Unlike Salama, Riso and other major New HOP developers are contractors as well as dealmakers, which gives them an edge in controlling their costs. In the past year, however, the nationwide construction boom has driven up the price of building materials significantly, and labor and insurance costs remain high. Alan Bell, principal of the Hudson Companies, a Brooklyn-based developer, says that the cost crisis is even making it prohibitive to build federally subsidized housing for senior citizens, formerly a straightforward transaction. Says Bell, "You can't make the numbers work."
City Limits Magazine
Bell and other vets of New York City real estate say they're confident the market will calm down sometime soon. In the Bronx, Jim Buckley, executive director of University Neighborhood Housing Program, anticipates it could descend with a crash, leaving speculators stuck with apartment buildings they have no commitment to maintaining over the long haul. Some troubling signs suggest that might already be happening. In 2002, after years of steady improvement, 13 predominantly low-income neighborhoods saw an increase both in serious housing code violations and the number of buildings where landlords had failed to pay taxes for more than a year--indications that these neighborhoods could see habitable housing abandoned, not gained.
Buckley doesn't want the Bronx to repeat its history of large-scale landlord abandonment--and he does want his CDC and others to continue to rebuild and manage affordable apartments. He is working with financial institutions, including Enterprise and Fannie Mae, to, as he puts it, "lay the groundwork for acquisition as the market drops."
The working concept is a Multifamily Assistance Center that could advise lenders--who have the right to intervene if their property becomes degraded--on how to rescue their real estate from negligent landlords.
Buckley sees this effort as a potentially vast source of affordable housing in the long term. "We may see more buildings moving to affordable housing opportunities," says Buckley." "We're thinking preventively now." •
