Human Costs of Financial Failure

Stopping Apartments From Making Tenants Sick

By Alec Hamilton (Gotham Gazette)
Jan 2012

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.”