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Additional reporting by Donal Griffin
FLOODS OF COMPLAINTS
Landlord: Steven Carter (Cronus Capital and Perseus Capital Management)
At the height of the real estate boom, the private-equity firm Cronus Capital, controlled by financier Steven Carter, went on a buying spree, amassing about 30 buildings in Harlem and Washington Heights in just a few short years. Two of the buildings now sit on the city's worst-violations list. In four buildings, there are group lawsuits against Cronus's management arm, Perseus Capital Management, demanding that either the landlord and its managers make widespread repairs or a judge appoint an independent administrator. Tenants in six properties have been granted building-wide rent reductions by the state, says Diogenes Abreu, of the Northern Manhattan Improvement Corporation. At least 60 additional tenants in 15 separate buildings have enough lingering repair problems that the state has also lowered their rent.
Cronus is an affiliate of HIG Capital, a $7.5 billion European private-equity firm. Carter, the principal of Cronus, lives in the Sabrina, a luxury condo building at West 98th and Broadway, not all that far from the screwed-up buildings under his control.
Cronus boasts the conversion of a Chelsea office building into luxury condos, and also has various real estate ventures in New Jersey, Florida, and Houston. The Bronx and Washington Heights buildings fit one of Cronus's "investment strategies": "Acquire underperforming properties and develop a specific turnaround plan." Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, translates: "When you say 'underperforming assets' in a rent-stabilized building in New York, that means the tenants themselves. The tenants themselves are the underperforming assets, because they are too poor."
As for Cronus's "turnaround plan," consider, among other properties, 79 Audubon Avenue, which Cronus acquired in April 2007. Earlier that year, before Cronus purchased it, the building had 79 code violations, including a four-foot-wide hole above the row of mailboxes in the lobby, says tenant advocate Evan Hess. Sixteen months later, the number of violations had surged to 217. Seventeen tenants declared a rent strike, placing their rent payments in an escrow account. In September 2008, a judge ordered Cronus's management arm, Perseus, to complete all repairs in 60 days. But by February 2009, the building had 224 violations—even more than when the judge first ordered the landlord to deal with them. As of March 2010, the building had more than 180 violations.
Quotable: Tenant Lida de la Rosa says of her Washington Heights building: "We've got holes, holes, holes—I'm talking about holes!"
What it's like to live there: Running water, stagnant water, leaking water, no hot water—all are plagues at various Perseus buildings. Liliam Evora, a grandmother and teaching assistant who lives at 184 Nagle Avenue in Washington Heights, has endured a constantly leaking hole in her ceiling. She says she called Perseus every single day for two years, but got no rhythm. So she petitioned the state for a rent reduction—and got it. Public Advocate Bill de Blasio recently used Evora's building—with its 168 heat and hot-water complaints this past winter—to kick off a campaign in support of a City Council bill that would increase the fines for landlords who go more than five consecutive days without providing heat for their tenants.
At 11 Vermilyea Avenue, also in Washington Heights, Milagros Puello, a 58-year-old home attendant who lives in one of the apartments that sued Perseus, couldn't get her leaky bathroom ceiling repaired. After six months, the ceiling collapsed. She paid a neighbor $200 to tape it up with plastic garbage bags, but she says that dust from the broken ceiling has brought on asthma attacks. A judge has ordered repairs in 17 apartments in the building.
"It's like a cat-and-mouse game with them," Lida de la Rosa, a 46-year-old office assistant who works for an insurance company, says of dealing with Perseus management. "There's really no use in calling. You leave a message, but you never get through." De la Rosa lives in 507 West 170th Street, a building with 347 code violations—half of them immediately hazardous—making it one of the 200 worst in New York, according to the city's weighted scale of serious violations and violations per unit.
"Abandoned—we just feel abandoned," says Eligio Valerio, a 42-year-old taxi driver who lives in a Perseus-run building at 516 West 169th Street. "My fuse box is broken. There are so many rats, so many broken windows. They just don't fix!"
It's not just low-income and rent-stabilized tenants who are having problems. Yoni Etzion, an Israeli musician who shares a one-bedroom apartment with her boyfriend at 618 Academy Street in Washington Heights, says the company never came through on major repairs that were promised before the couple's September 1, 2009, move-in date. After numerous calls and e-mails, the couple decided to just show up at the company's Upper Manhattan office, a copy of their lease in hand, and throw a fit. "They just don't care," Etzion says flatly. A tenant in Etzion's building told El Diario that she had to sponge-bathe her children on the fire escape because the company wouldn't repair her bathtub.
Mitigating factors: Adam Foreman, Perseus's maintenance director, tells the Voice that the company is "well aware that there are plenty of violations out there." He says he has done a lot of work to clear the violations from the city books. But, he adds, "We're just a management company. The investors are the people that own the buildings." Foreman says the city is also at fault: "[Department of Housing Preservation and Development] generates so many funds for the city. They are more compelled to write violations than they are to come out and clear them."
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