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Mayor Bloomberg, Speaker Quinn And Housing Commissioner Cestero Launch Proactive Housing Preservation Initiative

January 13, 2011

New Proactive Enforcement Bureau Will Identify Distressed Multifamily Buildings Before Conditions Worsen Instead of Waiting for Tenant Complaints

City Council and Bloomberg Administration to Expand City’s Authority to Force Irresponsible Landlords to Pay for Repairs, Promoting Maintenance and Saving Taxpayer Dollars

Mayor Michael R. Bloomberg, City Council Speaker Christine Quinn and Department of Housing Preservation and Development Commissioner Rafael E. Cestero today launched the Proactive Preservation Initiative, a new, aggressive approach to identify and address deteriorating physical conditions in multifamily buildings throughout the City before they reach a state that endangers the health and safety of residents and threatens the quality of the surrounding neighborhood. Currently, the City’s primary means of identifying problem buildings is through complaints received through calls to 311. The Proactive Preservation Initiative will enable the City to identify and address buildings preemptively, and the City expects to use it to put roughly 500 distressed buildings on a path to stability over the next 12 months. The Mayor and Speaker made the announcement at Our Lady of Angels School on Webb Avenue in the Bronx, near 2785 Sedgwick Avenue, one of the 10 buildings of the Milbank housing complex that will be among the first to be rehabilitated as a result of the new initiative. The Mayor and Speaker were joined by Council Member Erik Martin Dilan, State Senator Gustavo Rivera, Assembly Member Vito Lopez, Borough President Ruben Diaz Jr., New York City Housing Development Corporation President Marc Jahr, and Desiree Hunter, Board Member of the Northwest Bronx Clergy Coalition.

“Our job is not just to wait until conditions around the City decline to a low point and fix them then, it’s to be vigilant and act aggressively to address problems before they worsen,” said Mayor Bloomberg. “That’s why we created the SCOUT program to survey street conditions constantly, and it’s why we are launching the Proactive Preservation Initiative to protect the City’s housing stock. Now, instead of simply waiting for tenants to complain about poor conditions or irresponsible landlords, we’ll use data on properties, building owners and neighborhoods to identify buildings that are vulnerable or are in decline, and step in to fix the the situation before it worsens.”

“Today, we're adding an incredible tool to combat over-leveraged buildings across the City,” said Speaker Quinn. “The City Council has fought tirelessly on the behalf of tenants living in these buildings, plagued with deplorable conditions. By identifying and fighting the problem early on, the City has a chance to save these buildings before it's too late. This innovative and proactive approach will be a vital asset in our continuing battles against irresponsible owners and lenders. I want to thank Mayor Bloomberg, Commissioner Rafael Cestero, the Council Housing and Buildings Chair Erik M. Dilan and Council Members Inez Dickens, Annabel Palma and Fernando Cabrera for their continued work on the Council's Task Force on Financially Distressed Rental Housing.”

“New York City has long relied on tenants to lodge complaints about needed repairs in their apartments to determine when to intervene, but too often that happens only after conditions have become deplorable. We’re stepping up the City’s enforcement of housing maintenance and taking a proactive approach to identify at-risk buildings before conditions worsen,” said Deputy Mayor for Economic Development Robert K. Steel. “By doing that, we’ll go a long way toward improving conditions for tenants, protecting neighborhoods and saving taxpayer dollars.”

“The health of our neighborhoods is contingent on the stability of our housing,” said Commissioner Cestero. “We’ve seen this movie before—when properties are destabilized, either by unsupportable debt or by physical decline, or both, they can bring down entire blocks. HPD’s refreshed focus on preventing this decline as opposed to reacting to it will stabilize and strengthen communities across the City. Over the course of Mayor Bloomberg’s New Housing Marketplace Plan, HPD has invested in the construction or preservation of more than 110,000 units of housing – much of it in the South Bronx, Upper Manhattan and Central Brooklyn. Hundreds of thousands of people live in homes that we have built. Just as New York City created the blueprint for revitalizing the inner city, we are poised to establish a national model to address decline in the health of multi-family housing stock and avert neighborhood distress.”

The new Proactive Preservation Initiative represents a major shift in the way the City identifies distressed buildings. Until today, the Department of Housing Preservation and Development (HPD) has primarily learned of and reacted to problematic conditions in apartments through individual tenant complaints. Going forward, HPD will also work with the City Council, the New York City Housing Development Corporation and New York State Homes and Community Renewal to collect and consolidate data from multiple sources to pinpoint distressed buildings that are actively declining and have the highest likelihood of becoming blighted and blighting influences. HPD field staff will survey the buildings, and for buildings that appear to be in decline, the agency will analyze other data, such as outstanding tax arrears, outstanding water arrears, neighborhood foreclosures, and notices from local elected officials, community groups and advocates. Based on that information, HPD will determine the appropriate course of action, which might include working with a building owner and providing rehabilitation loan, or stepping up code enforcement actions against irresponsible or absentee owners.

To implement the new initiative, HPD has formed a new 10-person Proactive Enforcement Bureau within its Division of Enforcement and Neighborhood Services. The Proactive Enforcement Bureau will be responsible for conducting cellar-to-roof inspections on the most distressed buildings identified by the Proactive program and helping to drive them toward remediation. Intervention strategies can include a combination of stringent Housing Maintenance Code enforcement, inspection, offering preservation loans, financial counseling and referrals and transfer of ownership. Buildings are selected for the initiative based on an increase in both distress and rate of decline – measured in terms of the rise in the number of emergency housing code violations over the past two years. Approximately 250 buildings, representing more than 8,000 households, will be chosen and prioritized for Proactive Preservation every 6 months.

To strengthen these tools, the Bloomberg Administration and the Council will develop ways to authorize the City to sell liens that are placed on properties when irresponsible landlords fail to make repairs and the City has to. If landlords refuse to pay the City back for emergency work done, Emergency Repair Program liens are placed on the property, but there is little that compels an owner to make the payment and too often taxpayers subsidize irresponsible owners. If the City is authorized to sell the liens to a third party collector, it would save taxpayer money and encourage landlords to make repairs themselves before winding up in that situation.

“It is very important for the City to be proactive with housing code enforcement. During the real estate boom, the City and private sector made tremendous investments in multi-family housing stock. We need to protect that investment," said Council Member Dilan, Chair of the Council’s Housing & Buildings Committee. “By looking at early indicators of building distress, we can avoid some of the nightmares tenants endure when irresponsible owners walk away from their buildings.”

“My office has been working to address the many issues at the buildings within the Milbank portfolio since I first came to Borough Hall,” said Borough President Diaz, Jr. “The Proactive Preservation Initiative is a great new tool through which we can identify bad situations, like those at the Milbank portfolio, before things get out of hand and tenants are forced into an unlivable situation. The stories we heard from tenants at the Milbank portfolio and other buildings in similar situations are heartbreaking, and the Proactive Preservation Initiative will help ensure that tenants in problem buildings will not have to suffer like they did. I thank Mayor Bloomberg, Speaker Quinn and Commissioner Cestero for partnering on this important program.”

“I salute the Bloomberg Administration for putting into place a housing preservation initiative that will prevent deterioration, protect tenants and preserve thousands of units of affordable housing,” said Assembly Member Lopez.

“I applaud Mayor Bloomberg and the City Council for standing with the residents and families of the Bronx, where housing concerns and deteriorating conditions have too often disrupted the ability of Bronxites to provide a healthy and safe environment for their families,” said State Senator Rivera. “No one should have to wait until housing conditions threaten their health and well being or that of their family in order to report irresponsible landlords or receive assistance from their elected officials.”

“To succeed, proactive enforcement needs to draw upon a broad range of tools, including HDC's ability to finance projects,” said Marc Jahr, President of the City’s Housing Development Corporation. “Consequently, HDC's enormously pleased to be able to harness its programs to HPD efforts to preserve the City's existing affordable housing stock.”

“Northwest Bronx Clergy Coalition has had its feet on the ground in the Northwest Bronx for 36 years, and we have witnessed the ebb and flow of the real estate market and the effect that deteriorating building conditions have on our neighbors and families,” said Northwest Bronx Clergy Coalition Board Member Desiree Hunter. “The City, particularly HPD, has been a good partner and we are very pleased to play a role in making this new initiative work. This goes far beyond the Milbank buildings – and we will continue to work cooperatively to help improve bad building conditions wherever we find them.”

An initial pilot phase of the initiative surveyed 80 buildings and inspected 28 more – not including the 10 Milbank properties – resulting in 4,100 new violations and resulting in 11 referrals to housing litigation. More than 250 buildings with more than 8,000 households have been identified for potential intervention over the next six months.

In the case of the Milbank portfolio, HPD is pressing the current holder of the debt to sell the portfolio to a responsible owner. Leverage points put into play as a result of the new initiative include the results of cellar-to-roof inspections, which have increased the Housing Maintenance Code violation load by 1,871 to a total of 4,549; the New York City Housing Development Corporation’s acquisition of the $3 million mezzanine debt on the portfolio from Deutsche Bank; and crafting a repair agreement with the putative new owner.

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