Owners of burned Bronx building held billions in real estate, reaped housing subsidies

When a trio of sophisticated investment firms purchased the 19-story Bronx tower two years ago, executives said they were committed to protecting the apartments “for the families that need them.”

Like other investors pouring money into purchases of affordable apartments, the firms are expert in acquiring properties using government incentives and, collectively, they hold assets worth billions of dollars. The homes, they say, serve a critical social need.

“We’re proud to add Bronx Park to our growing portfolio of affordable housing throughout the city,” Rick Gropper, co-founder and principal of Camber Property Group, one of the partners in the joint venture, said at the time of its purchase.

The fire on Sunday at the complex that left 17 people dead, however, has illuminated a striking contrast – between a group of investor landlords, whose portfolios have flourished with deals based on government incentives, and the residents of a building that has a record of building code violations for mice, roaches, lead paint and faulty safety doors, ensuing scrutiny showed.

Preserving affordable housing by luring investors with government incentives is often touted as the answer to the nation’s expanding housing needs. But the Bronx tragedy has highlighted complaints from some advocates who say that while the deals are enriching some landlords, too little attention has been paid to guarantee the homes such programs produce are suitable for tenants.

The owners of the Bronx tower are, in addition to Camber, Belveron Partners and LIHC Investment Group, both ranked among the nation’s 20 biggest owners of affordable housing, with properties across the country. Camber is based in New York, Belveron in California and LIHC is in Maine.

“These landlords are making a lot of money off these buildings with all these different subsidies,” said Judith Goldiner, a longtime housing attorney with the Legal Aid Society whose clients include tenants of the Bronx building. They “should have been making sure this building was safe.”

Fire investigators have linked the Bronx fire to a malfunctioning space heater being used in a bedroom, and two interior doors that were left open, allowing the deadly smoke from the apartment to waft through the building.

Tenants have told reporters that smoke detectors went off during the fire, but that the alarms rang so frequently at the tower that some residents may have ignored them. Investigators also are studying why the two doors were left open, allowing the smoke to spread, when regulations require that doors be equipped with automatic closing mechanisms, officials said.

Like many other older buildings, it was not equipped with sprinklers. While sprinklers were not required for the Bronx building, advocates said more care should have been taken to ensure that fire doors to the stairwell closed properly and that the building was adequately heated so that space heaters were not required.

“I would like the state of New York to take a lot more responsibility for asset management on the buildings that the state subsidizes. They have next to no code enforcement. That means we’re subsidizing people to live in really dangerous conditions,” said Cea Weaver, a housing advocate and campaign coordinator for Housing Justice for All in New York state.

Kelly Magee, a spokeswoman for the property owners, said that there were no known problems with the smoke alarms and that doors at the tower had been equipped with the self-closing mechanisms, as required. The violations regarding infestations and peeling lead paint, she said, had previously been rectified by the managers. They are cooperating with fire officials, she said.

“We are devastated by the unimaginable loss of life caused by this profound tragedy,” the property owners said in a statement. “Our thoughts are with the families and friends of those who lost their lives or were injured, and we are here to support them as we recover from this horrific fire.”

As city officials across the country face rising political pressure to promote affordable housing, many have opted to expand existing incentives for private companies to build or preserve developments such as the Bronx tower. Under such programs, landlords typically commit to holding down rents in exchange for government financing and tax benefits.

Proponents of the subsidies say they are essential to stem the loss of affordable housing and that without them, market forces will propel rents ever upward. Neighborhood objections, aging buildings and bureaucratic obstacles, they say, make preserving such housing impossibly expensive, and even with the subsidies, such projects can be risky.

“Without dedicated programs to make sure that these properties remain affordable, it’s very difficult to keep them that way, especially as they age,” said Andrew Jakabovics, vice president for policy development at Enterprise Community Partners, a nonprofit affordable housing advocate and investor.

Whatever the challenges in building and preserving affordable housing, however, the three firms behind the Bronx building reflect the success that some investment firms have enjoyed.

Like other such groups, the joint venture that purchased the Bronx building is expert in developing and buying properties that rely on the complicated incentives and, using such subsidies, they have accumulated large holdings.

Belveron Partners, based in San Francisco and founded in 2006, claims a stake in nearly 30,000 affordable apartments across 33 states. Its assets, the company says, are worth $3 billion.

LIHC Investment Group of Portland, Maine, formerly Low Income Housing Corp., has 15,000 affordable apartments, according to the website Affordable Housing Finance.

The third firm in the joint venture, Camber Property Group, is the only one focused largely on New York City. From its beginnings with small-scale projects in Brooklyn, Camber now touts 24 projects that encompass 5,839 units, according to the company.

Just last month, Camber was named “developer of the year” by the New York Housing Conference, a housing policy organization, during a virtual ceremony in which the firm was touted as “builders of hope” and a bridge between the public and private sectors. Gropper was also a member of New York Mayor Eric Adams’s transition team.

In December 2019, the three firms formed a joint venture that would rely on several government incentive programs to purchase the Bronx tower as part of an eight-property portfolio of New York buildings totaling 1,275 units for $166 million, according to real estate records and company announcements reported at the time.

In announcing the purchase, Gropper gave “thanks to our public and private partners.”

Several government incentives benefit the owners of the property, according to documents and state officials. The subsidies date back to agreements made in 2013 but continue to benefit the present owners of the tower and the other seven properties: There was a bond loan from the state’s Housing Finance Agency in the amount of $25 million and another $11 million loan from the same agency. Freddie Mac, the government-sponsored enterprise, guaranteed the loan, and this lowered owners’ interest payments.

The U.S. Department of Housing and Urban Development’s Section 8 program also provides subsidized vouchers for 76 of the apartments in the building, the agency said.

Brian Butry, a spokesman for New York state’s Homes and Community Renewal, said the state has oversight of both Section 8 and regulatory compliance inspections of units that benefit from housing vouchers – not the building itself.

Jakabovics said that while HUD, lenders and local housing agencies enforce maintenance standards at complexes that have received incentives, sometimes their inspections are not enough.

“It’s a fairly robust system, but … it’s far from perfect,” he said.

Rafael Cestero, president of a New York nonprofit that owns 4,000 affordable apartments in the city, said the incentives are essential to preserving such homes, and he rejected the suggestion that the affordability of the units in the Bronx fire could have led to any maintenance lapses that might have set off the tragedy.

“Everything I’ve read about the fire suggests this is an unbelievably sad human tragedy – accidents happens, tragedies happen. It was a horrible, horrible thing,” said Cestero of the Community Preservation Corporation. But “there are hundreds of thousands of units around the city of New York that are subsidized like this one. If the affordability and the subsidies were connected to the fire, we would see more of this.”

Other housing advocates, however, argue that given the profits some landlords have garnered from subsidized affordable housing, more ought to be spent improving the properties.

Developing and owning affordable housing “is a hugely profitable business,” said Weaver, of Housing Justice for All in New York state.

Unfortunately, Weaver said, the role of private companies “doesn’t always have good results.”

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