Monday, August 6, 2012

Development group announces request for proposals for healthy food business in renovated Bronx slums (NY Daily News)




Bronx


"Kelly Street Green" project would offer grants, free apartment, access to local produce


BY / NEW YORK DAILY NEWS


FRIDAY, AUGUST 3, 2012, 6:00 AM


Kelly Street Restoration is developing  five troubled apartment buildings on Kelly St.  in Longwood.

VIOREL FLORESCU FOR NEWS/STR


Kelly Street Restoration is developing five troubled apartment buildings on Kelly St. in Longwood.






Wanted in the Bronx: entrepreneur to convert notorious slum into fresh food enterprise.

The development group behind the renovation of five buildings on Kelly St. is looking for an individual or organization to open a new business there, such as a healthy takeout restaurant, it announced Thursday.

Kelly Street Restoration has released an unusual request for proposals for 2,822 square feet of revamped commercial space at 935 Kelly St., with frontage on bustling E. 163rd St. in Longwood.

The applicant the development group selects will lease the space at a substantial discount - $7 per square foot or roughly 1/4 of market rate - and benefit from up to $150,000 in grants and loans to cover startup expenses.

It will also gain access to fruits and vegetables grown at a new community garden behind the buildings and farms upstate. Lastly, the selected operator will score a rent-free apartment at 935 Kelly St, plus mentorship from successful Manhattan restaurateurs.

Kelly Street Restoration hopes to select a local go-getter with a small bank account and a big heart, said John Crotty of Workforce Housing Advisors, 1/3 of the development group.

Longwood needs a new type of business that caters to busy working people who want to eat healthy, he said. The project is called "Kelly Street Green."

"We want to take someone on a well thought-out gamble, someone who understands that this will require effort and commitment and someone who can be an agent for change," Crotty said.

That someone could be Darada David. For two years, the Bronx native ran a tiny restaurant, health food store and Internet café sandwiched between bodegas and fast food joints on Melrose Ave. near the Hub.

PeaceLove Café hosted live jazz and poetry slams, and served tasty sweet potato pie. But the cafe closed last August because David could no longer make rent.

"That type of business in the Bronx needs a lot of support," said David, who will think about applying for the Kelly St. space. "Sometimes a feel-good business makes less money, but it does a lot for the community."

Kelly Street Green is the cherry atop a $16 million residential overhaul that began in January.

Workforce Housing Advisors, Monadnock Construction and Banana Kelly Community Improvement Association, a nonprofit, are rebuilding 916, 920, 924, 928 and 935 Kelly St., some of the worst slums in the borough.

For years, tenants in the gritty walkups lived with broken windows, leaks, rats and roaches, and went without heat. The tenants are living elsewhere during the renovations but will keep their old rents when they move back.

The new business will replace a Chinese takeout restaurant, nail salon and discount store that all closed this past winter. To learn more, visit kellystgreen.com.






Read more: http://www.nydailynews.com/new-york/bronx/development-group-announces-request-proposals-healthy-food-business-renovated-bronx-slums-article-1.1127767#ixzz22m0kTe2o

Tuesday, June 12, 2012

World's Greatest Bank Finances Project for One of NYC's Leading Affordable Housing Providers


Morgan Stanley Provides Financing to Kick-Start Preservation of Distressed Residential Buildings in the Bronx. Financing Will Help Four of New York City’s Most Distressed Multi-family Residential Properties to Undergo Eventual Rehabilitation.        


Morgan Stanley (NYSE: MS) has provided multi-million dollar interim financing to Workforce Housing Advisors, Inc. (WFHA) to make possible the rehabilitation of four multi-family buildings with 120 units in the Bronx.

The four buildings, located at 2239, 2241, 2323 and 2333 Creston Avenue, have deteriorated significantly in recent years, amassing building code violations, as well as municipal liens and fines.

The buildings, which are occupied, have been placed in the New York City Department of Housing Preservation and Development’s (HPD) Alternative Enforcement Program, which annually targets the 200 most distressed multi-family residential properties in the City for intervention.  WFHA, in partnership with the NYC Partnership Housing Development Fund Company Inc., a not-for-profit housing development fund company, has taken ownership of the buildings.

The interim financing provided by Morgan Stanley allows WFHA to pay down the municipal arrears and move forward with preparations to renovate the buildings.  HPD expects to provide a low-interest loan through its Preservation Participation Loan Program, in conjunction with more conventional financing and Low Income Housing Tax Credits, to fund the rehabilitation of the properties and preserve them as affordable for current and future tenants.  In the last two years, this type of public-private financing in partnership with HPD has stabilized 1,500 units in comparably distressed and overleveraged properties, effectively preserving the housing as affordable over the long term.

“We appreciate Morgan Stanley's leadership in stepping up to partner with us on this project,” said John A. Crotty, founding partner of Workforce Housing Advisors.  “Their support will allow us to take the critical first step of a long-term process to transform four buildings in the Bronx in significant need of rehabilitation and make a substantial difference in the lives of the working families who reside there.”

Said Audrey Choi, Head of Global Sustainable Finance at Morgan Stanley: “We are committed to supporting affordable housing in our communities.  We see this as a unique opportunity to improve the living conditions of families and individuals in need of sound, affordable housing in the Bronx.”

Part of the financing provided by Morgan Stanley allows for payment to the City of three-quarters of a million dollars to clear liens due to unpaid taxes, municipal charges and emergency repair expenditures.  Without the new financing, the high holding costs would have continued to burden the properties, further delaying the shift to rehabilitation.

“It takes many steps and many partners to rescue and restore distressed affordable housing,” said HPD Commissioner Mathew M. Wambua.  “The buildings on Creston Avenue have miles to go before their tenants will be able to feel comfortable and secure.  But we are on the right path – and welcome Morgan Stanley as a new partner in our ongoing efforts to preserve the City’s existing multi-family housing stock.  The financing they have provided has kick-started the turnaround process, and that is a commitment for which we are gratified.  More importantly, by making this commitment, they agree as we do, that financing housing in our City is a very sound investment in our collective future.”

In the last two years, HPD financing has stabilized 1,500 units in distressed and overleveraged properties, including two other transactions with Workforce Housing Advisors, with 174 more distressed units slated to begin construction by the start of the summer.

About Morgan Stanley
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services.  The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,300 offices in 43 countries.  Since 2006, Morgan Stanley has executed more than $5 billion in loans and investments to strengthen underserved communities.  For further information about Morgan Stanley, please visit www.morganstanley.com.


About the NYC Department of Housing Preservation and Development (HPD)
HPD is the nation’s largest municipal housing preservation and development agency.  Its mission is to promote quality housing and viable neighborhoods for New Yorkers through education, outreach, loan and development programs and enforcement of housing quality standards.  It is responsible for implementing Mayor Bloomberg’s New Housing Marketplace Plan to finance the construction or preservation of 165,000 units of affordable housing by 2014.  Since the plan’s inception, more than $19.4 billion has been invested or leveraged by the City to finance the creation or preservation of more than 130,606 affordable homes.  For more information, visit www.nyc.gov/hpd.


About Workforce Housing Advisors
Workforce Housing Advisors operates in the multi-family real estate market in the New York metropolitan area by repositioning distressed assets as affordable housing resources.  It works collaboratively with for-profit, not-for-profit and government partners to execute redevelopment plans for properties that had previously been subject to financial and physical distress.


Contact: Media Relations, Sandra Hernandez, 212.761.2446

Friday, June 1, 2012

The Story of Hip Hop as told by Grandmaster Caz


A first hand account about the history of the building, the history and other little tidbits.

By Nathan Rabin June 21, 2012

Even if he were still alive, Frank Sinatra would probably never give you a personal tour of the Capitol Records building unless you were an unusually foxy dame. Similarly, you can ask politely, but Berry Gordy is not going to show you around Motown, either. But thanks to the good folks over at Hush Hip Hop Tours, you can get old-school legends like Grandmaster Caz (a.k.a. Casanova Fly), solo hitmaker Kurtis Blow (“The Breaks”), and godfather of hip-hop DJ Kool Herc to show you spots around the Bronx where hip-hop was born and bred in the mid-’70s. 
In 2007, the New York State Office Of Parks, Recreation & Historic Preservation recognized 1520 Sedgwick Ave., a 102-unit apartment building, as the “birthplace of hip-hop” and the site of DJ Kool Herc’s first bona-fide hip-hop party on August 11, 1973. So when Pop Pilgrims decided to visit, it joined forces with Hush Hip Hop Tours and, more specifically, with 52-year-old tour guide and hip-hop giant Grandmaster Caz of the Cold Crush Brothers, a charismatic walking encyclopedia of early hip-hop. 
The owners of the building recently had some bad experiences with film crews shooting without permission, so as a peace offering, we brought along enough food and beverages for a 40-person barbecue for the building’s residents. We loaded the foodstuffs onto the plush Hush Hip Hop tour bus and headed to our destination with the great Grandmaster Caz in tow. “Empire State Of Mind” blared on the stereo as the perfect soundtrack and mood-setter to the afternoon’s endeavors. 
Outside the weather was grey, drizzling, and oppressively overcast, but we weren’t about to let that stop us. We unloaded our gear and food at 1520 Sedgwick and were led to the unassuming rec room that had served as the unlikely birthplace of a cultural movement that would transform pop culture in ways pioneers like Caz and DJ Kool Herc could never have imagined. 
Grandmaster Caz has every reason in the world to feel frustrated by his treatment from the music industry. Everyone from 2Pac to Will Smith to Jay-Z has paid tribute to Caz and his group in song, but the Cold Crush Brothers never released a proper album, let alone scored any hits. Caz’s former manager Big Bank Hank—a non-rapper recruited by early hip-hop mogul Sylvia Robinson to perform in her group the Sugar Hill Gang—notoriously “borrowed” Caz’s lyrics for the seminal and influential single “Rapper’s Delight” (the first true hip-hop hit), without ever crediting or compensating Caz. Hank was so incompetent in his creative thievery that he borrowed lyrics like, “I’m the C-A-S-A-N the O-V-A and the rest is F-L-Y,” that literally spelled out the nickname of the man he was ripping off. 
Yet today, Caz is anything but bitter. His decades in the business have blessed him with humility and a wonderful sense of perspective. He’s grateful for all the places hip-hop has taken him and proud of all it has accomplished. We couldn’t have asked for a more knowledgeable or authoritative guide to hip-hop’s early days. We had the honor of learning about the genre’s embryonic beginnings from a man who lived through them. 
After the interview concluded, Caz suggested we shoot some footage of a young friend of his breakdancing, and we were consequently treated to a private display of virtuoso pop-locking and b-boying from Caz’s gifted young protégé. 
We then left 1520 Sedgwick and Caz gave us a condensed version of the tour he gives Hush Hip Hop patrons. The highlight of the tour came when Caz used the bus’ impressive sound system to perform “MC’s Delight,” a feisty answer-song and extended Big Bank Hank diss track he wrote on the 25th anniversary of “Rapper’s Delight.” The camera crew and I didn’t need any further convincing: At that point, we were ready to head over to Big Bank Hank’s house and deliver some justice. 
We visited Caz’s spot on the Bronx Walk Of Fame and checked out a mural devoted to fellow Bronx hip-hop icon Big Punisher looking shockingly svelte, as well as various locations where the ill-fated50 Cent vehicle Get Rich Or Die Tryin’ was filmed. Caz made sure to note the former location of Disco Fever, the legendary early hip-hop club where much of Krush Groove was filmed. Time marches on, however, and the former location of Disco Fever now houses, not a memorial or a museum, but a 99-cent store of little importance to the history of hip-hop.
In our interview, Caz compared the Bronx in the ’70s to Beirut. It was, in his estimation, a lawless realm, an urban Wild West of burnt-down buildings, ubiquitous graffiti, and rampant poverty, the perfect place for a bunch of kids with nothing but energy, talent, and the boundless enthusiasm of youth to create a whole new culture out of their parents’ old albums, some microphones, and turntables. As wide-eyed pop pilgrims, it was both edifying and educational to visit the vibrant, electric streets of the Bronx with an icon who had helped shape the evolution of hip-hop as a young man.

http://www.avclub.com/articles/new-york-1520-sedgwick-the-birthplace-of-hiphop,81610

Saturday, February 4, 2012

CHPC Report on Overmortgaged Buildings


New Report: Neighborhood Impacts of Overmortgaged Buildings



Neighborhood Impact Image 3

A brand new CHPC study reveals that over-mortgaged and foreclosed multifamily buildings increase the risk  of deterioration of nearby buildings and raise costs for private owners  and New York City in the form of additional Emergency Repair Program  (ERP) expenditures.

Commissioned and funded by  Enterprise Community Partners (Enterprise), “The Impact of Multifamily  Foreclosures and Over-Mortgaging in Neighborhoods in New York City” examines more than 1,100 multifamily buildings across Brooklyn, Bronx,  Manhattan, and Queens. It highlights the need to monitor multifamily  housing stock and coordinate public and private sector intervention so  that the stock may be improved, returned to responsible owners, and  preserved for another generation of tenants.

Additional findings from the study include:

  • For buildings within a 500 foot radius of an over-mortgaged building, the average percentage increase in ERP liens per building was 198%. However for buildings outside of the 500 foot radius, the average percentage  decrease in ERP charges was 39%.

  • Buildings within a 500 foot radius had $1,892,142 more in ERP charges in 2010 than they would have had if they were not near an over-mortgaged or foreclosed property.

  • The average per building percentage increase in Class C housing code violations, the most serious, was 13.7% between 2008 and 2010 in buildings located within 250 feet of an over-mortgaged building.  The average increase per buildings outside of a 250 feet radius was only 6.3%.

You can read, share, and print the full report below. You can download a pdf here.


Human Costs of Financial Failure

Stopping Apartments From Making Tenants Sick

By Alec Hamilton (Gotham Gazette)
Jan 2012housing

On a cold January day, the wind funnels down Creston Avenue in the Morris
Heights neighborhood of South Bronx like a river through a canyon. Buildings
seem slightly closer to the street here, and the tall towers loom over the
narrow street and sidewalk. A couple of teenage girls walk down the street,
laughing and shoving each other.


Some new construction gleams incongruently on one side of the street, but
most of the other buildings on this block are much older, with a foregone
elegance still barely visible in the stonework and tiles.

Yet inside these buildings residents complain of deteriorating living
conditions. On a survey tenant after tenant writes of mice and cockroach
infestations, peeling paint, broken toilets, inconsistent heat and hot water,
and a front door with no lock. “The hallways smell like urine” writes one.

Tenant Johannie Burdier says the building was poorly maintained, dirty, and
sometimes simply scary. She tells of a former building manager who, she says,
took money from people in exchange for access to sell drugs from inside the
building. A resident for seven years, Burdier lives in the building with her
aunt and her eleven year old daughter. She says for much of her time there they
were lucky if there was heat or hot water in the apartment.

Another resident, who works the night shift, writes that they were frequently
robbed in the unlocked building entrance. “Always, always, always, they assault
us and take our money and our things in the doorway. Why?” asks the tenant,
writing in Spanish, “Why is there no lock on the door or security camera?”

These complaints are more than an inconvenience. Constant anxiety, prolonged
exposure to molds, unchecked vermin and inadequate heat and hot water – all
these things make people sick. The vast majority of people living in failed
buildings are low-income and uninsured. When they get sick, they go to the
hospital. And the city is left holding the bill.

A new pilot program, created by housing advocates and healthcare workers,
aims to increase awareness of the public health costs resulting from distressed,
overleveraged buildings. The program sends healthcare providers and social
workers into buildings on the brink of receivership to identify and treat
housing-related illnesses. The team hopes to help tenants, compile data on the
health outcomes of living in buildings in poor condition, and eventually
determine the actual cost to the city.

Dina Levy, Director of Organizing and Policy at the Urban Homesteading
Assistance Board, or UHAB, says that what is happening in these buildings is a
public health crisis. “It’s an outrageous moral problem, but it’s also a
financial problem in whatever geographic space it’s happening in.”

She explains that when banks and owners fail to care for buildings, the costs
of that failing often shows up in the medical bills of the people who live in
those buildings, and that these tend to be low-income people without healthcare,
so that cost is ultimately absorbed by taxpayers and the city. Until now, she
says, there has been anecdotal evidence that people in certain buildings are
getting sick, but a study would provide the first quantifiable direct
connection.

“What we have observed is that people are getting sick and don’t have the
resources to get adequate medical care,“ she said. “Why are banks and landlords
allowed to harm people physically, and why should we be paying the cost of
that?”

The project has gone out to buildings four times since Labor Day, and plans
to do more outings this year. Members of the Committee of Interns and Residents
of SEIU Healthcare, collaborating with the Family Medicine Department at Bronx
Lebanon Hospital, the Pediatric Department at Jacobi Medical Center, Urban
Homestead Assistance Board (UHAB), and Workforce Housing, created the Doctors’
House Visit Program as part of a larger community outreach program, the Healthy
Bronx Initiative.

Tim Foley, Political Director of the Committee of Interns and Residents for
SEIU Healthcare, said that the committee was drawn into involvement in the
project by its members. “We were getting feedback from members who were
frustrated to only be dealing with the effects of illnesses and not the causes."

The most recent visit was in November, to a building at 2239 and 2241 Creston
Avenue in the Bronx. One attending physicians and three resident physicians went
to the building, accompanied by a social worker and an administrator with Bronx
Lebanon. They visited with residents in twenty-one of the building’s fifty-four
apartments.

The team had three specific goals: to help bring relief to tenants suffering
health consequences from their building; to gather data for a Bronx-Lebanon
study of the correlation between poor housing and chronic health problem; and to
give tenants information on their rights regarding the condition of their
building.

Levy says that as of July 2011, 2239 Creston had 431 outstanding code
violations, while 2241 had 431 violations. The former owners, Victor and Alan
Fein, originally bought the Creston buildings along with several others in the
Bronx on a loan from Astoria Federal Savings Bank. Three of those projects –
including the Creston --have since gone into foreclosure.

A Village Voice article from March 2010 names the brothers as owners of three
Bronx properties listed as being among the city’s worst. The article says the
Feins have operated since the mid-'90s under various company names including
Cherokee Partners and Apache Properties. Workforce Housing Advisors, an
affordable housing development firm led by ex-city developers, is working on a
public-private financing deal to purchase and renovate the buildings.

Orlando Moronta, the building super, has lived in the building since 1998. He
says the Feins barely contacted him in the decade he owned the building. He
tells of unscrupulous former building managers who rented out apartments while
telling the owner they were vacant, in order to pocket the money, and rented to
people engaged in drug activity. Since the building went into foreclosure,
Moronta says things have actually improved slightly. He says the number of
violations is down and there have been recent mold remediation efforts and lead
paint removal.

Tenant Johannie Burdier said she tried avenues to address problems in the
building. She tells of taking her complaints directly to the Fein brothers’
office on Bronx Park East, where she says a relative of the brothers would
dismiss her complaints and call her a liar. Fein Property Management did not
respond to a request for comment, other than to say that relative was no longer
working there.

Calling 311 didn’t help either. Burdier the city would investigate and order
the brothers to make the repairs, and then when no repairs were made, would send
out workers. But she said often the repairs were never made, because the
landlord or an employee would always show up and order the city workers off of
the premises.


Unhealthy Buildings, Unhealthy Tenants


One of the main health effects that doctors point to as resulting from
hazardous living conditions is pediatric asthma. Pediatric asthma is
particularly an issue in the Bronx, where the rate of death from asthma is
nearly three times higher than the national average and hospitalization rates
are five times higher, according to a report from the Wagner School at NYU.

While most studies of asthma in the Bronx have focused on traffic, doctors on
the visits saw a direct correlation between mold and asthma. Dr. Kerone Thomas,
a second year family medicine resident at Bronx-Lebanon who was part of the
visit, says living conditions are a major factor in developing childhood
asthma.

“Based on the observations we made of mold in the apartments and residents
with asthma, there seems to be a strong correlation.” She said in many of the
apartments the visiting health workers saw evidence of mold, leaky pipes, and
rodents.

While over-leveraged buildings are not the only buildings in poor enough
condition to cause housing-related illnesses, they do present a unique situation
for the city. Banks and lenders are generally regulated by the federal
government and the state, so there is often not a lot that local governments can
do to address blighted or neglected buildings in city neighborhoods.

Cities can, through the Housing Preservation Department, enforce building
code. The Department is required to identify the worst two hundred buildings in
the city for the Alternative Enforcement Program (AEP), which attempts to hold
landlords accountable for violations. If a building is found in violation and
does not comply with the AEP order to fix the problems, HPD can send out a
contractor to make the repairs and bill the owner for the cost. If the owner
does not pay, HPD can have a lien placed on the property.

In 2010 a law introduced by City Council Speaker Chris Quinn was passed that
added asthma to one of the list of violations that made a building eligible for
the AEP. The Creston buildings were added to the AEP list in 2010.

While building code enforcement is an important step, some problems with
enforcement remain. Though HPD can put a lien on a property, UHAB tenant
organizer Dan Desloover says some of those liens are not foreclosable."



“There’s no ultimate stick to make building owners do what they should do
on these violations.” He says that with so many building violations in the city,
some problems slip through the cracks. “Even if things are pretty bad, there are
just so many things going on that things get lost.”



Identifying housing-related illnesses and applying health code violations to
the retinue of charges against a bad landlord may not make much of a difference.
Dina Levy points out that for owners unconcerned with breaking the law, the
threat of breaking further laws may not carry much weight.

“For those people you need other tools. If you’re willing to be on the wrong
side of code violations, are you going to be willing to be on the wrong side of
health violations? Probably.” She says from a public policy perspective the goal
will have to be to think creatively about enforcement measures beyond
violations.


Costs of Compliance


Mitchell Posilkin of the Rent Stabilization Association, New York’s largest
real estate industry trade association representing some 25,000 landlords and
building agents, worries that adding more regulation will only hurt good
landlords who are already struggling to maintain compliance. “There is already
an alphabet city of regulations throughout the city.” he said, listing lead
paint regulations, building codes and fire codes. “You can always increase the
penalties, but most owners do not need the threat of penalties to comply.”

He also had concerns about pinning health problems to building conditions,
citing cases where children in New York City buildings with high lead levels in
their blood were found to have acquired those levels in their country of origin,
not in their New York apartments. Posilkin said the science necessary to
identify something like a particular mold as a responsible for an individual’s
health issue is not available, and expressed concern that the issue would become
“an annuity for trial lawyers.’

“We’re quite dubious. We believe everybody should know their rights, and we
believe that landlords should maintain their buildings, but not every ailment in
society can or should be attributed to how landlords maintain their
buildings.”

Posilkin is concerned that current regulations are making building ownership
untenable for many landlords outside of Manhattan. Referencing the recent ban on
using #6 heating oil due to its increase in asthma, he said “It’s easy to say
that owners should get rid of number six oil but who is going to pay? If you’re
owning and managing affordable housing in the South Bronx, where are you going
to get that money?”


Human Costs of Financial Failure


There are some 80,000 failed housing units up for receivership in New York
City. The problem can be partly attributed to outdated policies. After the
financial collapse of the seventies and the subsequent abandonment of areas of
the city, new housing policy was set in place to spur reinvestment in
neighborhoods.

The policy was successful – lots were rehabilitated, and neighborhoods
restored. By the nineties, the policies designed to entice banks into investing
in these neighborhoods were just icing on an already-sweet cake. Developers and
investors, savvy at accessing investment credits, purchased buildings in
gentrifying marginalized neighborhoods and converted them to market rate as the
neighborhood became wealthier.

By 2005, the success of these gambles means that multi-family apartment
buildings with rent restricted units are fetching enormous sums, despite the
inability of the rent rolls to pay back the debt. Banks, intending to
immediately resell those mortgages in pieces on the secondary market as
mortgage-backed securities, didn’t worry too much about their due diligence on
the loan.

And then the market collapsed. Building owners suddenly found that even at
market rate, rent rolls could not support the mortgage debt. Property taxes and
operating costs such as water and sewer continued to increase, and soon
investors found themselves sitting on properties worth less than their mortgage.
Many stopped putting any more money into what now looked like a bad investment,
and the buildings fell into disrepair.

When an owner defaults, the bank holding the mortgage cannot force the owner
to reinvest in the building or even pay their debt. All they can do is foreclose
on the property. The properties go into receivership. The owner gets to keep the
money they made. The bank keeps the profits from the mortgage-backed securities
they sold.

In receivership these already neglected buildings deteriorate further.
Receivers may do some limited maintenance and upkeep, but do not usually
undertake major repairs.

Meanwhile the losers in this game, besides those whose pensions and
investments lost money over those securities, are the tenants. Holes in the
walls, rats, unsafe electrical wiring, bad heat, flaking paint, all the
crumblings of failure compound to create health hazards for the very people
those walls should be protecting.


A Policy Response


Questions remain about what the appropriate policy response should be. Using
health code to go after negligent owners seems likely to encounter many of the
problems that using building code does. Without harsher enforcement, those
already on the wrong side of the law seem likely to stay there.

In addition, the levels of government most affected are not the ones with the
most regulatory power. While it is cities and local governments that pay for the
health-care costs of low-income renters suffering building-related problems,
they have very little power over the banks and lending companies that are
underwriting mortgages.

Levy says while she isn’t sure what the policy answer is, she hopes that
providing more information on the cost burden of these buildings will help
summon the political will necessary to address the issue. She says the effort to
raise awareness of the relationship between failed buildings and heath is an
important first step. “Once that’s established then there are all kinds of
openings for trying to figure out what is the right policy solution to address
that.”

Meanwhile Burdier is still looking for a way to move out. Her bathroom
ceiling is leaking, and she says she’s been threatened with eviction because
checks collected by the management company were never turned over to the new
receiver. “It’s unbelievable,” she says. “I wish I could move.”

Monday, January 9, 2012

Kelly Street Press Release

HPD, Workforce Housing Advisors, Banana Kelly, Monadnock Construction Annouce New Year's Gift to Tenants in Five Severly Distressed Bronx Buildings


$3.4 Million HPD
Acquisition Loan to New Owners of Kelly Street Portfolio

Loan Adds To HPD’s 2011 Tax
Credit Allocation That Will Generate $9.28 Million in Equity for Substantial
Rehabilitation of Five Buildings Suffering from Extreme Neglect

New York CityDepartment of Housing Preservation and Development (HPD)
Commissioner Mathew M. Wambua, Workforce Housing Advisors (WFHA) principal
John Crotty, Banana Kelly Community Improvement Association President Harry
De Rienzo, and Monadnock Construction President Nicholas Lemboannounced a
plan to improve conditions at the Kelly Street portfolio of properties in the
South Bronx, keeping the five buildings’ 81units affordable to their
residents. HPD is providing a $3.4 million acquisition loan to the
development team of WFHA, Banana Kellyand Monadnock Construction through its
Participation Loan Program (PLP)to enable the developers tobegin to
substantiallyrehabilitate the buildings. This loan, made possible by the U.S.
Department of Housing and Urban Development (HUD) Neighborhood Stabilization
Program (NSP), comes in addition to a Tax Credit allocation provided by HPD
in late 2011 that will generate $9.28 million in equity towards the
rehabilitation needs of the portfolio and bank financing. The previous owner,
after refinancing these properties with an unsustainable level of debt,
allowed them to slide into such a deplorable state that all five had been placed
in HPD’s Alternative Enforcement Program (AEP), an initiative that annually
targets the worst 200 buildings in the City.

The preservation of the City’s existing affordable housing stock and the
protection of the tenants is a critical component of Mayor Michael R.
Bloomberg’s New Housing Marketplace Plan (NHMP). Launched in 2003, the NHMP
is a multibillion dollar initiative to finance 165,000 units of affordable
housing for half a million New Yorkers by the close of the 2014 fiscal year.
To date, the plan has funded the creation or preservation of more than
126,900 units of affordable housing across the five boroughs; 4,245 of those
units in Bronx Community District 2 where the Kelly Street portfolio is
located.

“Affordable housing is an irreplaceable commodity in New York City. Over
the past three decades, Kelly Street has been emblematic of the struggle of
neighborhoods to exist and endure in up and down markets,” said HPD
Commissioner Wambua. “In the 1970s, we nearly lost Kelly Street to the
ravages of the economic crisis and the massive disinvestment that caused the
abandonment and burning of thousands of units of housing. With the eventual
rebuilding of the South Bronx and buoyed by the strong economy pre-2008
economy, these properties were purchased with unsupportable debt by
speculators who let the buildings fall into extreme disrepair. It’s been a
long and winding road for these tenants who refused to be pushed from their
homes. Thanks to our partnership with Workforce, Monadnock and Banana Kelly, the
end of their living in squalor is in sight and their homes will once again be
secure, safe havens in a neighborhood that they helped to save.”

The Kelly Street portfolio consists of 916, 920, 924, 928, and 935 Kelly
Street in the Hunts Point-Longwood section of the Bronx. In December 2010 the
owner was held in default on the mortgage and the portfolio went into
foreclosure. On January 7, 2011 WFHA purchased the debt on the portfolio from
Ridgewood Savings Bank with a short-term bridge loan from the New York
Affordable Housing Preservation Fund (NYAH), a $100 million real estate
equity fund created by Citi Community Capital and L+M Development Partners to
stem the loss of affordable housing in the NY region. WFHA pursued
foreclosure proceedings against the original owner, eventually taking title
to the five buildings after a foreclosure auction held on August 1, 2011. In
March 2011Harry De Rienzo of Banana Kelly was appointed by the Bronx Housing
Court as the 7-A administrator for the properties, effectively allowing him
to address the unsafe and unsanitary conditions within the buildings, manage
the day-to-day operations, establish legal tenancies, collect rent and
perform the necessary repairs to keep the properties in stable condition
until WFHA acquired title. Monadnock has joined WFHA as a partner in the
project and will serve as the general contractor during the rehabilitation
process.

“This new process demonstrates the ability of government to work
effectively with private sector partners to achieve long term sustainable
solutions to a new and evolving problem, in the case of Kelly Street
overleveraged properties that had massively failed. We applaud everyone who
demonstrated the courage necessary to make this renewal occur,” said
Workforce Housing Advisors Partner John Crotty.“The residents of Kelly St
will be the first of many tenants throughout the city who will see their
living conditions greatly improve as a result of this innovative thinking. We
expect the revival of Kelly Street to go beyond the apartments by including
an environmentally friendly community development program for urban green
space and retailat the property. ”In addition to working with these
developers to redevelop the Kelly Street properties, HPD recently partnered
with WFHA to assist in the purchase of a former Mitchell-Lama building at
1520 Sedgwick Avenue in the South Bronx – known as “the birthplace of
Hip-Hop” – to rehab and keep it affordable to its current residents.

“I started organizing on this block in 1976. As a long-time resident and
founding member of Banana Kelly, it was very discouraging to witness the
deterioration of the block where Banana Kelly got its start and its name,” said
Banana Kelly President Harry De Rienzo. “It was even more discouraging to
discover that millions of dollars in mortgage funds had been borrowed, with
no evidence of any investment in these properties; that vulnerable
populations were rented apartments that were not only uninhabitable, but a
health hazard, and it was equally discouraging to learn from tenants that
third party rent payments continued to be collected and deposited by these
slumlords even after a court order prohibited it. But now all that will
change. This project was made possible due to a unique
private/not-for-profit/ public partnership, with all participants working
from respective strengths for one common goal – the redevelopment of these
building and the restoration of dignity to the neighborhood, the block, and
these long-suffering residents.”

The total cost of acquisition and rehabilitation for the five buildings
will be approximately $16.5 million. HPD will provide a $3.4 million
acquisition loan through its Participation Loan Program, funded by the third
round of HUD’s NSP. JP Morgan Chase is providing a $9.37 million construction
loan. A total of $9.28 million in equity raised through the sale of Low
Income Housing Tax Credits (LIHTC) will be used to pay additional
construction costs and on completion of the renovation be applied to pay down
the bank loan to a supportable level. Developer equity and a first mortgage
from JP Morgan Chase complete the funding package.

Now that HPD and Chase have closed on the construction financing, work on
935 Kelly Street, the largest building, will start once all of the tenants
have been temporarily relocated to apartments in the four other buildings.
This first phase of construction will begin in February. The second phase,
which will see the complete renovation of the four other buildings, also
requires that the tenants be temporarily relocated.

"The Kelly Street Project is an opportunity for Monadnock to help
people improve their lives and work with partners who share our values. It is
also a sound business venture that will continue the ongoing efforts to
reshape the South Bronx. Thanks to Work Force Housing Advisors, Banana Kelly,
HPD, Chase and National Equity Fund for making this project possible,” said
Nicholas Lembo, President of Monadnock Construction.

Prior to the sale of the buildings to WFHA, all five properties had at one
time been placed in HPD’s Alternative Enforcement Program (AEP), an
initiative to effectively identify and increase the pressure on the owners of
some of the City’s most distressed residential buildings to bring the
buildings up to code. This program is credited with stabilizing the
buildings, and ultimately leading to the partnership with Banana Kelly and
Workforce Housing Advisors. Absent AEP, the properties would have continued
to rapidly deteriorate and pose a health and safety risk, and possibly,
orders to vacate the tenants may have been necessary – leaving the residents
without permanent homes and threatening the stability and integrity of the
surrounding neighborhood.

The AEP allowed HPD to target these properties, do roof-to-cellar
inspections, replace major buildings systems (i.e. roofs, boilers, etc.)
andperform emergency repairs to the most hazardous conditions which the old
owner refused to address. With the transfer of ownership complete and a fully
funded repair plan in place, the City will no longer need to intervene on
emergency repairs and the current tenants can begin to look forward to
responsive management and the promise of newly renovated homes.

                                                 # # #

About the NYC Department of Housing Preservation and Development
(HPD)


HPD is the nation’s largest municipal housing preservation and development
agency. Its mission is to promote quality housing and viable neighborhoods
for New Yorkers through education, outreach, loan and development programs
and enforcement of housing quality standards. It is responsible for
implementing Mayor Bloomberg’s New Housing Marketplace Plan to finance the
construction or preservation of 165,000 units of affordable housing by 2014.
Since the plan’s inception, more than 126,900 affordable homes have been
created or preserved. For more information, visit www.nyc.gov/hpd.