PA James Calls For Temporary Freeze Of Third-Party Transfer Program

Letitia James
Public Advocate and the Democratic nominee for NYS Attorney General Letitia James makes an appearance at the Democratic Party Conference (Photo by Tsubasa Berg)

Editor’s Note: The following is the 10th 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.

Public Advocate Letitia James yesterday called for a temporary freeze of the Department of Housing Preservation and Development’s (HPD) Third-Party Transfer (TPT) program to address recent concerns about New Yorkers losing their homes in error.

James’ call comes as KCP continues its ongoing investigative series on how the program has taken at least four fully paid off properties  from black and brown people, alleging they have not paid off their property taxes and water bills,  and have “distressed properties.” Once taken they are given to the city-affiliated Neighborhood Restore Housing Development Fund Corporation (HDFC), who in turn give them to often connected non- and for-profit developers.

KCP’s first story came on Sept. 17 from a tip that HPD utilized the TPT program to take the fully paid-off brownstone of retired nurse, Marlene Saunders, 74, for back taxes, a water bill and calling the immaculately maintained brownstone a “distressed property.” The brownstone at 1217 Dean Street is on a rapidly gentrifying block and has been assessed at over $2.2 million.

After examining Saunders papers, KCP determined the property taxes were indeed paid, but the city Department of Finance took over 120 days to credit it to the Saunders’ account. Meanwhile the Saunders family maintained they knew nothing about a court foreclosure proceeding that resulted in the taking of their property.

Ms. Marlene Saunders, 74, of 1217 Dean Street in Crown Heights, Brooklyn (Photo by Tsubasa Berg)

KCP, City Council Member Robert Cornegy Jr. (D-Bedford-Stuyvesant, Northern Crown Heights) and James all then questioned HPD about this, and they said there was a clerical error on the Saunders’ part and agreed to give the property back. According to sources, HPD has yet to file the papers to give the deed back to Ms. Saunders who continues to reside in the property along with her extended family members.

A few days later, KCP received another tip, in which retired Haitian-American McConnell Dorce, 69, had his four-unit property at 373 Rockaway Parkway in East New York taken under the TPT program. Dorce paid $25,000 in 1975 for the property and has long paid off the mortgage on the property.

Like Saunders he had a similar tale of not receiving any notices and having thousands of dollars in property taxes that were not credited to his account. In addition, Dorce said he was bombarded with building inspectors looking at everything from the nails in the wall to the new boiler he had recently installed to the fresh paint job he had applied in the building this past summer to come up with violations making it a supposed “distressed property.”

McConnell Dorce
Mr. McConnell Dorce, 69, of 373 Rockaway Parkway in East New York (Photo by Tsubasa Berg)

Days later, KCP learned HPD through its TPT program took another fully paid off property from an African American family in the same highly questionable proceeding. This time 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.

Then days later, KCP learned of the city taking yet another property of  six working-class Latino tenant families at 19 Kingsland Avenue in East Williamsburg. Like the other three cases, the tenants produced documents showing they paid back taxes that were never credited to their account.

In this case, the tenants were co-op owners from a similar HDFC program years ago and owned the property free and clear. However, in this case the owners claim they received foreclosure counseling services from the same non-profit that now owns their property, St. Nick’s Alliance.

The seizure of these fully paid off smaller properties worth millions of dollars and that are black and brown-owned comes at a time when property values are at an all-time high due to gentrification, including the arrival of the first $1 million home in East New York this week.  It has some questioning whether it is constitutional for the city to seize properties without due process or fair compensation.

James said that on paper TPT identifies properties in debt to the City and transfers them to affordable housing non-profits to ensure they remain affordable. However, there has been recent concern that homes are being included in the program or foreclosed upon without sufficient notice to the homeowner, she said.

James said the temporary freeze would allow HPD to address these concerns and to ensure that the agency has adequate safeguards in place to protect homeowners whose properties enter the program.

Despite James’ call for a freeze, and the involvement of local elected officials, HPD continues to stand behind the program they feel is safe-guarding affordable housing.

“The focus here is on buildings, not owners, and the primary objective is to protect tenants and make sure they have safe, affordable homes. TPT is a program of last resort for significantly distressed buildings, and the City has done significant outreach to both owners and tenants over the last three years, offering various forms of assistance to address conditions.  Almost 80 percent of buildings have exited the program,” said HPD spokesperson Juliet Pierre-Antoine.

However, as KCP previously reported, the residents at 25 MacDonough Street are now facing homelessness as the new owners of their building, the Wall Street-based non-profit Urban Homesteading Assistance Board (UHAB) have posted notice they will likely  have to relocate while a total renovation is done on the building. They have also met with tenants with a UHAB attorney present, and nobody representing the tenants, to dictate the options they have when UHAB takes control of the building.

Ryan Benn
Mr. Ryan Benn, a resident of 25 MacDonough St. (Photo by Tsubasa Berg)

Mayor Bill de Blasio‘s office did not give a comment in time for publication but just last month he claimed that the properties erroneously placed on the transfer list were a “small reality” in relation to those that needed the city’s help.

Yudy Ventura, President of the co-op owners at 19 Kingsland Avenue, is excited for the freeze and is hoping it will give her and her fellow tenants the opportunity to finally fight for their property back.

“I have a lot of hope that we can get our building back. You know there are a lot of similar cases like ours and we just want to own our property again. With the Public Advocate behind us, I think we really have a chance now,” said Ventura.

But Lamaar Jones, who is fighting the city in court to get the 25 McDonough property back to their family which has owned it for 50 years, thinks differently. He noted there were over 60 properties – almost all fully paid off and in communities of color – that had a foreclosure judgement against them in one preceding.

“Contrary to Mayor de Blasio’s belief that these are isolated incidents, I find it hard to believe these are insignificant properties,” said Jones, a finance graduate from the prestigious historically black school, Morehouse College. “The evening news will report a petty crime in the local Bodega, but the city lifts about $60 million and it takes weeks and weeks of reporting before anyone pays attention.”

James encourages any homeowner who believes they have been erroneously placed into TPT to contact the Public Advocate’s office by calling 212-669-7250 or emailing [email protected].

Photographs by Tsubasa Berg