New York, NY – September 7, 2010 – (RealEstateRama) — Mayor Michael R. Bloomberg, Senator Charles E. Schumer, Congressman Jose E. Serrano, City Council Speaker Christine C. Quinn, New York City Department of Housing Preservation and Development Commissioner Rafael E. Cestero and New York City Housing Development Corporation President Marc Jahr today announced a plan to improve conditions at 1520 Sedgwick Avenue in the South Bronx – known as “the birthplace of Hip Hop” – to keep it affordable to its hundreds of residents. The City helped finance the sale of the threatened property’s mortgage through the $750 million program Mayor Bloomberg announced in his 2010 State of the City address to assist tenants in physically and financially distressed multifamily buildings. The New York City Housing Development Corporation approved a $5.6 million loan to WinnResidential and Workforce Housing Advisors to purchase the mortgage note for the property in an effort to get the building back into responsible ownership and assure its long-term affordability for the current and future residents. The City Council, led by Speaker Quinn, committed $3 million to 1520 Sedgwick in fiscal year 2011 to restore the building to good repair.
In 2008, 1520 Sedgwick was purchased by a developer who planned to remove the current residents and quickly resell the property. Senator Schumer joined tenants to try to block the owner’s plan and preserve 1520 Sedgwick as affordable. When market conditions worsened and a resale became more difficult, the building owner largely neglected the building’s mounting maintenance needs, leading to its physical distress and the proliferation of housing code violations. Tenants were left to cope with substandard conditions. Over the course of the last two years, the City, Senator Schumer, and Congressman Serrano, advocated on behalf of the tenants, and more recently worked with WinnResidential and Workforce Housing Advisors to negotiate the purchase of the outstanding mortgage note from Sovereign Bank, preserving the units as affordable.
“New York City’s economy may be recovering faster than the nation’s, but real estate speculation that led up to the recession left many apartment buildings throughout the city in trouble,” said Mayor Bloomberg. “In January, we launched a $750 million program to protect New Yorkers in such buildings. It will enable us to reverse the declining conditions at 1520 Sedgwick Avenue – famed for its role during the birth Hip Hop – and keep it affordable for its hundreds of tenants. Many people deserve credit for getting this done, including Senator Schumer and Congressman Serrano, who worked closely with the City’s Department of Housing Development and Preservation, the Housing Development Corporation and the tenants of 1520 Sedgwick.”
“This is a huge victory for Sedgwick residents that will serve as a model for preserving affordable housing throughout New York City,” said Senator Schumer. “The message here is clear, residents of 1520 Sedgwick, and residents of affordable buildings throughout the City, should not be used as pawns for predatory equity investors to make quick profits. The purchase of this note is a major milestone that we hope will be a big win for residents of Sedgwick.”
“We are so gratified to see that this property is moving towards a solution that we believe will put it in the hands of a responsible landlord,” said Congressman Serrano. “We cannot allow the current economic distress to undermine our city’s housing stock making it either dilapidated or unaffordable. We have shown that there is a third way possible, where we preserve quality, affordable housing, and I applaud all those involved in this effort.”
“Three decades ago, DJ Kool Herc mixed funk songs with African beats and rap, and hip-hop was born during a house concert in the basements of 1520 Sedgwick,” said Speaker Christine Quinn. “Hip-hop has often been an expression of hardships and 1520 Sedgwick has seen its fair share of struggles. After the fiscal crisis, 1520 Sedgwick became a victim of predatory equity investors, and we were at risk of losing a historical and cultural landmark. But with this purchase and $3 million of Council funding for repairs, we will now see the rebirth of 1520 Sedgwick – and maybe see history created once again. I’m particularly excited that this will give tenants a chance to recreate their homes, not to mention the possibility of one day converting the building into a co-op. I want to thank the Mayor, Senator Schumer, Congressman Serrano, HPD Commissioner Cestero and HDC President Marc Jahr for continuing to think of creative solutions to save the City’s distressed buildings.”
“I congratulate the tenants of 1520 Sedgwick Avenue in their victory to stop predatory investors,” said Council Member Diane Foster. “I am pleased how all of the elected officials at the State, City and local levels have come together as a team, to help the tenants of 1520 Sedgwick Avenue maintain the viability and affordability of their building.”
“This is an exciting moment for Bronxites,” said Bronx Borough President Ruben Diaz, Jr. “A bit of their history and culture is being preserved through this infusion of cash by HPD and HDC. This office has fought and organized for the preservation of Mitchell-Lama housing, including 1520 Sedgwick Avenue, through our Bronx Mitchell-Lama Task Force, and stood with Senator Schumer when he first took up the cause. I would like to thank the Mayor, Commissioner Cestero, and HDC President Mark Jahr for making this a reality, and recognizing the importance this building has for the Bronx and for hip-hop.”
“Last January, Mayor Bloomberg outlined an innovative approach to address the needs of privately owned, physically and financially distressed multi-family buildings by giving us the tools to recapture and preserve as affordable thousands of units of occupied housing,” said Commissioner Cestero. “We are putting our financial power to work with owners and lenders to restructure buildings’ financing to a sustainable level and in doing so preserving and keeping affordable our City’s housing stock. I thank the tenants of 1520 Sedgwick and Senator Schumer for their perseverance and unwavering commitment to this effort.”
“We are acting affirmatively to preserve the diversity of our City over the long term,” said President Jahr. “We are committed through the Mayor’s housing plan to leaving this City with more affordable housing options than have existed before, and we will continue to work tirelessly with tenants, owners, banks and advocates to achieve that goal. This approach is making a difference at 1520 Sedgwick, and it is doing the same with other properties, citywide.”
“We are excited to be part of a groundbreaking program to rescue broken properties,” said Workforce Housing Advisors Partner Kevin Gallagher. “Our philosophy of long term ownership and valuing existing resident input will bring stability to this iconic property. The leadership provided by government was laudable and innovative. They continue to perform their functions with little to no fanfare, but actions like this are a clear indication of the commitment by government leaders to the working families of New York City. We thank them all.”
The new owners of the mortgage have filed for foreclosure, which will lead to a public auction for the property that is anticipated to be held in the spring of 2011. At that point, the City will provide additional financing through the Bloomberg Administration’s New Housing Marketplace Plan – designed to create and preserve 165,000 units of affordable housing by 2014 – to keep the housing units affordable. In the meantime, WinnResidential and Workforce Housing Advisors have assured tenants that they will maintain the property in good condition and will ensure that the units remain affordable while the foreclosure process is underway
