Local Tenants and Activists Demand Changes in Signature Bank’s Lending Practices
Activist groups in New York City have a long history of fighting back against landlords intent on pushing out rent stabilized tenants. In the past couple of years they’ve also been going after banks that help developers purchase vulnerable rent regulated buildings. Case in point: a protest staged last month in Midtown Manhattan, where Signature Bank was holding its annual shareholder meeting.
Tenants from across the city and members of advocacy groups, carried signs with slogans like, “Don’t underwrite displacement,” and called on Signature to, “fully adopt responsible lending practices to protect tenants’ rights.”
Signature is not the only bank targeted by activists, but it has been a main focus of their campaign during the past year. In protracted negotiations with bank officials, they have pressed for commitments to stop granting loans that put rent regulated residents at risk of displacement and to monitor unsafe construction practices. Tenant leaders say Signature has made some concessions but has not gone nearly far enough.
One of the groups leading the charge on the issue is the Association for Neighborhood & Housing Development (ANHD). In a statement, ANHD’s Jaime Weisberg said, “When banks make loans that are too large for the current rents to support, landlords have even more reason to find all possible ways to raise rents – legal, semi-legal, or illegal – all unscrupulous… We have seen this again and again. Banks may not be the only problem in these situations, but they are definitely part of the problem, and should instead become part of the solution.”
Another organization involved in the coalition is the Cooper Square Committee, which is on the front lines advocating for tenants on the Lower East Side. Several property owners with buildings in the neighborhood — including Icon Realty Management, Jared Kushner and the Sabet Group — have Signature loans.
This past fall, Sabet picked up a 20-unit walkup building at 61 East 7th St. for $8.3 million. It was not long after the transaction took place that counselors at Cooper square Committee began hearing from tenants about disruptive renovation projects in the building and questionable buyout offers. According to public records, Signature provided the Sabet Group with a loan in the amount of $6.375 million, raising suspicions among tenants that they were now living in an over-leveraged building. They grew more concerned after learning about previous legal battles between Sabet and tenants living in Chelsea.
Earlier this spring, the Tenant Harassment Protection Task Force paid a visit to the building, which resulted in a partial stop work order. In a March 23 letter to executives at Signature Bank, the tenant association detailed various problems, including the discovery that fire stopping was not used during building renovations. “Our association,” they wrote, “has been monitoring and logging the unsafe breathing levels in apartments… with soot and debris continuing to infiltrate our homes.” The tenants pleaded with the bank executives, “Please consider in the future the consequences of the money you lend to landlords (with questionable track records).”
Yonatan Tadele, a housing coordinator at Cooper Square Committee, told The Lo-Down, “Whenever rent-regulated buildings are being financed, Signature Bank must improve their lending standards across the board – from initiating loans, to dealing with problems that arise in buildings currently financed by the Bank.”
In December, Signature Bank came out with a statement, which was titled, “Our Pledge to the Community.” Among other points, Signature asserted, “The Bank’s underwriting for multi-family loans considers cash flow projections based on in-place rents and market rate projections for vacant apartments.”
“In the event building conditions affecting safety or quality of life are brought to the Bank’s attention,” the bank noted, “we will work diligently to encourage our borrowers to ameliorate those conditions.” In a statement provided to WNYC last year, Signature said, “No one and no bank is perfect. But our overall record should be applauded and not denigrated. We note some of the names in question and have worked toward encouraging positive outcomes for tenants to the extent legally possible.”
But Cooper Square Committee pointed out that Signature has still not reached and agreement with tenants and advocacy groups. The pledge, said Yonatan, “falls short of a number of key items; namely, specific protections to prevent tenant displacement and utilizing responsible tenant engagement. One such protection that would’ve made a lasting difference at 61 East 7th Street is having a defined policy that would prevent hazardous construction and ensure tenants’ safety.”