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Shoddy Work and Debt Plague Buildings Renovated by Tenant Group: Residents

By James Fanelli | November 17, 2014 7:49am
 Tenants at 644 Riverside Drive said the renovation work that SHUHAB has performed has been shoddy. They fear that they'll be buying a lemon when the rental building becomes a cooperative.
Tenants Advocacy Group Has History of Shoddy Repairs at Buildings It Owns
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HAMILTON HEIGHTS — A tenant advocacy group that buys tax delinquent buildings from the city in order to rehab them and eventually sell them off to residents as cooperatives is leaving renovation nightmares and heaps of debt in its wake, lawsuits and residents claim.

The Urban Homesteading Assistance Board, which regularly organizes rallies to shame bad landlords, has been hit with complaints of shoddy repair work and financial mismanagement at three buildings that it purchased through a joint partnership with another nonprofit.

Tenants at one of the buildings, 644 Riverside Drive in Hamilton Heights, told DNAinfo New York last week that they’re being slammed with rent hikes of as much as 90 percent on Dec. 1 after enduring ten years of drawn-out and costly renovation work that left serious defects — including improperly installed windows and holes in walls that cause drafts and rodent infestations.

 Zxavier Simpson has been in a legal fight with SHUHAB, a tenants advocacy group that owns 640 Riverside Drive. SHUHAB made the public advocate's worst landlord list this year for its operation of the property.
Zxavier Simpson Fights Landlord Over Shoddy Apartment
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The new rents will eventually become the tenants’ maintenance fees when they’re offered the opportunity to purchase their units as part of a co-op.

“It’s going to be pretty difficult for me to pay that much money [in maintenance fees],” said a longtime resident who asked not to be identified for fear of retaliation. “I was planning to die in this apartment. Now I don’t know if I can stay.”

Under a partnership known as SHUHAB, UHAB and the nonprofit Settlement Housing Fund purchased 644 Riverside Drive and its sister building, 640 Riverside, in 2003 through the city Department of Housing Preservation and Development’s Third-Party Transfer program.

The program lets responsible parties purchase buildings that the city seized from landlords buried in tax debt.

Under the supervision of HPD, the responsible party then rehabs the building and either eventually sells it to the tenants as a co-op or keeps it as affordable rental housing.

The city took hold of 640 and 644 Riverside after decades of neglect under deadbeat landlords Alex DiLorenzo III and Andonis Morfesis.

Tenants in the two buildings opted to work with SHUHAB in the program. UHAB, which started in 1973, had a long history of fighting for tenants and working to preserve affordable housing.

Tenants at the Riverside buildings told DNAinfo that when they entered into the program, they were promised the opportunity to buy their units for $2,500 and pay a reasonable amount in maintenance fees after SHUHAB took out loans to renovate the buildings.

More than a decade later, only 644 Riverside has been renovated — and that was only finished this year. Tenants in 644 Riverside said while they await an offer to purchase their apartments, many problems remain.

Bill-Lee Lanndis, 53, had his apartment renovated two years ago but he still has water leaks in his bedroom, which have warped his floorboards and led to mold. He recently went to housing court to compel SHUHAB to repair the leaks.

“I had renter’s insurance. I’m uninsurable now,” he said. “When you have so many instances of flooding, they cut your policy.”

Lanndis lives on the 11th floor of a 12-story building. He said SHUHAB claims that the building’s roof and water tower were rehabbed, but leaks still happen during rainstorms.

“Whenever there’s inclement weather, I’m sitting in my dining room with an umbrella,” he said.

Speaking on behalf of SHUHAB, UHAB executive director Andrew Reicher told DNAinfo New York that its contractor, Dellwood Construction, renovated the roofs and water towers at 640 and 644 Riverside.

“Both buildings got the new roofs which are still under warranty,” he said.

But tenants said the worst problem is the high energy costs due to poor construction work.

Earlier this year, 644 Riverside tenants association hired an independent contractor to inspect the windows in apartments. The contractor found the windows were improperly installed — some upside down — and didn’t have any labels identifying the manufacturer.

“They put no insulation in the window. We have air infiltration all through the buildings,” a tenant said, noting that the problem leads to higher heating bills.

Reicher told DNAinfo that the windows are “an ongoing concern” that they hope to address.

“Windows are an important part of their weatherization. We are looking to engage an engineer,” he said.

The tenants also complained that in order to install new wiring and pipes during the renovation, construction crews drilled holes from the basement to the roof — but never patched them up. The holes cause rodent infestation and further problems with air infiltration, according to tenants.

Barry Mallin, a lawyer for the tenants, sent a letter to HPD last month notifying the agency of the window problem, but the agency did not respond. Instead HPD sent notifications to tenants that because the renovations were supposedly complete, their rent would rise on Dec. 1.

Once the rent increases kick in, SHUHAB is expected to make an official offering to 644 Riverside tenants on the cooperative.

Tenants said that ten years ago officials gave them much lower estimates of what their montly maintenace fees would be.

For example, in 2004, they were told that when SHUHAB completed the cooperative conversion, the owner of a one-bedroom apartment in the building would likely pay $600 a month in maintenance fees. Now HPD says the owner of a one-bedroom is expected to pay $991 a month, according to tenants.

Tenants blame the sharp rise on huge cost overruns from the protracted renovation. SHUHAB initially took out at least $27 million in loans from Bank of America and HPD to cover the cost of rehabbing both 640 and 644 Riverside, records show.

But tenants said they fear that SHUHAB borrowed more money and that most of the loans have already been spent on 644’s repairs. They said SHUHAB refuses to share its financials with them.

Reicher of UHAB did not provide DNAinfo with the amount SHUHAB has spent on renovations so far.

The financial obscurity and the ongoing window problems make tenants skeptical of purchasing the apartments from SHUHAB.

“I know that we are going to have to invest a lot of money to make this building energy efficient,” a tenant said. “That’s the reason we are saying we are buying a lemon.”

Meanwhile, tenants at 640 Riverside fear that they will be on the hook for more debt and will face drawn-out renovation work.

Last week DNAinfo wrote how the SHUHAB made Public Advocate Letitia James’ annual list of the city’s worst landlords for its ownership of 640 Riverside. The building has more than 300 housing code violations, according to James’ list.  

"In wake of the 644-Dellwood fiasco, UHAB and HPD now have a great opportunity to redeem themselves by doing the right thing in 640," said 640 Riverside tenant Roberta Gold.

"What concerns me is that they have not committed to any concrete measures for tighter supervision of renovation work — they have not even acknowleded dropping the ball in 644 — and so far no public officials have interevened to safeguard our interests."

Tenants from both buildings said their situation reminds them of what’s going on at 938 St. Nicholas Ave., a Harlem building that SHUHAB stewarded to a cooperative conversion in 2006.

SHUHAB purchased the building in 2002 through the Third-Party Transfer program and took out millions of dollars in loans to renovate it. 

However, last year the tenants-turned-cooperative owners sued SHUHAB and HPD, accusing them of fraud and claiming the hired contractor, Dellwood Construction, barely made renovations and did shoddy work.

The lawsuit refers to two HPD officials who pleaded guilty last year to accepting bribes and kickbacks in exchange for steering city business to contractors. But it doesn’t make specific accusations of HPD corruption in regard to 938 St. Nicholas.

However, the lawsuit claims that the new roof already leaks, 90 percent of the toilets installed in apartment bathrooms had to be replaced and the brickwork has cracks. The deficiencies have caused apartments to fail Section 8 Housing inspections, according to the lawsuit.

The cooperative still owes more than $6 million in bank and HPD loans that it inherited from the SHUHAB renovations.

“It’s really disgusting. It’s taking advantage of the poor, saddling them with millions of dollars in debt,” said Adam Leitman Bailey, the lawyer for the apartment owners of 938 St. Nicholas.

Bailey has previously represented tenants at East Village apartments who accused SHUHAB of financial mismanagement and dragging its feet in converting their buildings to cooperatives.

He said he recently met with Manhattan Borough President Gale Brewer’s office to complain about SHUHAB. Brewer’s office declined to comment on the meetings.

“They need to be put out of business quickly,” Bailey said of SHUHAB.

Reicher declined to comment on the 938 St. Nicholas case, citing pending litigation. But he defended UHAB and SHUHAB's record.

"I believe we are and we have for 40 years," he said when asked if UHAB did a good job in the Third-Party Transfer Program. 

"They are some of the cities worst buildings," he said of the buildings SHUHAB has purchased. "That’s why they go into the programs. They’re not easy. They cost a lot of money. They require a lot of subsidy. They go through difficult financial times."

Reicher said UHAB has assisted in the preservation of 1,500 buildings and created home-ownership opportunities for 30,000 households.

HPD also said that the 640 and 644 Riverside buildings were severely distressed when SHUHAB bought them. The agency said the project has taken longer than expected, partly because renovation took place while 644 Riverside was occupied.

The agency said SHUHAB would also contact tenants who have complaints about their apartments and will create a new "punch list."

HPD also said that it's committed to finding financing for the renovation of 640 Riverside units and expects to start construction next year.

HPD declined to comment on 938 St. Nicholas Ave., citing pending litigation. But a city Law Department spokesperson said HPD only helped choose and approve SHUHAB as the sponsor — but was not in charge of overseeing the renovation work.

Tenants at 938 St. Nicholas also had their own lawyers and engineer to inspect the building’s condition before and after the renovation, the city spokesperson said.

Settlement Housing did not respond to requests for comment.