A landlord who has been one of the South Side’s biggest multifamily buyers got on the wrong side of the Chicago Housing Authority last year.
Brooklyn-based dealmaker Shaya Wurzberger’s firm Levav Properties — which he says has spent about $100 million to buy 1,000 apartment units in the past three years — was suspended by the CHA from making leases with the Housing Choice Voucher program, formerly known as Section 8 rental assistance.
The suspension lasted a year and Levav was reinstated in February. Wurzberger said the suspension was due to the firm having a handful of units placed into “abatement,” meaning they failed housing quality standards inspections.
The CHA’s owner’s handbook says landlord suspensions from the Housing Choice Voucher program are rare.
While the authority’s landlord guide says suspensions aren’t common, there are several owners who have been suspended for various reasons in recent years, including failing to get units into compliance within the Housing Choice Voucher program’s requirements, according to a person familiar with the matter.
Rentals with leases subsidized by the program are inspected at least every two years, and if a unit fails an inspection, the landlord is given 30 days to bring the unit into compliance, or 24 hours for certain emergency repairs.
Landlords are given multiple chances to avoid suspension if units fail inspections. Wurzberger said he had four units fail an inspection. Suspensions are only triggered after landlords fail to remedy problems for two months, according to CHA documents.
For landlords with 21 or more units in the program, the authority sends a formal warning letter when 10 percent of their program units have gone through contract terminations for housing assistance program leases due to failed inspections. (For landlords with 20 or fewer units in the program, it takes two such contract terminations to trigger the formal warning letter.)
Wurzberger said he had about 40 units in the program at the time of his suspension, meaning that four units failing to get out of abatement for failing inspections could have led to a suspension.
During abatement periods caused by a unit’s multiple failed inspections, landlords have 60 days to remedy the problems. Landlords are not paid by the housing authority for units in abatement, but if they get fixed up within 60 days, they can receive back rent for the period of abatement.
Following the formal warning letter, a property owner gets suspended from making new housing choice voucher leases for a year only if there is another contract termination due to failed housing quality inspections within the next year, a threshold Levav apparently met.
Owners who have been suspended must attend a property management course offered through the Chicago Association of Realtors, Community Investment Corporation, Spanish Coalition for Housing or another organization approved by the housing authority.
Levav had to maintain a solid record during the suspension. The CHA could have considered removing the firm entirely from the rental assistance program if it failed additional inspections that led to voucher contract terminations during the suspension.
Since Levav’s eligibility to host new Housing Choice Voucher leases was reinstated, Wurzberger said the firm has done dozens of new deals with subsidized tenants — between 50 and 100 since February, he said.
“Despite the unfortunate events, our operations experienced no significant impact,” Wurzberger said in a statement. “… This experience was a learning opportunity, and we now have a strong partnership with CHA.”
Other than confirming that Levav was suspended from the housing program for a year and reinstated in February, the Chicago Housing Authority didn’t comment. It referred questions about the suspension process to its landlord guidebook and an annual administrative plan for the agency that was published in August. It said a formal written records request would be required for information about the number of other landlords who have faced similar suspensions. The Real Deal submitted a request and is awaiting a response.
Wurzberger also said units that led to his firm’s suspension weren’t owned by him or Levav but that Levav had engaged in a third-party property management agreement for another owner’s buildings. Levav was dinged by the CHA for its role. Wurzberger said his firm is engaging in less third-party management today.
Wurzberger said that he was able to rent units to unsubsidized tenants at market rates during the suspension.
It’s unclear how Levav’s suspension impacted the ability of subsidized tenants to find landlords willing to work with the voucher program over the last year.
An audit by the CHA’s Office of Inspector General published in 2023 found it’s uncommon for units to go through abatement without remedying the problems and cause a housing subsidy contract termination for a landlord.
Based on a study of 5,000 abatement periods from 2019, it found that only 5 percent of them were on track to go or did go an entire abatement period without the problems in a unit being fixed.
Another 56 percent of abatements were considered “inactive” because the units either got fixed up and returned to receiving payments from the CHA before the end of the abatement period, or the end date was reached, and the average length of time in abatement was 36 days, meaning it was more common for units in this batch to be fixed before reaching their end of abatement.
And for 39 percent, the scheduled abatement period was canceled because the unit was brought into compliance before the period started.
“We take owner responsibility very seriously. People should call the Chicago Housing Authority if they’re a Housing Choice Voucher tenant frustrated by their property conditions,” the CHA’s Inspector General Kathryn Richards said.