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New NYC budget could help affordable housing groups buy notorious apartment buildings
By
David Brand
Published Jul 3, 2024
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Photo by David Brand
By
David Brand
Published Jul 3, 2024
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Days after city leaders approved a small funding stream to help affordable housing groups acquire apartment buildings, tenants, organizers and some city councilmembers are setting their sights on a pair of rundown Manhattan properties packed with “warehoused” apartments.
The city’s new budget includes $15 million for the Neighborhood Pillars program that is supposed to provide low-interest financing and funding to nonprofit groups and other “mission-driven” developers that commit to keeping apartments permanently affordable and rent-stabilized. It’s a much smaller sum than the $250 million that councilmembers had demanded, but more than Neighborhood Pillars has received in five years.
Councilmembers and affordable housing groups said they hoped the money could help fund the purchase of two Manhattan apartment buildings, where tenants have faced harassment and hazardous living conditions for years.
The city is facing its deepest affordable housing shortage in decades, but some landlords are choosing to hold empty low-cost apartments off the market because they say renovating them is too expensive with little to no payoff if they’re rent stabilized. Supporters of the Neighborhood Pillars program said it gives affordable housing groups a shot at buying some of these buildings, renting out the empty units and keeping prices far lower than the market rate in neighborhoods like the East Village and Hell’s Kitchen.
“It would level the playing field, keep affordable housing truly affordable and keep low-income families in the neighborhoods they’ve called home for so long,” said Councilmember Carlina Rivera, who represents the few remaining tenants in one of the buildings on East 14th Street.
But the clock is ticking.
The current property owner is trying to unload the buildings after foreclosing on the previous landlord, Daniel Ohebshalom, and acquiring them last year.
Ohebshalom, who topped the public advocate’s annual worst landlord list, was recently jailed for ignoring court-ordered repairs at two of his other buildings in Washington Heights.
A sales brochure for adjoining properties on West 45th Street in Hell’s Kitchen puts the sale price at $5.25 million and informs prospective buyers that they could work with the city’s housing agency to renovate the buildings and potentially charge rents up to about $3,200 for a one-bedroom apartment. Or, the brochure adds, prospective buyers could opt to keep the apartments off the market, a tactic known as “warehousing.”
“They could warehouse these units in anticipation of future policy changes as the city’s housing crisis continues to expand,” the listing notes.
A third of the complex's 30 apartments are being held off the market, with potential rents ranging from about $700 a month to $4,500 a month, according to the brochure.
State law prohibits owners from inflating rents on empty stabilized apartments once they become vacant. The two buildings feature a mix of stabilized and “market-rate” apartments, where landlords can set any price for rent.
Inside another former Ohebshalom-owned building on East 14th Street, 20 of the 25 units are vacant, said Peter Griffin, a photographer who has lived in his fifth-floor apartment since 1979.
Peter Griffin has lived in the East 14th. Street apartment since 1979.
Photo by David Brand
He said conditions have improved somewhat since a company tied to investment firm Maguire Capital took over, but tenants have dealt with years of well-documented break-ins, collapsed ceilings, mushrooms sprouting from walls and other hazards.
The elevator and gas lines are still broken, forcing Griffin, 65, to walk up the five flights of stairs to his apartment.
“We just want sound management that does their job and lets us go back to living,” Griffin said.
Neither Maguire Capital, the company’s principal Marvin Azrak or their attorney responded to requests for comment. Nor did Cushman & Wakefield, the real estate firm suggesting that prospective buyers warehouse apartments.
Elected officials representing the buildings said they’re prime candidates for Neighborhood Pillars.
Councilmember Erik Bottcher, whose district includes the West 45th Street building, said the city could use some of the new money in the budget to help affordable housing groups acquire the former Ohebshalom buildings.
“What we don’t want is a for-profit buyer who seeks to further deregulate the buildings, and what we certainly don’t want is more apartments warehoused while we’re in the midst of a historic housing crisis,” said Bottcher.
In a May letter to the city’s Department of Housing Preservation and Development and the state’s Division of Homes and Community Renewal, Bottcher and seven other local elected officials said they feared an investor could purchase the buildings and try to remove the apartments from the rent-stabilization system, punishing tenants who have remained in the building despite the “poor physical conditions” and years of “intentional neglect.”
The state’s “substantial rehabilitation” program allows building owners to deregulate apartments if they prove they renovated at least 75% of the building. An HCR spokesperson said tenants can challenge a landlord’s application and pointed to stricter new rules stating the agency will deny an owner’s request if there are past findings of tenant harassment.
HPD spokesperson Ilana Maier said the agency is “excited to relaunch” Neighborhood Pillars. .
At least one nonprofit organization is considering purchasing the buildings, though the current prices — $5.25 million on West 45th Street and $7 million on East 14th Street — make that a challenge.
Valerio Orselli, the project director of the community housing group This Land Is Ours, said he toured the buildings and is discussing a plan to purchase them with other affordable housing investors.
Orselli said the consortium would take care of essential repairs and renovate empty apartments to get them back on the market, but he said it will probably take up to a year to put the funding together for a purchase.
“We need some time to make this deal happen because it can’t happen overnight,” Orselli said. “There’s nothing we can do to prevent the sale of the building.”
But he said the city does have some leverage.
The owner of the two Manhattan properties is facing steep fines and an ongoing lawsuit from the city’s Department of Housing Preservation and Development to fix the problems at the properties, as well as one on Third Avenue and another in Queens' Middle Village neighborhood. The lawsuit was first filed against Ohebshalom and his associates in 2022 and penalties would apply to whoever owns the properties.
Ohebshalom’s attorney did not respond to a request for comment.
Tenants at the buildings are also suing for repairs, and continuing to organize to discourage a buyer from maintaining the poor conditions.
A banner hanging on the fire escape at 440 West 45th St warns “Buyer Beware: Organized Tenants Live Here. No Speculators.”
At East 14th Street, Griffin said he and his neighbors also want a nonprofit group to take over and restore the empty units, fix the broken elevator and turn the gas back on after years of worsening conditions.
“We're all human,” Griffin said. “We don't want to be pushed around or treated like crap.”
Tagged
new york city
housing
manhattan
Politics
David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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