“We have broken ceilings, cracking doors and floors and walls,” she told the roughly 150 attendees at a conference on distressed HUD housing hosted last week by the Partnership to Preserve Affordable Housing. Colon added that heat and hot water for the buildings’ 125 tenants is intermittent and unreliable, and security is non-existent. “We have a failing building with a lot of violations,” she said.
In response to these conditions, HUD sent the owner of Hunts Point I a notice of foreclosure last month. Colon worries that, as often happens in HUD foreclosures, the buildings will be sold in a public auction and lose their Section 8 status, which caps rent at 30 percent of a family’s household income. To Colon, that outcome might be just as bad as the original problem.
“We have bedridden people, mentally disturbed people in our buildings,” Colon said. “If we lose our Section 8 housing, where will we turn to?”
Fortunately for residents like Colon, in recent years the city has had some success at working with HUD, tenants, housing advocates and developers to transfer distressed buildings like Hunts Point I to responsible owners, thus keeping buildings affordable for low-income New Yorkers. The city has used this approach since 2002, relying on tenants to take an active role in preserving their buildings and maintaining affordability in 11 “distressed” – meaning in poor physical and/or financial condition – HUD properties that had gone into foreclosure.
Now the housing activists, advocates, lawyers and developers working under the Partnership to Preserve Affordable Housing's umbrella are trying to expand the current ad-hoc approach into a systematic, citywide process. The conference presented what the housing preservation community has learned about rescuing distressed HUD housing over the past five years.
Shaun Donovan, commissioner of the Department of Housing Preservation and Development, told the panel that “the uncertainty involved because there wasn’t a clear path out of this foreclosure process has been a real problem” and created unnecessary fear for tenants. He wants HUD to continue to get tough with bad landlords, but to also help create a more “programmatic” approach to finding new, responsible owners that would ease tenants’ minds.
“One of the things we want to be able do is move from this retail, one-by-one approach to a wholesale approach that is more predictable,” Donovan told the group. Part of his recommended “wholesale” approach includes a proposed "demonstration project" in which HPD would purchase a portfolio of HUD-owned mortgages.
Advocates at the Partnership's panel claimed that as many as 58 other HUD-assisted buildings in the city, containing more than 6,600 apartments, are distressed and could face foreclosure soon. All 58 buildings cited received failing marks on their most recent Real Estate Assessment Center (REAC) score, HUD’s test for evaluating its buildings. REAC scores run from 1-100, with anything under 60 failing. After two consecutive failing scores, HUD can begin foreclosure proceedings. The most recent REAC score at Hunt’s Point 1 was 39.
