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-
“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.
