Crown Heights: The Good, the Bad, and the Buyouts

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How a neighborhood got hot, and what that has meant for its longtime residents, for better and for worse.

Crown Heights Tenant Union Protests Buyouts - Photo Credit: CHTU

The Crown Heights Tenant Union protests buyouts in a recent demonstration.  (Photo courtesy of CHTU)

 

A new report by MNS Real Estate Brokerage shows that Crown Heights is one of Brooklyn’s fastest growing rental markets. Young, wealthy professionals are moving in, property values are increasing, crime is decreasing, and the neighborhood is getting downright trendy. But what’s happening to the lower-income residents who used to live there?

In the shadows of gentrification is a complicated and often oppressive reality: Many rent-controlled Crown Heights tenants are being bought out of their apartments and some are being harassed in the process.

How does a neighborhood get to that point? Before these buyouts began, Crown Heights underwent a socioeconomic revolution. Here’s how it all started, and where those rent-controlled tenants are now.

The Crown Heights Draw

Douglas Elliman Real Estate says Crown Heights could be on its way to becoming the new Williamsburg. But for decades, racial tensions and high crime warded off potential renters and investors from elsewhere in New York and the greater U.S.

The real estate market began strengthening in 2012 with the opening of the nearby Barclays Center. The venue started attracting new businesses, giving the neighborhood an economic boost. Franklin Avenue in Crown Heights became particularly wealthy.

“It’s undergone a renaissance of restaurants, boutiques, coffee shops, bars, so that’s a really big draw” for renters, says Alex Maroni, an agent for Douglas Elliman Real Estate. “I think that Nostrand Avenue is poised to really undergo a huge transformation, too.”

Young professionals are moving into the blossoming neighborhood, many of them looking for an affordable escape from Manhattan’s ever-spiking rents. According to Maroni, these Manhattanites once moved from the borough to fully gentrified Brooklyn neighborhoods, such as Brooklyn Heights and Park Slope, to save money. But today, a two-bedroom rental unit in established Brooklyn is just as costly as comparable apartments in Manhattan, coming in at well over $3,000 dollars per month. A similar unit in Crown Heights sits at a more affordable $2,500 per month.

“It’s one of the last good deals,” for both renters and buyers, Maroni says. “Once you get past a certain avenue in Crown heights or Bed Stuy, the housing stock changes and you don’t have that many more classically beautiful brownstone and townhouse blocks,” he explains. “So this is it, in a sense, for New York City.”

This gentrification is inspiring infrastructural improvements, such as the newly finished renovation of the Utica Avenue subway station. Such changes, coupled with the neighborhood’s close proximity to landmarks like The Brooklyn Public Library and Prospect Park, are not only attracting wealthy renters, but property investors, too.

Enter, Big Spenders

Property management corporations are buying and renovating large apartment buildings in Crown Heights in the hopes of scoring a slice of the booming rental market. One such corporation, BCB Realty, recently purchased a number of buildings in the neighborhood.

But the process of making money in this rental market involves risky speculation. BCB Realty reportedly took out a hefty $5 million mortgage on its building at 1059 Union Street. Yet because the building is made up of mostly rent-controlled units, it’s presently valued at only $1.8 million.

To turn a profit, investors like BCB Realty are encouraging rent-controlled tenants to vacate their units. This way, they can charge newcomers market-value prices.

BCB-owned 1059 President Street - Brownstoner.com

BCB-owned 1059 President Street – (Photo courtesy of Brownstoner.com)

Cea Weaver, Assistant Director of The Urban Homesteading Assistance Board (UHAB), explains that the potential profits to be gained by offering buyouts to rent-controlled tenants are colossal.

Landlords can only increase these tenants’ rents by 4 to 6 percent annually due to legal guidelines. But “typically what they’ll do upon vacancy is raise [the rent] more than 20 percent,” Weaver says.

 

Deal or No Deal?

The question of whether to accept or reject a buyout is one many tenants struggle with. For some, the offers are a welcome gift.

“Some buyouts are upgrades,” Adrian Cardona, a broker at Rapid Realty, explains. “It all depends on the situation, but if a tenant is employed and dreaming about home ownership, this is a great down payment.” The fact that many of these buyouts are offered in hard cash is especially enticing.

“Sometimes investors catch tenants at the right time; their grandchild is in college, they’re in debt, they need to pay medical bills,” Cardona adds. “It’s like an angel knocking on their door.”

For others in Crown Heights, the buyouts are less than satisfactory.

“Now that they’re beautifying the neighborhood again, well, we want to be here, too,” Crown Heights resident Donna Mossman explains. “I live in a community; I work in a community, why do I have to give up my apartment?”

Mossman, 57, has lived in the neighborhood for more than 37 years and shares a rent-controlled unit with her mother in a BCB-owned building at 1159 President Street. She recently declined a $70,000 dollar buyout. According to Mossman, a five-digit-buyout is not as generous an offer as it might appear.

“What can I buy for $70,000 dollars? People don’t know that you have to pay tax on that money,” Mossman explains.

Kerri White, Director of UHAB, agrees.

“If you do the math, [the buyout] really isn’t going to last you that long, especially if you want to stay in the neighborhood,” White says.

When Buyouts Turn Ugly

For some tenants, the buyout process is as simple as accepting a fat envelope at one’s doorstep. For others, the process is ridden with complications. Many tenants even report being harassed into accepting the offers.

“We went over five days straight without heat and hot water,” Mossman says. “And when BCB started doing construction in the apartment above me, our bathroom nearly caved in. When I opened my closet, there was dust all over my clothes. They cut my telephone lines, it’s horrible.”

Crown Heights Tenant Union Flyers - CHTU

Posters at a Crown Heights Tenant Union protest. (Photo courtesy of the CHTU)

To combat buyout-related issues, Weaver and White launched the Crown Heights Tenant Union (CHTU) in 2013.

The union strives to combat landlord harassment and educate tenants on affordable housing issues. The group is also working to institute policy that will regulate buyouts and make the process more transparent.

The group’s push for regulation comes in response to a number of accusations by BCB tenants, including that the company is illegally converting one-bedroom units into two-bedroom units.

Mossman and another rent-controlled tenant, Joan Golding, are just two of many active locals whom CHTU group has helped. Golding says she, too, was  harassed by BCB Property Management to accept a buyout.

“I still have my bathroom not done,” she says of her unit’s repair needs. In addition to apartment-related troubles, Golding explains how “garbage piles up” outside her unit. “There are a lot of flies, big flies,” Golding says. BCB Realty declined to comment.

Where Are They Going?

For some who accept buyouts, especially elderly tenants, the process of beginning anew is a healthy opportunity.

“It can lead to better quality of life,” says Anthony Lolli, Founder and CEO of Rapid Realty. That’s because some seniors  “can move in with their children or their grandchildren.”

For those tenants who cannot move in with friends or relatives, starting over can be an economic battle.

“Affordable housing is not that easily found in New York City and so to move out of your unit, especially in a neighborhood like Crown Heights, it’s going to be very difficult to find something at the same price level,” White explains.

Many of these tenants are relocating to less gentrified areas of Brooklyn, like the Eastern Brooklyn neighborhoods of Canarsie and East Flatbush, and the Southern tip of Brooklyn.

“A lot of people are moving to Rockaway and parts of Queens. Some are leaving the state,” Cardona adds.

And some of these residents end up paying more—sometimes $300 dollars per month more—to live in these less established areas than they were paying to live in their rent-controlled Crown Heights units.

So, is it worth it to accept?

“You have the right to take the money,” Mossman says. “But go look for an apartment first.”

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