NYC: Deal will fix buildings ailing in foreclosure

The ten Bronx buildings — where residents have lived with more than 4,800 housing violations for problems ranging from collapsing ceilings to mold-covered walls and waterfall-sized leaks — have been purchased by a local investor who has vowed to correct both the decay and the underlying structural issues that worsened in the buildings during the years in foreclosure, Mayor Michael Bloomberg and City Council Speaker Christine Quinn announced in the courtyard of one of the buildings.

 

A year ago this week, Quinn gathered with the buildings' tenants to announce a court action demanding that those connected to their landlord's failed mortgage step in to pay for repairs. In September, the court ruled that the special servicer representing investors, LNR Partners, must pay for fixes — a ruling that may have helped spur the sale announced Tuesday.

 

The buildings — once managed by Milbank Real Estate — were among thousands of properties around the country that fell into default in the housing collapse, leaving tenants unsure where to turn when landlords walked away from investments that had turned sour. In New York City alone, more than 25,000 rent-stabilized apartments had deteriorated visibly by the beginning of 2010, housing officials said. At that time, landlords nationwide owning more than 300,000 apartment units had fallen behind on payments or gone into foreclosure.

 

Steve Finkelstein, the principal behind Finkelstein Timberger Real Estate, which purchased the Milbank portfolio, said he expected to spend $7 million or more fixing the buildings over the next three to four months. The company, which is spending $27.75 million to purchase the buildings, has signed agreements with the city to make the repairs and limit rent increases on previous tenants to no more than $30 per month for each unit.

 

Finkelstein also agreed to forgive what he estimated was roughly $3 million in back rent owed by tenants, many of whom stopped paying because of conditions in their apartments. Of the 535 units, about one-third are vacant. Rents for those apartments will go up more significantly to reflect the cost of renovations, he said.

 

A spokeswoman for LNR declined to comment Tuesday. A lawyer for Milbank did not immediately return a call seeking comment.

 

Finkelstein's repair estimate of $7 million is far lower than an architect's study commissioned by Quinn, which estimated the buildings require $18 million to $24 million in repairs. And it is also lower than the estimate of $10 million to $15 million offered last year by Joe Cicciu, the court-appointed receiver who has been collecting rents and making some repairs to the buildings.

 

Finkelstein scoffed at the higher estimate.

 

"I can do a good quality job for the numbers I'm talking about," he said. And in any case, he said, "We're going to pay what it costs to get them fixed."

 

Quinn said in a statement that she and other officials will continue to work with Finkelstein to ensure the tenants see the repairs they've been promised.

 

"We do recognize the disparity between the two figures, but we continue to be confident that Mr. Finkelstein will return the buildings back to lawful, decent living conditions," she said.

 

Dina Levy, policy director at the advocacy group Urban Homesteading Assistance Board, which has been working with the tenants, said she was cautiously optimistic about the deal.

 

"But I think the real work is ahead of us and it remains to be seen," she said.

 

-Copyright 2011 Associated Press