Editor’s Note: The following is the seventh 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.
Mayor Bill de Blasio today defended the city’s taking of more than 60 properties in Brooklyn – including those of at least three fully paid off African American owned properties worth millions of dollars – and transferring their ownership for “re-development” to non-profit and for profit companies.
But New York State Attorney General Candidate Keith Wofford took de Blasio and the entire city government to task for incompetence at best, and illegal political corruption at worst, in seizing the properties.
“What’s happening here is disgraceful and likely illegal. Mayor De Blasio lives nearby and sleeps securely at night, while his administration creates anxiety and fear among vulnerable citizens whose largest asset is ripped away without compensation or due process,” said Wofford.
Wofford went so far as to call the foreclosure proceedings “unconstitutional,” and urged the Mayor to act immediately in stopping anymore transfers under the program.
The program that the city’s Department of Housing Preservation & Development (HPD) utilizes in taking properties 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 affordable housing for low-to moderate-income households.
Over the years the program has been amended in its definition of distressed properties, most recently in 2016, in which the City Council approved an expansion of the program to include buildings which are subject to Environmental Control Board (ECB) judgments as a result of building code violations in the amount of a lien to value ratio equal to or greater than 25%.
In order for HPD to obtain the foreclosure judgements, the agency sought, needed and received city council approval – an approval that some city council members now say they approved because HPD misled them.
Ben Kallos (D-Manhattan), who sponsored the 2015 legislation, said the measure was never intended to put longtime property owners with smaller properties in foreclosure. He also said before the council voted on the measure to foreclose on the properties in question, HPD assured all council members that both all all the tenants were good with the foreclosures and the owners were aware of what was happening and were given proper notice.
City Councilwoman Alick Ampry-Samuel (D-Brownsville) has also said HPD was misleading in their characterizations of the properties being seized, and has been even more critical following a recent meeting with agency officials, citing a lack of responsibility by housing officials and a lack of information regarding their program specifics.
HPD officials say their goal under TPT is to work with building owners and tenants at every step, and that about 76% of buildings originally deemed eligible for transfer in the current round have been able to correct conditions and exit the program. Each TPT building has been proactively reached out to a minimum 74 times since mid-2015 if they had both DEP and DOF arrears at a minimum, invited to four events, and provided HPD contact information for further one on one support, HPD officials say.
But the continuing KCP investigation has found that of the 68 properties seized in a foreclosure judgement granted in December 2017, a overwhelming majority of them are in traditional African American neighborhoods in Central Brooklyn that are rapidly gentrifying. Seven of the properties have three or less units, and 21 are six or less units.
HPD did not provide any requested information on the threshold criteria for seizing the properties or of any similar properties that might be behind on their water and/or property taxes in such neighborhoods as Park Slope, Bensonhurst or Brooklyn Heights.
The story came to light, when KCP learned the city foreclosed on Marlene Saunders, 74, a retired nurse, who nearly lost her paid-off and in pristine condition brownstone at 1217 Dean Street on a rapidly gentrifying block in Crown Heights.
The three-story brownstone had been in the Saunders family for 30 years and has been appraised at over $2.2 million. Saunders son showed KCP copies of checks paid and cashed by the city for property and water taxes, but were never applied to the property. He also stated the family knew nothing about the court proceeding, in which a foreclosure judgement was issued and only learned the family no longer owned the property through a flyer delivered to the brownstone months after they lost the deed.
Saunders has some political connections through her civic work with among other organizations, the 77th police precinct community council. As such, between KCP, City Council Member Robert Cornegy Jr. (D-Bedford-Stuyvesant, Northern Crown Heights), and Public Advocate Letitia James, the city agreed to give the Saunders their property back. Notably, they did so after blaming the family, saying the Saunders made a mistake in applying the necessary payment to the wrong property.
Days after KCP published the Saunders family story, KCP received a call from McConnell Dorce, 69, a Haitian-American immigrant, who felt in his bones that something was fishy after he went to the New York City Department of Finance (DOF) to pay property taxes on the four-unit home he thought he owned free and clear at 373 Rockaway Parkway – a property he bought in 1975 for $25,000. The property has been assessed at over $1 million.
In interviewing Dorce and looking at his paperwork, KCP found a similar pattern in Dorce’s story as in Saunders’ story, including the city taking his property taxes and not applying it to his property. Dorce has a son and grandson living in one of the units and stated that he literally went to the HPD and/or the Department of Fiance and the Buildings Department almost every day for a month trying to straighten everything out and was continually told conflicting stories.
Among the evidence he produced is a recording on his phone answering machine from a “Supervisor Wallace at HPD” dated Aug. 10, 2018 stating he no longer had any building violations. What Dorce said he didn’t know and that HPD never told him is he no longer owned the deed to the property when he received that call. The city instead sent five inspectors to his property issuing him violations, and he put money in trying to clear up the violations on a property he no longer owned.
Unfortunately for Dorce, he is of more modest means in both political clout and money. As such, he has as of yet retained reliable council, and HPD remains adamant they should take his property.
Just days later, KCP learned of yet another property on the list, which a African American family owned. 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.
Callender, who worked as an auto mechanic on Atlantic Avenue for years, had three children – a boy and two girls – and left his son as executor of the building and who fell behind on property and water taxes. Another family member was named executor, and entered into a payment agreement with HPD, paid them $25,000, went into HPD’s programs to fix the property and thought he had done everything by the book, only to have HPD foreclose on the family anyway.
However, in the Gilmer case they retained counsel, and just last week received 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.
Through all this, de Blasio continues to defend the program.
“Third Party Transfer is a tool of last resort to protect tenants. This program is used in extreme circumstances to fix buildings that landlords refuse to maintain. HPD conducts extensive outreach to owners and offers assistance to correct conditions and prevent foreclosure. For properties with persistent issues, this is the best path forward to improve conditions and ensure long-term affordability for residents,” said de Blasio spokesperson Jane Meyer.
But Wofford said putting at least a pause to the program and the foreclosures in progress is necessary because at stake could be tens of millions of dollars leaving Brooklyn’s African American community.
“Mayor De Blasio must direct HPD to stop any transfers of deeds obtained by prior HPD foreclosures under the TPT program until HPD makes a clear and public statement explaining how homeowners with no mortgage debt ended up on a foreclosure list, and an independent, thorough and swift investigation of the TPT program has been completed,” said Wofford.
Photos by Tsubasa Berg
