Brooklyn Boro

How changes to a city housing program could save vulnerable homeowners

What is Third Party Transfer, and why do some local officials want it reformed?

July 12, 2019 Kelly Mena

Yudy Ventura had owned her Bushwick apartment for more than 30 years when she learned her building was going to be seized by the city. The cause? Upwards of $50,000 that she and the other five tenant families owed in property taxes.

The building, however, was worth more than $2 million, she claimed, and had not one outstanding violation. It didn’t seem right to her that a debt that was a small fraction of the property’s total value should put it at risk of being seized.

The program through which Ventura’s property was foreclosed upon is now the target of a a City Council investigation, criticized by some for veering off course by seizing private residences for minor infractions. Now, two councilmembers will propose limiting the program’s scope by redefining its terms, the Brooklyn Eagle has learned.

According to the offices of Councilmembers Ritchie Torres and Robert Cornegy, the Third Party Transfer program, meant to rehabilitate blighted and abandoned properties, used overly broad criteria that allowed the city to repossess and transfer ownership of homes away from longtime property owners — often hitting Brooklyn’s rapidly gentrifying communities of color the hardest.

Representatives of Cornegy and Torres told the Eagle that the lawmakers will soon propose reforms to the program that would, among other changes, stop the city from repossessing homes due to minor infractions, weigh the value of any unpaid debts against the property’s total value, and omit properties that don’t have any tax debt but might owe city fees — all of which would significantly narrow the program’s scope.

Yudy Ventura’s building at 19 Kingsland Ave. Eagle file photo by Paul Frangipane

Following a six-month investigation into the TPT program — which falls under the umbrella of the city’s Department of Housing Preservation and Development — Torres and Cornegy have identified six categories of properties seized based on outdated policy.

“It is clear to us that HPD is targeting properties for Third Party Transfer disproportionately. It’s targeting Brooklyn and the Bronx, it’s targeting black and brown neighborhoods. It could be that HPD did follow the rules, but the rules are inconsistent,” Torres, who chairs the council’s Housing and Buildings Committee, told THE CITY last month.

The two lawmakers will hold a public hearing on Monday, July 22, to hear testimony on new criteria. The hearing was originally slated for June 17 but has been twice delayed.

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Overall, HPD claims that the TPT program has been a success. But last month, the agency announced the creation of a working group aimed to correct some of its pitfalls. According to the announcement, the group will be charged with developing recommendations to modify the program to address key concerns like large, simultaneous land grabs and ensure it effectively targets the properties with the highest levels of unpaid tax debt.

Louise Carroll, HPD’s commissioner, pointed to the rising cost of rent citywide as grounds for the program. “In addition to being an effective tax enforcement program, TPT has become a critical tool for protecting tenants, and is one that we can’t afford to lose in the midst of a dire affordability crisis,” Carroll said at the time of the announcement.

“We are looking forward to partnering with local advocates, community stakeholders and elected officials to modernize this program that has played a crucial role in protecting tenants and stabilizing properties,” added department spokesperson Matthew Creegan.

What is TPT?

The Third Party Transfer program was launched in 1996 as a tax enforcement program aimed at collecting unpaid taxes (such as water bills, property taxes, maintenance fees, etc.) and at stabilizing some of the city’s most “distressed” properties while still preserving affordable housing for local residents.

Under the program, the city designates qualified sponsors (nonprofit or for-profit developers) to purchase and rehabilitate distressed vacant and occupied multi-family properties.

As part of the process, the city uses in rem foreclosure, in which a court passes a judgement on whether or not to foreclose on a private residence in a bid to collect unpaid debts against the building. However, unlike a traditional foreclosure process — in which residents are evicted — tenants are left in the building with their rents maintained at an affordable rate.

The ‘clustering’ problem

Local officials are also hoping to reform the way in which the program identifies distressed properties through a process in which clusters of neighborhoods become targeted simultaneously.

One of the ways in which TPT identifies potential properties for the program is by using an already designated “distressed property” as a jumping off point for examining an entire city block for other potential seizures. For the city, this method allows for quick identification of other deteriorating buildings — but it also causes clusters of seizures within specific neighborhoods.

As previously reported by THE CITY, there were initially 192 properties targeted in Brooklyn alone in the most recent round of foreclosures — the most of all five boroughs. Out of the 11 neighborhoods where buildings were most often identified for potential transfer into the program, six were in Brooklyn.

Of these properties, the majority were concentrated in Central Brooklyn, specifically in the neighborhoods of Bushwick, Bedford-Stuyvesant, East New York, Stuyvesant Heights and Crown Heights North. These neighborhoods made up 60 percent of the 213 properties initially targeted for the program. Once one property on a block is identified, the city assumes that other properties in the vicinity could also be eligible for the program — and thus the clustering begins.

This kind of methodology can lead to certain neighborhoods becoming targets: One building’s debts open up a floodgate for the debts of neighboring buildings to come onto the city’s radar.

History of conflict

The program initially grabbed the attention of community leaders and local officials last September, when Marlene Saunders, 74, a longtime homeowner in Crown Heights, nearly lost her three-story brownstone to the program due to a clerical error: A $3,000 water bill that had gone unpaid was leveled against her $2.2 million property.

Then there was Ventura, the longtime Bushwick resident who accused the city of stealing her home outright. Ventura and five other Latino tenant families at 19 Kingsland Ave. live in what is known as a Housing Development Fund Corporation cooperative, a city program that helps moderate- to low-income individuals become property owners. Ventura thought she was in the process of paying off nearly $61,000 in unpaid debts, but ended up losing the $2.4 million building entirely.

In March of this year, Justice Mark Partnow vacated the original foreclosure judgements against all six property owners, including Ventura. In his decision, Partnow noted that the unjust seizure of property was “not an isolated occurrence, but, rather, is a widespread occurrence being experienced by many other property owners, who are being inequitably stripped of their valuable property rights.”

Brooklyn’s black-owned brownstone belt has been affected the most by the program, as rising real estate values have made senior homeowners especially the target of property seizures.

Brooklyn Borough President Eric Adams called for a temporary moratorium on the program back in April. “Homeownership is the cornerstone of black wealth — not only in New York City but across America,” he said. “And there has been a long history of attempting to take property from communities of color.”

Update (1:45 p.m.) — This article has been updated with a quote from HPD spokesperson Matthew Creegan.

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