Hugh Thomas stands tall (more than six feet) just outside of Jamaica's Neighborhood Housing Services -- a local nonprofit charged with solving the community's foreclosure crisis.
In reality, though, he is worn down.
Three years ago, the Queens resident, a native of the island of Jamaica, bought his first home for $460,000 -- a one-family house in St. Albans, to share with his wife, a health care technician at Woodhull Hospital, and raise his three children, two daughters and a son, ages 5, 10 and 15.
But Thomas, an air-conditioning and refrigerator repairman, got his slice of the American dream thanks to two sub-prime loans. Now, he laments, he is on the brink of losing it all. Come January, Thomas's monthly payments are set to increase by 25 percent -- enough to force this family of five, who lives on approximately $5,000 a month, back into renting.
"You try to make your family happy. You work hard and this is what happens," said Thomas, whose Jamaican accent is slight, but noticeable. He blames his sub-prime lender. "They trick you. A lot of my neighbors have lost their homes already."
Southeastern Queens, specifically Thomas's home turf, is ground zero for the city's foreclosure crisis. And the problem shows no signs of abating. Throughout the borough, foreclosure filings in the first three quarters of 2009 nearly surpassed the number of filings for all of 2008. Citywide, foreclosure filings for 2009 through September have already increased by 2 percent over all of 2008, according to data provided by New York University's Furman Center for Real Estate and Urban Policy. Almost 95 percent of those filings were in the outer boroughs clustered in minority areas, like Jamaica.
Months after the country's foreclosure crisis wreaked havoc in cities from Detroit to Las Vegas, the outer boroughs are feeling the cataclysm now more than ever. Experts and activists on the ground fear abandoned homes could replace promises of development, lower crime rates could start to reverse and property values in adjacent communities could plummet.
The city and state have responded by encouraging homeowners to see mortgage counselors gratis, funding the renovation of some bank-owned properties into affordable homes and expanding its original foreclosure rescue program to those beyond sub-prime loans.
But for some, including Thomas, these solutions may not be enough.
Walk down 88th Avenue in Jamaica. In just two blocks between 169th Street and 171st, according to RealtyTrac, five homes are in the process of foreclosure. One already has been taken over by the bank. A notice on one door, where weeds have grown over a narrow pathway, warns trespassers to keep out.
Hopeton Prendergast, a resident of 89th Avenue for seven years, says it's not uncommon to see the remnants of homes lost every week -- furniture, clothing and lives strewn along the curb.
"Every week you got someone's stuff on the street," said Prendergast, who was hanging out outside a local convenience store advertising soda and cold beer. "Some of them have children."
Those homeowners account for 1,589 foreclosure filings in Jamaica this year through Sept. 30, 2009, according to the Furman Center. In neighboring Queens Village, there have been 1,077. The trend trickles down the city's eastern border, spreading south to Canarsie in Brooklyn. (See our map above for a breakdown of foreclosures by year since 2007 per community district).
But just a river away, Greenwich Village and SoHo have seen only 31 filings through September.
The isolated pockets of foreclosure filings, experts say, reveal the number of homeowners in default has multiplied mostly in minority neighborhoods. Areas like Bedford Stuyvesant or East New York have seen 12 times the number of defaults as Midtown. Canarsie and Flatlands, have almost 800 foreclosure filings this year -- nearly five times the number seen so far in Brooklyn Heights in 2009.
Experts attribute this disparity, in part, to the fact that minority homeowners were much more likely to receive sub-prime loans than white borrowers, and thus more likely to default on them. According to a report released last week by the Furman Center, the percentage of black borrowers in New York City with subprime loans in 2007 -- the height of lending -- was seven times that of white borrowers.
In Jamaica, the city's foreclosure epicenter, nearly 75 percent of all residents are black and only 1.6 percent are white. Mortgage counselors there say homebuyers currently in trouble had gone through a local lender and usually received a sub-prime loan. Few went to a national bank -- which are few and far between in that area of Queens -- for a mortgage, said housing counselors.
For many community activists and nonprofits, the foreclosure numbers have resonated.
"I hate this map," Neighborhood Housing Services interim Chief Executive Officer Bernell Grier said at a recent forum. Behind her, a map pinpointed areas of foreclosure filings by district. Southeastern Queens had too many black dots to count. "I hate it because when you look at the concentration of where the dots are and when you know these communities, what have really been hardest hit have been communities of color and ethnic populations. These communities are being really devastated."
The problem, however, doesn’t end there. Experts predict the city could see a 33 percent increase in foreclosure filings by year's end compared to 2008. While some of it can be attributed to a 90-day moratorium on foreclosures enacted by the State Legislature at the end of last year, the crisis has spread from financially unstable homebuyers caught by catchy sub-prime slogans to those affected by the city's 10.3 percent employment rate.
With hours cut and jobs lost, dreams of homeownership disappear too.
Inside Neighborhood Housing Services of Jamaica some homeowners wait more than a half hour to be seen. On one of the lime-green walls, a poster from the city's new advertising campaign targeting the financially burdened asks, "Debt stress? You're not alone. We can help you."
Housing counselors enter the waiting room and take homeowners back one by one. Most meetings last an hour. Each counselor reviews a new client's paperwork and makes a budget. "How much is your water?" one counselor asks. "How much is your cell phone?"
These counselors are at the intersection of city, state and federal programs -- all of which attempt to tame the flood of foreclosures, some with more success than others. Neighborhood Housing Services goes through every property owner's crisis one at a time, working with lenders to renegotiate the terms of the mortgage -- a process that can take up to three months, counselors say. In New York, it takes at least a year for a home to go through the foreclosure process.
In Jamaica, Neighborhood Housing Services have seen about 500 people this year and successfully secured an affordable mortgage agreement for 100 of them. The mortgages can be renegotiated under a federal program known as "Making Home Affordable," established by the Obama administration in March. Under the program, only 2,000 of 500,000 loan modifications have been made permanent, according to a review by Congress last month. Those numbers have spurred the Obama adminsitration to announce a new campaign to apply pressure to lenders to modify more mortgages.
Back in Jamaica, another 300 modifications are under review, counselors said.
Cerinelly Disla and Helen Maxwell are just two of the counselors based at Neighborhood Housing Services. So far this year, they say, they've been booked up.
This nonprofit is one in a network established by the Bloomberg administration last year called the Center for New York City Neighborhoods. The center and its partners, which include Legal Services NYC and the Neighborhood Economic Development Advocacy Project, provide free advice and legal services to homeowners at risk of foreclosure. This center has been the administration's primary response to the foreclosure crisis.
And so far, it has had varied success. Citywide, said Executive Director Michael Hickey, the center has seen 6,000 homeowners since July 2008. Of those 1,400 have applied for loan modifications. Only 25 percent of those changes have actually been approved by the lender.
"Those numbers are not as high as we'd like them to be," said Hickey, saying banks are inundated with requests and overwhelmed. "We're trying to make an elegant solution out of chaos."
The center also helps coordinate mortgage settlement conferences -- a state-mandated court negotiation between both the homeowner and the lender aimed at finding a solution between the parties before the foreclosure process kicks off. According to a report released by the center last month, these conferences have been ineffective in New York so far, resulting in a compromise in just 3 percent of cases out of nearly 800 surveyed. The conferences have been far more successful in other areas, particularly Philadelphia.
Earlier this month, the state expanded the program to require conferences for all foreclosure proceedings. Previously it only applied to those with sub-prime loans. The state expansion will put sanctions on lenders who appear at conferences unprepared to negotiate, correcting a major defect in the original program, said Hickey. It also will require courts to report on the conferences' effectiveness. While not a "panacea," the revisions are a good start, Hickey added.
Elsewhere, the Bloomberg administration has allocated $24 million of its federal stimulus funding to a local nonprofit, Restored Homes. The group is gearing up to purchase more than 100 foreclosed properties in 45 targeted ZIP codes -- from Jamaica to Staten Island's North Shore. Starting in January, said Executive Director Salvatore D'Avola, it will renovate and sell the former bank-owned properties for between 80 and 120 percent of the area's median income.
The effort is an attempt to avert a '70s-era like crisis, when tax foreclosures inundated neighborhoods and abandoned properties sprinkled blocks. Even so, Restored Homes only targets a small percentage of the bank-foreclosed homes. In 2006, lenders had acquired 280 foreclosed properties citywide, according to the Furman Center's Executive Director Sarah Gerecke. Two years later, about 1,800 properties have been acquired, she said.
"It's a small impact," said D'Avola. But, he continued, "We're going to make that impact as great as possible."
Those familiar with the program are less confident. One affiliate said lenders have hesitated to sell foreclosed properties at a discount. As a result, Restored Homes may have to pare down the renovations or sell the properties at a higher cost.
Despite these programs, residents, community leaders and experts fear neighborhoods, particularly those that have been hard hit, like Jamaica, will struggle to recover from not only the initial foreclosure crisis, but its side-effects.
Ingrid Gould Ellen, co-director of the Furman Center, says higher rates of foreclosures can precipitate other problems that lead to disinvestment in neighborhoods, such as high vacancy rates, a potential increase in crime and elevated levels of mobility in the neighborhood's schools. A study by the Furman Center last year found areas with more foreclosures can have spillover effects on adjacent property values, effectively discounting other properties in the area. In effect, Ellen says, foreclosures disrupt neighborhoods by more than just boarding up doorways and emptying mailboxes.
"We made so much progress in so many neighborhoods since the late 1970s," said Ellen. "The worry now is in certain areas the foreclosure crisis is threatening to undermine that progress and reverse it."
Although anecdotally residents and housing activists and even the area's City Council member say there has been an uptick in crime thanks to more vacant properties, police department statistics show crime in Jamaica has decreased by more than 16 percent from 2008 to 2009. In Bedford-Stuyvesant, another high foreclosure area, overall crime is down by more than 16 percent, although felony assaults are up by 14 percent.
Fears have also been sparked over how the crisis will affect renters. Last month, Ann Bragg, a resident of East Harlem and a leader at advocacy group Community Voices Heard, received a letter saying her landlord, who owns dozens of buildings throughout Upper Manhattan, was starting the foreclosure process. Now she wonders what will happen to the building’s conditions and her neighbors as a result.
“Do we get sold off and traded again to another predatory investor group who only cares about making more money?” Bragg asked at a City Council hearing on foreclosures last week. “And in the meanwhile, what will happen to our services and quality of life? Do we suffer even more through the cold winter without basic services or repairs while hungry investors get to receive returns on their investments?”
Besides the programs already offered for defaulted homeowners, officials have said little on how to handle hard hit neighborhoods moving forward. Last week, City Council members were at a loss at how to help.
“I unfortunately believe we have patchwork policies,” said Councilmember Melissa Mark Viverito of East Harlem. “I’m trying to figure our how we can tackle this.”
But it’s somewhat a waiting game. While foreclosure filings have increased dramatically since 2005, actual foreclosures have remained steady, say experts. That could be because banks are waiting to see if property values will recover before they acquire defaulted homes, which would allow banks to sell them for more at auction later. Stakeholders are encouraging officials to pressure banks to let residents stay and, in the meantime, ease up on homeowners –- such as forgiving water and sewer liens for those in default.
"We’re possibly going to live through a long tail in terms of the possible distress to these communities," said Hickey of the Center for New York City Neighborhoods. "The solutions that should have been to protect these communities were not there. Best you can do [now] is go through one loan at a time and fix it."
Back in Jamaica, Thomas is still scrounging for help. When his mortgage payments increase by 25 percent in January, he knows his family will no longer be able to get by.
"I'm trying to get help before it happens, but I'm hitting a brick wall everywhere I go," he said moments after seeing a housing counselor.
For now, policymakers plan to help those who can afford their homes with a small modification to stay in them. If rejected, experts say the city should help get these residents new housing, but ensure their neighborhoods are not trampled in the meantime.
"Policy shouldn’t be directed at keeping all residents in every home. It can't be," said Ellen. "If they really can't, we want to figure out how they can exit as gracefully as possible."
This month the City Council will be the scene of a showdown in a long-brewing battle between one of the city's biggest developers on one side and a tight coalition of labor and community groups on the other. The issue at the center of the battle is living wages – setting a minimum of $10 per hour for full-time employees at the project site. The outcome could set a precedent for future development deals.
Beyond that and the fate of a Bronx community, the dispute also calls into question the issue of agreements negotiated between community groups and developers and the city's entire land use review process. Is this really a path-breaking effort to require living wages at all public projects, as labor representatives claim? Or is it the familiar last act of a scripted dance around the city's Uniform Land Use Review Procedure in which developers sign on to non-binding concessions to win City Council approval of the deal at hand.
From Armory to Mall
The project this time involves the Kingsbridge Armory, the biggest armory in the nation. On Oct. 19, the City Planning Commission approved a deal giving the Related Companies, one of the city's largest developers, control of the now-vacant armory. Related plans to convert it to a shopping mall.
Related is buying the city's property, appraised at $20 million, for a quarter that amount. The city also has promised a giant package of tax incentives.
In return, a coalition of labor and community groups, the Kingsbridge Area Community Alliance, or KARA, wants Related to sign a Community Benefits Agreement that commits businesses in the mall to pay at least $10 per hour plus benefits and hire local residents. The agreement would exclude a supermarket that could kill local stores. The alliance also wants Related to provide discounted community space and a public plaza at the armory site.
Related has said it could agree to most of this, and the company has claimed it only hires union labor for construction. But Related has stopped short of agreeing to a living wage for all employees at mall businesses.
Although such Community Benefits Agreements may not be enforceable, their use has been growing as government, which is not a party to them, looks the other way. Projects at Bronx Terminal Market and Willets Point went to the City Council with community and labor groups threatening to stop them. They passed after last-minute concessions spelled out in the separate agreements. The City Council has rarely turned back a land use proposal supported by the mayor.
The ULURP Ballet
In the first action in the land use process for the Kingsbridge project, Community Board 7 approved the project. The board placed several conditions on its approval, but the City Council could approve the project without adopting any of them. Despite that, Related has signaled it will agree to some of the conditions, including establishment of an ongoing community advisory group, free wi-fi in the mall and a World Peace Atrium, and has said it is open to establishing a youth recreational facility as proposed by the community board.
The community board supports a supermarket in the mall. A local grocery store group that employs 400 unionized workers opposes the market.
Then, Bronx Borough President Ruben Diaz Jr. came out against the project. He complained that Related has not responded seriously to his concerns about traffic issues and the impact the mall would have on local businesses. This suggests that, with some concessions by Related, the borough president might not oppose a final deal.
In any case, the deal can go through without him. Even though representatives of three other borough presidents and the public advocate voted against the project at the City Planning Commission, the majority of mayoral appointees guaranteed support for the project. And if the community board, City Planning Commission and City Council approve the mall, the borough president's vote would not matter. The council member representing the Bronx district where the armory is located, Maria Baez, is a lame duck noted for her extensive absences. Since the full council usually defers to the members in whose district projects are located, there is likely to be a leadership vacuum.
Labor's Interests
If past agreements can serve as a guide, a community benefits agreement could help win City Council approval even though Community Benefit Agreements are not formally part of the land use review process and could prove difficult, if not impossible, to enforce. Those who question the agreements say they tend to reduce the importance of official public forums and favor back-room deals involving developers, government officials and selected community representatives.
City government has long maintained that such agreements are of dubious legality and can undermine the decision-making process set out in the city's charter. But the Bloomberg administration has turned a blind eye to these side agreements when they give an extra boost to unpopular projects like Yankee Stadium. And many community organizations see them as useful tools for extracting concessions from developers.
The agreements also raise the issue of who really represents the community. This has emerged as a key issue in the Kingsbridge saga where a critical question is whether, by focusing on the living wage as the make-or-break issue, labor has put its interests ahead of those of community based groups. Union involvement also highlights the chasm between organized construction workers and the service workers who will work in the mall and make less than half the average construction wage.
Out in front on the living wage issue is the Retail, Wholesale and Department Store Union, backed by a broad array of union locals and the construction trades as well as the AFL-CIO. According to Desiree Pilgrim-Hunter, a community activist with KARA, the living wage also is a community issue "because we live in the poorest urban county in the nation and we need good jobs with living wages."
But Crain's recently reported that the Building and Construction Trades Council of Greater New York "supports the development of the Kingsbridge Armory and all necessary approvals for this project by the New York City Council," without insisting that living wages be guaranteed for service workers. This raises a question about whether labor is really united on the issue.
Fred Lemoine, vice president of the building trades in the Bronx, said the construction unions simply wanted to clarify the position taken by the Central Labor Council supporting KARA and the agreement but "stopping short of drawing a line in the sand." With construction jobs way down in the current economy, these locals are sending a clear message that they support the plans for the mall. Project supporters will surely see this as a split in labor that can only help them at the City Council.
Even if labor got everything it has asked for, would it truly be getting a living wage? It is demanding only $10 an hour. While slightly higher than the minimum wage, this would put the average full-time salary just under the Bronx's already low average per capita income. While labor has demanded the promised jobs be full-time with benefits (in which case they pay go up to $11.50 per hour), those crucial details could get lopped off the list as the finale approaches.
The Community's Interests
Despite community support for labor, labor's demands seem to have eclipsed the concerns of community groups. The first community meetings about the armory in 2003 ended with a consensus that the priority in redevelopment should be additional schools, since classes in the district suffer from severe overcrowding, and other community facilities. After an initial promise to build schools on the site, the Department of Education backed out.
Instead, the city's Economic Development Corp. issued a request for proposals that favored market-based development and eventually accepted Related's bid. Six members of KARA took part in shaping the Request for Proposals, which could make it difficult for the group to mount any strong opposition now.
In the end, by reducing the land use issue to one of economic development, Related and its City Hall backers may have deflected discussion away from the more far-reaching issues of long-term sustainability. The armory project is the latest of several giant suburban-style malls that are getting dropped into the city's dense fabric without the roads and infrastructure that the suburbs enjoy. The onslaught of well-capitalized national chains moving into subsidized space threatens the very survival of existing small and medium-sized businesses in the area.
These developments also encourage greater dependency on auto use. The new mall would include 400 paid parking spaces, and the borough president and some community groups, instead of prioritizing better transit, are fighting for the lots to be free, which would spur even greater auto use.
Neither the land use process nor the debate over the community benefits process dealt with these vital issues of long-term sustainability. They, along with other planning issues, escaped scrutiny at the City Planning Commission, where they should have been the prime focus. In sum, the big loser in the whole dispute over the Kingsbridge Armory may be the land use review process itself.
The City Council is expected to vote in November and take a bow for putting on a good show in the final act of this familiar ballet that usually surrounds big development deals.
Tom Angotti is professor of urban affairs and planning at Hunter College, City University of NY, editor of Progressive Planning Magazine, and a member of the Task Force on Community-based Planning.
One hallmark of Michael Bloomberg's tenure, journalist Joyce Purnick writes in her new biography of the mayor, has been to pursue "bold projects full of political risk." That includes shaking up the city's schools and all but banning smoking. The following edited excerpt from "Mike Bloomberg: Money, Power, Politics" (PublicAffairs) looks at one instance where Bloomberg could not make his vision a reality.
Michael Bloomberg wanted his mayoralty to be defined by big moves -- the ban on smoking, the revitalizing of the schools and, most spectacular of all, luring the 2012 Olympics to New York.
New York has never hosted the Olympic Games. The very idea of staging the Olympics in New York drew yawns. While New Yorkers backed the idea of the Olympics bid, there was no excitement, no wellspring of support for it in the city.
Deputy Mayor Daniel Doctoroff was having none of New York's trademark diffidence. He'd had a light-bulb moment in 1994, while watching a World Cup soccer match at Giants Stadium. "The stands were packed with screaming, flag-waving Italian and Bulgarian New Yorkers. I wondered, why hasn't New York ever hosted the Olympic games?"
Doctoroff founded NYC 2012 to promote an Olympics bid. Bloomberg became a donor, a board member and his mentor. Tall and handsome, Doctoroff left a managing partnership of an investment firm to join the administration as the mayor's $1-a-year deputy for economic development. Bloomberg was profoundly influenced by him -- unduly so, as far as critics were concerned.
Doctoroff knew that mishandled, the Olympics could be a drain on the city's finances. But handled right, the games could remake a city. As Doctoroff saw it, sections of New York would stir to life in preparation for the games through upgraded zoning and improvements.
His centerpiece was an ambitious plan to transform a neglected section of Manhattan from 30th to 42nd Street west of Eighth Avenue into a sparkling new neighborhood. The Olympics plan was to be a catalyst for new roads, a Park Avenue-like boulevard, office towers, hotels, luxury apartment buildings, parks, a subway extension and expansion of the Jacob Javits Convention Center.
At the heart of the plan would be a "multi-use facility" with a retractable roof to lure the Olympics, return the Jets football team from New Jersey and accommodate conventions. The Jets were to contribute to the stadium's cost, but it would take at least $600 million more in public funds and the approval of the state power brokers in Albany -- the infamous "three men in a room."
Just about any major undertaking in New York State involves the governor and the leaders of the two legislative chambers. They control the obscure Public Authorities Control Board that must coordinate all public spending, and any one of the three has veto power.
Gov. George Pataki, a Bloomberg ally, posed no problem. The leader of the Republican-dominated Senate, Joseph Bruno, could probably be won over if the leader of the Assembly came along. Unfortunately for Doctoroff and Bloomberg, the third member of the Albany troika was the speaker of the Democratic Assembly, the powerful, elusive and cagey Sheldon Silver.
When it comes to almost anything of political importance in New York State, the frustrating guessing game is always, what will Shelly do? Silver knows politics like Bloomberg knows finances. It took the mayor a while to realize it, but he had met his match.
Doctoroff and Bloomberg, impatiently pursuing the Olympics, ignored the local community boards, bypassed the City Council and focused instead on gaining support from high-rolling business executives and construction union.
Their strategy, however efficient, failed to build consensus. Their project arrived in Albany with few allies, leaving Silver even more flexibility than usual.
Developing the far West Side of Manhattan was not to Silver's liking. He wanted state resources funneled to Lower Manhattan. Ground Zero lies in the heart of his district, as does Chinatown, which suffered greatly after 9/11. Months passed before Bloomberg and Doctoroff realized the speaker had to be energetically wooed -- and by the time they tried it was too late.
The Olympics plan had plenty of opposition, as development always does in New York. Community residents and some city planners were sure that an Olympics-size stadium was far from the best use of such valuable land, while businesses and leaders of industrial unions embraced it as a generator of jobs and economic activity.
The battling factions might have neutralized each other if not for the most potent of the opposition. It came from the rich and powerful Dolan family. The Dolans, Silver contributors, control Cablevision and Madison Square Garden. They saw the stadium as competition to their arena and mounted a costly campaign against it.
Silver raised concerns about the plan but portrayed himself as neutral, the better to wrench a series of concessions from Bloomberg. As his associates winced, Bloomberg attended the bris of two Silver grandsons, paid a condolence calls when the speaker's brother died, renewed his support for a new public school downtown and endorsed a package of generous business subsidies for lower Manhattan.
The day before the crucial vote, Bloomberg and Silver both attended a charity breakfast in the Roosevelt Hotel. The two met in a side room and the mayor pushed, cajoled, persuaded and refused to give up.
Next day, Silver and Bruno's representatives to the Albany control board abstained from voting to fund the stadium. And so it died. When asked it the stadium deal was really done, Silver replied with a wicked grin, "It was never alive."
Bloomberg was furious. "You think you have an agreement with him and then Shelly sticks out his hand and says, 'Wait a minute. One more thing.' The city suffered at Silver's hand," he charged.
New York's Olympics submission no longer had its dream stadium. The Olympics dream collapsed, and the designation finally went to London.
The stadium failure stands as Bloomberg's greatest miscalculation and embarrassment. Doctoroff and Bloomberg misjudged not just the politicians but also ordinary people.
The public did not want that stadium. One poll found that 58 percent of New Yorkers opposed the stadium and an even larger percentage was less likely to vote for Bloomberg because of it.
Paradoxically, by shattering Bloomberg's Olympics dream, Sheldon Silver saved Mike Bloomberg from himself. His veto was cast five months before Election Day. It removed the greatest obstacle to the mayor's election.
"We sent flowers to Shelly Silver," said William Cunningham, Bloomberg’s first-term communications director. "Big, red roses."
From the book Mike Bloomberg: Money, Power, Politics by Joyce Purnick. Excerpted by arrangement with PublicAffairs, a member of the Perseus Books Group. Copyright © 2009.
Correction: Due to an editing error at Gotham Gazette, this article originally said the stadium vote was five days before Election Day; it was five months.