City Takes Third African American Owned Property Under Guise of Affordability

Mr. Dorce's notice from HDFC

Editor’s Note: The following is the sixth of a KCP investigative series by reporters Kelly Mena and Stephen Witt on how New York City is taking paid off properties from longtime small property owners, including black and brown seniors, and giving them to connected non-profit and for-profit developers as gentrification sweeps across Brooklyn.

For the third time in two weeks, KCP has learned the city has taken a fully paid off property from an African American family in a highly questionable proceeding – undermining the family’s preservation of generational wealth – and putting it under the sponsorship of a Wall Street non-profit created three decades ago when New York City was rife with abandoned buildings, a stark difference from the million dollar properties in gentrifying neighborhoods today.

In this case, the city foreclosed on 25 MacDonough Street in the heart of rapidly gentrifying Bedford-Stuyvesant. Ronald Callender bought the 19-family rent stabilized apartment building in 1968, paid it off and left it for his three children under the name Gilmer Holding Corp.

25 MacDonough St.
This is the fully paid off porperty at 25 McDonaugh Street in Bedford Stuyvesant.

Callender left his son as the executor of his estate and he fell behind for a little over $120,000 in property and water taxes, although the building has been relatively well maintained. According to court documents, Gilmer entered into a property payment installment agreement with the city on Nov. 2, 2017. At this time, the family made an initial payment of $25,000, which the city took, but failed to remove the property from the foreclosure process.

At the same time, Gilmer paid an additional $535 to get the property in a payment plan to stop the city’s collection process. An amount that was, according to official documents, taken in full.  

This pattern of taking money from property owners and not crediting it to their taxes is similar to the two other cases that KCP investigated here and here.

The city’s Department of Housing Preservation & Development (HPD) then filed a request for foreclosure judgement on Nov. 27, 2017, and Judge Mark Partnow signed a judgement of foreclosure on Dec. 5, 2017. In all three cases, the property owners said they received no notification of a court proceeding, and only learned of it after notices of new ownership was sent to tenants in the building.

Attorney Amy Marion of the law firm Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone explained her clients are two African American sisters, who ran into problems when their brother, who was the executor of the estate didn’t pay the taxes.

“In this situation both the sisters are gainfully employed, hard-working individuals, but nevertheless they don’t have money saved. Losing out on a $3 million plus property is extraordinary and keeping it in the family [both sisters have children] are perfect examples of generational wealth. Keeping it in the family would make all the difference in how their socioeconomic condition would change, especially now that the brother is removed as the executor,” Marion said.

Marion last week successfully argued for a preliminary injunction from the foreclosure on the grounds that both the Gilmer’s procedural and substantive due process rights have been violated,  the property itself is not a “distressed property” as the city alleges and the program used to take the property was both untimely and caused irreparable harm.

In the Gilmer case, there is also state case law that government taking a property for money owed that is less than 10 percent of the value of the property is unconscionable. 

According to court documents, the Gilmer property is currently valued at more than $3.2 million dollars, meaning that a 10% lien to value ratio would have to be $300,000 or more to meet the 10% threshold required by the program to qualifying the property as “distressed.” However, HPD’s last recorded assessed value on the building was back in 2013, which estimated the property’s worth at  $2.06 million.

The program that HPD utilized in taking the more than 60 properties in the past year is called the Third Party Transfer (TPT) program, which goes back to the 1980s when New York City had many blighted and burned out properties.The program designates qualified sponsors to purchase and rehabilitate distressed vacant and occupied multi-family properties in order to improve and preserve housing affordable to low-to moderate-income households.

Over the years the program has been amended in its definition of distressed properties, most recently in 2015.

In its current iteration, the TPT program transfers the property to Neighborhood Restore a non-profit affiliated with the city, who in the Gilmer property case turned it over to the Urban Homesteading Assistance Board (UHAD) as the building sponsor.

UHAD is located at 120 Wall Street. The non profit was founded in the midst of New York City’s economic crisis of the 1970s when landlords abandoned their buildings en masse and the city found itself with more than 11,000 buildings on hand and no idea what to do with them. UHAB turned to the Long Island-based Concord Management of New York to manage the property.

Since KCP brought to light the programs and seizure of properties, State Attorney General Candidate Keith Wofford has called for a full-scale state investigation of HPD and other city agencies involved in the program and seizures of properties. He also called for an injunction on all properties seized thus far as well as records the city has on all the properties.

Additionally, City Council Members Robert Cornegy Jr. (D-Bedford-Stuyvesant, Northern Crown Heights), Chair of the Committee on Housing and Buildings, and Alicka Ampry-Samuel (D-Brownsville), among other lawmakers have met with HPD officials to explain among other things, how many of these “distressed properties” are owned by African American families.

Cornegy’s office is looking into the matter, and wants a full review of HPD’s seizure process and procedures.

“We’ve asked HPD to furnish us with documents or records that they have that might help us understand what their process is when it comes to picking out properties, so that we can maybe make some meaningful changes to the program,” according to a source close to Cornegy’s office.

Ampry-Samuel said she left the meeting with HPD angry about the agency’s constant defense of the program and fixing the system in the future.

“They feel as though the process has systems in place to protect seniors and to protect people who are vulnerable to predatory lending and other financial problems. And in a sense they feel, because they have these safety precautions in place, they have done everything they have needed to do to in these matters. But my argument is if you know that there is a senior on this list and it’s not a building it’s an actual home, then there would be more concentrated and intentional outreach to those individuals instead of saying, ‘oh well, we sent out notices and we have programs in place and if these homeowners didn’t take us up on the services, then that’s on them,’” said Ampry-Samuel.

“I was very disappointed in our meeting because I was hoping that they [HPD] would review all of the most recent transfers in light of what happened with Mrs. Saunders, as well as what came to light with Mr. Dorce. I was hoping they would put a pause on the process and really look at what was done and be able to reverse the transfers. But they were not willing to do that,” added Ampry-Samuel.

But for now the children and grandchildren of Ronald Callender have been given some saving grace on the family property, as a judge recently granted them an Order of Stay on the foreclosure proceedings tied to the building, citing an Order to Show Cause.