Preserve Our Buildings: Preventing Another ‘Burning’ Crisis in The Bronx and Beyond
In the 1977 World Series, fires burning outside Yankee Stadium led broadcaster Howard Cosell to famously declare, “Ladies and gentleman, The Bronx is Burning.”
This phrase captured the essence of New York City’s decline in that era.
However, it was merely a continuation of a trend observed a few years prior, evident in the financial hardships facing rent-regulated properties.
Years of stagnant rents, combined with escalating operating costs driven by high inflation, left many buildings with revenues insufficient to cover their expenses.
Building owners faced a tough decision: invest in heating fuel or pay property taxes.
Most chose to pay for fuel, which, in turn, negatively impacted the city’s budget and contributed to its financial crisis.
Recent data released by the Rent Guidelines Board reveals a troubling situation reminiscent of the Bronx of the late ’70s.
The RGB report, analyzing 2023 data, indicated that pre-1974 buildings in the Bronx are experiencing severe challenges.
Over 12% had operating costs that exceeded their income, even before accounting for mortgage payments or necessary upgrades like compliance with Local Law 97.
Taking these factors into account, the majority of these aging buildings are operating at a loss.
This aligns with various reports highlighting a surge in bankruptcy filings, with properties being sold at staggering discounts of 70% or more. In one instance, a building was sold at an astonishing 97% discount.
The number of older, rent-stabilized buildings that failed to meet mortgage payments has seen a significant increase in 2024.
In a striking example, one building owner is suing a bank because the bank refuses to relieve the owner of the property during foreclosure proceedings.
Yes, the bank prefers not to take ownership, fully aware that it would incur losses.
Buildings operating at a loss cannot access additional funding for emergency repairs or essential upgrades.
Banks assess a building’s ability to repay loans and typically won’t extend credit to properties incapable of demonstrating financial viability.
The unfortunate result of a building stripped of funds and now functionally bankrupt is a rise in violations.
This is driven by the lack of funds for repairs, layoffs, and broader disinvestment.
Consequently, when a building struggles to generate adequate income, it is the renters who ultimately pay the price.
The government is inadvertently exacerbating the situation. Expensive new mandates, such as requiring building supervisors to inspect tenants’ trash for proper composting or suffer fines, only contribute to the decline in living conditions for countless New Yorkers.
Our analysis indicates that in 2024, conditions worsened for many rent-stabilized buildings located outside Manhattan’s affluent neighborhoods.
Insurance costs have skyrocketed; water and sewer expenses have risen by over 10%; fuel prices continue their upward trend—meanwhile, the city consistently raises property taxes, even as most buildings lose value.
The Bronx can avoid a repeat of its past struggles. There is still the opportunity to turn things around.
Three essential actions must be taken:
* First, the Rent Guidelines Board should consider adjusting rents above the inflation rate to compensate for a decade of insufficient increases.
* Second, the government must establish a system for providing tax relief or subsidies to buildings facing severe distress. The RGB data indicates that 20% of pre-1974 buildings reported zero or negative income in 2023, yet they were still obligated to pay taxes.
* Lastly, we need a sustainable framework moving forward. This calls for a thorough evaluation of current regulations, ensuring that buildings nearly 100% rent-stabilized can thrive.
As a Bronx native raising my family here, I am determined to prevent my borough from repeating its troubled history.
However, witnessing numerous homes teetering on the brink of bankruptcy or already in the foreclosure pipeline makes it challenging to remain optimistic.
Kenny Burgos is the CEO of the New York Apartment Association and a former assemblyman from The Bronx.
