Council vote rescues 12 Manhattan HDFC buildings from foreclosure and sale

The New York City Council voted Wednesday to pull 12 foreclosed buildings, all of which are low-income cooperatives, from a list of buildings scheduled to be transferred to a for-profit development company.

Housing Development Fund Corporation (HDFC) cooperatives, or co-ops, are publicly subsidized buildings owned by resident shareholders. Some tenants, like Glory Ann Hussey Kerstein of Manhattan Valley and Jeryl Harris of Harlem, have lived in their buildings for decades.

“My kids grew up there,” Harris said. She has managed the property at 527 W. 151st St. since 1990 and purchased her share of the building in 2000.

But over the years, as violations mounted and taxes and bills went unpaid, the city Department of Housing and Preservation Development foreclosed on co-ops citywide and threatened to transfer ownership to a private developer. At that point, shareholders who currently own their homes would become renters, Assemblyman Al Taylor said during his testimony to the council.

Many of the developers are for-profit entities, and may not honor the legacy of affordable housing, Taylor added.

“Shareholders feel like they’ve been slapped in the face,” Taylor said. “The inclusion of for-profit corporations serves only to destabilize the Harlem community by eliminating affordable housing.”

The Department of Housing Preservation and Development did not immediately respond to a request for comment.

So far in 2018, the city has foreclosed on 53 housing corporation co-op buildings, turning more than 1,000 homeowners into renters, according to Hussey Kerstein, a member of the HDFC Coalition, which works to fight foreclosure and alert shareholders to their rights. That’s compared to 96 seized properties between 1999 and 2016, Hussey Kerstein said.

Taylor said the problem began in the 1970s and 80s when the city seized abandoned buildings. The city then created the housing corporation so low-income families who lived in these dilapidated structures could buy the property and keep out of homeless shelters, Taylor said.

But many of these new owners had no idea how to run a building.  “They were just thrown in there,” said Luis Cordero, who is on the board of his building at 526 W. 158th St. “They didn’t know who to talk to or that they needed to do certain things,” he said. “It’s like the blind leading the blind.”

Luis Cordero said he bought his share of the co-op at 526 W. 158th St. in 2012 and became a member of the board in 2015. (TheInk/Maggie Green)

Cordero said many of the residents of his building don’t speak English. He guessed that for decades, board members who may not have been able to read notices threatening penalties from the city housing department could  have thrown them out or put them aside. He said that when he became a board member three years ago, the problem was out of control.

“It’s hard when you’re trying to fight it by yourself,” Cordero said.

Taylor also testified that shady contractors often take advantage of co-op residents, charging for shoddy workmanship or even failing to complete a job. Taylor told a story from the co-op where he is a shareholder. The building needed a new boiler but the wrong one was delivered and never replaced, he said. The roof was also never repaired.

“I am responsible for maintenance,” Taylor said. “I am not responsible for the boiler that was the wrong size or the roof.” Taylor said he had been paying for services that were never properly rendered.

Left unattended, these poorly executed repairs could constitute a building code violation, Taylor said, and put the structure at risk for more fees and penalties.

In some cases, owners realized too late that their affordable prices were gouging the building’s coffers and plunging the co-op into debt. Harris said the tenants of her building had the luxury of in-unit washing machines. “But they didn’t tell us to raise the rent because the water bill was going to be so high,” she said.

Harris said owners knew they had to keep rents affordable but didn’t know they were allowed to increase building fees to accommodate amenities.  “Everything was low-income until the income didn’t allow us to do what we needed to do,” she said.

Harris’ building now owes the city $400,000 for water. When Harris received a notice that her building had an additional 14 violations that she needed to correct, she was shocked.

“All of the violations from 2008 through 2017 were corrected,” Harris said, explaining that one city agency that may come check on a violation may not relay the message to the housing department when the problem is fixed.

The Department of Housing Preservation and Development “needs to look at what they’re doing instead of taking our buildings from us,” Harris said. “You gave us nothing and we made it something. Why do you want it back?”

The housing department proposed an alternative to takeover by a private developer: a regulatory agreement signed by the board of each co-op. According to the housing department’s website, the regulatory agreement would reorganize the management structure of the co-op and put additional restrictions on tenants but allow the building to keep its co-op status and provide more tax exemptions for owners.

However, Cordero is skeptical. The agreement would require the city to designate a monitor to serve above the building’s co-op board. But, unlike the board, the monitor is not a tenant-elected official. Cordero worries a monitor might not have his building’s best interests at heart and might allow the property to slide into disrepair after the all the work he’s done to dig it out.

“We don’t want to fall back,” Cordero said.

After Wednesday’s vote, co-op members gathered outside  City Council chambers to congratulate one another on their victory before returning home to tackle the next problem: ascertaining what they owe and paying off their debts to keep their homes off the foreclosure list again.

“God is good,” Harris said. “Everyone’s going to have a cup of coffee and get back to the fight.”