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Firm City Tapped to Save Affordable Units Among Leaders in Eviction Cases

By  Carolina Pichardo and Amy Zimmer | January 24, 2017 5:41pm 

 A&E Real Estate Holding recently bought the development complex for $201 million. They will receive tax breaks in order to keep more than 900 units affordable for 30 years.
A&E Real Estate Holding recently bought the development complex for $201 million. They will receive tax breaks in order to keep more than 900 units affordable for 30 years.
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Facebook/Riverton Square

MANHATTAN — Much of Mayor Bill de Blasio’s affordable housing plan hinges on the preservation of existing affordable units.

But advocates worry that some landlords who get city subsidies to preserve affordable housing are the very same landlords who have the highest rates attempting to evict tenants from rent stabilized homes — and are therefore contributing to the loss of affordable housing.

One of the prime examples, they say, is A&E Real Estate Holdings.

A&E, which is believed to be the fifth biggest landlord in the city, inked a $201 million deal in 2015 to buy Harlem’s Riverton complex and pledged to keep its nearly 1,000 units affordable over the next 30-plus years in exchange for $100 million worth of tax breaks and incentives from the city, according to reports.

James Patchett, the incoming head of the city’s Economic Development Corporation who previously served as chief of staff to Deputy Mayor Alicia Glen, the mayor's point person for affordable housing, recently highlighted that deal, which he brokered, as a source of pride in reaching the administration’s housing goals.

“I really felt like I was representing [the tenants] as their agent, the person who was standing on the public side with the strength and the tools to ensure that they were protected,” Patchett told the Real Deal last week.

But A&E was also responsible for filing more than 2,230 evictions cases between January 2013 and June 2015, according to an analysis by Rentlogic, a rental listings platform that aims to empower tenants by using open source data to grade landlords on things like vermin infestations, mold problems and construction violations.

Rentlogic's Yale Fox questioned whether the city should be so quick to praise such a deal.

"Before the city trumpets a huge tax giveaway to a developer they should be reviewing the widely available data around evictions and other housing violations,” he said.

A&E ranked 18th in the city for eviction attempts based on the data from the Public Advocate’s office that Rentlogic obtained through ProPublica.

Fox noted that the top 10 percent of private developers are responsible for creating 80 percent of eviction attempts, according to the analysis.

But the number of eviction cases only tells part of the story since the formal process of evicting a tenant is often used after other measures fail, Fox added.

“They have a whole bag of tricks to evict tenants. For example, demolition evictions,” Fox said. “They tell people the building is being demolished, the people leave, then they don't demo the building. There are dozens of tricks including intimidation, unnecessary construction to disrupt the environment at all hours, or raising the rent in violation of rent stabilization rules.”

Fox believes that many landlords factor evictions into their business models when they buy rent stabilized properties.

Nearly 70 current and former tenants across 22 A&E buildings filed a lawsuit — which is seeking class action status — in October claiming the company illegally raised rents of stabilized units and falsified paperwork with the state.

“All one would have to do to determine if A&E is a good landlord is to go to their buildings and talk with their tenants,” said Aaron Carr, of the advocacy group Housing Rights Initiative, whose investigation of A&E led to the class action lawsuit. "We had people literally cry and beg us to help."

The rent of one plaintiff, who lives in a rent stabilized apartment at 344 Fort Washington Ave. in Washington Heights, for instance, was 230 percent higher than a previous tenant’s rent. That increase would have required more than $89,000 worth of improvements to the apartment, the suit say, but no such improvements were made.

“We must ensure that our tax dollars are only going to landlords who treat our laws and our tenants with dignity and respect,” Carr said.

A&E also has faced investigations by the state Attorney General’s office for illegal buyouts at an Upper West Side building (which was settled for $540,000), and by the state’s Division of Housing and Community Renewal (DHCR) for rent hikes at a Washington Heights building (which is ongoing).

A spokesman for A&E said the firm believed the lawsuit filed in October was without merit and has asked the court to dismiss it.

“The allegations of 63 of its 68 plaintiffs concern the conduct of past owners, not our company,” the spokesman said. “Moreover, none of these alleged issues were brought to our attention or that of DHCR prior to this action.”

New landlords are on the hook for previous problems involving rent stabilized housing.

When it comes to eviction cases, which are brought for nonpayment of rent, only 2 percent of the cases actually result in evictions, according to A&E data, while 98 percent of the cases get resolved with a schedule of a payment plan.

City officials said they reviewed A&E’s record extensively before entering into its affordability agreement at Riverton.

“Instead of sitting on the sidelines while Riverton was again sold to the highest bidder without protections for tenants, we worked with local officials to intervene,” said mayoral spokeswoman Melissa Grace. “That resulted in greater rights for tenants, repairs to buildings, and a 35-year guarantee for a thousand affordable homes. Riverton’s families now have security because of what Mr. Patchett and the team accomplished.”

No one from Riverton was part of the lawsuit, nor have there been complaints from tenants from that complex.

The city’s department of Housing Preservation and Development has oversight over the complex to ensure that affordability is maintained.

Cynthia Allen, the tenant leader of Riverton, said “so far so good” about the relationship with A&E, which is building a center for the seniors in the community slated to open this spring.

“They ask for our input and do consult with us,” Allen said. “Just because there’s nice things they seem to be doing, it doesn’t mean that we’re going to overlook if there’s something that’s out of line. We’re both clear on where the line is.”