Letter to Alphonso Jackson, Secretary of the Department of Housing and Urban Development, Re: Delay Sale of Syracuse Buildings to Ensure City's Concerns are Addressed

Letter

Schumer, Clinton Join to Urge HUD Secretary to Delay Sale of Syracuse Buildings to Ensure City's Concerns are Addressed

Senators' Letter to HUD Follows Earlier Requests to Delay Apartment Sale

Senators Charles Schumer and Hillary Rodham Clinton today joined to urge the Department of Housing and Urban Development (HUD) to further postpone the sale of the ElJay apartments in Syracuse for at least six months. In a letter to HUD Secretary Alphonso Jackson, Schumer and Clinton cited major concerns that HUD has set a sale price that does not take into account the high cost of renovating the buildings, and that the City would like to find a developer capable of rehabilitating the buildings to ensure that they are a resource rather than a burden for the Syracuse community. The lawmakers argued that at minimum a six month delay would be needed to allow all of the parties involved the necessary time to address these key issues before moving forward.

"Before prematurely pulling the trigger and selling off these buildings, we need adequate time to ensure the buildings are sold for a fair price to a landlord who is committed to preserving them as affordable and safe housing," said Senator Schumer. "With a six month extension, the City of Syracuse can guarantee that these buildings don't get snatched up by speculators and instead remain a cornerstone for affordable housing in the city." said Senator Schumer.

"Rushing to sell these buildings to the first available bidder is not only unnecessary, it would be a step in the wrong direction for a city that has worked so hard to improve their housing market," said Senator Clinton. "Providing a six month delay would allow the City of Syracuse and HUD ample time to address the issue of the buildings' market value, and would aid in the search for a responsible developer whose objectives are in line with Mayor Driscoll's goal of turning these buildings into a resource for the community."

A copy of the letter to HUD Secretary Jackson is attached -

April 9, 2008

The Honorable Alphonso Jackson
Secretary
Department of Housing and Urban Development
451 7th Street S.W.
Washington, D.C. 20410

Dear Secretary Jackson,

We are writing to you to urge you to delay the pending sale of the ElJay apartments in Syracuse, New York for at least six months. You recently granted a 21-day delay of the sale, and we would like to thank you for taking this important step to ensure that these buildings are sold to a responsible owner and that they continue to be a resource for the Syracuse community. However, we have two concerns with a sale of these buildings in the near future that require your further assistance.

Due to the Deficit Reduction Act of 2005, HUD is required to sell the buildings at a price that does not take into account the necessary rehabilitation costs. At the ElJay apartments, for example, rehabilitation costs are estimated to be at least $15 million, far above the actual value of the buildings. Congress included language in the 2008 Omnibus appropriations bill that was intended address this issue. However, we recently learned that HUD's Office of General Counsel does not think that the legislation grants HUD the authority to conduct sales at the actual market value. There are ongoing discussions regarding the resolution of this disagreement, and until this issue is resolved, we feel strongly that this sale should not go forward.

Moreover, the City of Syracuse would like to find a developer capable of taking over and rehabilitating these buildings to ensure that they are a resource rather than a burden for the Syracuse community. The City has made great strides over the past several years to support the Syracuse housing market, and we are concerned that if these 275 units of distressed housing are introduced into the market precipitously, it will undermine many of the housing accomplishments that the City has achieved. The City of Syracuse is actively working to identify developers interested in these properties that would act as responsible long-term owners and do the necessary rehabilitation work to make these apartments safe and sustainable. However, it will take time to prepare a bid package and line up the required financing. Rushing to auction now would only help push the buildings into the hands of speculators, who wouldn't do the rehabilitation necessary to make the units viable again. Instead, they would try to flip them for a quick profit, and would only increase the damage done to the buildings, perhaps to the point where they could no longer be rehabbed.

To ensure that there is enough time to accomplish this goal, we are asking for a delay of the sale of ElJay apartments for at least 6 months. This amount of time will hopefully allow HUD and the Congress to resolve the sales price issue and would ensure that a qualified buyer could be found, and given sufficient time to prepare a bid package.

Thank you for your prompt attention, and I look forward to working with you on this matter.

Sincerely,

Charles Schumer

Hillary Rodham Clinton

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