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Mismanaged Co-ops Uptown Owe the City More Than $21M, Records Show

By Gustavo Solis | June 5, 2015 8:17am | Updated on June 5, 2015 6:01pm

HAMILTON HEIGHTS —Mismanaged co-ops in Hamilton Heights, Harlem, and East Harlem owe the city more than $21.2 million in unpaid taxes and water and sewage bills, according to data obtained by DNAinfo.

Most of the co-ops started as foreclosed properties owned by absentee landlords that the city sold to tenants to give low-income New Yorkers homeownership.

About 60 percent — 200 of 329 co-ops in Community Boards 9, 10 and 11— owe the city money, according to records from the city's Department of Housing Preservation and Development.

Of those, 49 owe more than $100,000, according to data obtained by DNAinfo.

The worst offender — a co-op at 501 W. 143rd St. — is carrying a $3 million debt and is at risk of being foreclosed, according to HPD.

“We are aware of significant issues regarding how the board has been managing the operations of the cooperative at 501 West 143rd Street,” an HPD spokesman said in a statement. “This [co-op] has been identified by HPD and [Department of Finance] as a candidate Third Party Transfer program.”

If placed on the program, every member of the co-op would lose ownership of their apartment and be forced to become renters. For Ronaldo Kiel, who has spent more than $200,000 to buy and renovate his apartment, that would mean a complete loss on his investment.

“I would lose everything,” Kiel said, adding that he and other members have been locked in a legal battle over control of the board since 2013.

Co-op members say their property manager, Yvette Hanon, collects between $300 and $400 from every tenant of the 38-unit building to pay for maintenance and taxes. However, the board has not shared financial records with their tenants since 2004, according to the lawsuit.

Hanon could not be reached for comment.

The building is so poorly managed that is has more than 250 building violations and was on the Public Advocate's worst landlord list.

The tenants want the current management to step aside and have the court appoint a temporary manager to resolve the issue, Kiel said.

Boardmember Michelle Smalls, who is named in the lawsuit, shrugged off the debt saying, "Why are you reporting about us? There are other co-ops that owe money."

Among the other offenders include an East Harlem co-op at 129 E. 102nd St., which owes more than $800,000 in taxes, and one in Central Harlem at 157 W. 123rd St., which owes more than $930,000 — about half in taxes and half in other bills.

The city’s HDFC program turns neglected buildings into co-ops and lets the tenants run them. They are meant to be a way for low income residents to become homeowners in the city.

But housing advocates argue that the tenants are set up to fail.

"During program inception, the HDFCs were designed to fail," said Elsia Vasquez, the founder of Pa'Lante, a tenant advocacy organization. "Most of the time the shareholders don't have the management experience required to run a building. They lack the proper training and don't get enough support to meet today's needs."

The program is not sustainable, she said.

HPD does not have the regulatory authority to intervene in matters of the board. They can serve as advisors and answer any questions that the board or tenants have, but because the board is the owner of the building, they cannot force them to do anything, a spokesman said.

“We do our best to work with the Board to try and understand what circumstances got them to that point, and we work with them to understand how they might resolve the issue,” said HPD’s statement. “Unfortunately the Board and shareholders [are] not always receptive, and our efforts are not always successful.”

State Assemblyman Keith Wright is looking to change that by adding more oversight to the program, according to his spokeswoman Emma Forbes.

“The financial stability of HDFCs is of particular concern, because the loss of earned wealth for residents would be devastating to our communities,” she said. “While often unintended, mismanagement can result in the loss of a real estate asset that had the ability to transform entire families.”