Residents of Foreclosed Harlem Apartments Say Nonprofit Isn't Up to the Task

Tenants Seek to Block Sale

Residents of Foreclosed Harlem Apartments Say Nonprofit Isn't Up to the Task

By JOSEPH DE AVILA

A Harlem-based affordable-housing group wants to buy several foreclosed apartment buildings in East Harlem. But tenants in those apartments who say they've been victimized by neglectful landlords for too long aim to thwart a sale from happening.

The now-defunct British investment firm Dawnay Day previously owned the 47 apartment buildings before the properties fell into foreclosure proceedings last year. Dawnay Day originally purchased the 1,100 apartment units for $225 million in 2007.

Now Hope Community Inc., a nonprofit that currently manages 1,300 low-income apartments in Harlem, wants to acquire and renovate some of those buildings. Members of the tenant associations in the foreclosed Dawnay Day properties say Hope Community isn't up to the task.

"We've known for a while about Hope Community's history of neglect," said Juan Haro, coordinator for Movement for Justice in El Barrio, a group that represents the tenant associations in the apartment buildings. "We don't want another slumlord."

Hope Community's executive director, Walter Roberts, says that he is "bothered" by what he says are unfounded criticisms of his organization made by Movement for Justice in El Barrio. He also said that he has tried to reach out to Movement for Justice in El Barrio without success.

The two groups share the same goal of helping the tenants, Mr. Roberts said. "If there are issues, I am happy to have a discussion with them," he said.

Not all Dawnay Day tenants are opposed to Hope Community. "If Hope can get our building, that's a plus for us," said Anne Bragg, a Dawnay Day tenant who has lived in her apartment on East 117 Street for 39 years. "Hope has a pretty good reputation. We see their buildings and their upkeep."

The tenants in the 47 apartment buildings have a long history of squabbling with their landlords over issues like repairs, heating and infestations. In 2004, the tenants began organizing against their then landlord, Stephen Kessner. The Village Voice named Mr. Kessner one of the city's worst landlords in 2006.

Mr. Kessner couldn't be reached to comment.

In 2007, Mr. Kessner sold the apartment buildings occupied mostly by low-income tenants to the London-based firm Dawnay Day. At the time of the purchase, executives of Dawnay Day were quoted by British newspapers as saying that they intended to raise rents on the units once the current tenants were displaced.

But Dawnay Day fell victim to the financial crisis and eventually walked away from the 47 Harlem apartment buildings. Representatives for Dawnay Day couldn't be reached to comment.

Residents who lived under Mr. Kessner's and Dawnay Day's management say their apartments were often in squalid condition. Tenants had to deal with mice and bedbug infestations, shoddy plumbing and leaky ceilings, said Maria Mercado, who has lived in her cramped, one-bedroom East Harlem apartment with her mother and two children for 25 years.

Now Ms. Mercado says she worries that Hope Community will bring in more of the same type of negligent management. "With all that we've lived through, we don't want to regress," she said.

Ms. Mercado says she knows people who live in Hope Community-owned buildings and has seen the conditions of several of their apartments. Many of those apartments were in dilapidated conditions and in need of renovation, reminding her of the previous condition of her own apartment building, she said.

Mr. Roberts said that Hope Community is now renovating 63 low-income apartments in Harlem, assisting those tenants to find temporary residences nearby. When the work is complete, the tenants will be able to move back into their apartments at the same rent, Mr. Roberts said.

"We think we can replicate some of that work for some of the Dawnay Day tenants," he said.

C III Capital Partners LLC, the special servicer in charge of the properties, has yet to decide if it will seek buyers for the 47 buildings or if it plans to auction them off. "We are very focused on protecting the property and achieving recovery for the bond holders," Frank Garrison, a senior executive officer of C III, said without elaborating.

So far at least one for-profit organization has also shown interest in the properties. Manhattan real-estate company American Properties Inc. wants to acquire the buildings without raising the current rents of the tenants, said Scott Zwilling, a principal at the company.

Write to Joseph De Avila at joseph.deavila@wsj.com