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17 Affordable Houses Still Vacant After Decade in City Program, Report Says

 Hollie Osborn, left, and her mother, Ethel Osborn, right, made a down payment 13 years ago to a nonprofit developer responsible for renovating the house behind them, 1344 St. Marks Ave. in Crown Heights, as part of a city-run affordable housing program. They have yet to be able to move into the home, they said.
Hollie Osborn, left, and her mother, Ethel Osborn, right, made a down payment 13 years ago to a nonprofit developer responsible for renovating the house behind them, 1344 St. Marks Ave. in Crown Heights, as part of a city-run affordable housing program. They have yet to be able to move into the home, they said.
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DNAinfo/Rachel Holliday Smith

CROWN HEIGHTS — Seventeen Crown Heights properties in a city-run affordable housing program have sat empty for more than a decade, a new report from Public Advocate Letitia James says, leaving the potential homeowners — and the sizeable down payments they made on the homes — tangled in red tape.

The properties are all part of the Neighborhood Homes Program run by the city’s Housing Preservation and Development agency, responsible for choosing developers to renovate one- to four-family homes to become subsidized housing for income-qualified buyers.

Under the program in 2002, the agency transferred a total of 26 properties in foreclosure in the area to a nonprofit, Moore Better Homes, with the expectation that the group would renovate and sell them to buyers making up to 165 percent of the area median income.

At first, according to the report by the public advocate’s office released Monday, Moore Better did just that; between 2002 and 2005, the group rehabbed and sold five of the 26 properties.

The above map shows the locations of all 26 properties first transferred to Moore Better Homes by HPD in 2002 and the status of each property today, according to the recent report from Public Advocate Letitia James.

But soon afterward, the nonprofit hit financial trouble and in 2007, the city transferred the remaining 21 properties to a for-profit company, Heights Houses Corp., run by George Armstrong, an affordable housing developer who in 2011 pleaded guilty to federal charges for bribing then-HPD deputy Commissioner Wendell Walters, the report said.

Since then, only four homes have been sold, with 17 — and their 40 residential units — remaining empty and in disrepair, James said.

“Nothing has happened,” she said Monday, speaking to reporters in front of one of the 17 empty homes, 1344 St. Marks Ave. “They’re derelict. A lot of them are vacant. They’re eyesores. They’re bringing down property values.”

James said she has received complaints about the issue for years, stretching back to her time as the neighborhood’s City Council representative. Most concerning to her, she said, are the eight prospective owners who, to her knowledge, have put down tens of thousands of dollars with Moore Better and Heights Houses thinking they would someday own one of the “Neighborhood Homes” properties.

“They were forced to wait years to gain ownership of these homes, which never happened,” she said.

Hollie Osborn and her 93-year-old mother, Ethel, first made a down payment deposit of between $25,000 and $30,000 for the St. Marks Avenue home in 2003, she said, and have yet to get an answer from HPD about when they can move into the three-story house, conspicuous on a tidy block with its boarded-up windows and rusted gate.

“For 13 years, my mother has been suffering,” Osborn said, standing with James beside Ethel, who uses a wheelchair. “She should be enjoying her remaining years.”

James hopes HPD can resolve the issue and renovate the 17 homes by the summer, she said. Ethel expressed the same hope.

“Before winter comes next year, I will be living in my own home in peace and love,” she said, her voice barely audible above cars passing on the residential street.

In response to the public advocate’s findings, HPD spokeswoman Melissa Grace admitted that “no question there are some real challenges here” while pointing out that if the city moves to repossess the homes, “those low-income families could lose their right to purchase these homes.”

"HPD is committed to ensuring the rehabilitation of these homes is completed and that they are turned over to their rightful owners for affordable homeownership,” she said in a statement. “That’s why we’re pushing ahead to get the project completed so we can get these homes in the hands of the people who need them."

Heights Houses Corp. could not be reached for comment.

The agency also pointed out that of the 638 homes included in the Neighborhood Homes Program, about 600 have been sold to income-qualified homeowners to date.

The complete report from the Public Advocate's office can be found here.