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NYC Department of Housing Preservation & Development

FOR IMMEDIATE RELEASE
Thursday, November 18, 2010

Eric Bederman (HPD)212-863-5176
Kim Thai (Quinn) 212-788-7120


HPD COMMISSIONER CESTERO AND SPEAKER QUINN RELEASE FINDINGS ON FIRST ROUND OF EXTENSIVE INSPECTIONS AT MILBANK BUILDINGS

HPD Roof-To-Cellar Inspections Turn Up 1,245 New Violations Even With Access Limited To Fewer Than Half Of The Apartments - More Inspections To Follow

Bronx, NY – NYC Department of Housing Preservation and Development (HPD) Commissioner Rafael E. Cestero and City Council Speaker Christine Quinn announced today that HPD’s ongoing proactive inspections of the 10 buildings known as the Milbank portfolio have produced 1,245 new violations. During a joint conference call with Speaker Quinn on October 26th, Commissioner Cestero expressed his outrage at the conditions in the Bronx buildings, and announced that HPD would be undertaking full roof-to-cellar inspections.

“On October 25th, I had the opportunity to visit three of the buildings that make up this portfolio, and what I saw was appalling,” said Commissioner Cestero. “These inspection results – which encompass only 48 percent of the occupied units – are therefore not surprising. In fact, the conditions at these buildings continue to be disgraceful and we are committed to ensuring the next owners immediately repair the excessive number of hazardous violations, and that this owner has a long-term plan in place to operate these buildings with the best interests of tenants in mind. We are prepared to work with LNR, the servicer, to find a new owner who will treat these tenants with the respect they deserve and care for these buildings as the irreplaceable resources that they are.”

“These tenants have lived in these deplorable conditions for years. And that is simply unacceptable,” said City Council Speaker Christine C. Quinn. “Hundreds of tenants from these properties have suffered - and continue to suffer - because of the irresponsible action and speculation of one institution. I want to thank Commissioner Cestero for working with the Council and the tenants in putting their pain into a tangible context. I promise the tenants that the Council will do everything in its power to ensure that whoever the new owner is will be held accountable and will restore these 10 buildings back to livable conditions.”

The first round of inspections was completed on November 17. Additional inspections will be conducted over the weekend. To date, HPD has held three meetings with tenants to discuss conditions and concerns, the first on October 7 and the most recent having taken place last night. Housing advocates UHAB and Northwest Bronx Clergy Coalition (NWBCC) worked with the tenants to provide access to the HPD inspectors. Despite gaining access to fewer than half of the occupied units in the 10 buildings, HPD recorded more than 1,200 new violations, the majority classified as “B” (Class C is considered immediately hazardous and includes lead paint and cascading leaks, for example.)

In all, 198 of the 409 occupied apartments were inspected (the buildings contain a total of 548 units, 139 of which are vacant). HPD logged 243 new Class A, 823 new Class B and 179 new Class C violations, which brings the total of open violations on the 10 buildings to 4,335 (915 Class A, 2,599 Class B and 831 Class C). HPD reminds tenants that to request an inspection and to report any concerns over housing conditions they should call 311.

The Task Force on Financially Distressed Rental Housing - a collaborative effort with the New York City Council, HPD, and housing experts - has been working on Milbank for the past year. Speaker Quinn and the New York City Council has been closely working with tenants for months, putting constant pressure on the servicer LNR to make repairs on these 10 overleveraged buildings. In that time, the Speaker started a program that will enlist the help of pro-bono engineers and architects to survey distressed and overleveraged housing buildings across all five boroughs. This began with Milbank.

Milbank Real Estate purchased the rent stabilized properties in 2007, and ultimately defaulted on the $35 million mortgage. Already in a state of distress, the condition of the buildings rapidly declined under Milbank’s watch, leaving the tenants to suffer in deplorable and hazardous living conditions. In March of 2009, the mortgage holder, a $3 billion commercial mortgage-backed security trust controlled by Wells Fargo and serviced by LNR Partners, Inc., initiated foreclosure proceedings. After a failed attempt to sell the debt to an undisclosed buyer, LNR has recently enlisted the firm Massey Knakal to market the portfolio.

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