Council Members Dan Garodnick, Ritchie Torres, and Jumaane Williams announced the formation of a coalition to fight one of the major threats to New York's affordable housing stock: predatory equity.
The Coalition Against Predatory Equity (CAPE) already boasts over 40 elected officials and scores of advocates and is expected to grow considerably. They have organized around 4 principles that will protect affordable housing from being purchased in overleveraged deals that put tenants in the crosshairs. Such deals have endangered affordable units in places like Stuyvesant Town and Peter Cooper Village, the Three Boro Pool portfolio, the Urban American Portfolio, and many others.
CAPE’s organizing principles are:
1) We need a commitment from Fannie Mae and Freddie Mac that they will not lend money in any residential housing deal that puts affordable housing at risk. These mortgage giants play an enormous role in securitizing mortgages for home sales, but their charge should be kept to helping Americans afford a home, not helping drive Americans from those homes. This standard should apply to them making an investment directly or through any affiliate. Their balance sheet should have no exposure to plans that weaken our city.
2) Responsible investment of City and State pension funds. Some recent over-leveraged deals designed to harm tenants were supported by the investment of pension funds around the country. We must invest responsibly to ensure pension fund growth, while also avoiding deals that do harm to our affordable housing stock.
3) No subsidies for deals that create risk for affordable housing. We want to end any special protections from government -- either through tax breaks or subsidies -- that enable the reduction of affordable housing. Government help may exist to promote development, or to renovate apartment units, but with such benefits should also come an obligation to keep housing affordable to the maximum extent.
4) Legislative solutions defending tenants. We will seek opportunities to support legislation that helps to limit the abuses of predatory equity, and assists tenants in over-leveraged buildings.
"We are not going to just sit back and watch as properties get ravaged and tenants get harassed repeatedly in this city, " said Council Member Dan Garodnick, who represents Stuyvesant Town and Peter Cooper Village, and released a report about the dangers of over-leveraged housing last month. "This is a broad and determined coalition, and together we are determined to fight to end these predatory practices."
“One of enduring lessons the recent housing collapse taught us is that there are certain investors who will take out risky mortgages with no solid plan to avoid default. When defaults occur, tenants suffer from unlivable conditions and are often constructively evicted from their homes. Those engaged in predatory equity not only threaten the homes that people have lived in for decades, but they help deplete this city of desperately needed affordable units,” said Council Member Williams. “As chair of the council’s Committee on Housing and Buildings, I’ll do everything I can to end this dangerous practice and protect tenants and income-targeted housing. I am proud to stand with Council Members Garodnick and Torres on this effort.”
“ We cannot allow bad-actor landlords to overleverage the value of our homes and threaten the city’s already limited availability of affordable housing. In forming this coalition we are taking a stand against the degradation of a vital public resource,” Said Council Member Ritchie Torres, a leader in the fight against predator equity.
"I am proud to join this coalition and its mission to protect and preserve our city's affordable housing. Nothing was more shocking about the Tishman Speyer - Stuy Town/Peter Cooper transaction than finding out that the federally-chartered Government-Sponsored-
Enterprises tasked with expanding affordable
housing were actually investing in a deal that could only succeed by
converting as many affordable units as possible into luxury rent
apartments. I introduced legislation at the time to reform
these agencies and I will be introducing my bill again this week to
send a message that these GSEs cannot game the system and fail to comply
with their affordable housing responsibilities. I would like to thank
Council Members Garodnick, Torres and Williams
for their leadership on this issue," said Congresswoman Carolyn B. Maloney (NY-12).
“I commend Council members Garodnick, Williams and Torres for creating this coalition, which will serve as an important tool to address the problem of risky, predatory investment in New York City’s affordable housing stock," said Attorney General Eric Schneiderman. “Too often, high-leverage deals have led to disturbing reports of tenant harassment and high levels of disinvestment. Recently, for example, my office confronted the owners of a 1700-unit portfolio - where landlords were resorting to illegal tactics to salvage a bad business deal - and forced them to respect the rights of tenants and compensate renters for their hardship. My office will continue to keep a close watch on these deals as they evolve, and I look forward to working with the coalition to enforce the laws protect New York City’s renters."
"Too many New Yorkers are in desperate need of affordable housing throughout our city. We can no longer sit idly by as big banks and big-money investors engage in over-leveraged deals that put our economy and limited housing stock at risk. As a trustee of NYCERS, I am committed to taking a closer look at these deals to ensure that the City is not using pension monies that adversely affect New Yorkers. I am proud to stand with the members of the Council as we call for new policies to protect against predatory equity transactions," said New York City Public Advocate Letitia James.
“New York’s families can’t afford to see their access to quality affordable housing undermined by the purveyors of predatory equity financing and our families need creative solutions that will expand the pool of capital that is invested in meeting the housing needs of all New Yorkers,” Council Member Vanessa L. Gibson said. “Innovative initiatives such as strengthening the Community Reinvestment Act to encourage lending to responsible building owners, ensuring that government subsidies result in the creation of truly affordable quality housing and expanding the investment of City and State pension funds in the affordable housing market are essential measure that will go a long way toward making housing more affordable for the families I represent in the Bronx.”
“The practice of predatory equity investing is the worst thing to hit the NYC housing market since the 2007 crash! The practice is dangerous to our affordable housing market and the working people of New York City, creating a ‘lose-lose’ situation. In order for investors to profit, rents must be raised and the old tenants must move out. If this doesn’t work, the owners disinvest from the buildings, forcing the tenants to live in substandard living conditions. This is unacceptable and it must end. I commend Council Members Daniel R. Garodnick, Ritchie Torres and Jumaane D. Williams for bringing this issue to the forefront and working to put an end to this practice our city,” said Council Member Andy King, Co-Chair, Black, Latino and Asian Caucus.