HUD

'The No. 1 worst in the United States'

"HUD is the No. 1 worst landlord, I believe, in the United States," says Michele Byrd, a man who resides in the decaying carcass of an SRO at 524 West 150th Street. His landlord is the U.S. Department of Housing and Urban Development, the federal agency mandated by law to improve the housing stock.

Byrd's building has mice crawling through gaping holes in its walls, bare plywood floors, and until recently, no working refrigerators or stoves. With its dim halls, leaking ceilings, and decrepit stairways, it looks like a crack house, and until the dealers left last June, it was one. HUD has owned Byrd's building since August 2004, and a simple tally of its 97 housing-code violations belies the extent of its wreckage.

His bathroom is overgrown with mold, and he didn't have running water for months. In the third-floor hallway a mouse has lain decaying on a chemical trap for weeks. Byrd says the management firm retained by HUD has made some improvements, such as recently providing him with a filthy refrigerator and a stove that belches smoke when a burner is turned on. But it's not just the traditional service failings of most bad landlords that have drawn the ire of tenant advocates about HUD. The federal agency has taken unprecedented actions to remove the people who live with these conditions: no-cause evictions.

Stagnant water behind 306 Troutman Street in Brooklyn, where Nicholas Diaz’s daughter 
Carmen Perez lives in a building owned by HUD
photo: Jay Bachhuber
Stagnant water behind 306 Troutman Street in Brooklyn, where Nicholas Diaz’s daughter Carmen Perez lives in a building owned by HUD

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    In fact, it took a federal judge to dam the flood of these evictions, in a decision unnoticed by the local press. Hundreds of low-income tenants who had lived in buildings like Byrd's for years—and had depended on bargain-basement rents to survive—were simply told they had 30 days to get out. In court this spring, the tenants' lawyers argued that these eviction notices were unconstitutional and violated HUD's regulations.

    "I'm telling you right now," Federal District Court Judge Frederic Block ruled in March, "that HUD will not go forward to seek to enforce the no-cause clause against anyone else, so I'm going to give you a formal order to take you off the hook. If they do that they will have to be subject to contempt proceedings. Does that make it clear?" Judge Block's home-saving injunction was only temporary, however. He's reviewing the legal issues and is expected to render a final decision in the coming months.

    HUD spokesman Adam Glantz says the agency brought eviction proceedings against 262 tenants who live in buildings HUD owns as part of the controversial 203(k) program. Glantz says 149 of the tenants who got notices are still in the buildings, many of which are concentrated in Harlem and the Bushwick section of Brooklyn, two rapidly gentrifying neighborhoods. He maintains that HUD "gave all existing tenants a chance to sign up at very reasonable rents" before starting eviction proceedings and that the 149 occupants who were allowed to stay executed leases as a result of the court filings. In most of the other 113 cases in which evictions went forward, HUD contended that all it had to prove is that the tenants received 30 days' notice. In addition to those evicted and those forced to pay higher rents under new leases, advocates say, many people have been harassed out of these buildings by dangerous conditions or threats of eviction.

    "Most of these tenants have a right to be there," says Brooklyn housing lawyer David Pieragostini, "and some of those people have been scared away by this process—they just moved." Many tenants talk of neighbors who accepted small buyouts from HUD's management companies.

    It is unclear why the agency is so aggressively pursuing the evictions and other anti-tenant tactics. If the rationale is to clear and improve the frequently dilapidated properties, HUD's actions perplex advocates. Jennifer Levy, a South Brooklyn Legal Services lawyer who argued the tenants' case in the federal suit, says the evictions appeared too "seemingly arbitrary" to be connected with an attempt to empty the buildings for redevelopment. If, however, the goal is to facilitate the rehab of these buildings, Levy says, "it makes no sense for HUD to develop low-income housing by throwing onto the street the very people who require that housing."

    HUD has demanded back rent from tenants who have paid religiously, sent John Doe eviction notices to well-established residents, and challenged the tenancy of people who have lived in their buildings for decades.

    Angelica Quinones, her sister Nancy, and their neighbor Wanda Alvarado, for example, have proof of residence that they have lived at 55 Harrison Place in Brooklyn for years. Yet HUD recently attempted to evict all three, claiming they were not legitimate tenants. "They didn't even investigate to see what our history was," says Quinones.

    Sheila Stowell, a tenant organizer at the West Side SRO Law Project, questions HUD's priorities, saying, "Why do an eviction proceeding for people who have gone through hell? Why spend all this money on lawyers rather than fixing roofs and other dangerous conditions? HUD is actively displacing tenants. . . . If HUD cares about the welfare of the tenants, they have not put their money where their mouth is."

    The current HUD scandal is rooted in an earlier one. In the 1990s, corrupt real estate investors exploited HUD's 203(k) program, taking huge mortgage and renovation loans based on inflated building values. As landlords, they then spent the rent and let their buildings rot. James Lewis, who founded Harlem Operation Take Back to press HUD to rehab the 203(k) buildings and who now works for a low-income-housing developer, estimates that speculators defrauded the government out of close to $200 million in the city. After City Limitsexposed the scandal, HUD started large-scale foreclosures on the buildings. Rick Echevarria, associate director of Bushwick Housing Independence Project, estimates that around 3,000 people across New York City have been directly affected by the 203(k) implosion.

    City officials point out—quite accurately—that it was not HUD management that caused these buildings to fall into disrepair in the first place. An HPD spokesman, Neill Coleman, says the 203(k) properties "had fallen prey to unscrupulous lenders and nonprofit organizations, leaving many of them in terrible shape." In response, Coleman added, "the city and HUD have formed an unprecedented partnership to invest nearly $168 million over five years to rehabilitate over 500 occupied and vacant multi-family properties."

    It was, however, HUD's failure to monitor its own loan program that allowed crooked investors to purchase and neglect the buildings. And advocates also hold HUD accountable for what they call the appalling negligence of its first two management companies, Arco and National Housing Group, brought in after the original scandal. They also blame HUD for the current conditions in many properties, even while they give its current management firm, Prescient, better grades than its predecessors.

    Glantz contends that HUD "has spent a significant sum to make repairs, replace old oil burners and water heaters, as well as pay utility costs." Yet many 203(k) properties stand out on their blocks. They are the buildings one crosses the street to avoid walking past.

    On Bushwick streets lined with colorful vinyl-sided apartment houses, many of HUD's buildings slump like beaten boxers, with broken-window black eyes and chipped-paint bruises. Inside, unlit hallways lie behind front doors that don't lock.

    In Harlem, they are the crumbling brownstones that stand in stark contrast to the rows of newly renovated historic homes. "My building looks abandoned. It looks like a crack house! I'm embarrassed when I walk outside," Theresa James, who lives at 514 West 149th Street, cried at a recent tenant rally.

    Carmen Perez's apartment at 306 Troutman Street in Bushwick has plastic sheeting covering holes in her bathroom ceiling, and a gaping hole in the kitchen wall exposes electrical wiring directly under a leaky pipe. Backed up sewer water pools below her back door. HUD took over her building in May 2004 but has yet to make any substantial improvements.

    What is perhaps most frustrating about this ordeal is that it could have been prevented. Had HUD listened to the warnings of its own inspector general, the buildings would have never fallen into the hands of corrupt investors. HUD's IG warned in a February 1997 report about the 203(k) program, "The program design encourages risky property deals, land sale and refinance schemes, overstated property appraisals, and phony or excessive fees."

    Despite the warning, HUD continued approving wildly inflated loans while investors defrauded HUD and abused tenants. In 1997 a New Jersey housing inspector, Jim Hawthorne, showed HUD officials a video of children in a 203(k) building playing near open sewage and electrical hazards. In a subsequent Village Voicearticle ("Seduced and Abandoned," January 23, 2001), Hawthorne claimed that the officials wept when they saw the video but did little except bar investors from directly participating in the program.

    A government audit in April 2004 claimed that HUD's first management company, Arco, tolerated unlivable conditions. Its second manager, National Housing Group, was a small Florida-based operation with limited management experience, which HUD admitted won the management contract because its bid was substantially below its competition. HUD got what it paid for, and the tenants suffered.

    "NHG wouldn't come ever," says William Mabry, a 69-year-old jazz drummer who has lived at 510 West 168th Street since the late 1970s. His downstairs neighbor Victoria Meyer moved into the building with her son just as NHG took over. "No one was taking care of the building when I moved in," she says. "Plumbing leaked, the refrigerator didn't work, and windows were broken." She withheld rent for a year, and NHG tried to evict her, but in court she convinced a judge that her actions were justified. She paid her back rent and the problems were fixed, but not until NHG had lost its contract and Prescient had taken over. Mabry and Meyer say Prescient has made recent improvements—fixing electrical problems and replacing a door.

    This summer could be a turning point in this long, sad tale of the 203(k) scandal. "Over 200 of the buildings have been sold, and the others are slated for renovation over the coming months," according to HPD's Coleman. Tenants and housing activists are fighting for development options that would give tenants some control over this new housing, such as mutual housing associations or limited-equity cooperatives. If the development process moves forward and tenant choices of new developers are respected, the years of court battles and living in hellish conditions could end with safe, affordable housing. If the plan stalls, tenants will be stuck in the miserable conditions they've faced for as long as a decade.

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