Chair Sanchez questions HPD on proactive vs. reactive asset management

Thank you, Chair Lee.

And good afternoon again.

Thank you.

Thank you so much for that context and testimony.

My first question, I just want to start with...

Something that you say in your testimony, HPD is legally required to approve rent and maintenance fee increases up to the amount necessary to cover the building's costs, and failing to approve an increase would risk violating the state law.

I highlight this point in your testimony because it doesn't answer a question, a fundamental question that we here at the council have, which is what is HPD's asset management?

model?

Are you fundamentally being proactive or reactive?

Are you waiting for the buildings to come to you with an application for an increase?

Or are you monitoring as an agency the building's health and the financial health of the building so that you can smooth out over time the increases that are needed at the building?

So our housing supervision team works with the housing companies to regularly review income and expense statements from each housing company and their annual financial audits.

So by reviewing the existing financials, we can work with the...

co-op boards or the private owners to come up with a plan to address any increases that could be coming up.

So then why is it that if you are regularly as an agency reviewing financials at a building, increases can be presented in a way that is making up for many years at a time?

So in some cases, we are planning for long-term capital improvements.

More often than not, Mitchell-Lamas won't come to us for the increase until the pre-development process is completed to do the capital work.

So it becomes kind of one fell swoop of addressing any increases to meet operating needs and then support major capital improvements.

Thank you.