What is Neighborhood Restore HDFC?
Neighborhood Restore Housing Development Fund Corporation (Neighborhood Restore) is a non-profit organization that administers the New York City Department of Housing Preservation and Development's (HPD) Third Party Transfer program (TPT). The organization's mission is to ensure the maintenance of safe and affordable housing in New York City. This is done by overseeing the stabilization, management and rehabilitation planning for distressed housing in long-term tax arrears.
TPT governs the transfer of properties from owners who have defaulted with respect to their obligation, to entities that have the capacity to stabilize, manage and rehabilitate them. Under this program, when New York City forecloses on properties for unpaid taxes, ownership is transferred directly to Neighborhood Restore instead of the City. Neighborhood Restore, in turn, works with qualified developers as they stabilize, manage and plan for the future ownership and rehabilitation of these properties. After all obligations have been met during Neighborhood Restore's interim ownership, properties are transferred to the qualified developer (which may include the building's tenants as a cooperative), who will own and continue to manage the property assigned to the developer as affordable housing.
Following the fiscal crisis of the 1970s, massive depopulation, disinvestment, and impoverishment struck many of New York City's neighborhoods. Coupled with national economic trends such as high fuel costs and massive inflation, building and home owners were saddled with increasingly unmanageable financial costs. As a result, tax delinquencies rose, and foreclosures increased.
|An early Third Party Transfer
building in Harlem before and after rehabilitation.
(Move mouse over image for after)
For a number of years, the City took possession of tax delinquent properties (called in rem foreclosure), in part to avoid the complete deterioration of distressed and poorly maintained housing stock. By 1994, the City's inventory of properties grew beyond its capacity to rehabilitate them in an efficient manner, and HPD had become the City's largest landlord. The average length of City ownership was more than 19 years, and each building cost the city $2.2 million to manage, repair and sell. In addition, while each building was in the City's hands the City lost out on an average of more than $200,000 in property tax revenue.
Seeking a new approach, TPT was created to decrease the City's financial burden, and to ensure that tax delinquent properties are responsibly managed and developed. Local Law 37–passed by the New York City Council in 1996–revised the in rem foreclosure procedure to permit the transfer of ownership of tax delinquent properties directly to new owners (such as Neighborhood Restore) without ever taking title itself. By doing so, the City avoids the cost of managing the properties and preparing them for sale. These new responsible third-party owners are selected based on a proven track record of sound property management and affordable housing development experience. Rehabilitation with private financing leveraged by public funds is the ultimate goal for all TPT properties.
To facilitate the transfer of properties, HPD worked with Enterprise Community Partners, Inc. and Local Initiatives Support Corporation to create Neighborhood Restore. Neighborhood Restore's role is to administer the process jointly with HPD and act as the interim owner of TPT properties while qualified developers assume their management while planning for their future rehabilitation.
Since its creation in 1999, Neighborhood Restore has helped to facilitate the rehabilitation of hundreds of buildings in New York City and has helped to preserve over 5,500 units of affordable housing.