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Tenants in buildings on brink get new management

Legal protections and new hope — plus persistent concerns — under deal struck by Attorney General Eric Schneiderman

The lives of tenants across 42 buildings in Manhattan, Brooklyn and the Bronx are about to get much better.

Or so they hope.

In February, a Bronx building among dozens facing foreclosure had garbage piled in the lobby. Photo: Claire Moses

In February, a Bronx building among dozens facing foreclosure had garbage piled in the lobby. Photo: Claire Moses

The more than 1,500 families living in a group of apartment buildings facing foreclosure will see new management in the coming weeks, after Attorney General Eric Schneiderman struck a deal with the buildings’ owners, Normandy Real Estate and Westbrook Partners.

The agreement provides rights and protections that include a $600 rebate to make up for illegal fees that were charged, acknowledgement of the right of tenants to organize and the termination of the contract for the company running the buildings, Colonial Management.

To tenant organizers, the announcement is bittersweet.

“We still have these people who are mismanaging these buildings,” said Sheila Garcia, an organizer at New Settlement’s Community Action for Safe Apartments, referring to the property’s owners.

Two other players that previously had ownership stakes in the real estate venture, Vantage Properties and David Kramer, are no longer involved.

“It is unprecedented. It’s really exciting,” Garcia said, adding that she wished that there had been a role for residents in their buildings’ management going forward. “It could have been even more unprecedented if tenants were involved. We could have gotten to the extreme.”

Foreclosure proceedings on the properties have also come to an end, since the owners have found a new source of funding to keep the buildings. No payments had been made on the $133 million mortgage since May 2012. The owners found a new lender in commercial mortgage lending firm Ladder Capital, who provided the owners with a $146 million loan.

Bronx-based Langsam Property Services Corporation will now serve as the management company for the 42 buildings. The company currently manages 350 buildings.

The agreement with the Attorney General stipulates that the owners are not entitled to justify rent increases rent based on the cost of repairing of existing housing code violations.

“I don’t see how they’re going to make money off of it,” said Kerri White, a director at the Urban Homesteading Assistance Board. In the past, she said, predatory owners of buildings have been able to make money by pushing tenants out and increasing the rent. Since the agreement with the attorney general makes that impossible, it’s unclear how the rent roll will sustain the mortgage this time around.

The agreement states that the new management company is required to provide the Attorney General’s office with “a financial underwriting analysis that demonstrates a capacity to adequately repair and maintain the portfolio without additional rent increases.”

The agreement also emphasizes tenants’ right to organize under New York state law. Tenants had charged Colonial Management with interfering with that right.

“It’s a 14-page agreement that basically enshrines these tenants’ rights,” said Ian Davie, an attorney with Bronx Legal Services who had been working with the tenants. “It goes above and beyond what the law requires in some cases, which is just incredible.”

The attorney general began to investigate the claims of harassment and intimidation in November and found Colonial Management at fault. The investigation also showed that “Colonial did not maintain the buildings, that the buildings have multiple outstanding code violations.”

Bronx City Council member Ritchie Torres — who in March had led a group of fellow members to protest conditions in the buildings on the steps of City Hall — praised the agreement, calling it a victory for tenants.

“For too long, real-estate speculators and landlords have been preying on the vulnerability of low-income communities just to make a quick buck,” Torres said in a statement.

“Responsible property owners who respect tenants and support affordable housing are the only kind of property owners who should be operating our city, period.”

While Tuesday’s announcement comes as a relief to many, the fight isn’t over yet.

The putrid smell in the lobby of 1511 Sheridan Ave. still lingers. The doors at 711 Fairmount Pl. remain unlocked. Organizers are in the process of informing the tenants of the new agreement and will urge them to keep their new managing agents accountable.

“It’s not like we have this agreement and we can now go home and celebrate and never talk about it,” White said. “It’s a pretty strong step forward for tenants, but it’s an ongoing process.”

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