Congress bailing out slumlords

From the NY Post:

A bill winding its way through Congress proposes to prop up deteriorating apartment complexes by injecting $2 billion from the Troubled Asset Relief Program into an effort to stabilize multifamily properties in default or foreclosure.

The bill, which is called the TARP for Main Street Act and was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep. Nydia Velazquez (D-Brooklyn and Manhattan), would use TARP funds that have been returned by banks and plow it into programs that, according to the bill, would create "sustainable financing" for the complexes as well as provide funding for property rehabilitation.

The House is considering the measure, which focuses on apartment buildings with units that are either rent stabilized or receive government subsidies.

Many developers during the housing boom bought rent-regulated apartments by borrowing against the properties themselves and betting they could make hefty returns by converting them into market-rate buildings.

However, thanks to the recession and the collapse of the real estate market, many developers are now struggling to make mortgage payments, let alone finance repairs and upkeep of the properties they own.

From the Daily News:

Some of the city's worst landlords are sharing in $81 million in federal stimulus money - even though their buildings are riddled with housing code violations.

Since March, millions of dollars have been doled out to buildings where tenants have repeatedly complained of rats, roaches, faulty elevators, lack of heat and flaking lead paint.

Millions more will follow.

The problem is that the Recovery Act distribution makes no distinction between good landlords and bad ones.

As a result, landlords - regardless of the number of serious housing code violations they've racked up - are allowed to pocket stimulus money without being forced to make repairs.