Nonprofit Landlords Have Gone The Extra Mile To Support Tenants During The Pandemic. But There’s Trouble Ahead.
Many community development corporations assist not only tenants, but also a wider community of low-income people with a range of social services.
A landlord in Brooklyn delivered 10,000 donated pineapples to tenants and to other families in its wider community. Then, the following week, loads of bananas, oranges, and apples.
The landlord also established a relief fund—open to tenants and others, regardless of immigration status—to help households pay for burials, groceries, cellphone bills, and other urgent expenses. Not stopping there, the owner delivered space heaters to some neighboring buildings where other landlords weren’t providing heat.
The landlord is the Fifth Avenue Committee, a Brooklyn-based nonprofit community development organization founded in 1978. It’s dedicated not only to the development and revitalization of affordable housing and commercial storefronts, but also to advocacy work and a variety of services for low-income residents, including adult education and literacy, workforce development, tenant advocacy, legal and financial counseling, and more. The organization manages 454 affordable apartments in Brooklyn.
Not all landlords can be expected to have the capacity or expertise to provide robust holistic services during this period of crisis. But the efforts of the Fifth Avenue Committee and many other similar organizations exemplify how much the city’s community development corporations (CDCs) have become crucial sources of support for thousands of New York City’s low-income residents, who have been disproportionately affected by the health and economic fallout of the COVID-19 pandemic. Yet as tenants across the city go on rent strikes and landlords demand relief from declining rent revenues, many CDCs are also facing their own looming fiscal challenges.
“Our CDCs don’t want to be put in the position where they have to ask for rent from a tenant they know isn’t earning during this crisis,” Barika Williams, executive director of the Association for Neighborhood and Housing Development, which supports the work of community development corporations and grassroots neighborhood-based groups, said in an email. “At the same time, they also have buildings they have to run, and they have to maintain the quality and the services of their buildings.”
For many low-income communities, CDCs have long played a role similar to the mutual aid networks that have formed across the city during the pandemic, Williams said.
“These organizations serve as community caretakers,” she said. “In this crisis they’re being called on to do even more, and they’re the ones who [will] be there serving the community for the long-road of recovery.”
The Mutual Housing Association of New York (MHANY), which owns and manages affordable housing in several boroughs and New Jersey, has been using the texting app Hustle to hold individual conversations with tenants and learn about their needs. According to executive director Ismene Speliotis, the organization delivered care packages to each of its 2,000 apartments, is launching a food distribution program, and has responded to tenants’ needs in other ways.
“When the virus started, when everyone was panicking and everything was off the shelf … [and] you cannot get Lysol you cannot Clorox. … I was going out of my mind,” said Lorna Blake, a tenant whose name was given to The Appeal by MHANY. She said she and her neighbors were happily surprised to find deliveries of essential supplies to their doors, and were grateful for Speliotis’s frequent check-ins and the organization’s efforts to continue addressing maintenance problems. “We wasn’t expecting a landlord to go all out. She was really thinking about the residents.”
Of course, nonprofit landlords and superintendents aren’t infallible. The Appeal made cold calls to reach tenants living in buildings owned by a few different nonprofit housing providers in New York State that were working on new outreach, mutual aid, and cleaning efforts. Two tenants praised their landlords, two had no major issues but did not recall receiving phone or in-person outreach, and one was frustrated by what she said was insufficient cleaning.
Still, many CDCs are reaching numerous tenants through their efforts during the pandemic.
According to its website, St. Nicks Alliance, based in Brooklyn’s Williamsburg neighborhood and serving 4,400 tenants in its buildings and other members of the community, had placed 2,546 wellness calls to seniors and delivered 2,023 meals and grocery bags by the seventh week of the crisis, among other efforts. The Cypress Hills Local Development Corporation, which has developed 350 units of affordable housing in Cypress Hills and East New York within the last 25 years, has hired a Minority and Women-owned Business to do additional cleaning in its buildings, and has been serving tenants with food drops and supermarket gift cards, among other forms of support.
Among other steps, the Fifth Avenue Committee also conducted a survey asking tenants about their needs, coordinated grocery deliveries for quarantining sick families, and hired companies for increased disinfecting. It sent extra letters to residents of supportive housing that outline their responsibilities to stay in quarantine and the services available to them.
Many CDCs also assist a wider community of low-income New Yorkers with a range of social services, and they continue to do so. For instance, the Fifth Avenue Committee—through outreach to the roughly 5,500 people including tenants they serve annually, along with fliers that are often given out during food distributions, virtual town halls, and social media—has offered help with obtaining government benefits and entitlements, financial and legal counseling services, and emergency relief funds.
But as CDCs try to support their tenants during the economic downturn brought by the pandemic lockdowns, they’re also taking a financial hit.
Many nonprofit housing organizations in New York City operate on slim margins. According to research by the University Neighborhood Housing Program, nonprofit affordable housing providers spend significantly more on expenses but also take on less debt than for-profit rent-stabilized landlords. And for some, acquiring masks, buying extra sanitizing equipment, and providing services to a growing number of tenants and community members means even higher expenses during this time.
CDCs are generally funded with a mix of government grants, government service contracts, management and development fees, private foundation funds, and individual donors and rental revenue. City, state, and federal funding can all be in the mix, depending on the services provided and the type of housing offered. CDCs now face threats to all those income sources.
“Right behind all of that [pandemic-related] pain and suffering, are all the deep cuts to education and the safety net,” said Michelle Neugebauer, executive director of the Cypress Hills Local Development Corporation. She said the organization anticipates almost $4.6 million in cuts when the city budget is passed in June. There are proposed cuts to a range of programs, including the Summer Youth Employment Program, the Basement Apartment Conversion Pilot program and others (over a quarter of the organization’s $16.5 million budget).
In western New York, the 15-year-old nonprofit People United for Sustainable Housing (PUSH Buffalo), made headlines in late March when it canceled April rent for the households living in its 99 apartments and for its five commercial tenants—and subsequently announced the same for May. A philanthropic partner helped the organization cover the lost rent, which amounted to roughly $45,000 for each month. PUSH Buffalo also receives Section 8 funding, a government subsidy, of just under $15,000 a month.
PUSH coupled its rent cancellation with other initiatives for its tenants and wider community of members, including organizing to help tenants in other buildings negotiate with their landlords on rent, meeting people’s needs with mutual aid, opening a physical mutual aid hub in its gymnasium with donated food and supplies, performing wellness check-ins and more.
“We continue to challenge other landlords and developers to say, if a nonprofit can do this … and give some relief to tenants in this moment, then certainly people who are for-profit developers can do the same. And it really is begging the question and the willingness to put people over profit,” says Harper Bishop, deputy director of movement building at PUSH, though he also acknowledges that not all landlords are in a position to cancel rent. “We’re asking people to consider what it is they’re able to do, and to do that.”
Many New York City nonprofit housing organizations, however, have larger portfolios, which can make it more challenging to cancel rent across the board; $45,000 would simply not be enough to cover the lost rental revenue from all those units. And what works for one nonprofit may not work for all. Every nonprofit housing provider faces a different set of expenses for debt service, labor costs, insurance, water, and maintenance, and each receives a different set of revenues.
Just how much rent revenue each New York City-based CDC stands to lose remains to be seen. According to an April study conducted by the Local Initiatives Support Corporation New York City and based on interviews with 21 community-based organizations, “almost all [community-based organizations] are concerned about loss of residential rent revenue. One predicted a loss of 50 percent or more of rent revenue.”
Speliotis, the MHANY executive director, says the organization’s rent collection dropped roughly 20 to 40 percent in April, depending on the building, and she expects May will be worse.
“Basically, I tell [tenants] there is no formal policy, because there is not, yet. And if they can pay something they should pay, and if they can’t, then they shouldn’t—I don’t need to give them permission not to pay, because they just don’t have it,” she said. Although CDCs sometimes go through eviction processes with tenants to secure resources for their continued tenancy—like funds from the city’s One Shot Deal emergency assistance program—Speliotis said she hopes the city will provide aid to tenants in need without making landlords send tenants to court.
“She is not rushing for the rent,” confirms Blake, who says several members of her family are not able to work and that their household has not been able to make rent. “I have friends that I know who are living in other buildings … like regular landlords, and they cannot wait until this virus is finished to kick them out of the apartment.”
The Fifth Avenue Committee has residential and commercial tenants, and of the latter, 80 percent are “small, minority and/or women owned businesses.” The organization has offered its commercial tenants rent deferrals, but is still encouraging them to offer a portion of rent, and is trying to help residential tenants apply for benefits that will help. “[With] our residential tenants, we have seen a drop-off in collections, but those tenants who could pay did pay,” said Michelle de la Uz, executive director of the Fifth Avenue Committee, explaining that in April they collected about 80 percent of rents.
CDCs generally support protections for tenants, but they still hope to collect rent from those who haven’t lost income. The sector has not, in general, been a vocal supporter of the rent strikes happening across the city.
Cea Weaver of Housing Justice for All, a coalition organizing rent strikes in New York City, says that none of the buildings that participated in building-wide rent strikes are owned by CDCs. She said these nonprofits are among the city’s best landlords and that Housing Justice for All is also pushing for more nonprofit housing ownership. She argues that the “tactic” of the rent strike is needed to compel the government to act.
Neuberger, the Cypress Hills Local Development Corporation executive director, said she’s sympathetic to rent strikes. “But I just know that [for] the budgets of our buildings; what comes in, goes out. … These projects were underwritten at really, really low margins.”
CDCs, like other landlords, have called for government relief for tenants and owners. The federal CARES Act passed in March did include $12 billion in relief for housing and homelessness, but advocates say it fell far short. Furthermore, because CDCs do not always have large mortgage debts, they say relief in the form of mortgage forbearance or forgiveness will be insufficient. Governor Andrew Cuomo’s executive order allowing tenants to cover rent with a security deposit is also problematic from a CDC perspective: For tenants who’ve lived in a CDC apartment for decades, security deposits now make up just a fraction of the rent.
According to research by the University Neighborhood Housing Program, subsidies to offset operating costs like the high cost of water, compliance with local laws, real estate taxes and insurance would be of great help to CDCs. So could greater flexibility with some regulations, assurance that government contracts will be paid, guarantees that nonprofits can easily draw on reserves and then be later replenished by the government, and expansions of HUD-funded affordable housing programs and the Low-Income Housing Tax Credit program, nonprofit housing directors and advocates say. Certainly, some for-profit landlords—particularly smaller owners and homeowners—also operate on thin margins and without significant mortgage debt, and would also benefit from these solutions.
“If [tenants] have to apply for help and have to qualify, then quite honestly, owners of properties ought to as well,” suggests de la Uz. She adds that the key component of a relief bill would be relief targeted to tenants who have lost income and are of low-to-moderate incomes, and commensurate relief for owners, especially those that house primarily low-to-moderate income tenants.
There are several bills under consideration by the state legislature that would provide relief to tenants and landlords affected by the pandemic, some which would establish rental assistance funds and others focused on mortgage forgiveness. One, the Emergency Coronavirus Affordable Housing Preservation Act of 2020 spells out some remedies specifically for nonprofit affordable housing providers. It would give providers the ability to easily use their financial reserves to cover important costs and the right to withhold mortgage or construction loan-related payments owed to the state. Providers could apply those payments to operations, replenishing reserves, or other urgent obligations. It would also allow affordable housing providers to apply for relief if they’ve lost 10 percent or more of rental income, or can prove hardship.
Yet affordable housing nonprofits are also increasingly concerned that powerful for-profit real estate companies will have the attention of New York’s government during the city’s recovery: Cuomo’s New York Forward Reopening Advisory Board includes two representatives from the Blackstone Group and several other real estate executives, while Mayor Bill de Blasio’s new 30-member Construction and Real Estate Sector Advisory Council includes just one nonprofit.
Furthermore, to pay for rental assistance funds, New York State is banking on an infusion of federal dollars. The HEROES Act, the coronavirus relief package currently under consideration by Congress, does include $100 billion for emergency rental assistance, along with some other funding focused on housing and homelessness.
“The reality of the current situation is that without government and mainly the federal government, providing rent relief to NY, our renters, homeowners and CDCs will be left devastated,” Williams said in an email. “It’s unacceptable for government to say to tenants or landlords, we’re going to do nothing. We cannot leave NYC residents facing homeless or a lifetime of Covid19 debt and we can’t leave the housing market in disrepair.”