UNHP first noticed a significant gap between rising Bronx multifamily sales prices and flat net operating income in 2000. This growing disconnect not only prevented us from continuing to work assisting tenant groups to purchase buildings, but also rekindled memories of a time in the late 1980s and early 1990s when Freddie Mac over-financed and then foreclosed on a large number of Bronx multifamily properties. In 2003 and 2004 we proactively set out to limit the damage of speculative investment to Bronx properties and neighborhoods through the creation of the Multifamily Assistance Center and the Building Indicator Project (BIP) database.
The Building Indicator Project (BIP) is a database developed by UNHP to identify NYC multifamily properties in physical and/or financial distress. UNHP worked with financial institutions, appraisers, property managers, and research organizations over a number of years to develop a scoring system that accurately reflects current conditions and is a proven indicator of financial or physical distress in a property. The BIP database features a specially designed formula using housing and building code violations, various city liens, and other building information to create a weighted scoring system to indicate distress. Based on numerous physical inspections and feedback from BIP users, a score of 800 or more classifies a property as likely to be physically and/or financially distressed.
Through our Multifamily Assistance Center, UNHP has been able to work successfully with lenders, public agencies, foundations, community groups and most recently, banking regulators to improve these distressed properties for the low-income families and individuals that live there.. One major lender has used the BIP scoring to prioritize inspections and follow up with services and owners to see an improvement in half of the high scoring properties. A community group was able to use the BIP to work with the lender and ultimately the landlord and HPD to gain improvements in a very high scoring building. UNHP highlighted the work of the BIP at our 2011 Affordable Housing Forum and corresponding report, New York City’s Multifamily Housing in Distress. The report was downloaded over 60,000 times in the 18 months since its release. Commitment to asset management and using tools like the BIP can improve housing. For high scoring properties (800+), there is significant variance in the weight of physical/financial distress between lenders UNHP works with and lenders that have been unresponsive to using the BIP. In April 2015 lending institutions without BIP subscriptions had an average score 46 % higher than Lenders with BIP data.
BIP data has been useful in numerous research projects, organizing campaigns, and has been cited directly and indirectly in the press and in a number of recent Community Reinvestment Act examinations. Starting in 2014, the Department of Financial Services (DFS) CRA examinations will consider whether a bank has met its responsibility to ensure that a multifamily loan submitted for affordable housing or neighborhood revitalization credit under CRA contributes to, and does not undermine, the availability of affordable housing or neighborhood condition. DFS recommended the use of a tool like the BIP to determine if bank-financed buildings provided decent housing in low-income neighborhoods. Financial Institutions and community groups can apply for a subscription to BIP data. Contact us at (718)933-3101 to find out more.
The UNHP Multifamily Assistance Center is committed to preserving the affordability and improving the habitability of multifamily buildings in the Northwest Bronx and New York City. The Assistance Center is a collaborative effort between UNHP and major multifamily lenders, foundations, public agencies, owners, and managers to preserve affordable, quality housing in Northwest Bronx and other low income neighborhoods in NYC. Using UNHP’s own Building Indicator Project (BIP) as one of the main tools along with other data, demographics, and rent levels, these groups discuss the Bronx housing market, sales price and operating expense data and trends, and underwriting and servicing criteria. UNHP has held yearly financial roundtable meetings to discuss housing trends and share lender portfolios since 2006. These meetings have been attended by over 30 major lenders, two different HPD Commissioners, and two national housing foundations.
UNHP continues to work to make sure the BIP data remains an accurate and relevant indicator of multifamily building distress. Click here and here to read our blogs on our Multifamily Assistance Center blog work.
“UNHP's BIP inspired HPD to create our own measures of financial and physical distress. The light UNHP shines on troubled portfolios of even the strongest banks has been a critical component in the success of our Overleveraged Properties Initiative.”
— Rafael E. Cestero, Former Comissioner, NYC Department of HPD