Paterson's Housing Pick Grapples With One Crisis After Another
Veteran housing lawyer confronts Stuy-Town ruling, predators
Last year, the state's highest court threw the real estate world into chaos when it found that the owners of Stuyvesant Town in New York City had illegally collected special tax breaks while deregulating thousands of apartments. Tenants threatened to sue. Landlords lost piles of money.
And Brian Lawlor was left to clean up the mess.
"We have a crisis in New York City with Stuyvesant Town and the J-51 decision," Lawlor said in an interview earlier this month, referring to the tax breaks. "There's so many parties that are adversely impacted by it, from owners who don't know what rents to charge, to tenants who don't know what rents to pay, to lenders who don't know what buildings are worth."
He added: "That's eventually going to come to us."
The confusion caused by the Stuyvesant Town ruling is just one of several challenges facing New York's housing market, as lenders, landlords and developers begin to emerge from the rubble of the collapse. And they will all be looking for guidance to Lawlor, who was recently appointed commissioner of the state Department of Housing and Community Renewal by Gov. David A. Paterson.
Lawlor is a housing lawyer who spent virtually his entire career working for the state housing department.
"He was in DHCR before our organization even started," said Kenyon Craig, the president of Syracuse-based Housing Visions, a non-profit developer founded in the 1980s.
Some advocates, especially from New York City, say they know little about Lawlor because he has spent most of his career toiling in the state's tangled bureaucracy. But others say his long tenure at DHCR is exactly what the housing world needs.
"Every agency has a couple of those people who have been there for quite a while who really understand all the issues, and Brian is one of those guys," said Ted Houghton, executive director of the Supportive Housing Network of New York.
Houghton said that with Paterson on his way out, advocates and developers were looking for a steady hand to shepherd the state's housing agenda through a tumultuous year.
"He provides some continuity between administrations," Houghton said. "At this stage, what the New York housing community needs is somebody who is going to be able to have the housing agencies in as good a position as they can be come November and the beginning of the new year."
But Lawlor said he was not content to simply keep the commissioner's seat warm until the next governor's appointee arrives. Housing officials are already drawing up plans for what Lawlor called a "radical," state-led approach to the J-51 crisis that would work outside the framework of the courts and the existing law, which requires tenants to file overcharge complaints that often take months to adjudicate. Such a system might face challenges from lawmakers and landlords, but would be embraced by advocates, who say the J-51 decision has created a web of complex legal issues that most tenants cannot unravel.
"We're working with some buildings now that do have J-51s that shouldn't have been deregulated, and we're running around finding law firms," said Dina Levy, director of policy and organizing for the Urban Homesteading Assistance Board.
Levy's organization has also been working to rescue thousands of rent-regulated units from the grip of what many call the "predatory equity" crisis, in which speculators buy buildings hoping to turn a quick profit but shirk their responsibilities to tenants once those deals go bust. Officials estimate that as many as 110,000 apartments in New York City are in precarious financial situations. And many advocates argue that the state, more than the city and federal government, has a responsibility to intervene, since the state has jurisdiction over rent-regulated apartments.
Advocates have called for the state to kick in "preservation financing" to help bridge the gap from financially troubled landlords to responsible owners, such as non-profit organizations. The city has already allocated $750 million, which Levy said would be insufficient for the scale of the problem. "The state is going to have to do something comparable in terms of resources to preserve some of these buildings," she said.
But Lawlor said he was skeptical of such rescue efforts because they could be seen as bailouts for irresponsible investors. DHCR, he said, has focused its efforts primarily on inspections of financially shaky buildings and sharing information with the city housing department to make sure owners adhere to the law.
"This is a crisis that is the result of bad decisions by investors and by lenders. I don't really think that it's the role of government, and particularly state government, to intercede and to bail out those bad decisions," Lawlor said. "Our focus is to keep an eye on those buildings, inspect them regularly and to respond to complaints, to make sure that there is no decrease in services while the ownership issues get worked out."
But with less than a year on the job, Lawlor's attention seems likely to go toward grappling with urgent problems like the J-51 ruling and the predatory equity crisis than developing a broad new agenda for the state's housing agencies.
Unless, of course, he gets to stick around for longer than the next eight months.
"Right now he's the kind of guy you want trying to keep everything together until the next administration comes in," Houghton said. "And, hopefully, he'll be part of the next administration as well."
Reprinted from the Capitol Newspaper, via DHCR
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