, 3445 Jerome Avenue, and are by appointment only. Contact University Neighborhood Housing Program at 718-933-2539 for more information or to schedule an appointment.

Sponsored by:
• University Neighborhood Housing Program
• Fordham Bedford Children’s Services
• Fordham Bedford Housing Corporation
• Mosholu Preservation Corporation
• West Bronx Housing & Neighborhood Resource Center
• Food Bank for New York City
• ARIVA
• Ridgewood Savings Bank
• JPMorgan Chase Bank
• Signature Bank
• TD Bank

Our Water Comes From "Somewhere" Upstate – But how do we pay for it?

The Women's City Club of New Y0rk is sponsoring an upcoming forum on NYC's water system and how it's paid for. Here are the details:

Why do Harlem and the South Bronx pay more for water and sewer usage than the Upper East Side of Manhattan or Northeast Queens? Why does a building in which the median household income is $25,000 pay a higher water and sewer tax than a building in which the median income is $55,000? Why do residential buildings pay more in water and sewer costs than commercial, industrial or government buildings? Why is the water rate being increased 14% this year and every subsequent year? Why do water rates include lease payments to the City that are hundreds of millions of dollars more than the cost of the water system’s infrastructure provided by the City?

If your head is spinning right now, so was ours - until we started learning more about the way the NYC water and sewer system is run and how rates are set. The more we heard, the more we realized that this complicated and discriminatory system needs to be better understood and reformed. Of primary concern is how this system negatively impacts the City's stock of affordable housing, and why incentives are needed to encourage conservation.

To broaden the public's understanding of these matters, we have gathered a group of experts who have examined the issues, will outline the problems in easy to understand terms, and recommend reforms.

OUR WATER COMES FROM "SOMEWHERE" UPSTATE –
BUT HOW DO WE PAY FOR IT?

Date: THURSDAY, JANUARY 29th, 2009
Time: 12:30 pm - Program; Noon - Registration
Venue: League of American Orchestras, 5th floor conference room, 33 West 60th Street (between Broadway & Columbus Avenue)
Registration: No charge members of WCC and Housing First! No charge students; $15.00 non-members.
Advance registration requested: contact Raolat Abiola, WCC 212.353.8070 x. 204.

Panelists:

• Jim Buckley, Executive Director, University Neighborhood Housing Program
• Lisa Deller, NY Regional Director of the National Equity Fund, an affiliate of the Local Initiatives Support Corporation
• John McCarthy, Exec. VP, Chief Operating Officer, Community Preservation Corporation
  Harold Shultz, Senior Fellow, Citizens Housing and Planning Council
• Representative from the NYC Water Board (invited)
• Moderator: Ann R. Loeb, Co-Chair, WCC Housing & Planning Committee

Co-Sponsor: HOUSING FIRST!

The Women’s City Club of New York (WCCNY) is a nonpartisan, nonprofit civic organization that shapes public policy through education, advocacy and citizen participation.

For more background on the issue, check out UNHP's website or read more on the West Bronx Blog.

Housing Articles from the NY Times

On Saturday Jim Dwyer of the Times had a piece on the overfinancing of apartment buildings in the Bronx and how community groups never pushed for this scenario. UNHP's Jim Buckley is quoted extensively defending the role of the Community Reinvestment Act (CRA), a 1977 law that aimed to end redlining but has now come under attack from the Right for fueling the current housing implosion.

Charles Bagli follows this up with an article today on the financial trouble many private equity landlords are experiencing as they realize they can't drive rents up quite as fast as they had planned. While most of the properties featured in the article are located in upper Manhattan, there are a lot of private equity buildings in west Bronx.

Is the Bronx Real Estate Bubble Finally About to Burst?

Opinion by Gregory Lobo Jost
The morning after the 2000 election, when many of us were learning about the fascinations of the electoral college and wondering who would be our next president, University Neighborhood Housing Program convened a forum at Fordham University's Lincoln Center campus on the early signs of a housing bubble in the Bronx. While no one knew just when such a bubble might burst, we were able to document a growing disparity between sales prices and the profitability of apartment buildings or, in other words, the emergence of a speculative bubble. With the help of the Citizens Housing and Planning Council, we refined the research and in 2003 released a report, A Real Estate Bubble in the Bronx? that showed it was impossible to prove we weren't experiencing a speculative bubble.

Fast-forward to 2007 and the release of another UNHP report on the topic, Shrinking Affordability, documented how the disparity between profitability and sales prices was continuing to increase to previously unimaginable levels, fueled primarily by private equity investor groups. In the west Bronx, private equity groups such as SG2, Pinnacle, Prana, Ocelot and Normandy have purchased large numbers of rent stabilized buildings, often paying significantly more per unit than other owners. In 2007, for instance, Private Equity groups paid on average about $83,300 per unit while the rest of the purchasers paid an average of about $76,000 per unit. Adjusted for inflation, the overall average sales price had more than doubled since 2001. Yet the buildings themselves are only about as profitable as they were back in 1990, as the operating expenses have climbed at least as fast as rents (according to Income and Expense Studies from the Rent Guidelines Board).

Our main concern on this issue has been the potential for owners to cut back on services to buildings in order to handle their huge debt service (mortgage) payments and rising operating costs (e.g., fuel, water, insurance). The worst case scenario involves a building going into foreclosure -- a losing situation all around not just for the owner, investor and lender, but more importantly for the building, the tenants and the neighborhood. As we saw in the late 1980s with the rash of multifamily foreclosures in Bronx buildings overfinanced by Freddie Mac, these properties often fell into serious disrepair and communities as a whole suffered.

Is history about to repeat itself? A story in the New York Times earlier this week discusses how the owners of the Riverton, a large middle income and mostly rent stabilized housing complex in Harlem, are warning their lenders that "they are in imminent danger of defaulting on their mortgage." While a number of small Bronx apartment buildings (6 - 15 units) have already gone into foreclosure in recent years, the Riverton may signal a wave of larger defaults stemming from faulty logic made by private equity investor groups in the West Bronx and Upper Manhattan, as a follow-up article in today's Times discusses:

Until a few years ago, places like Upper Manhattan and the Bronx held little allure for investors in residential property. But as the New York real estate market heated up, major real estate companies began competing vigorously for rent-regulated buildings in these neighborhoods in the belief that they could manage them more professionally and, hence, more profitably.

The recent disclosure that the owners of Riverton Houses, a 1,228-unit apartment complex in Harlem, might default on their loan has shocked the real estate industry. And it has raised fears about other apartment building deals from the not-so-distant past, when the frenzy in the market was reaching its peak.

The strategy in these types of investments has been to achieve high levels of turnover in apartments (i.e., force/encourage as many tenants to move out as possible, especially the ones with lower rents) in order to take advantage of rent stabilization laws that allow for a 20% increase in an apartment's rent upon vacancy. Coupled with increases from Major Capital Improvements and the allotted annual increase approved by the Rent Guidelines Board, getting a tenant to move out of an apartment could easily translate into a 25 - 35% jump in the allowable rent for the next tenant. In a gentrifying neighborhood (e.g., northern Manhattan), creating high levels of turnover could dramatically increase a building's income, thereby justifying the high price paid for the property.

With the example of the Riverton leading the way, we are able to see how this strategy might not pan out the way the Private Equity groups are hoping for. First and foremost, tenants are being organized and educated about how to keep their apartments and avoid being forced out. As long-time owner/manager of Bronx and Upper Manhattan buildings Frank Anelante points out in the same Times article today, turnover in his units is closer to 2%. By way of contrast, private equity groups have documented in their filings with the S.E.C. plans to reach turnover rates as high as 30% of the apartments in the first year and 10% percent annually in the following years. With the example of the Riverton, we are beginning to see what may happen to more owners when they can't meet this outlandish target.

And if private equity groups are having a hard time in gentrifying upper Manhattan, their troubles may end up being even worse here in the west Bronx where tenants already typically pay half of their income on rent. For the sake of our neighborhoods, let's all hope for a soft landing.

Northwest Bronx Banking Fair this Thursday

Northwest Bronx residents will have an excellent opportunity to comparison shop for a bank account this Thursday evening. At least a dozen local financial institutions will set up shop on E 196th Street, offering low-cost bank account options to attendees.

Here in the Bronx and other neighborhoods across the country that have suffered from redlining in the past, the percent of residents with a bank account lags well behind over-banked areas like lower Manhattan. Fringe financial institutions such as check cashers, pawn shops, and rent-to-own establishments have taken the place of bank branches in many Bronx neighborhoods.

Fortunately there are many more bank branches in the Northwest Bronx than there were 10 or 15 years ago (although they do cluster around each other on major commercial strips). While they are all supposed to have a low-cost checking account option available, it isn't always easy to get into one of these accounts by just walking into a branch. Many customers end up in high-fee checking accounts that don't even compare favorably with a check casher. In neighborhoods where households typically spend half their income on rent, paying extra for financial services is not an option.

For folks that are interested in starting a bank account (or getting into a lower-cost account), the Northwest Bronx Banking Fair will offer a unique opportunity to learn about how to shop for an account and then speak with representatives from a dozen local financial institutions, many of which will be offering special incentives for opening an account on the spot.

Here are the details:

The Northwest Bronx Banking Fair

Thursday, July 31 2008

Dinner at 6:00PM / Program Begins at 6:30PM
Our Lady of Refuge Parish Center

290 E 196th Street (between Bainbridge & Briggs)
Dinner, A/C and childcare will be provided
Se habla español

Sponsored by

• University Neighborhood Housing Program

Co-Sponsored by

• Fordham Bedford Children’s Services
• Fordham Bedford Housing Corporation
• Mosholu Preservation Corporation
• National Student Partnerships
• Northwest Bronx Community and Clergy Coalition
• POTS Soup Kitchen
• Rose Hill Management
• Tolentine Zeiser Community Life Center
• West Bronx Housing and Neighborhood Resource Center

Invited and confirmed* Banks Credit Unions:

• Bethex Federal Credit Union*
• Apple Bank for Savings*
• Amalgamated Bank*
• Banco Popular
• Bank of America*
• Capital One Bank*
• Chase*
• Citibank*
• Commerce Bank*
• Emigrant Savings Bank*
• HSBC Bank*
• Ridgewood Savings Bank*
• Washington Mutual Bank*

RSVP to University Neighborhood Housing Program at (718) 933-2539 by July 30.

More on SG2 and Private Equity

Opinion by blogger Gregory Lobo Jost:
In addition to Private Equity landlord SG2's buying and selling, the Daily News Bronx Section reports on the continued lack of cooking gas at 1530 Sheridan Ave. Tenants have been making due with electric two-burner counter-top stoves since the end of December, with many tenants reporting problems.

This potential sale of two dozen properties represents more than a third of SG2's portfolio; according to our own research, the firm owns about 70 buildings with 4,700 apartments in the Bronx. Overall in 2007, private equity groups paid a significantly higher price per unit ($83,300) for their Bronx apartment buildings than other buyers ($76,000), expecting higher returns through "maximizing income potential" (read, raising rents through various means).

It's curious that SG2 is trying to flip some of their buildings so quickly. It may be that they are trying to cash out while there are still buyers willing to pay extremely high prices despite soaring operating costs (fuel and water being prime examples). It could be that they are realizing that the "upside potential" in these properties isn't meeting expectations, as tenants are already paying half of their income on rent and the gentry fails to arrive in the Bronx.

Unfortunately, the extremely high sales prices being paid for west Bronx rent stabilized properties means many tenants will be forced out to cheaper parts of the City. (Oh wait - there aren't any parts of the city that are cheaper!) Of course, the possibility exists that tenants able and willing to pay the higher rents won't materialize in our neighborhoods, but that isn't good news either: buildings may likely fall into disrepair and may even end up in foreclosure. (Read more on this here and here.)

Meanwhile, I just found out last week that my building is also for sale for more than $120,000 per unit! Hopefully no one, especially a private equity firm, will buy it.

A Few Quick Links on Water Rates

Just a few quick updates on the water front:

The Water Board is proposing a 14.5% rate hike for this July 1. The best news summary of the situation is by Jarrett Murphy on City Limits. A longer report on water rate reform can be found on UNHP's website.

Also, here is an op-ed in the Post from Friday by Comptroller Thompson regarding the controversial rental payment.