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Experts Warn Of Foreclosure Crisis As Floodwaters' Toll Persists


NEW YORK — If the water that destroys much of your house comes up from below the structure, would you describe that as a flood? Grantley Hunt was mulling this question when his insurer balked at covering the damage caused by Superstorm Sandy over a year ago to his two-family house, which has an almost unobstructed view of Jamaica Bay in Queens.

The house is almost dead even with the bay. But Hunt was ready – he thought he was ready – when the water from the bay surged onto the streets of the Rockaways one year ago: He had encircled the house with sandbags.

“There was no way that water was coming into my house,” he recalled thinking. “So, when my son told me there was water in the basement, I said, ‘No, that’s not possible.’”

But the water was rising in the basement. “Oh Sandy, she fooled us,” Hunt said, his tone of voice changing as he started to talk about the hurricane as if she were an unannounced visitor. “She came from under the house!”

{pullquote}If the water that destroys much of your house comes up from below the structure, would you describe that as a flood?{/pullquote}

To Hunt, it didn’t matter how the water had gotten into the house — only that it did. But to his insurer, water that comes from underneath a house is technically not a flood, Hunt said, and his insurance company told him so when it refused to cover some of the damages. Up to now, Hunt has paid for all of the repairs himself – about $22,000 to rip out the dry wall that was soaked, replace appliances and electrical fixtures, flooring.

Like thousands of others whose lives were upended by the storm on Oct. 29, 2012, Hunt and his family may have escaped the storm surge, but a year later, the floodwaters’ toll on housing in New York City persists.

Forbearances on mortgages are set to expire, flood insurance premiums are expected to rise significantly and affect a larger number of homeowners due to new flood maps and the release of disaster recovery funds that could help homeowners has been slow.

All of the problems have compounded an already acute affordable housing crisis in the city.

“Hurricane Sandy exposed a lot of the deficiencies we have in affordable housing in New York City,” said Nick Charles, spokesman for the Local Initiatives Support Corporation of New York, which has overseen a mold remediation program in affected areas. “These are communities struggling with economic, social, and education issues. Hurricane Sandy comes in and exacerbates all of that.”

And other advocates warned that the expiring forbearances on mortgages — usually lasting 12 to 18 months — is a crisis in the making. “There’s a potential for a large foreclosure crisis – tens of thousands will be at risk of foreclosure,” said Matthew Hassett of the Center for New York City Neighborhoods.


Sandy’s 13-foot storm surge reached nearly 76,000 residential buildings with nearly 300,000 housing units in the city’s five boroughs, according to a report by the Furman Center for Real Estate and Urban Policy at New York University. Roughly 75 percent of the structures affected by the surge were single- and two- to four-family homes, but they made up only 30 percent of housing units affected by the storm. Most of the housing units affected were in larger residential buildings.

In some cases, entire homes were destroyed — for instance, more than 120 burned to the ground in Breezy Point where firefighters watched helplessly because they couldn’t pump water without electricity. Scores of New Yorkers living in residential buildings – Mitchell Lama cooperatives, public housing projects, rent stabilized and rent subsidized apartments – lost electricity, water and sewer services.

The Federal Emergency Management Agency has spent $6.6 billion overall and almost $1 billion in New York to help homeowners pay for repairs, dislocated tenants pay rent, and to cover additional costs associated with the storm. The National Flood Insurance Program has paid nearly $3.4 billion in claims to 56,766 policyholders, the agency stated in a press release. Congress approved about $60 billion for storm relief overall.

The city itself allocated $108 million for repairs to New York City Housing Authority buildings – 402 of which were in the surge area, the agency said in an email, adding that those buildings are home to nearly 36,000 residents. The city demolished 275 buildings and issued almost 2,000 violations on buildings in the areas affected by the storm.

{pullquote}There’s a potential for a large foreclosure crisis – tens of thousands will be at risk of foreclosure," says one housing advocate.{/pullquote}

But all of that money has not been enough to shelter some people rendered homeless by the storm: Some evacuees continue to be displaced, with as many as 200 people still living in hotels paid for by the city.

Advocates say that number doesn’t encompass others who are living with relatives and renting apartments. “That’s really only a small fraction of the people who are displaced,” Hassett said.

The storm has put the city’s affordable housing issues atop the list of issues facing the city, advocates said – just in case the record number of homeless people in city shelters had not already.

Housing First!, a broad coalition of community, business, labor, civic, and religious organizations, issued a set of recommendations for the next mayor to turn concern into action.

"Looking forward, the next administration must not only redouble rebuilding efforts but must also partner with state and federal agencies to tackle the prohibitive insurance premiums that threaten to further damage our coastal communities through displacement and disinvestment,” said Rachel Fee of Housing First!

The city has estimated that the cost just to repair housing damaged by the storm will reach $3 billion.


The signs of Sandy remain visible in Far Rockaway. In Hunt’s house, two-by-fours are laid bare in the walls, where workers cut out paneling that was soaked. The work is on hold, however, because Hunt’s insurance company is balking at paying for the repairs. Aside from arguing over the definition of a flood, the company also insisted he did not send in a form years ago that would have continued his insurance; he said he sent it three times.

The Legal Aid Society has retained additional attorneys to help homeowners and tenants navigate the process of obtaining help from FEMA and insurance companies.

Since the storm, requests for legal aid have increased rapidly, according to Tashi Lhewa, one of the attorneys.

"The real problem is the lack of uniform guidelines by government agencies providing repair assistance" Lhewa said. "This leads to applicants being denied assistance on improper grounds and lacking access to an adequate appeal process."

As for homeowners’ efforts to obtain payments, he said the process is very time consuming.

"Claims have been taking time — a lot of time," he said. "And there's still a lot of people who need help."

The city launched a repair program, too, with FEMA called “NYC Rapid Repairs.” According to the city’s after-action report, “Rapid Repairs is the first program of its kind in the country and repaired approximately 11,500 homes with more than 20,000 units when it concluded in April 2013. At the peak of the program in January, Rapid Repairs completed work on more than 200 homes per day with labor from more than 2,300 skilled workers in a single day working under 10 prime contractors.”

In June, the city introduced “Build It Back,” another program to assist those impacted by the hurricane. The city extended the deadline to apply for the program to Oct. 31 and is urging people who were affected to apply. The city also reduced property tax payments for property owners in affected areas.

Hunt got some good news in August when his application for assistance from the Build It Back fund had been approved. But he has yet to see any of the promised money.

Not far from Hunt’s house in Far Rockaway, dumpsters line the streets and emergency heating systems are set up. The entrance to Breezy Point is guarded by a police checkpoint. Still, businesses are gradually reopening and life is getting back to normal, Hunt said, even though the local home improvement stores cannot seem to stock enough tiles, paneling and other building supplies.

“There has definitely been a psychological impact, lots of people won’t admit it, but it has affected them,” Hunt said. “Me, I’ve always been a little crazy.”

Hunt, a veteran of the Vietnam War, owns an almost identical two-family home next door and he had rented one floor of the house to a woman and her two children. The family evacuated in a hurry as the hurricane approached, leaving behind papers, family pictures and clothes.

Hunt recently gave a reporter a tour. A framed copy of the serenity prayer hung on a wall next to the Ten Commandments. Red Cross blankets scantly covered a couple sofas.

“I won’t throw it in the street – that’s a constructive eviction – and it wouldn’t be right,” he said, scanning the apartment recently. “A lot of tenants who’ve left, I don’t think they’ll ever come back.

De Blasio Pins Affordable Housing Hopes On Mandatory Inclusionary Zoning

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Democratic mayoral hopeful Bill de Blasio has ambitious plans to reshape the inequalities in the real estate market by mandating developers build affordable housing.

His plan to ensure that New York is no longer a “tale of two cities” is seeded in his affordable housing proposal known as mandatory inclusionary zoning. The policy would require developers to set aside a certain percentage of a building's units as permanent affordable apartments in exchange for increased building heights and tax breaks.

But an optional version of the policy, instituted by Mayor Michael Bloomberg’s administration, has had a checkered history in New York City. Instead of stimulating the creation of more affordable housing, many developers have chosen to opt out  — leaving policy experts skeptical of how a mandatory plan might work.

The Bloomberg administration’s optional zoning policy pairs well with its pro-development mentality. The policy gives developers the choice to participate in the program and receive perks like taller buildings or government subsidies to make up for the added development costs, or not participate at all.

Dozens of neighborhoods in Manhattan and Queens currently qualify for inclusionary zoning because big real estate developments are already underway in those areas (see map below). But only 13 percent of all new multi-family units are currently designated as affordable housing and more than a third of the city has been rezoned during Bloomberg’s tenure.

De Blasio’s hopes of breaking away from the Bloomberg mold by implementing mandatory inclusionary zoning is paramount to his campaign promises to revamp the affordable housing crisis in the city.

“I want to see much more aggressive policies in terms of how the city works with the real estate industry,” de Blasio said in a recent Ask Me Anything forum on the online aggregator Reddit. He said he plans to add an additional 200,000 affordable housing units in the next decade.

At a recent mayoral debate, Republican mayoral hopeful Joe Lhota said inclusionary zoning is unconstitutional.

"I don't believe in mandatory inclusionary zoning,” he said. “I don't believe that that will work. I think it's a violation of the constitution.”

Supporters of a mandatory program like City Councilman Brad Lander, who represents Brooklyn’s 39th district, said he thinks de Blasio has a shot at passing a citywide mandatory inclusionary zoning policy.

“It’s an important part of a much bigger plan motivated by addressing the tale of two cities and the affordability crisis,” Lander said. “He’s built a great campaign on the basis that the inequality in New York City is much too big.”

There are many potential problems with a mandatory program, according to The Furman Center for Real Estate and Urban Policy at New York University. Slowing of new development of market-rate housing could create a domino effect that would provide less affordable housing. Extra construction costs may also be passed on to market-rate tenants to make up for the losses incurred by creating affordable units.

Allowing developers to build taller to accommodate more people exacerbates the stress on public services and would require finite plans for more schools and better infrastructure.

Lander admitted there are pitfalls to the program, but his 33-page report makes a case for why the city could benefit from inclusionary zoning. He said it is important that the specifics be spelled out early on to ensure the program can be successful.

A comparable policy might be the city’s Inclusionary Housing Program, created in 1987, with a goal to incentivize developers to create affordable housing in market-rate developments. In its 26-year history, inclusionary housing has created a little more than 4,500 affordable units. Prior to the creation of the inclusionary zoning program in 2005, there were only 1,753 affordable housing units preserved or created.

Recent massive rezoning projects in the Brooklyn neighborhoods of Williamsburg and Greenpoint, as well as in Manhattan’s Chelsea, have accounted for about 2,700 affordable units, or less than two percent of the total housing units built in the last eight years.

The Edge in Williamsburg is an inclusionary zoning fairytale. The zoning allows developers to build an additional 1.25 square feet for every square foot of affordable housing built. Of the 1,000 residential units at the Edge, 347 are affordable housing units (about 35 percent).

But the success of the program at the Edge is an exception. Even in areas with the strongest participation seen in Manhattan’s Hudson Yards and West Chelsea, there is only 18.6 percent of total development designated for affordable units — falling short of the 20 percent standard set by the program.

To avoid any legal concerns, de Blasio’s legislation will need to set clear-cut guidelines on the types of projects that will be mandated and what real estate developers will be required to build or pay for.

The Furman Center has already done part of de Blasio’s work of determining the hurdles he might face by creating a list of four specifics it thinks is necessary for a mandatory program to be successful. Those include the duration the units need to remain affordable; whether or not affordable housing requirements need to be met on or off site; whether developers can contribute to an affordable housing fund instead of building units; and what kind of density increases developers might be offered.

Inclusionary zoning is not the only option that incentivizes affordable housing. The 80/20 subsidy program gives developers tax-exempt bonds for their commitment to provide 20 percent of their units to low-income tenants in desirable city locations.  

But that program also has shortcomings, at least one policy expert said.

“It is merely a zoning bonus,” said Josiah Madar, a research fellow at the Furman Center. “The developer provides affordable housing, the city lets them build bigger.”

Without a mandated inclusionary zoning, Lander said he fears affordable housing will disappear, especially in upscale neighborhoods.

“There’s not a silver bullet,” Lander said of the affordability crisis in New York.

Hurricane Sandy Buyouts Cause Storm Of Confusion, Worry From Politicians


ALBANY, N.Y. — The Fox Beach community of Staten island sits only a few blocks from the ocean on wetlands where tall reeds sprout across the landscape.

After the lives of three of its residents were lost during Hurricane Sandy and flooding destroyed a number of the small bungalows that make up the community, more than a few people who live in Fox Beach were ready to abandon the previously idyllic area.

A few days after the storm, a large group of local homeowners began meeting in the St. Charles School auditorium to discuss how to move forward and, when the prospect of government buyouts was brought up, the room was casually polled.

“Every person in that auditorium raised their hands,” said Joseph Tirone, who owns a home in Fox Beach and is the head of the Oakwood Beach Buyout Committee. He said the homeowners pressed officials for weeks, and eventually caught the attention of Gov. Andrew Cuomo.

Cuomo announced on Feb. 25 that the Fox Beach community, which is a subsection of the larger Oakwood neighborhood, would be the testing ground of his general buyout program designed to return parts of the seashore to a natural state to create a storm buffer.

“There are some places that Mother Nature owns,” Cuomo told the audience at the College of Staten Island. “She may only come to visit every two years or three years or four years. But when she comes to visit, she reclaims the site.”

Weeks later, the buyout program is coming into focus for the Fox Beach community, but what will happen with the rest of storm-ravaged New York is still hazy. For months, homeowners have heard sometimes conflicting reports about the city’s plans, the state’s plans, as well as programs offered through the Federal Emergency Management Administration.

Lawmakers and community members say they have been told that the state under Cuomo will be unveiling a number of “enhanced areas” in the next few weeks where homeowners will be able to apply for a buyout worth 100 percent of their homes pre-storm value, with a five percent incentive if they move within their borough. The Cuomo administration has yet to confirm.

The state has allocated $171 million for buyouts, but officials estimate they could ultimately spend $400 million. Officials estimate 10,000 homes were severely damaged during Hurricane Sandy but expect only 10 to 15 percent of owners will take buyouts.

Meanwhile, the Bloomberg administration is not billing its efforts as a “buyout” program and will refer those looking for buyouts to the state.

Instead, the Bloomberg administration has also proposed a program that, if approved by U.S. Housing and Urban Development, will allow the city to buy damaged property at post-Sandy rates for redevelopment. The city’s program would appeal to property owners who aren’t part of the “enhanced areas” that would be covered under the state.

City officials say the properties would first be offered to homeowners who are staying and might want a larger yard, or to add to their property. It is unclear exactly how much the city plans to spend on this program.

Staten Island Borough President James Molinaro says his office has received 400 inquiries about home buyouts but is unsure how the programs offered by the city and state will help.

“Almost every block is a different story, every home has a different problem,” Molinaro said. “Some of these people are already underwater on their mortgage.”

Molinaro said it is unclear how those homeowners would benefit from a buyout if the money they get from the city or state does not cover their mortgage and they are left without a home.

He noted, however, that some banks in New Jersey have been working with homeowners to come to mutually beneficial solutions.

“I wouldn’t say there is an easy answer, but it is a problem we are aggressively addressing,” Tirone said. He said he expects banks to work with homeowners who are underwater on their loans and who want to take a buyout.

The press and local officials have underestimated the desire for buyouts, he said. “Elected officials are opposed to buyouts because they can’t visualize unbuilding,” said Trione, who feels city lawmakers have failed to do enough to ensure local homeowners are briefed on all their options.

Tirone recalls the story of a retiree who had tapped out his life savings to make repairs to his house following Sandy. “If he had been made aware that he could get the pre-storm price for his house and buy a new house that is not in a storm zone, he could have been set for life with his savings still intact,” Tirone said.

Molinaro is skeptical of the process so far, saying, “I have not seen any movement yet. The governor said he would buy homes at 100 percent of their value pre-Sandy but I have not seen any purchased yet.”

He emphasized that he has advocated for prioritizing buyouts to homeowners who have completely lost property and who have no mortgage so that they can quickly purchase a new home. Molinaro said he had warned residents that the buyout process can take years.

Randy Douglas, Town Supervisor of Jay, N.Y., knows firsthand that the government buyout process is anything but quick.

The Town of Jay suffered flooding in 1996 and 2008 from the AuSable River; then, in 2011, Hurricane Irene hit and the flooding was worse than ever. Roads, parks, youth facilities and sewer systems were wiped out along with homes. The town nearly lost its iconic covered bridge.

Some residents had simply had enough. Eighty homeowners out of the town’s estimated 2,500 residents were interested in a buyout program — one that paid 75 percent of pre-storm value.

Eighteen months later, residents are just now signing contracts with FEMA for the purchase of their properties. And the number of interested homeowners has dropped to 40.

”Some of them just couldn’t wait due to the length of time,” Douglas said. “A two-year process is way too long. I actually had people pass away during the process. It is just really sad.”

Douglas said he hopes that the concerns of victims of Irene and Lee have helped push officials to expedite the process for other homeowners. (The good news for Douglas: the state has included funds in its Sandy recovery plan to make sure homeowners who are bought out from Irene and Lee get a full 100 percent of their homes’ pre-storm value).

Despite having advocated for buyouts and having helped his residents push through the process, Douglas said there isn’t anything terribly positive about seeing residents decide it is time to pack it up.

“I’ve said since day one this isn’t a good thing,” he continued. “You lose your tax base, you lose families who have lived here for generations and you lose your identity. But with us, we couldn’t continue to put people in harm’s way.”

Douglas said he understands the reluctance of New York City officials to fully back buyouts. “Mayor Bloomberg has said he wants to build back stronger and seems to want to avoid buyouts. I’m not criticizing him because you don’t want to lose these people. You don’t want to give them up,” he said.

Sen. Joe Addabbo of Queens, who represents some of the neighborhoods hardest-hit by Sandy, including Breezy Point where dozens of homes went up in flames, said he has not seen a great deal of interest in buyouts. “We have a lot of longtime homeowners whose families have been here for generations who just want to rebuild. They aren’t looking to go somewhere else,” Addabbo said.

Addabbo acknowledged, though, that there has been confusion about buyouts. "Whenever there is a lack of information there is confusion," he said, "but I think it will end as we get more information on the two programs in the next two weeks.”

But Addabbo admits he doesn’t favor buyouts — in fact, he thinks they are a bad idea. “Personally, no, I don’t buy into the buyout program so to speak. It is a loss of revenue for the city, and the neighborhood behind that neighborhood loses their storm buffer, I think it causes other problems,” Addabbo said.

The state senator said not enough is being done to address flood mitigation. “What about seawalls, jetties, things that mitigate flood damage? Why aren’t we talking about that? Instead we are gonna buy 'em out? I don’t want them to leave,” he said. “As an elected official I want them to stay. Whether they have to elevate or [do] flood mitigation — whatever it takes.”

The Fox Beach community of Oakwood was labeled an “enhanced area” where the entire neighborhood was eligible for a buyout. Of the 183 households that were eligible for the state program, 180 have submitted applications according to state officials. Those homeowners are eligible for 100 percent of their homes pre-storm value. 

Tirone said he thinks Cuomo’s motivations are completely apolitical. “I truly believe this plan has nothing to do with politics. The governor wants to create a natural buffer for those inland,” he said.

Meanwhile, plans for his neighborhood are developing apace. Homes have been appraised and, although he thinks Cuomo might be unhappy with him for such a bold prediction, he speculated that the process could be completed before the end of the year — a notable accomplishment given that the federal process can take three to five years at times.

But, for now, Tirone is still helping get the word out about the state program. “I get five to 10 calls a day from residents asking me to help them get bought out,” he said.

Image of destroyed home in Oakwood, Staten Island, by Paul Soulellis, used under Creative Commons license. 

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