Bidding Wars - HUD Auctions off buildings for seniors & disabled

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City Limits WEEKLY
Week of: October 4, 2004
Number: 454

BIDDING WAR
HUD auctions off building for seniors and disabled to landlord with sketchy past.
By Cassi Feldman and Sarah Unke

Going once. Going twice. Sold. Those words may bring a dangerous twist to the lives of senior and disabled residents at the Bronx Center for Independent Living. The U.S. Department of Housing and Urban Development just auctioned off their building to a known scofflaw.
Last July, HUD shocked tenants and city officials alike by selling Pueblo de Mayaguez, a distressed 75-unit apartment complex, to Emmanuel Ku, a Queens-based landlord with more than 1,400 outstanding code violations. Now, a year later, Pueblo residents are already reporting broken windows and roaches.

Ten more federally subsidized buildings are already in foreclosure and at risk for auction. To help protect tenants, Congress passed an amendment to its 2004 appropriations bill, requiring purchasers of HUD-owned property to be “in substantial compliance with applicable State or local government housing statutes, regulations, ordinances and codes.” The city, also concerned, has outlined a "Property Disposition Program" that would allow it to purchase HUD-held mortgages at negotiated price.

But neither of those efforts could stop Juan F. Frias from submitting a winning bid of $1.69 million to purchase the Bronx Center, a 21-unit building located at 1310 Morris Avenue. (The second-highest bid came from Ku.) Although the property must be kept affordable, tenant activists worry that Frias won’t manage it properly.

According to the city’s housing records, Frias owns another building at 302 East 139th Street with 90 pending code violations, including inadequate heat, hot water and gas. Of those violations, 38 are class C, the most serious.

Frias did not respond to several calls seeking comment.

“These auctions are not an appropriate way to handle distressed buildings,” said Anne Lessy, director of New York City organizing for Tenants and Neighbors, an advocacy group. “Tenants are losing and speculators are winning and responsible owners are being shut out of the process.”

This isn’t the first time Frias has hit a public auction. He first acquired 302 East 139th Street from the city in 1989 for $124,000. Carol Abrams, spokesperson for the Department of Housing Preservation and Development, said the city is in the midst of an exhaustive review to assess whether buildings it has sold off in recent years are still in compliance with city codes.

On September 28, HPD sent HUD a letter alerting the agency to Frias’ violations. “HUD has the right to refuse to sell,” said Abrams. “It will be HUD’s determination to make.” HUD declined to share its plans. “The city of New York has raised a number of issues with us, which we are reviewing,” said spokesperson Adam Glantz.

Meanwhile, the building’s residents, who lack a formal tenant organization, seem to be largely in the dark. “They didn’t tell us anything about that yet,” said one tenant, who declined to be named. “They just told us there’s a possibility this building might be sold.”


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