Raise the Roof

by Eileen Markey


When Jim Buckley, FCRH ’76, was a student on Fordham’s Rose Hill campus, the Bronx was in crisis. After a generation of redlining—when banks refused to lend in neighborhoods with large African-American and Latino populations—some landlords began setting fire to their buildings, collecting insurance money and walking away.

They left hundreds of destroyed blocks and dozens of devastated neighborhoods in their wake. Even buildings that weren’t torched sank into disrepair. Bereft of the capital improvements necessary decades after they were built—and ineligible for the second mortgages that usually enable owners to renovate—floors buckled, roofs leaked, walls collapsed and a generation of Bronx children grew up in deplorable conditions.

“You would walk into the building and you’d put a marble on the floor and watch it just roll. The floors were sagging, the elevators—if they had elevators—were always out. Rodent infestation, busted-up lobbies. Things were in terrible shape. Often you couldn’t even find out who the landlord was,” Buckley said of his early days working on what would become the Bronx’s revival.

Buckley began that work in 1976, as a housing organizer for the Northwest Bronx Community and Clergy Coalition, a grassroots organization started in part by Paul Brant, GSAS ’72, a Jesuit scholastic and young philosophy instructor at Fordham who had trained with legendary community organizer Saul Alinsky in Chicago. Within a few years, neighborhood activists marshaled by the coalition— and working with larger groups like National People’s Action—succeeded in changing the nation’s banking laws. Redlining was no more.

But the Bronx was still bruised from years of neglect. It was time to rescue all those rickety buildings, to leverage newly available bank financing and to build decent, safe and affordable housing for working-class New Yorkers.

In 1983, Fordham helped to found an organization dedicated to doing just that. The University Neighborhood Housing Program (UNHP)—of which Buckley is executive director—was launched when Fordham linked with the coalition to rehabilitate a handful of apartment buildings in University Heights.

“Why we initially got involved in these projects was the notion of the Jesuit mission coupled with mutual interest the University had with the community,” explained Joseph Muriana (FCRH ’75, LAW ’89, GSAS’95), Fordham’s associate vice president for government relations and urban affairs. “Seeing your future tied to a group beyond yourself, that’s really a lot of what the Jesuit mission is about.”

UNHP became an independent entity in 1986, but it maintains close ties to the University. Muriana sits on its board of directors, as do various faculty members and administrators. Buckley and Deputy Director Gregory Lobo Jost (FCRH ’97, GSAS ’05) are Fordham graduates. And the group has molded more than a few Fordham interns, undergraduate and graduate students alike, into pragmatic advocates for social justice.

In December 2009, UNHP completed a substantial renovation of the Rose Hill Apartments, the nine-story, 119-unit building adjacent to Fordham’s Bronx campus.

Built in 1984 with the University as a partner, the building houses low-income senior citizens and disabled residents and is independently operated. Using a combination of tax incentives and interest-free bonds, UNHP managed $5 million worth of heating system, roof and window repairs, as well as upgrades to apartments and common areas.

Additional funds bought the building from its previous owner and paid off the old mortgage, ensuring that rents will remain affordable for current and future residents—all of whom earn less than $30,000 a year.

For UNHP, the Rose Hill Apartments deal was about stability, preserving a haven in the community. And it is of a piece with the group’s other work.

Since the 1980s, UNHP has maintained relationships with banks, directing money to neighborhood developers willing and able to build and manage quality rental housing. It’s had a hand in the purchase of more than 50 buildings and assisted in the rehabilitation of an additional 2,000 apartments. It’s helped some buildings transform into tenant-owned cooperatives and kept up a steady stream of research on the real estate market. The group also sponsors free tax preparation for low-income Bronxites and offers financial literacy workshops to help families manage debt and avoid the snares of predatory lending.

“We’re doing stuff that’s assisting working-class and immigrant populations,” Lobo-Jost said, “people who really embody what New York is all about.”

But now Buckley and Lobo-Jost fear the borough is on the brink of another disaster. Scores of large rental buildings in the Bronx are headed toward foreclosure, threatening to leave tenants and neighborhoods in the same kind of deplorable conditions Buckley witnessed as a young man. What was once a problem of banks refusing to lend became a crisis of overlending.

About a decade ago, Buckley and Lobo-Jost noticed a disturbing trend. Apartment buildings in working-class and poor neighborhoods in the Bronx and northern Manhattan were selling for far more than they were worth—many times what an owner could earn from collecting rents.

“We’ve been saying for ten years that you can’t run a building responsibly for this much money,” Lobo-Jost said. “A lot of the reason we got into research is because during the bubble, the prices were too high for community developers.”

During the real estate boom, Wall Street-backed investors bought up dozens of apartment buildings in the Bronx and throughout New York and other major cities. Backed by private equity funds, they took out huge mortgages, banking—quite literally—on being able to sell them in a few years for an even higher price. In the meantime, they would try to shake out poor and working class tenants and bring in people who could pay higher rents.

The thing is, it didn’t work, said Patrick Logan, FCRH ’90, GSAS ’95. Logan, who began a career in affordable housing after serving as the director of community service at Fordham’s Rose Hill campus for five years, is now a mortgage officer at Community Preservation Corporation, a nonprofit that provides low-cost loans and other financing for the renovation and preservation of affordable housing. He said the speculative business model of the private equity investors failed.

“These companies had every intention of buying a property and holding it for a few years,” Logan said, “before flipping it to someone else for an even higher price. “That’s not going to happen anymore.”

Landlords across the Bronx are finding themselves unable to pay their boom-time mortgages. Their reckless deals mean financial losses, but come with a human cost as well: thousands of tenants left paying rent in buildings that are collapsing around them.

The solution will depend, Logan and other affordable housing experts said, on how banks that underwrote the inflated mortgages behave in foreclosure. “The banks are going to have to take a discount,” Logan said, “and work with responsible owners.”

When UNHP first detected the trend of overpriced sales, the group anticipated the ugly endgame. So it started tracking sales, then cross-referencing them with city data on tax liens, building-code violations, water and sewer bills. It is slow, tedious work, but it has yielded a valuable tool in the form of UNHP’s Building Indicator Project, a database detailing the financial and physical condition of 7,000 Bronx apartment buildings.

“We’re trying to identify the buildings before they get too far into crisis. If we can, we want to work with banks that hold the mortgage to step in before it becomes a crisis,” Lobo-Jost said. “With this data, we can go to the banks and say, ‘Look, these are your properties, you need to take care of them.’”

In UNHP’s experience, Buckley said, before private equity landlords end up in foreclosure proceedings, they take what money they can from the buildings. Elevators break down, calls for repairs go unanswered, the boiler keeps running dry in winter, broken windows and sagging floors don’t get attention. But the landlord keeps collecting rent.

That’s the scenario at Manuel Rivera’s home on Webster Avenue at 188th Street. Milbank Real Estate, a California-based firm backed by private equity funds, bought Rivera’s building and nine others for $35 million in 2007. In 2009, that collection went into foreclosure. The buildings are now controlled by a special servicer and could be presented at auction in a few months.

During the building’s financial crisis, the landlord received dozens of notices of violations from New York City inspectors. From March 2009 to January 2010, the building had no heat or hot water. As fall turned to winter, Rivera and his wife bought space heaters to help warm the bone-cold rooms. They put their two young daughters in a single bed, so they could keep each other warm. All the while, the landlord collected rent.

“I have holes in the floor of my kitchen. We have so many rats in the entire building. The front door, you can just kick it and it opens up,” Rivera said. “We have many windows that are boarded up, broken.”

Rivera, who has lived in his apartment for seven years and is president of the building’s tenants’ association, said he and his neighbors want a say in who buys their home next. “We need to get an organization that can get the building,” he said, “and keep the rents where they are.”

UNHP is in the early stages of working out a deal for Rivera’s building and some of the other Milbank properties. “Part of what we’re doing is to pull together different groups to see if there’s an acquisition we can get together,” Lobo-Jost said. If all the groups decide it’s a good idea, they would attempt to buy Rivera’s and the other buildings from the bank that controls them now. But it would have to be at a steep discount. The high sale price is what landed the buildings in their current condition.

This borough has been through this a few times now,” Buckley said one January afternoon, sitting across a table from Lobo-Jost in UNHP’s crowded office on the Grand Concourse. “This may not be the catastrophic bubble that takes out hundreds and hundreds of buildings, but it is significant. The research we do,” he added, “isn’t just data for data’s sake. We do activist research.”

Much of the design and implementation of UNHP’s research falls to Lobo-Jost. He delights in the detail and fine-tuning of data collection and is much more willing to talk about building code violations than why he works to create and preserve affordable housing. “It’s seems pretty basic. People need a decent place to live. People who aren’t rich deserve neighborhoods that aren’t falling apart. Going to school in the Bronx can get you engaged in ways you hadn’t thought of before you came,” he said. “Then when you get into the work, you realize there are all these other Fordham graduates who have been working on this, going back years and years. You are part of something bigger than yourself.”

—Eileen Markey, FCRH ’98, is an urban affairs and public policy reporter whose work has appeared in The New York Times and City Limits. She lives in the Bronx.