City to Close Slumlord Loophole

Big news in the world of housing today: the city is finally starting to own up to the extent of its slumlord problem. And Mayor Michael Bloomberg himself vowed to close a loophole that has allowed slumlords to avoid the financial consequences of breaking the housing code and putting the lives of thousands of tenants in immediate danger.

In a November cover story, 'Who's My Landlord?,' we described the many ways slumlords are able to disguise their identities and avoid taking responsibility for the disastrous state of their properties. We pointed out how hard it is for the city to prevent the worst slumlords from owning real estate. Or at the very least, enforce the law so that slumlords are pressured to clean up their act.

Finally, the city seems to responding. Today, the Mayor, along with Housing Preservation and Development Commissioner Rafael Cestero stood in front of one of ten crumbling buildings that have been lost to foreclosure and announced that the city will be making serious changes in the way slumlords and distressed buildings are handled. The buildings were owned by Milbank Real Estate - the California-based company that the Voice first named on our Worst Landlords list.

This is the first time, to our knowledge, that Bloomberg has looked at the buildings (This may be, in fact, the closest the mayor has ever gotten to examining the "The Worst Bathroom in New York."

The biggest change is this: the city says it is going to find a way to authorize collection agencies to go after landlords that have outstanding emergency repairs liens on their properties.

That sounds wonkish, but it's actually a big deal. It means that the city is going to close a loophole that has allowed slumlords to consistently not repay the city for repairs, and therefore forcing taxpayers to subsidize them. Since 2007, the city has spent $23 million making emergency repairs in its 200+ worst buildings, but slumlords have only paid back $4 million.

The city itself admits today (though they didn't when the Voice asked them the same question three months ago), "there is little that compels an owner to make the payment."

If the city finds a way to sell off the tax lien to a private third-party collector, it will save a lot of money and put more pressure on landlords to pay it back, Mayor Bloomberg explained today, in response to a question from the Voice.

Selling liens to the third party collector has been surprisingly effective in getting slumlords to change their ways.

The Voice has criticized the city's emergency repairs program over the past year because it works like a band-aid - the system merely responds to 3-1-1 calls, which means that the city doesn't actually take action until the buildings are already in a disastrous state. And the 'worst properties' program that is meant to be a big stick targets too few buildings to really make a difference in the living conditions for the vast majority of tenants.

But now, things will work differently, Cestero says. Instead of waiting for 3-1-1 calls to come, the city plans to use data analysis to identify distressed buildings in advance. The city will analyze the data to track a 'rate of decline,' which means the system will try to identify buildings that are 'disasters-in-waiting' by spotting a change in the number of emergency code violations over a two year period. The point is to target problems before they become disasters like the Milbank portfolio.

Milbank is only the tip of the iceberg. Once the city begins to analyze this data, the official number of buildings in distressed condition -- we never really had a tally for this before -- is going to skyrocket. Cestero's new program is a big start at measuring the extent of the slumlord problem -- and finally owning up to it.


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