Will Work with Lenders, Property Owners and Housing Advocates to Protect Tenants in Buildings at Risk of Foreclosure
CITY HALL – City Council Speaker Christine C. Quinn, Council Members Erik Martin Dilan, Inez Dickens and Annabel Palma, and New York City Department of Housing Preservation and Development (HPD) Commissioner Rafael Cestero today held the first meeting of the Task Force on Financially Distressed Rental Housing. The task force was created to monitor problems resulting from the continued fallout of the housing market crash, and perform rapid response when these problems threaten the welfare of building tenants.
Today’s meeting brought together advocates and experts from the tenant, banking, and affordable housing development communities, including representatives from Fannie Mae, the New York State Banking Department, Enterprise Community Partners, Local Initiatives Support Corporation, the Phipps Houses Group, New York City Partnership, Citizens Housing and Planning Council, Association for Neighborhood and Housing Development, Tenants and Neighbors, Housing Partnership Development Corporation, Urban Homesteading Assistance Board, Community Service Society, and the Furman Center for Real Estate and Urban Policy.
In addition to working with HPD in its ongoing efforts to track at-risk buildings and respond to emergent problems, the Task Force has been charged with three main goals. First, it will explore opportunities at city, state and federal level to create a simpler, more wholesale approach to the problem. Second, it will develop a strategy to engage banks in a meaningful discussion about distressed buildings. Last, it will create a state and federal legislative agenda in response to the crisis caused by over-leveraged multifamily buildings.
“We’ve heard a lot about the effect the housing crash has had on homeowners,” said Speaker Christine Quinn, “but far less attention has been paid to problems faced by many rental buildings and the tenants who call those buildings home. Our Task Force will work with housing advocates, lenders, building owners and tenants, to find ways to keep these financially distressed buildings from falling into disrepair. We’ll respond quickly to potential foreclosures around the city, and find creative new policies to prevent problems before they escalate.”
“There are too many tenants across the city living in buildings where the owners paid too much and cannot afford to maintain them,” said Housing and Buildings Committee Chair Erik Martin Dilan. “I look forward to working with the members of the Task Force to develop policy recommendations that will ensure these buildings are properly maintained and their tenants are adequately protected.”
“I look forward to working with Speaker Quinn, my colleagues and others to ensure that tenants and their families are protected and have safe and decent homes,” said Council Member Inez Dickens. “The only solution is to have building owners that are willing and can afford to maintain their buildings.”
“I am proud to be serving as a co-chair of the new Task Force on Financially Distressed Rental Housing, in order to help ensure that the strongest commitment is extended to tenants in all at-risk buildings,” said Council Member Annabel Palma. “I look forward to working with HPD, advocates, developers and lenders to develop the best solutions for tenants and our multifamily housing stock.”
“The problems caused by overleveraged properties are issues that we have been analyzing and actively working to resolve since they sprang to prominence during the economic downturn. At HPD we have utilized our resources ranging from development to enforcement and preservation to help tackle these challenges, and create a roadmap forward for at-risk properties throughout the five boroughs,” said HPD Commissioner Rafael E. Cestero. “I look forward bringing this expertise and all of our resources to bear on this important issue as I join Speaker Quinn and my colleagues on the Task Force in working together to preserve, maintain, and strengthen our City’s affordable housing stock.”
At the height of the housing boom, a large number of equity investor groups purchased multifamily rental properties using unrealistic revenue expectations and took out loans that could not be supported by existing rent roles. Soon they faced major revenue shortfalls, and some landlords responded by cutting back on maintenance, which in turn led to physical distress.
Buildings that remain unable to afford debt service payments soon face foreclosure, putting the future of thousands of renters at risk. The Task Force on Financially Distressed Rental Housing will provide these buildings with much needed support from city government to ensure good conditions for tenants.
The Task Force will focus on finding alternative solutions to the issues posed by overleveraged buildings across the five boroughs. It will engage the broader housing, real estate and banking industries to develop measures that will support distressed multifamily properties.
The Task Force will also look to close legal and policy gaps through federal, state and local legislation. It will encourage banks and other lenders to work with developers and property owners to realistically appraise buildings, and to find appropriate plans to deal with specific problems at individual buildings.