Making Policy Public: Predatory Equity

But first, CUP provides some context:

In the spring of 2008, we put out a request for proposals to advocacy groups to participate in Making Policy Public (MPP). One of the first submissions we received was from Amy Chan, a tenant organizer at Tenants and Neighbors (T&N). Her proposal was about a recently discovered but at the time almost totally unreported phenomenon, risky private equity investments in New York City’s housing stock. When the jury met in the early summer, the proposal was an immediate standout. The issues were complex, misunderstood, and it seemed like an MPP poster could be a vital part of an organizing and education campaign. That summer 2008, we posted the four policy briefs that the jury selected and issued a call for designers who were interested in collaborating with these advocates to create fold-out posters addressing public policy concerns. Again, Glen Cummings of MTWTF sent in a standout submission. At 2×4, prior to founding MTWTF, Glen had produced a lot of complicated infographics that maintained a sense of playfulness. The jury felt that the predatory equity issue was so complicated that having an experienced designer like Glen would be critical to making the project succeed. Glen worked with Amy of T&N and Dina Levy of Urban Homesteading Assistance Board (UHAB) to battle the predatory equity takeover of affordable housing in New York City.

And now, here’s Glen in his own words, images and – crucially – in the teams’ strong and effective word-image relationships:

I’ve been interested in interdisciplinary collaborations since around 2001, seven years before I started MTWTF, and I always try to facilitate them whenever possible. I was excited to be invited to collaborate as part of Making Policy Public.

What I liked about the MPP series was its inherent multidisciplinary focus, and the chance it offered to learn about the subject and then actually create an impact.

Meeting
I met Rosten Woo and John Mangin of CUP as well as the team of advocates I was going to be working with: Dina Levy from UHAB and Amy Chan from T&N, at CUP’s offices in Gowanus, Brooklyn.

Dina and Amy told us all about their recent research, and gave us printouts of the slideshows and handouts they had developed for their presentations. They had a deep knowledge of the history, legal aspects and current state of NYC subsidized housing that they needed to transfer to CUP and myself before we could begin. I introduced myself by showing a range of related design projects and describing why each was organized the way it was, and looked the way it did. Although no two projects are the same, showing related solutions can jumpstart a discussion about project’s structure and tone: Rosten and John presented the collaborations’ structure, which they had established. They had already begun setting up a schedule and a basecamp site for the project, taking on the organizational responsibilities that normally are the designer’s.

Underway
At out first working meeting, Dina and Amy staged a teach-in and brought us all up to speed on the finer points of predatory equity. To understand predatory equity we needed to know aspects of NYC housing law, finance, and federal banking regulations. Their knowledge was endless but because Dina and Amy were experts, I knew I’d be able to focus on the big picture knowing they would let me know if I was off track.

Here’s what I learned: predatory equity is when speculators aggressively buy up buildings that are covered by government programs that keep rents affordable. They evict tenants, convert the apartments into market-rate rentals or condos, and then resell the building for a big profit.

That’s only half of the problem. Most of these deals were made during the real estate boom for way too much money. The loans were huge and unsustainable. If the speculators can’t evict the tenants and sell the building quickly they default on their mortgages, putting tenants’ homes at risk, and leaving banks, insurance companies, and the federal government holding all the debt. It is a second sub-prime crisis ready to happen.

Just as we were beginning our collaboration, 1520 Sedgwick Avenue, a predatory equity building in the Bronx widely recognized as the birthplace of hip-hop, was being overleveraged by a predatory developer.

This was not only a case of people potentially losing their homes; but also of New York City losing its heritage and culture. The threats are social and cultural as well as economic.

Through their work helping tenants organize and speaking to lawmakers and media sources, Dina and Amy knew that the poster would have to address two different audiences: 1) Tenants who wanted to know how the law and predatory equity practices could directly affect them and 2) decision-makers who would need inside information to take action. They imagined the publication’s goal was to mobilize tenants in affected and at-risk buildings and to convince politicians and banks to recognize the problem and take immediate action. We agreed finding a way to visually explain predatory equity was the best place to start.

Comic by Chris Ware. Used without permission.

Progress?
At the start of our next meeting I presented some visual material for discussion. I hoped this discussion would help us decide how the booklets’ content would be organized, and that would help us determine what visual language would work best.  For example, if the information could be organized as a story, a narrative explanation, a comic strip format would work.

Images from “Graphis Diagrams 1970”

If we thought that decision-makers would respond to numerical data we could create a vivid set of information graphics.

Of course it’s a porous situation. You could relate a set of facts and figure as a narrative, and you could relate narrative as a set of information graphics, but you have to start somewhere. It’s a reciprocal relationship between the information and the design. You move back and forth between saying “What format can deliver this information?” and “What information can be be delivered by this format?”

Rosten felt the tenants would respond best to something direct like a comic strip. Amy and Dina though the decision makers would respond best to words, but might be turned off by the tone of a comic strip. It seemed that combination of strong main text and a serious comic-strip could work.

I also had created a dozen rough sketches for the project. The idea was not to pick a final direction, but just to make visuals part of the discussion as early as possible. We looked at the sketches and discussed how the graphics worked and which ones were communicating  better than others.

Sketch no. 1 uses a simple narrative format to personify the different actors and institutions involved in predatory equity. It proposes two stories: why predatory equity is bad for tenants; and why predatory equity is bad for banks, the federal government and the general public, all in an extremely brief 12 frames.

Sketch no. 2 compare the usual flow of money between landlord, tenants and banks in an affordable housing scenario with the flow in a predatory equity scenario.

Sketch no. 3 addresses both sides of the situation through an imagined dialogue. The back features a poster.

Sketch no. 4 explains predatory equity then provides message templates to inform neighbors, local government, banks, and the news media about the impending crisis.

Dina and Amy thought the sequential images and iconic characters really helped explain some of the technical parts of the story, but that that a cartoony feeling would alienate the decision-makers who would receive the publication.

We also agreed that our goals weren’t ambitious enough. In addition to explaining the situation, we had to propose specific solutions, and convince people to act, if anything was going to get done. We moved forward without discounting anything. We knew we’d have several sections- an introduction, an explanation and a call to action- and that each section would address two audiences: one liking visual narratives one liking textual facts.

Crash
In October Dina and Amy told us the predatory equity situation was shifting. We’d been working on a poster to stop predatory equity, but the financial crisis seemed to be changing the nature of the challenge. This was the absolute trough of the financial crisis hysteria. Everybody thought the world was ending.

Dina and Amy asked that we pause for a month until they found out how the government would respond to the crisis and how that would affect predatory equity situation.

A month or so later our mission was clearer.

The predatory equity mortgages were like giant versions of the single-family mortgages that had crashed the economy and trashed the banking system.

The federal government had committed to bailing out the banks, and those bail-outs meant the federal government would have some leverage to tell banks what to do, and perhaps to keep them from foreclosing on at-risk buildings.

Dina and Amy had been working with a coalition of housing experts and federal elected officials on a plan to save buildings at imminent risk of foreclosure.

So now we would also need to promote viable short- and long-term solutions and tell all parties how best to proceed.

The short term solutions had to do with saving buildings that were already overleveraged. How could these buildings be saved from foreclosure? with loan modifications and a strategy we called “preservation short sales.” (Download the PDF at the end of this article if you want to get more details). With loan modifications, the federal government would press banks to modify loans to allow speculators to continue paying their mortgages and providing services. In a preservation short sale, the federal government would offer tax incentives for speculators to sell the buildings at a loss to responsible owners. The key goal in both scenarios was to keep the buildings affordable for current tenants.

Long-term solutions would involve new loan standards for banks that would dry up money for huge predatory equity deals.

The political and financial viability of these solutions kept shifting as Dina and Amy met with the various coalitions and elected officials so we had to develop language and a visual design that was general enough to be accurate in 6 months, but specific enough to deliver real information.

Establishing The Design
The publication design was developed around the outline below. Each section would provide a terse executive summary flanked by an illustrated narrative that either clarified the text or gave further information. This design established how much space was allotted to each part, how much text would fit, and what it would look like.

The front is divided into four panels that act as a booklet. The acts as a poster, so I consider that one panel as well.

Panel 1 cover and back cover
Panel 2 explains predatory equity
Panel 3 explains the short term problem and solutions
Panel 4 explains the long-term problem and solutions
Panel 5 the poster, shows solidarity and tells how to engage the situation

The pamphlet had to be inviting enough to suck a reader in but also contain a good amount of density. We wanted the cover to stand out on an elected official’s desk and really look nothing like something you’d expect a “policy brief” to look like.

The first spread breaks down the basics of the problem in a simple précis and cartoon narrative. But, when you open the gatefold, you are hit with a great deal of information. We thought the seriousness of the content here offset the playfulness of the graphics, hopefully hitting that space where it can be both inviting and taken seriously.

The other audience for the publication is of course tenants and tenant organizers. Instead of using the poster surface to contain a complicated diagram, we decided to keep it simple and graphic: something that could be read from 40 feet or more. (as in a window on a 2nd story. The poster would help create a visual “identity” for the issue.)

Development
Next Dina and Amy refined the language, finding the right balance of specificity and crafting it to fit in the allotted spaces, while Rosten, John and I worked together to finish the narrative graphics.

Rosten, John and I worked on the narrative graphics developing both the content and visual approach for each panel, and trying to find the right balance of clarity and personality for each illustration. You can see the details in various stages of completion above.

My favorite detail, and I believe John’s favorite too, is the “Eye of Providence” put in place to re-regulate banks.  We had a long discussion about whether or not we were somehow either promoting the freemasons with the ominous eye, or perhaps making the government appear too big brother-ish.

Each additional information panel was built up as an argument. This panel illustrates how federal underwriting standards could prevent future predatory equity deals.

All the panels fit together like this, because they are eventually printed on one side of a sheet.

At the last minute to we added a crowd at the bottom of the cover and poster that protests particular predatory equity speculators. The idea was to introduce a second level of information here to match the two levels throughout.

The “snake squeezing two towers to form a dollar glyph” remained the same throughout the process, but it shifted color several times, starting out red (too weird?), moving to bright green (too friendly?) and eventually becoming black (nice and scary).

Rosten and I were both particularly interested in how the colors conveyed the content, so we spent a lot of time looking at the color pallet of the publication and in the end, I believe, developed something unique. Rosten was excited about the prospect of using more than 2 colors, so we developed a palette with four. Even though the paper is quite basic, the printing itself is luxurious. It’s not often you see anything printed in 4 spot colors given away for free. We hoped people who received it would think it was attractive and hang it up.

CUP, T&N, and UHAB reviewed the final designs and after a few slight adjustments we were off to press, and then into the hands of the people who would use them.

The Process
One of the interesting things about the project was that the development of the content was 90% of the project, which is not always the case. That’s not to say that we sat around waiting for a master text to be written before beginning the visual design. Early visual designs helped us establish a structure that the content could be developed to fit.

It’s a particularly strong way that designing can act to prefigure the content, instead of waiting for content to be completed which in this case could have never happened without narrowing the parameters. The predatory equity situation was ever-changing and way too complex.

Dina and Amy were amazing to work with. Having a constant open dialogue between the content development and the publication design helped us reduce a complex set of information into an approachable publication.

The Launch
Advocates handed out The Predatory Equity Survival Guide as part of a crucial tenant association meeting in East Harlem where new plans to combat predatory equity were announced. Tenants were trying to educate themselves ahead of a big City Council meeting on predatory equity that was happening the next week.

Amy, Dina, and tenant leaders delivered charged presentations to the attendees. One part teach-in, one part pep rally. Several hundred people turned out. Attendees seemed enthusiastic about having concise information and a new tool to help them fight predatory equity.

Tenants took home stacks to distribute at their own tenant meetings. Plans are already underway to distribute a Spanish language version this summer.

We checked in with Amy and Dina this afternoon for a late-breaking update.

Amy says:

We have since distributed the survival guide through Stuyvesant Town, Riverton, and the City Council and we constantly get tenant requests for more.

And, according to Dina:

We’re advancing the campaign on individual buildings, primarily those run by Putnam, SG2, and Ocelot. All three have loans held by Fannie Mae. All are in decaying condition, some of the worst conditions in the city. We’re working to convince Fannie Mae to take responsibility for the maintenance of the buildings and to bring the debt back to a sustainable level. Meanwhile, the Federal Government is starting to pay attention to the multifamily housing crisis and is looking at strategies for preservation. To get more information or get involved contact me at Levy [at] uhab.org.

For more information about predatory equity:
Download a PDF or purchase a copy of the poster at the Making Policy Public website.

Should lending institutions bear some of the responsibility? In need of adequate services and repairs from overextended landlords, Bronx tenants urge banks to write down mortgage values.

Are private equity investors like Pinnacle Group, Normandy Partners, and Vantage Properties harassing rent-regulated tenants in order to make way for market-rate renters? Tenants and representatives from investment groups discuss how a business plan based on higher-than-average vacancy rates affects the experience of building residents.

Is it in a tenants best interest to pay higher rent for the sake of keeping their building soluble? Over-leveraged owners contend that legislation to reduce market-rate conversions will send many buildings into foreclosure.

What kind of regulation and oversight of real estate transactions should government exercise? Senator Chuck Schumer has repeatedly criticized predatory equity deals.

Does predatory equity belie common sense? One developer claims that ineptitude is to blame for unrealistic projections that trouble landlords and tenants alike.

Finally, Tenants and Neighbors is a NY state-wide tenants’ rights organization whose efforts include education, leadership development, and grassroots mobilization. See their characterization of predatory equity here.