In the 1950s and 1960s, the practice of “blockbusting” became commonplace. Speculators depressed housing prices by scaring away white middle-class residents. Then they resold the properties to black homebuyers at artificially inflated prices, often resulting in default and further devaluation.
Today the practice of blockbusting continues, except now it’s largely minority renters that the investors want out. The new buyers are us, the taxpayers, underwriting the supportive housing industry.
Government agencies pay supportive-housing profiteers far above market rate for buildings they convert from normal rentals to taxpayer-subsidized housing for the mentally ill. For each “special-needs” tenant their facilities house, investors can collect more than $3,000 a month. Protected by rent stabilization, existing residents, who might only pay $500 a month for the same unit, often stand in the way of maximum profits. So investors use the threat of the incoming population to scare them off.
In the case of St. Louis Hall, a six-story residence on W. 94th St., supportive-housing developers known as Lantern Organization and its for-profit wing, the Lantern Management Group, have a blockbuster at their disposal called “NY/NY III.” In 2005, Mayor Bloomberg and then-Gov. George Pataki started this initiative to house the city’s most high-risk group of homeless single adults, with problems ranging from persistent mental illness and chemical addiction to HIV/AIDS. While pursuing a noble goal, the champions of NY/NY III failed to anticipate how supportive-housing speculators would use NY/NY III as a weapon to intimidate existing residents.