MANAGEMENT
OF CITY-OWNED
PROPERTY:
A LOW-INCOME HOUSING POLICY FOR NEW YORK CITY
by
Elizabeth Ann Strom
B.A.,
Swarthmore College
(1980)
SUBMITTED IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS OF THE
DEGREE OF
MASTER OF CITY PLANNING
at the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
June
c
1985
Elizabeth Ann Strom
The author hereby grants to M. I. T. permission to reproduce and to
thesis document in whole or in part.
copies of this
distribute
Signature of Author
Department of
"
Certified by
Urban Studies and Planning
28, 1985
AMay
-----------
~
Phi Iip
L. Clay
Thesi -Superviso r
Accepted
by__-----------------------------Chairman, Departme t
1 Committee on M
Rotch
JUL11 1985
LRA
P illip
L. Clay
sters Students
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MANAGEMENT
OF CITY-OWNED
PROPERTY:
A LOW-INCOME HOUSING POLICY FOR NEW YORK CITY
by
ELIZABETH ANN STROM
Submitted to the Department of Urban Studies and Planning
on May 28, 1985 in partial fulfillment of the
requirements for the Degree of Master of City Planning
ABSTRACT
Private disinvestment from rental properties in New York City
has
been
a problem now for at least two decades.
This
process
results
in the abandonment of buildings,
many of which are
also
In the past twenty years,
vacated by tenants.
New York City has
lost approximately one million housing units.
There are different theories about why landlord
abandonment
occurs.
The
neoclassical theory focuses on rent regulations and
zoning
laws
as
disincentives
for
reinvestment.
Existing
are allowed to deteriorate as regulated rents fail
structures
to
cover maintenance and improvement costs.
This theory assumes that
the
private
market
would be the most effective
mechanism
for
providing housing if only the government would leave it alone.
Challenging
this
theory is the contention that
a
growing
the
for
number
of
New
Yorkers do not earn enough money to pay
rent-to-income
upkeep of their rental units.
Figures on average
are
not
If peoples' incomes
ratios
bear
out this contention.
then
government
sufficient
to support a private housing market,
This
housed.
people are adequately
step
in to
insure that
must
private
sector
to
continue
can
be
done
by
subsidizing
the
providing
housing
to the poor,
or by circumventing the
private
market altogether.
The
economic problems that have led to
this
affordability
gap
are generally beyond the control of any municipal government.
Yet
certainly
city governments suffer
the
consequences.
City
services are taxed by the symptoms of neighborhood
deterioration;
valuable.
the
city
tax base is erroded as property becomes less
completely;
In
the most extreme cases,
property loses its value
foreclosure
the
city government becomes its actual owner through
taxes.
In some
New
York
City
for
non-payment
of real estate
percentage
the municipal government owns a sizeable
neighborhoods
property.
of the residential
New York City appears to be unique in the extent of its
taxWhile vacant
foreclosed inventory and its methods of managing it.
Most
occupied buildings are not.
buildings are sold at auction,
city's
housing
agency.
are managed by the
occupied
properties
Others
enter
one of several alternative management programs;
the
goal of most of these is to sell the building to the tenants as
limited equity cooperative.
a
been
problemnone of these programs has
While
certainly
all have been effective in providing shelter to the poorest
free,
segment
of the population living in the most delapidated housing.
alternative
of
current
the
long
term success
Doubts
about
management programs center around the lack of resources devoted to
city
buildings
enter
fact that most
In
spite of
the
them.
city
programs
with
every major system deteriorated,
ownership
rehabilitation
of
only a few thousand dollars toward the
devote
The future of these housing programs seem imperiled by
each unit.
the frayed shoestring on which they must operate.
require
for city-owned propertry would not
funding
Proper
in program
with a change
In fact,
new resources.
substantial
the
to
ensure
more would be needed
$20
million
design., only
be
This is money that would
viability of each unit.
structural
since the city's failure to invest in its properties
spent,
well
today will only lead to greater expenses tomorrow.
more
of
attracting
should
explore ways
officials
While
adequate
fact
in
sources,
and
tapping private
money
federal
An equitable tax
funding should be available in the city budget.
developers
for
abatements
not
be
would
there
which
in
system,
revenue to
sufficient
generate
would
areas,
in
lucrative
operating
pay for the renovation of city-owned residential buildings.
Thesis Supervisor:
Title:
Associate
Dr. Phillip L. Clay
Professor
of
Urban
Studies
and Planning
TABLE OF CONTENTS
Abstract
Table of Contents
INTRODUCTION............................................... . . ...... 1
A. Traditional Responses to Gaps in the Supply of and the
Demand for Housing:
The Case of New York City.........
.2
B. Housing Costs and Renter Incomes in New York City......
.4
1. The Rent Gap Today:
A Snapshot...................
.5
2. The Rent Gap:
Trends.............................
.7
C. The Southside..........................................
10
D. What is the In Rem Housing Program?....................
12
PART I
1. Landlord Abandonment...................................
A. The Dymanics of a Declining Neighborhood...............
B. Portraits of Slum Landlords............................
17
17
21
2.
A.
..1 a
Tax Delinquency and Foreclosure....
.. a
Overview...........................
.. a
B. Tax Delinquency in New York City...
C. City Ownership and Tax Delinquency in the Southsi de.
.. a
D. Conclusions........................
27
27
29
35
42
PART II
3. Antecedents to the In Rem Housing Program.
A. Homeownership for the Poor.................
B. Self-Help Housing and Sweat Equity........
C. Early New York City Cooperatives..........
D. Early City-Sponsored Cooperatives.........
.45
.46
.48
.50
.53
.57
4. Creation of Current In Rem Programs.......
.57
A. The Office of Property Management.........
B. The Division of Property Management:
Public Landlord......60
5.
A.
B.
C.
6.
A.
B.
C.
Management Progr ams:
Creation of the Division of Alternative
Application of Self-Help Housing Models to Management of CityOwned Property..........................
................
a a ... 68
The Community Management Program........
.. 69
................
a
... 72
Tenant Interim Leasing..................
.. 74
a a a
Why Self-Help?.......................... ................
.. 75
1. Critiques of Self-Help: I.......... . .a.............
U
2. Critiques of Self-Help: II.........
... 83
DAMP's Effectiveness in Creating Tenant
Lack of Alternatives............
......
Sales Policy....................
.. Aaa.. a
Financial Viability.............
195 South Fourth Street.......
167 Havemeyer Street..........
Cooperati ves.
.........
.........
.........
.........
.........
aa
aa
as
...
...
...
92
93
95
.. 98
.. 102
.. 106
7.
A.
B.
C.
PART
8.
A.
B.
C.
D.
E.
A Proposed Alternative Management
Tenant Leasing:
Assisted
112
Model..........
112
Program Design..
a
......................
116
Sales Policy.... e......................
117
. . . . . . . . . .
Program Rational e.
III
Funding the In Rem Housing Program.........
How Much for In Rem Housing?...............
Additional Government Funding Sources......
Housing Trust Funds.
Alternative Funding Sources:
The Cross-Subsidy Program..................
. .n . .
An Equitable Tax System....................
119
121
124
125
132
133
CONCLUSION....................................................136
A. The Future of In Rem Housing..............................138
APPENDICES
Systems,
Summary of Changes in New York City Rent Regulati on
1.
142
........
a.
1943 through the present.........................
........
a.
143
2. The Redemption Process............................
........
146
3. The Legal Status of DAMP cooperatives.............
Costs
for
In
Rem
Calculating Projected
used for
4. Assumptions
........
148
Buildings........................................
5. Sources for Proposed Housing Trust Fund...................149
BIBLIOGRAPHY...................................................152
GIntroduction
INTRODUCTION
... for most of the last three decades housing groblems have
generally been confined to low-income and minority people.
Others have had housing inconveniences.
1
-- Cushing Dolbeare
study
This
was
motivated
need
provide
to
public
Although there has been a
adequate housing for the poor.
to provide basic needs such as food and health care to
commitment
There
publicly supported housing is available only to a few.
all,
is
by the urgent
consensus
streets,
but
that
people should not be driven to
live
there is no consensus on how to provide
in
the
sufficient
housing to avoid this consequence.
Difficulty in defining national
in
luxury,
distribution
of
housing
involve
construction and finance industries,
some
these participants.
the
many
levels
of
and
the
each of which makes money at
Consumers of housing are
point in the process.
supporting
Finding a way to provide housing to those
incomes aren't sufficient to motivate this establishment is
whose
therefore
over
The production
good and investment.
consumer
due
necessity
Housing is both
part to its schizophrenic nature.
and
all
policies for housing is
complex.
past four decades reflect
the
needs
owners.
The constant shifts in
the
consumers,
No group has been able to find an efficient
way to create
low-income housing.
1
policies
disagreement about who
developers,
to be subsidized--the
government
or
most
the
and equitable
Rarely
real
has
a public program worked outside of
estate industry,
profits.
the
endeavoring to limit costs by
private
eliminating
This is precisely the approach of New York City's In Rem
Housing
Program.
This program represents New York's attempt
to
handle the thousands of occupied housing units that have come into
its
ownership
by
virtue of the former owner's
failure
property taxes.
It is thus a program by default,
Gradually,
officials
city
have begun to see
treating
(or the impossibility of
stock.
They
together,
have
offer
low-income
not by design.
the
necessity
programs
that,
unique and comprehensive means of
housing.
In
pay
of
ignoring) their occupied housing
developed a series of
a
to
rem housing
programs,
taken
preserving
most
of
which
replace
traditional
control,
have taken root only because of the private sector's lack
of
interest
subsidies.
in
private
providing
management with
low-income
public
housing
or
tenant
without
deep
But they offer alternatives to the for-profit housing
system that could extend beyond the landlord-abandoned stock.
A~.
Traditional Res29ones2 to Ga2sin the SU221Y of and the Demand
for Housing:
than
The Case of New York City
More than any other city,
New York is a renter's town.
Less
30"/
owns
of
that
With
the
of
the
population
its
housing,
and
2
percentage
predominance
(75%)
7.3%
live
in cooperative
apartments
of multi-family apartment
live
in
investor-owned
rather
.
buildings,
than
most
owner
renters
occupied
3
buildings .When
tax
burdens become too high in other
cities,
property owners lobby for changes in tax assessments.
York the voices of small
of
But in New
property owners are drowned out by
those
tenants demanding rent regulations and developers lobbying for
tax
abatements.
take
This may explain why New York has been able
such bold steps in seizing
landlord
and
tax-delinquent
to
buildings:
the
homeowner lobby has relatively little influence
policy-making.
The city is further unique in the fact that
in
most
landord-abandoned
property is of the multi-family tenement stock.
Furthermore,
New York has lost an astounding 360,000 housing
4
units since 1970, the equivalent of
this loss has persisted
A
Table
inspite of
four Bostons
Paradoxically
.
low vacancy rates:
Net Vacancy Rates By Mognthly Contact
ityn 12h4
RentL
NRw
York
New York
City
Rental
Monthly
Contract Rent
Vacancy RatS
Total
2.04%
Less than $100
$100-$124
$125-$149
.52
1.44
.26
.69
.37
$150-$174
$175-$199
$200-$249
$250-$299
$300-$399
1.50
2.18
1.45
1.77
2.99
$400-$499
$500 or more
Source:
Stegman,
from
1984
Housing and Vacancy Survey
This apparent contradiction exists because most New Yorkers
pay
Units
enough
that
can't
rent to make proper building maintenance
worthwhile.
are
standing
abandoned, whether
they
are
left
or
demolished, are no longer considered part of the housing stock and
therefore are not included in the calculation of the vacancy rate.
The bulk of housing loss occured during
economic
distress
for the entire
faster than renters' incomes,
these
city.
and total
the 1970s, a time of
Operating
population fell.
trends have begun to reverse in the 1980s,
housing abandonment has slowed.
costs
rose
Some of
and the rate of
For the first time since
before
1970 there was a net gain of nearly 85,000 housing units, although
a
continued drop in the number of
rental
housing units.
Between
5
1981
.
and 1984 population rose by 1.1'4
rates
The very
low
vacancy
reflect the impact of population growth on a housing market
not yet recovered from the disasterous 1970s.
B.
Housing Cgts and Renter Incomes in New York City
The difficulty of providing housing for low-income
has
increased
over the past few years,
risen must faster
than incomes.
reflects
a continuing trend,
housing
quality
sheltering
between
it
as
the
as operating costs
is so severe that it
In
most
New York
critical
City
the
has
replaced
barrier
4
to
discrepancy
what people can pay and what the market demands is
indeed.
have
This affordability crisis, which
nation's
population.
families
large
1.
The Rent Gap Tgdgyi
Today,
a
month.
A Snagshgt
the median apartment in New York City rents for $330
Median
income
for all New York renters is
close
to
6
$13,000
a year
A tenant earning the median and paying a quarter
.
of his or her gross income for rent could afford $270.00 a
$60 below the median.
month,
This gap would be closed if the rent-income
ratio were increased to one-third, in which case the median tenant
pay $360.00 a month.
could
for
a single person,
While this might be a feasible ratio
however,
a family with children
7
pressed to pay one-third of a small
A
comparison
is
hard-
income for shelter
of median rents and median incomes is
not
an
adequate measure of housing affordability in New York for
several
reasons.
First,
$330.00
of
1,901,000
rental
units in the city.
a
month
is the median
This includes the
units run by the New York City Housing Authority
rents
in which
218,000
apartments
median
rent
the
With a waiting list of over ten years, NYCHA
apartments are not actually available on the
are rent-controlled
of $259 a month brings down
market.
(see Appendix
the
Similarly,
1) their
city-wide
median.
the current city regulations apartments become decontrolled
upon vacancy.
be
(NYCHA),
all
168,000
are held to 27% of a tenant's income and subsidized by
federal government.
Under
rent
Therefore these apartments cannot be considered to
available on the market at those
apartments, or
17.5% of the rental
rents.
In
total,
stock, are either not available
or not available at current low rents in any meaningful
snapshot
of the rental situation
386,000
sense.
is somewhat misleading;
A
current
tenants in place enjoy a reasonable median rent, but those seeking
apartments are faced with another supply curve altogether.
In
as
New
a city encompassing such extremes of wealth and
York
suspect.
that
does,
black
monthly
rent
family,
which
but
the actual median
can afford $166.00,
Clearly,
housing
for instance,
under
$13,000,
Hispanics
many
only
$229.00
the
$298.00;
is
is
Hispanic
is confronted with a
$275.00
minority families are far more constrained
market.
for
median
average black family can comfortably pay a
The
median.
it is $11,000 a year and for
renters
$8,000.
problem
a
A breakdown of the statistics will reveal
while annual income for all renters is just
for
the
any aggregate measure such as
poverty
That finding an affordable apartment is
families
is indicated by
the
32.9%
of
in
a
all
8
households paying over 40% of their income for rent
Another
inadequacy
affordability
rents
may
is
not
that,
of
the median
rent
as
in severely deteriorated
reflect the actual cost of
running
a
measure
of
neighborhoods,
a
building.
Landlords serving low-income tenants are frequently delinquent
in
their property tax payments (see Chapter Two) or in their building
Their tenants pay low rents but
maintenance
practices.
substandard
housing in return.
well
What it costs to run a
receive
building
may be higher than the median rent in poor neighborhoods.
6
2. The Rent Gap:
Trends
These figures suggest that, even in the absence of all other
deterrents,
low
incomes
are
enough to prevent
occupying decent private housing.
rent
the
poor
A look at the trends affecting
levels and incomes shows that the rent gap will most
increase,
especially for the poor.
abandonment
median
peaked,
operating
shocks
of
1973 and
likely
During the 1970s, when owner
expenses
rents and median incomes.
property owners--fuel
from
rose faster
than
Two of the largest
costs
and capital--were climbing rapidly.
1979 drove the price of oil
from
both
for
The oil
a
reported
9
twelve cents a gallon
were marginal in
While
faster
1970 to $1.05
a gallon in 1980.
the prime rate jumped from 5% to
same time,
expenses
in
than
is less of
levelling off,
incomes.
a problem today
median rents are
From 1981 to
1984,
real
dollars) of
10
5.8%
.
renters actually fell 4.4% while real
number
of
coop conversions:
became
coop or condominium owners,.
calculated
This
as
in
operating
still
increasing
income
(in
rents
increased
the
because many upper income
their incomes are
part of the renter total.
large
renters
no
But there are
1967
longer
factors
Landlords
feel
are entitled to recover the profits they claim to have
lost
the
legal
and
disparity is due at least in part to
other than a shift in tenure preference at work.
they
Properites that
1970 would be losing money ten years later.
inflation
are
18%.
At the
1970s,
and the Rent Guidelines Board,
rent levels in New York City,
determines
has granted increases
changes in operating costs in recognition of
7
which
their claims.
above
Thus
crises:
New
be
Subscribers
notion
one
City is experiencing
supply and affordability.
problems
opens
York
addressed
to
when
the
by
increased
new
follow
housing,
the
government
public
policy
disincentives
that
(e.g.,
"trickle
as
down"
filtering
housing.
(e.g.,
the
this
expensive,
below.
would best
be
It
development
by
rent
by
would
served
by
a
removing
regulations)
tax abatements).
tax cuts for the rich have never
into
process
promoted
embrace
as housing vacated
zoning restrictions and
and offering incentives
just
interest
housing
production.
however
group is filled by the group just
that
But
housing
filtration
up units all the way down the line,
income
related
Logic would dictate that both
popular theory of
they reason that
two
bank accounts
doesn't appear to
Weinstein proposes several
of
the
provide
managed
poor,
adequate
so
to
the
low-cost
reasons for its failure:
open
to
has
barriers
housing
market
... the
competition and the easy movement of dwellings from one group
of users to another, such as fixity of location, zoning, deed
restriction, discrimination and simply because of the lack of
a surplusli.
Critics
of
the filtration theory have pointed to the
plight
of
residents of the Bronx, where the construction of the 60,000-unit,
middle-income
of
sound apartments.
middle-class
but
Coop City project was expected to open up thousands
they
Apartments vacated by the primarily
Coop City residents were occupied by black
soon
deteriorated
8
into
slums
and
many
wbite
tenants,
are
now
12
.
abandoned
Whatever
the
dynamics that lead to
deterioration and building abandonment
the next chapter),
new,
high-rent
neighborhood
(they will be explained
in
this example suggests that the construction of
units
provides
an
insufficient
guarantee
of
improved housing conditions for the poor.
It is also unlikely that rent subsidies alone can compensate
for the paucity of adequate,
to
enable
renters
theoretically
families,
except
into
opening
seek
up
new
apartments
They are meant
at
higher
opportunities
for
rents,
low-income
but the extremely low vacancy rates in-New York for all
luxury housing
question.
above
to
affordable housing.
(see Table A)
Rental
bring this line of
subsidies would have to
reasoning
bring
families
the $500-a-month level to give them a significantly
chance
of
finding
subsidies to all
supply
an
apartment.
Even then
the
better
issuance
of
eligible renters without any increase in
housing
would merely raise the base rent for slum housing
without
necessarily improving conditions.
The
inadequacy
of such provisions for low-income
led to the inception of other federal
for
instance,
offering
231-unit
costs
of
HUD's Section
8,
tried to address both supply and affordability
by
construction
developers.
programs.
families
But
Harlem
financing and generous rent
subsidies
the projects sponsored by Section 8,
apartment complex
with
estimated
to
such as a
construction
$80,000 a unit and requiring another $12,440
a year
to
13
subsidize
exorbitant
rentals
building
,
only
and
seemed to waste
tax
operating costs render
9
dollars.
the
Such
systematic
construction
politically
'of
new
poor
both
course,
such deep subsidies benefit the developers
than the tenants.
the
premise
deteriorated
of
and
more
Poor families can be housed just as comfortably
less expense in moderately renovated units.
lies
impractical
unpopular.
Of
at
units for the
of the In Rem
Housing
In this assumption
which
Program,
saves
housing units before they succumb to the last stages
It achieves moderate rehabilitation at
abandonment.
minimal
but
developers,
cost by relying for renovation not on for-profit
on the tenants themselves.
do
What
It's too expensive to construct new units for the poor,
housing?
and
affordable
units
population
is
the affluent
for
construction
new
open
will
no
especially
up,
While newly
growing.
now
is
must
abandonment.
simultaneously
The
reduce
since
New
York's
units
constructed
the loss
that
guarantee
units
of
this
In Rem Housing Program addresses
are
city
housing,
necessary to accomodate the demand for market-rate
policy
low-income
these trends suggest for the future of
through
latter
issue.
C.
The Southside
Because
interesting
trends
that
aggregate
data can obscure so many
disparate
I
felt it was important to
study
factors,
in one neighborhood.
is
experiencing
I wanted to examine a
private
10
disinvestment,
but
and
housing
neighborhood
is
not
a
SI'
V
\.
[
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SOUTHSIDE STUDY AREA
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See
-
-
REIENTIAL DEVELOPMENT
wasteland.
I chose the Southside,
comprising
the
1.
Although it
of
is lotated in
other
Southside
has much
Harlem
Williamsburg-Greenpoint
section
neighborhoods
of
Northern
for a number of reasons:
Brooklyn,
woes
one of several
Brooklyn and shares many of the
neighborhoods in the "outer
boroughs.,"
is only ten minutes from downtown Manhattan.
in common with Manhattan neighborhoods such
and the Lower East Side,
where the trend toward
the
It
as
the
depreciation of property values is beginning to be reversed.
There are the first signs of land speculation but few yet of
gentrification or upgrading.
2.
40%
of the Southside's
housing
stock--turn-of-the
century tenements--resembles that of Manhattan neighborhoods,
but
the
many one- to-four- unit brownstones are similar
to
those
in
other
Brooklyn
neighborhoods.
The
population
therefore contains both tenants and homeowners.
3.
There is a high incidence of city ownership in this
area
and
many city-owned buildings are in alternative
management
programs.
Because of the long
history of tenant management
in
the
Southside I was able to interview tenants
in
longestablished cooperatives as well as those living in buildings
still undergoing conversion.
4.
The
Southsi.de is one of the poorest neighborhoods (see
Table
B)
in
the
city.
The
In
Rem
Housing
Program's
effectiveness
in this area would therefore indicate
whether
the
program can indeed create housing opporunities
least affluent.
ii
for
the
Table B
A Profile
The Southside:
Number of persons
Number of households
Persons per household
22,872
7,493
3.05
Persons of Spanish origin
Population of Spanish origin
20,146
88%
Labor Force participation
52%
(labor force/population.aged 16-65)
Unemployment
11.7%
Median income
$6,319
Receiving Public Assistance
30.0%
Source:
D.
Census
What Is the In Rem Housing Program?
Officially,
in
1980
the In Rem Housing Program
(described at length
Chapters Three and Four) is the means by which New
handles its abundant stock of occupied,
York
City
landlord-abandoned,
tax-
foreclosed
housing.
foreclosed
stock are among the poorest in the city--their
annual
But
since
tenants
living
in
income is $4,000 less than the median for all
IRHP is,
occupied
rental
in effect,
the
taxmedian
renters--the
a housing program for the poor.
The 46,000
in rem units represent only 2.4% of the city's
occupied
14
stock
but
they
are
clustered
in
deteriorated
neighborhoods:
these areas, where there is little private market
activity,
handling
neighborhood
the
housing
of
policy.
12
city-owned
On
the
property
other
becomes
hand,
the
city-owned
represent
buildings
the
gentrified neighborhoods;
the poor
housing
last islands of affordable
in
their disposition decides the future of
in those areas.
While many occupied, city-owned buildings are managed by the
the Department of Housing Preservation
housing agency,
city
Development, one-third of
the units are managed by other sponsors.
able
of these are tenant and community groups which are
Many
the buildings,
purchase
has
IRHP
The
is
management
and
as cooperatives.
after some renovation,
tremendous impact in
taking hold,
for
where
neighborhoods
traditional
unlike
to
tenant
production
programs, it builds on community strengths and ultimately develops
local
institutions
studying
in
the process of
In Rem Housing Program we have the
the
housing.
developing
opportunity
In
to
evaluate the applicability of such alternative forms of management
to
a large housing program.
small-scale
none
but
Many cities have experimented
with
tenant management and/or sweat equity
projects,
but
of
treatment
for
the
IRHP
this
has proposed
kind
thousands of units.
and propose a
similar
alternative program that confronts.some important issues,
such as
In
this thesis I describe the IRHP,
insuring the long-term viability of tenant-managed buildings,
and
determining an appropriate role for community organizations, which
the current program handles poorly.
I make this proposal bearing
in mind that there are a few things that the IRHP is
1.
It
is not a solution to all
13
city-wide housing
not.
problems.
It
not
is
even a complete solution to
It builds no new units,
problems.
housing
low-income
and is limited to
those
buildings that are abandoned by their owners.
apartments.
not a proposal for renovating vacant
is
It
2.
vacant
renovate
is no low-cost way to
there
Unfortunately
buildings.
which was once envisioned as
Even sweat equity,
can
a means of creating housing for low-income families,
no
longer produce inexpensive units.
presents a model of for the management of
While it
3.
property in the absence of private investment, it does not
provide a means or a rationale for taking low-income housing
Thus it
out of private hands when there is market interest.
cannot support the efforts of low-income housing advocates in
gentrifying neighborhoods.
4. This is not an alternative to publicly subsidized housing.
subsidies
The
needed
this
for
program
are
lower
much
on
than those for rehabilitation programs that depend
private developers and those for public housing, but they
are
necessary.
thesis
This
addresses the question,
house its poor in the absence of private interest
government
sufficient federal funds?"
need
to
maintain
the
New York City,
connect
Part
landlord-abandoned
properties
of
described the Southside,
low-income
as
and outlined some of
Part I
landlord abandonment and neighborhood
these processes with the phenonmenon of tax
II will
the
The introduction has presented backround data
points of the In Rem Housing Program.
theories
whether
or tenant control best addresses
public agency,
housing resources.
on
In this pAIper I will contrast the
in rem housing alternatives and further question
for-profit,
and
New York City's response to that query
is its In Rem Housing Program%
current
municipal
"How can a
contain a description of
14
will
examine
decline,
and
delinquency.
the components of
the In Rem
Housing Program,
tenant
and questions concerning its basic premise--that
management
can
save
landlord-abandoned
housing.
The
strengths and shortcomings of the IRHP will also be examined, with
suggestions
for
improvement.
In
Part III I
will
discuss
the
financial
resources needed for a viable program, and identify some
potential
funding sources.
Notes for
Introduction
1.
Cushing Dolbeare, "The Low Income Housing Crisis,"
in Chester
Hartman,
ed.,
America's Housing
Cisis:
What Is To Be
(Washington D.C.: Institute for Policy Studies, 1983).
Done?
2.
Michael Stegman, Hggging in New York:
Study of a Qity
(New
York:
Department
of
Housing
Preservation
Development, 1985) 45.
12@!L
and
3.
Committee
on
Housing and
Urban
Development,
Recommendations of the In Rem Housing Task Force,"
Service Society, 1981)
1.
4.
Robert Schur, "Growing Lemons in the Bronx,"
(July/August 1980) 42.
5.
Stegman,
6.
IBID
"Report
and
(Community
uggsing in New York,
Working PgggEM,
10.
7.
Michael Stone, "Housing and The Economic Crisis:
An Analysis
and An Emergency Program," in Chester Hartman,
ed. America's
Housing gCisis.
8.
9.
Stegman, Houging in New York,
Mel
jagazine
Ziegler,
11.
Jerome I.
George
1976),
"Biography of an Unwanted Building," New
(May 24,1971),
10. Stegman,
Weinstein,
ed.
York
30.
uggsing in New York,
Sternlieb,
146.
122.
"Housing Subsidies:
HousingL
1973-4
An Overview,"
(New York:
AMS
in
Press,
84.
12.
Joseph Shuldiner,
quoted in Joseph Berger,
"Failure of Plan
for Homeless Reflects City Housing Crisis," New York Times
19
February 1985.
15
"New York City's Housing Cycle:
Seymour Durst,
13.
Down, "Emgire State RgggEt 9 (July 1983), 20.
14. Stegman, Huggging in New York,
16
228.
Down
and
GPart I
CHAPTER ONE:
A
of
study of
LANDLORD ABANDONMENT
city-owned housing must begin with a
landlord abandonment.
owns
nearly
landlords
worth
10,000
at
After all,
residential
if the City of
buildings it
is
discussion
New York now
because
some point decided that keeping them was no
the trouble.
empty hulks of
While the term abandonment evokes
buildings,
in fact not all
by their owners end up vacant. investors
have
remainder
of
walked from many
their
longer
images
of
buildings that are left
This chapter explains why private
New
York
neighborhoods.
The
this thesis is about what happens to the people left
behind.
A.
Ih
DyggMics of a Declining Ngighbghgood
There is no simple explanation of
landlord abandonment.
might think--and many housing analysts continue to
One
maintain--that
unwise government policies, such as excessive property tax burdens
and
stringent rent controls,
might have discouraged owners
from
maintaining their properties and ultimately led them to walk away.
Profiles of
all
slum landlords dating back through the 1970,
failed
to
regulations
studies
of
neighborhoods
landlords
rents
any
contributed
have
existence
find
evidence that
to
either
1
disinvestment
.
taxes
or
Other
national
shown no correlation between
abandonment
2
rent
control .
More
likely,
tenants
are paying all they can for their
are charging what the market will bear.
would not produce higher market rents,
17
however,
and
in
apartments,
Higher
rent
the
slum
and
legal
and therefore would
have no impact on a landlord's ability to maintain his property.
The
to
phenomenon of
the demographic changes associated with
exodus of
It
abandonment bears a striking
correlation
--
"white flight"
city.
largely middle-class residents out of the
white,
the
is sad to think that white families would rather abandon their
neighborhoods
only
talk
than live with Blacks and Hispanics,
need
as
strongholds
white families in such white
to
but one
the
Northwest Bronx and the southeastern part of Brooklyn to sense the
fear with which they view the entry of people of color into
neighborhoods.
building--and
racial
The
a
rapid exodus of an entire population makes a
neighborhood--vulnerable
between the slumlord and the tenant.
process,
possible
Black
they
to
dynamic also comes into play in the
milking
their
described
abandonment.
hostile
The
relationship
The ugly last phases of the
later in more detail,
are
in
part
because of a white landlord's disrespect for his or
and Hispanic tenantry.
can live without heat
Since they somehow "don't
her
count,"
in the winter and have drug dealers as
neighbors without causing their landlord much guilt.
This dynamic
3
is
apparent in the previously cited studies
conversations
and
with Southside landlords.
The
impossible
connection
between disinvestment and ethnic change
to ignore but difficult to
explain.
Stegman
is
posits
that the lower incomes, larger families and different attitudes of
non-white
the
in-movers have an impact on the quality of
cost of maintaining it.
attitude
toward
its
and
He further suggests that a family's
apartment may be more
is
housing
important
than
its
income
for
estimating the potential
in
"If
deterioration:
gets or creates a tenant who does not seem to care,
landlord
net earnings are partially cut.
.
.
a
his
and there is some incentive to
4
allow the property to deteriorate"
.
More precisely.,
tenant can double the cost of maintaining his or her
the
landlord
and tenant are of
thus
properties,
for
potential
process
decreasing personal contact and increasing
the
rapid turnover in a neighborhood
At the first signs of
will declare a neighborhpod off-limits.
becomes
a
self-fulfilling prophecy.
and abandon it.
of
the
to sell
forced
the
devoting
transition, banks,
Thus disinvestment
Even landlords who want
maintain their buildings can no longer get financing,
sometimes
area's
beginning
abandonment discourages public agencies from
resources to that area.
too,
an
so much on the investors' confidence in
the
of
his
he may even be afraid to
investment decisions in both the private and public
hinge
stability,
unquantifiable
antagonism.
Because
sector
When
visit
for instance;
tenants,
races,
unit.
The landlord may be willing to take advantage of
problems arise.
the
different
a careless
to
are
and so
to a slumlord who will milk the building
The timidity of
lenders can have a subtler
low-income housing market.
Because of
the
high
impact
risks
associated with inner city investments, banks may look for shorter
increasing the monthly debt service burden
on
This added pressure compels the landlord
to
for ways of increasing his or her income to maintain his
or
pay-back
the
look
periods,
property owner.
her bank payments.
Bank red-lining cannot be blamed entirely for
disinvestment,
however;
one study found that over three-quarters
of
the landlords in some inner-city neighborhoods would not
5.
improvements even if long-term financing were available
The
loss
inability
of
withdrawal
private capital
neighborhood amenities.
the
to
have
converted
only
in
the
but also in
the
It is the removal
deterioration of a recreational site that
to an area's residents.
decline
is evident not
property owners to get financing,
of
landmark,
seems
of
a
movie
Every
I@W=i@ME@f
theater that
into a Pentacostal
church.
is
Withdrawal
abandonment
City
either
abandoned
of
public
Many Brooklynites swear that
services
since
neighborhoods
also
the fiscal
crisis
of
1975
"triage" policy,
poor
services
abandonment.
be
fighters
such
Public
as
sanitation
as
a
factor
for instance,
this
the
issue in New
caused
allowing
In
leading
city
the
the
cited
to
deterioration
withdrawal
from an arson-prone neighborhood can result
of housing units.
to
landlords
service reduction and housing
very closely linked;
demonstrated
and
Ebbets
to become even more underserved.
Women's City Club study of a Bronx neighborhood,
can
1957,
contributes
This has been a controversial
administrators to adopt a de facto
poorest
or
of the borough's decline.
process.
ever
a
signals
the public housing project constructed on the site of
Field as a symbol
York
of
R@!@h9BFhSS9
Brooklyn began to go downhill when the Dodgers left in
see
make
of
fire
in the
loss
The residents of the Northside of Williamsburg
connection
seven
years
ago.
In
this
neighborhood, dominated by wood frame houses, arson was becoming a
20
disturbingly
common means of
landlord abandonment.
closed the only local firehouse.
neighborhood
protest
Yet the city
The residents, seeing that their
was doomed without firefighting
services,
began
a
that included a year-long occupation of the firehouse and
culminated
in a demonstration blocking rush-hour traffic
Brooklyn-Queens Expressway.
neighborhood
services
survived.
on
The firehouse was reopened,
More commonly,
however,
and the
the decline of
that leads to abandonment is more gradual
neighborhood residents are less capable of
the
and
therefore
perceiving and
halting
it.
B.Portraits of Slum Landlords
Responding
to
the stereotypes of the 1950s and
led to slum clearance policies,
1969
-and 1970 studies,
slumlord
Their
showed
Sternlieb and Stegman,
that,
minority
one-third
sixty years old,
Newark,
professional
of property owners,
Pittsburgh,
45% of
in
unconscionable
of inner-city property owners in
while
that
their
were determined to debunk the myth of
as a big-time operator reaping
profiles
1960s
of
profits.
several
landlords made
up
a
cities
sizable
the rest were a diverse group.
inner city property owners
and one-half earned under $10,000
all landlords were craftspeople,
a
the
were
6
year .
In
over
In
workers or small
real
estate
only
21% professionals in the
businesspeople,- and
7
field .
In New York City, where the predominance of multi-family
tenements
would
seem to lend itself to
the owners were professionals.
only 31%
of
or small
businesspeople;
15%
21
professional
ownership,
34% were craftspeople
were retired or unemployed,
and the
8
balance was split among between miscellaneous professions
Of
cism.
course,
First,
this breakdown must be viewed with some skepti-
percentages refer to the population of
the number of housing units.
Professional
represent one-third of all owners,
units.
In
Baltimore,
percentage
of
total
for
real
but control
instance,
owners,
not
estate people may
two-thirds of
fifty landlords--a
property owners--were found to
all
small
control
one-
9
quarter
owners
of
the inner-city rental
inventory
can register their buildings in the name of
or another individual.
Stegman
profitable
and
property,
transformation
explain
Rolf
the
corporation
large landlords.
Sternlieb describe landlords operating
rental
invested.
a
property
In the Southside buildings were sometimes
"owned" by mothers, sons or associates of
the
Second.,
.
of
the
many of whom seemed
neighborhoods
in
barely
overwhelmed
which
they
had
Goetze created a typology of property owners
housing
market
in a similarly
transitional
by
to
Boston
10
neighborhood
Type
B,
.
His Type A,
Blue-Collar
landlords.
returns
Established Owners and Managers, and
Investors,
describe
most
of
Stegman's
Both types operate in stable markets, count on steady
and security,
and make their money by
providing
decent
housing.
But
difficult
the economic trends of
for such owners to make a profit.
introduction made clear,
income
the 1970's made it
increasingly
As the data in
the
escalating operating costs have outpaced
gains for most renters.
Between
1970 and
1976,
rents in
11
New
York City rose 179% faster than renters' incomes
these figures,
a
profit
Type A and B landlords who had been barely earning
in
1970
were,
unattractive options.
or
they could sell
Whichever
of
contribute
for
by
1978
or
to the Operatorsq
faced
Goetze's Type D
these options the original
landlords
to the decline of the building and
running them down without concern
with
two
the
landlords.
chose,
they
neighborhood,
unprofitable buildings
by
for housing quality in a process
"milking."
One
of
the more intriguing aspects of New York's
real estate market is the persistence of
Southside,
buildings
which
1980,
They could walk away from their buildings,
the Operator makes a living off of
known as
Given
.
title
reveal
marginal
these Operators.
In the
searches and interviews with tenants in a dozen
a pattern:
Most of
had been owned by an individual
these New
Law
tenements,
or family for decades, were
at some point sold to a corporate entity that represented one of a
small
group of
local
landlords.
the death of the original owner,
point
The
rapid
after
but often
price
to cluster around
increases.
1973-4 and
Robert
followed
it seemed to come at a
which he could no longer make a
sales seemed
oil
In some cases the sale
Schur
legitimate
1979-80,
suggests
profit.
times
that
of
many
original
landlords who sold to Operators were
"not
sufficiently
12
cognizant
of
["milking"'s]
nuances
"
.
Tenant
reports
of
decreased
undesirable
Activists
services,
tenants
from
illegal
coincided
rent increases,
with
the
and an
change
in
other low-income neighborhoods report
identical to that in the Southside.
influx
of
ownership.
a
pattern
There
is
money
to
be
made
in
unfortunately
for those who live in them,
from
them well
running
"milks"
a
by
avoiding
as many
will
foreclose
started
possible:
be reluctant
to
foreclose.
to
an
longer.
on a property after one year of
water,
and
landlord
end result
only
and
in
Chapter
possible
even
action
and
hot
Meanwhile
the
Peter Salins describes
the
slipshod repairs.
continues to collect rent.
of this
the
services provide limited heat
infrequent,
of
indebtedness,
installment agreement that delays
Maintenance
Debt
(although legally the city
and even when the city threatens foreclosure it is
sign
to
Payment
fact foreclosures take place every three years or so--see
Two)
owner
because the landlord knows that the
property taxes can be avoided for years
can
as
An
not
because the building was purchased for
or postponable,
holder
expenses
already
but
comes
but from running them poorly.
service is either minimal,
very little,
buildings,
the profit
profit from a building which has
deteriorate
mortgage
these
process:
A combination of aggressive rent collection efforts,
minimal
maintenancetax
delinquency,
low
purchase
down
payments,
and
delinquency
in
paying off purchase money
mortgages
can
permit
an
owner
to
make a handsome profit for
a
limited
time,
even
as
he
writes
off
a
larger
portion
of
the
rent
roll
and
depreciates
the
asset
value
of
the
property
to
zero
by
walking
away
from
his building when its economic
potential
is
exhausted (13).
The
extent
Operators
alternatives
in
of
disinvestment
poor
neighborhoods
available
to
city
24
and
the
preponderance
circumscribe
officials.
For
the
of
policy
instance,
a
slumlord
whose
profit
comes from milking will
not
necessarily
provide adequate services if
government subsidies allow his or her
tenants to pay higher rents.
Even a more reputable property.owner
might not feel that rent subsidies assured a sufficient income
merit
new investment.
such
as
those
government,
tenantry.
currently
might
necessarily
Interest subsidies on improvement
offered
encourage
A
program
landlord-tenant
Another
from
landlords
to
by
the
city
renovate
but
not
to deal
with a
deteriorated
neighborhood
loan money with subsidized
rents.
this expensive proposition still does not address some of the
less tangible but,
New
landlords
loans,
to maintain rents affordable to the former low-income
would have to couple subsidized
And
to
to
as Stegman's study
which has become the unarticulated policy
York City,
manager.
The
foreclosure
in
is not to try to stop landlords from walking away
their unprofitable properties.
of
significant
tensions that contribute to neighborhood decline.
alternative,
management
demonstrated,
In the landlord's
these buildings is handed over to a
legal
statute
mechanism
for
doing
this
not-for-profit
is
that allow the city to seize tax
properties and then either run them itself
to low-income housing providers.
Housing Program.
25
absence,
the
tax
delinquent
or negotiate their sale
This is the basis of
the In Rem
Notes on Chapter One
1.
Michael
Stegman,
uggsing
Inyestment
in
the
Inner
City,
(Cambridge: MIT Press, 1972) ; George Sternlieb, Ihe
Tenement
Landlord,
(New Brunswich:
Center for Urban Policy
Research,
1969);
and Women's City Club,
With Love and
Affection:
A
Study g
Building ebagdonments (New York,
1977).
2.
Peter Marcuse, Housing Obandonment:
Does Rent Control Make a
Difference?
(Washington
D.C.:
Conference
of
Alternative
State and Local Policy, 1977).
Stagman,
3.
Landlord,
Housing
Investmimnt,
Stern1iab,
and Women's City Club.
4.
Stegman,
5.
Sternlieb, The Tenenement Landlord,201.
IbM
oggsing Ieestment,163.
6.
George
Sternlieb
and
Robert Lake,
"The Dynamics
Estate Tax Delinquency," National Tax Journal 29 (1976),
7.
Sternlieb,
8.
Ibid.
9.
Stegman,
10.
Iioament
of
Real
265.
The Tenement Lanldord.
ousing lneystment,27.
Understanding Neighbrgood Change:
The Role of
Ballinger
Revitalization,
(Cambridge:
81-82.
Rolf Goetze,
xgaeStations
Press,
1979),
in
Urban
11.
Harry DiRienzo and Joan B.
Allen,
It
New York City In
Housing EcggERg,
(New York: Urban Coalition, 1985),13.
12.
Robert Schur, "Growing Lemons in
(July/August 1980),44.
13.
Peter Salins,
Effects of Public
the Bronx,"
Rem
Wgring Pagng
The Ecology gf Hgsing Destruction:
Economic
Intervention in the Housing Market,
(New York :
New York University Press, 1980),
26
14.
CHAPTER TWO:
TAX-DELINQUENCY AND FORECLOSURE
A.
Overview
Separate
abandonment
from
is
but
not
independent
the phenomenon
of
tax
of
the
problem
delinquency.
of
Certainly
property can be neglected and vacated while the landlord continues
to
pay property taxes.,
but a building is not truly abandoned
long as the taxes are being paid.
city's
one
policy,
in private hands,
to this study.
and
how
an understanding of the process
tax foreclosure
of
tax
affects
low
foreclosure.
that
willingness to enforce its own tax laws is integral
tax
property
today and in years
It becomes clear
is
income
Lastly it looks at the status of
the Southside to determine the impact,
come,
marginal
This chapter explains real estate
property
housing in New York City.
in
foreclosure is the
instrument for halting the deterioration of
properties
important
Since tax
as
the
to
city's
to the success
of any programs treating the in rem housing stock.
Threatened seizure of tax-delinquent properties is,
cities,
the
means of
enforcing tax collection.
like bank foreclosures,
are in rem actions,
the
title to the property is
thing,"
in
which
further claim against the owner is made.
obligate
Such
or actions
In rem
for most
seizures,
"against
vested
but
actions,
no
which
the city only to inform owners by sending notices to the
address on the building registration record, are preferred to
27
in
personam
lawsuits,
which must be done individually
that the owner be served personally with all
in
personam
and
require
legal papers.
While
actions might be more effective for recovering
lost
tax dollars, they would be burdensome to any city with more than a
token tax foreclosure case load.
It
play
is
in the abandonment process.
properties
deciding
In
hard to say just what role real estate
do
not
factor
fact,
abandonment
point
that
payments
owners of
marginal
tax
burdens
landlord walks away from his
correlate
taxes
with
are
Of course,
desire higher taxes;
the
investment.
likelihood
find that landlords with higher tax burdens are
likely to abandon.
owners
suggest that property
when a
studies
Studies of
tax
of
less
this does not imply that property
it only underscores the self-evident
that owners of more valuable properties are less likely
to
walk away from their investments.
Tax delinquency need not be a sign of disinvestment.
payment penalties are below market interest rates,-
many
If late
property
owners will be slow in their payments since it costs them less, in
effect,
to "borrow" money from the city than the bank.
cities have uniform or expeditious foreclosure policies,
little
incentive to be punctual
in real
is thus possible that some degree of
there is
estate tax payments.
It
tax delinquency can exist and
not indicate any problems in an area's housing market.
28
Since few
High
rates of tax
abandonment,
owners
however,
delinquency are generally associated
and indicate a housing market so weak that
are willing to lose their property.
A rule of
business
is that a firm must cover all
operate;
fixed costs can be put off for a period.
taxes
constitute
landlord
will
a
fixed cost,
stop
with
paying
it
taxes
thumb
in
variable costs in order to
is likely
before
Since property
that
a
defaulting
marginal
on
such
1
operating
company
expenses
will
as fuel
cut off
or salaries.
After all,
his credit a lot faster than the
foreclose on his building.
likely to be the final
the
oil
city
will
Therefore, nonpayment of taxes is not
indicator of the abandonment process.
neither is it the first indicator.
But
Most building systems require
periodic upgrading, but can continue to operate for some time even
without proper maintenance.
rather
than
replaced.
re-papered;
While
every few years,
title
For instance,
boiler
tubes can be capped rather
vestings for
such deferred
a roof can be patched
nonpayment of
taxes
maintenance can go on for
a
than
occur
dozen
years before a major system gives out.
B.
Tax Delingugngy in New York City
New York City is one of the few municipalities that regularly
forecloses
willingness
Cleveland,
on delinquent properties,
to
seize
occupied
and is nearly unique in
buildings.
Pittsburgh
its
and
two other cities with tax payment problems, backed off
from ambitious proposals that would have left them responsible for
2
abandoned
property .
In
Boston,
tax foreclosures are
ad
hoc,
occurring
only if there is interest in a
29
particular
parcel.
I
found
no
city
references to clear-cut foreclosure procedures
other
than
New York.,
be
any
policies
and
in rem buildings.
It
and no other city has
programs dealing specifically with occupied
may
in
that the severity of New York's abandonment
problem
has
forced this city to pursue a more aggressive strategy, but in fact
New
York
cities,
has a
lower percentage of
including
Boston,
abandoned
units
than
other
that do not foreclose on thousands of
tax-delinquent buildings each year.
Tax
delinquency to the point of foreclosure was first
noted
as a problem in New York City during the Depression, at which time
the
Citizens
Housing
Council
published
a
deliquency with other symptoms of urban blight
state Administrative Code in
time,
was
used
sparingly
until
the
mid-1960s,
tax
for the first
borough
foreclose
in one year.
three years of
The fiscal
on
landlord
process,
in
making
an
entire
any property that owed more
crisis of
1975 focused attention on all
including
Part of the revenue shortfall
Concern
tax
receipts for that fiscal
over
than
aspects of
its collection of
property
that brought New York
the brink of bankruptcy was its overestimate of potential
estate
it
taxes was eligible for foreclosure.
the city's fiscal management,
taxes.
although
delinquent properties
By law,
This power
At this time computerization
records streamlined the foreclosure
to
tax
A change in the
to foreclose directly on delinquent properties.
possible
to
.
linking
1948 allowed the city,
abandonment was noted much earlier.
of
study
year by some $46
City
real
4
million
growing delinquency rates was instrumental
in
City
Council's passage of Local Law 45,
foreclosure
which allowed the city to begin
proceedings on any property that owed more than
quarters
of
taxes.
involved
in
community-based
acceleration
Some council
members,
revitalization
particularly
efforts,
of the title vesting process as a way to
four
those
saw
the
alter
the
involvement of city government in low-income housing. More likely,
however,
the
this bill
serious
majority
of
those on the City Council
were anxious to "send a signal
about pursuing all
believed
voting
for
to Albany" that they were
revenue collecting
alternatives,
that a shorter grace period would simply prod
and
landlords
5
into paying their taxes more promptly
In
fact,
Local
Law 45 had the dual effect of improving
tax
payments and pushing unprecedented numbers of buildings into
ownership.
For
properties,
those
yearly
owners
foreclosures
interested
in
keeping
limited the number of
they can afford to wait before paying their taxes.
the
verge
of
sooner.
the
results
disparate proponents:
could
point
advocating
see
an
immediate
property
the
number
that
objectives
(see Table
of
on
much
the
responsibility
2.1)
those
intervention in deteriorating buildings
could
increase
1978-1980,
Since
in
the
number
the sudden
of
increase
units
in
in
city
city-owned
immediately following the law's
of buildings going
(See Table 2.2).
quarters
and
programs.
in
the
those concerned with fiscal
to improved collections
public
management
satisfied
their
Buildings
being abandoned entered city ownership
Thus
city
in rem each year has been
passage,
falling
Table 2.1
Tax Delinguency Rates, 1Z4-1984
(OOOs)
Fiscal Year
%Not Collected
1975
6.9
7.5
$2,897,460
1976
1977
1978
NA
NA
6.8
4.7
3,378,611
3, 318,583
3,329,998
1979
1980
1981
3.6
3.6
3.7
3,499, 080
3,798,604
3.996,383
4,200,567
1982
1983
1984
3.2
2.9
3.0
From Moody's Municigal and Government Manual
(as reported by the City Comptroller)
Table 2.2
Year
In Rem Actions Since Passage of Local
Borough
1978
1978
1978
1979
1980
1980
1980-81
1981
1982-84
1984
1985
Estimated Total
(Action #)*
Buildings Taken
Staten Island(35)
Manhattan(29)
Bronx(31)
Brooklyn (32)
Queens(37)
Staten Island(36)
Manhattan (30)
Bronx(32)
Brooklyn(33)
Queens(38)
Bronx(33)
536
2167
3947
7331
1677
131
813
1121
5824(est)
826 (est)
771 (est)
25,144
From
Fourth
Annual
In
Rem
interview
with Howard Hecht.
*In
Law 45
Rem Actions numbered sequentially by borough.
RegCt,
and
In
after
spite
the
of these successes,
vestings
of
Local
1978-79.
Law 45 was never enforced
While the
city
authority to vest any property owing a year of
wait
at least three years between in rem
retains
the
taxes, in fact they
actions.
The
official
explanation for these delays centers on the expense and difficulty
of
year
taking title to and managing thousands of
(see Chapter Four).
estate
market
foreclosure
fiscal
new properties
It is also likely that the improved real
in many areas qbviated the need for
threat
to enforce property tax
responsibility
each
advocates no longer
an
payments.
With
the
concerned
about
tax
delinquency,
only
low-income
neighborhoods
where
abandonment has not abated--not
housing
immediate
advocates
from
a
those
powerful
constituency--are pushing for city involvement.
Further
delinquency,
complicating
abandonment
gentrification.
Just
the
relationship
between
tax
and foreclosure policy is the spread of
three or four years ago tenant leaders
most low-income neighborhoods tenant
leaders could be certain that
any building with poor services and numerous code violations
had accumulated tax arrears,
next
title vesting.
in
and would
be taken by the city
Today this is true in fewer
Wherever
there exists the first whisper of
property
owners will
resume tax payments.
market
also
in
the
neighborhoods.
revitalization
Poor services
may be
an indication, not of the owner's intention to abandon, but of his
or her plan to empty the building of
income
minority
tenants
in
order
its present,
to
rent
to
presumably lowmore
affluent
newcomers.
many
The effects of upgrading tenantry are significant in
neighborhoods;
while it bodes well for the
health of the city,
general
fiscal
it does not mean an improvement in the living
conditions of those that inhabited the area in its dark days.
fact,
in some areas,
buildings taken by the city in earlier days
are now the only remaining low cost rentals.
city-owned
In
buildings
keeps
these
Only the presence of
neighborhoods
economically
integrated.
City-wide
prompt
tax
statistics may reflect-an encouraging trend toward
payments,
but
they
mask
the
fact
that
in
some
neighborhoods tax delinquency is still rampant. Responsible owners
continue to flee, selling buildings to "milkers" (see Chapter One)
or
simply abandoning them.
which
in
In these areas both the
speed
with
the city forecloses on deteriorating properties and the way
which it manages and disposes of the buildings it owns have
powerful
city
impact on the community;
in fact,
is by far the largest landlord.
shows
that
in
neighborhoods,
the
the
Southside,
length
in these areas
The data
and
presented
presumably
of time between
in
foreclosure
a
the
below
other
actions
allows hundreds of housing units to deteriorate and become vacant.
Since those that do enter city ownership are successfully
and
form the still shaky backbone of neighborhood
efforts,
occupied,
it
revitalization
would behoove city officials to take action
deteriorating
process as possible.
properties
treated
as early in the
against
abandonment
C.
City
wnersh i2 and Tax Delinguency in the Southside
A portrait of city ownership patterns and building conditions
in
the
Southside
inaction--on
that
can
Table
demonstrates the
one neighborhood.
impact
the percentage of
city is even higher,
owner-occupied
programs
and
city
The
parcels
27"4 are city-owned
dwelling units controlled
by
(see
the
since the small buildings are more typically
less
likely
to
become
in
rem.
affecting city-owned property would have a
impact on this
action--or
Of buildings and vacant
be classified as residential,
2.3);
of
Clearly,
considerable
community.
number of city-owned parcels is not surprising given the
depressed condition of the private market in Williamsburg over the
past fifteen years.
More striking is that 40.6% of all
city- and privately-owned,
to
This comes to some eleven
fifteen vacant buildings or lots on each tax
successful
currently
presence
one
is vacant.
lost
the
programs that treat the
under
of
to
city ownership,
their
456 vacant properties.
73
block.
private
the
the
represents
foreseeable
future.
low-income
were the market to grow strong enough to
investment,
Southside residents.
buildings
impact is dwarfed by
Public rehabilitation or new construction programs for
attract
However
Southside
Each vacant unit
low-incoming housing for
families no longer exist;
property,
it
would
exclude
most
current
Table 2.3
Total
City god Private Ownershig
Residential
Parcels*
in the Southside
1122
City owned
308
(27%)
Privately owned,
vacant lot
174
(15.5%)
Privately owned,
vacant building
47
590
Privately owned, occupied
(4X)
(52.6%)
*Estimated,
using maps and surveys.
It is difficult to determine
whether
a vacant lot was once the site of a residential building;
a
lot is considered residential if the surrounding buildings
are
residential.
Buildings with both commercial and residential units
are considered residential,
but loft buildings that have recently
attracted illegal residential tenants are not.
Table 2.4
Total
Vacant Lots and Buildings
Residential Parcels
1122
Vacant lots
313
(27.9%)
Vacant buildings
143
(12.7%)
36
Table 2.5
Total
City-Owned Progerty
City-Owned Parcels
308
Vacant lots
139
(45'4)
Vacant buildings
96
(31%)
Occupied buildings
Central Management
Alternative Management
Tenant-owned cooperative
73 (24%)
35
24
14
Sources:
Survey, and New York City
Department of Housing
Preservation
and Development, Office of
Property
Management.
Since
HPD
seldom
Southside
buildings
each was a
large,
or
evacuates occupied properties
were closed after the last
vesting
the assumption
vacant by the time the city takes them
is the the
two
action;
seriously deteriorated structure with only
two remaining tenants),
are
(only
one
buildings
(See Table 2.5)
There
is an active demolition program, so an in rem action would include
many
public
more
vacant buildings and
fewer
empty
lots.
Thus,
any
policy that is to have a serious impact on housing in
the
Southside
must
intervene
earlier in
before a building becomes vacant.
the
abandonment
process,
Given the state of the private
market described in Chapter One, it is unlikely that incentives to
landlords
would
such as property tax abatements and
have a major impact on abandonment.
low-interest
loans
The alternative is to
take the buildings out of for-profit management once the signs
abandonment are clear, but while the buildings are still viable.
of
This was one of the goals of
to
Law 45,
and the authority
seize title to properties with over four quarters of
tax
arrears
remains
abandonment.
have
the
city's
Because several
title vestings,
however,
most
potent
property
weapon
against
years are allowed to elapse between
the reality is that no vesting
papers
been filed on buildings three or four years in arrears.
Brooklyn
the
summer of
1979,
Today,
at
Local
first post-Local
Law 45 vesting took place
the next one three years later in
the
earliest
it will
in
August,.
no third vesting has even been scheduled,
In
the
1982.
suggesting that
take place is the spring or
summer
of
1987.
Vesting
work
delays occur for several
behind each vesting
legwork
of
visiting
buildings is.
same
and
enormously
While the
legal
time-consuming,
assuming management
of
the
thousands
of
Currently vesting and management are handled by the
HPD personnel,
chaos.
is not
reasons.
Furthermore,
so an annual
vesting would create
perpetual
each vesting brings thousands of new
units
under city management, adding expense and taxing the staff.
Since
many
occupied
buildings remain in city
ownership
indefinitely,
buildings are not leaving their portfolio to make room for the new
ones.
Given
officials
these considerations,
are
reluctant
it
is not surprising that HPD
to pursue a more
vigorous
foreclosure
policy.
Delaying
run,
title
but
foreclosures may lighten HPD's burden in the
in the long run it has its costs.
vestings,
buildings
In the time
short
between
in the abandonment cycle become
:38
more
dilapidated;
ultimately
their boilers give out,
they
records of
are
vacated.
they lose units to f'ires, and
Because there
saved with faster foreclosures.
rem action
arrears and
occupancy
adequate
But
accurate
of
the
all
of 250 units,
costs of
with substantial
For
require
any of
an
be
tax
go from nearly full
displacement
or the cost to the neighborhood of
buildings.
is
units that could
vacancy as services were withdrawn.
measure
it
in the winter before the 1982
I did see five tenements,
containing a total
to
families,
would
no
the exact dates on which buildings become vacant,
impossible to calculate the precise number of
in
are
There
to
is
these
another five
no
250
vacant
these units ever to provide housing again
investment of
between
$40,000
and
$70,000,
depending on the extent of destruction by exposure to the elements
and
they
vandals.
would
Had these buildings been vested two years earlier,
have
maintenance
work,
needed
only
systems
replacements
and
which could have been done for $10,000
other
a
unit
with little disruption to the inhabitants.
Tax
delinquency continues to be a problem in the
Southside,
and tax delinquent buildings continue to be among the worst
neighborhood.
quarters of
housing
As of
in the
last June, 216 buildings owed at least three
tax arrears, representing 36.6'. of the privately owned
(see Table 2.6).
Many of
the 174 privately owned
may also owe taxes, but these don't show up on HPD's records.
39
lots
Table 2.6
Total
Tax Arrearage in Occugied Buildings
Privately Owned, Occupied Buildings
Quarters in Arrears:
3
4-7
8+
Source:
New
590
51 (8.6%)
89 (15.1%)
76 (12.9%)
City Department
of
City
York
Planning.
A
profile
buildigng
units.
of
small
a
skewed distribution
with an average of 32.7 units each,
(three and four unit)
recorded
quality,
of
represents
buildings.
heat,
suggests
violations a
the presence of
deterioration.
hazardous
tenants
a
local
are
violations
large
irregularity
violations
measure of
in
10.4
large number
many code
less-than-ideal
building
(e.g.,
each
lack
building
The sample buildings
or 3.5 violations per
these, four violations in each building
there
nine
several hazardous conditions
a serious level of
considered hazardous.
of
and a
exposed or frayed electrical wiring)
have 35.5 violations each,
reveals
tax-delinquent
While the
housing inspections and the pickiness of
makes
the
Table 2.6 reveals that they have an average of
This
buildings
of
in
of a sample of forty-nine of
apartment.
Of
(.4 per dwelling unit)- are
An examination of the large buildings alone
slightly
fewer violations
(.45) per
dwelling
(3.24)
unit.
In
but
more
addition,
in 20% of the tax delinquent buildings have complained to
tenant advocacy group about poor services
in
the
past
year.
A
comparison of the scope of tax
delinquency today and three
years ago shows that very little has changed.
40
The last
Brooklyn
in rem action was held in
arrears
since
the
1982, encompassing buildings fallen
1979 action.
eligible to be taken,
and 93 of
193 Southside
those
buildings
(mostly the smaller
or 48.1%, were subsequently redeemed by their owners
Two
with
the
were
ones),
(see Appendix
for an explanation of the redemption process).
consistent
into
This is
city-wide estimate that only 20%
of
not
those
6
eligible
for foreclosure will
suggests
that the Southside has fewer landlords putting
ultimately become city-owned
and
off
tax
vesting,
165
payments without intending to lose their buildings.
Last
June,
Southside
three
years after the last title
buildings were four quarters in arrears
eligible
for
foreclosure.
and
therefore
If the same percentage of
landlords
were to redeem as had in 1982, a title
have
netted 85 buildings.
owing three quarters.
payment,
action
then
last
buildings.
taken in
vesting at that time would
In June there were also 51
If these landlords had neglected their next
216 buildings would have been eligible for
fall,
Either
1982,
with
an expected
figure
yield
buildings
vested in
rem
city-owned
the 100
buildings
currently
Interestingly,.
of
vesting list
in the next in rem action.
instituted
a
the
of
be
again
be
on
the
Since the city has since
"supplementary
vestings"
had been on the previous in rem list
41
to
This means that nearly
93 redemptions will once
policy
in
23 of the
in arrears were those scheduled
1982 and subsequently redeemed.
that
112
in
and suggests that there has been little change
one-quarter
properties
of
is in the range of
the Southside from the 1979-82 period.
216
buildings
in
which
and
whose
owners
had defaulted on their redemption agreements can be
into city ownership between official
taken
actions.
D.Conclusions
This
and
overview of city-wide and neighborhood tax
foreclosure trends suggests several
appears
market
that
is
the overall health of
improving.
neighborhoods,
suggests
First,
directions.
New York City's
familiarity with some of
with the affordability data in
areas
estate
New
York's
Chapter
experiencing
property
that have traditionally strong markets are
Second,
some
degrees
the
neighborhoods
means
have
tax
of
now
delinquency down,
the
low
not experienced
"turned
getting
been
around";
and housing costs
income.
this
1,
market:
that in the mid-1970's had
of abandonment have
values are up,
beyond
areas
It
real
the following trends in New York City's housing
stronger.
are
taken
My
policy
delinquency
Meanwhile,
upgrading,
so
some
remain
affordable to the poor but continue to suffer abandonment and show
high
rates
of
tax delinquency.
Tax foreclosure policy must
be
sensitive to these different trends.
In traditionally strong areas tax delinquency has never
a major concern.
collecting
the
In these areas city officials are interested in
sufficient
transitional areas,
been
taxes to support municipal
services.
the city treasury should be benefitting
increase in property values;
In
from
buildings that had become city-
owned at an earlier time must be maintained as low-income housing.
It
is
in
deteriorated areas that tax
42
foreclosure
becomes
the
Part II
major
component
of
housing policy.
The
city
must
foreclose
frequently -- every other year at least--and be willing to
interim
vestings,
taking
title
to buildings whose
signed repayment agreements and defaulted.
buildings
owned
revitalization
private
can
efforts.
interest--and
happen--the
form
If
even
the
a neighborhood
of
begins
in the Southside this has
ensuring an integrated community.
landlord
foundation
city-owned stock will remain a
owners
had
City foreclosures save
before the abandonment process is complete,
buildings
conduct
low-income
and
city-
grassroots
to
attract
begun
to
resource,
Now that the crisis is over and
abandonment is slowing down,
the city should be able to
deal with it more effectively where it is still
occurring.
Notes on Chapter Two
1.
If
there
was an outstanding mortgage,
the
landlord
would
probably continue paying debt service on it even after
defaulting
on
taxes,
since
a
private mortgage holder would
probably
act
against
a
defaulter
more
expeditiously
than
a
municipal
government.
In many depressed neighborhoods where tax delinquency
is
most common,however,there are few outstanding
bank
mortgages
after
years
of
red-lining
Current
owners
have
bought
their
buildings
with
cash,
or have arranged purchase money
mortgages
with the seller, who is probably not eager to regain his property.
In many cases,
therefore, the threat of mortgage foreclosure
on
these properties is not a real one.
2.
Michael
Goodwin,
"City-Owned
Houses
Come
Pandora's Box.," New York Times, 7 January 1979.
Complete
with
3.
Brian
Sullivan,
"The Division of
Alternative
Management
Programs:
The Last Best Hope for In Rem Housing in New York
City," (Pratt Center, 1982), 3-6.
4.
Harry
DiRienzo and Joan B.
Allen,
The New York City In Rem
Housing PCggram, (New York:
Urban Coalition, 1985)
5.
Goodwin,
"City-Owned Houses."
43
6.
New
York
City
Development, The First
Department
of
Housing
Preservation
Annual In Rem Housing Regort, 6.
44
and
ANTECEDENTS TO THE
CHAPTER THREE:
IN REM HOUSING PROGRAM
Urban
self-help housing grew out of
the housing crisis
that
confronted low-income, inner city tenants in the early 1970s.
net
result
of
urban
renewal had been the
loss
of
The
affordable
housing:
by 1967, 404,000 low- and moderate-income units had been
1
destroyed,
replaced
by
41,580
units
.
The
moratorium
on
federally assisted housing had left a void in the creation of
income
new,
units not filled by city programs,
mixed-income
developments
low-
which concentrated
such as Battery
Park
City
on
and
Roosevelt
Island,
and
on
stabilization
of
transitional
2
neighborhoods
.
Low city-wide vacancy
rates,
the
worsening
condition
of
opportunities
private tenement housing,
and
restricted
housing
for blacks and Hispanics created the conditions
in
which poor tenants had little choice but to take action.
Tenants
had been taking over their buildings from abandoning
landlords since the mid-1960s,
if not earlier,
and by the
early
1970s many had found ways to renovate and purchase their buildings
as
legal
cooperatives.
over where their
landlord had failed?
and Ronald Lawson,
empowerment
assertion
based
incarnation
and able to
take
According to Robert Kolodny
their confidence had been boosted by grassroots
movements.
Kolodny
maintains
that
of consumer rights and the resurgence of
voluntary
reversal of
Why were they willing
action,
it
is unlikely that
roles would have emerged"
of the civil
.
"without
the
neighborhood-
such
Furthermore,
a
dramatic
the
urban
rights movement had focused directly
45
on
housing
issues.
The
Harlem rent strike of
1962-3,
which
had
rapidly spread to other New York City ghettoes, had been initiated
4
by CORE organizers .
Civil
tension
and
Owners
visit
to
rights unrest,
for better or worse,
exacerbated
distrust between black tenants and white
interviewed
by Stegman and Sternlieb who were
their properties (see Chapter One) may have
their
tenants'
certainty
that
before
the city could take them in rem.
Receivership
and
appointment
Article
7a,
both of
of
their
These measures
which
as
newly
legal
provide
and the Emergency Repair Program,
to
reacting
their
voiced
measures
buildings
include
for
of an administrator to manage a property in place
the landlord,
city
Residents'
since helped tenants take control
have
afraid
been
may have hastened the creation of
dissatisfaction
landlords.
increased racial militance as well
their rights as renters.
of
the
the
of
which allows the
to provide emergency services when the landlord is unwilling
5
and to place a lien on the property
A.Homeownershig fgr the Poor
The
New
concept of tenant-initiated
York
City was built
elsewhere:
homeownership
Homeownership
for
behalf
conversion
on two ideas that were in good
for
low-income
largest scale under Title 1 of
1968.
cooperative
the poor and
families
was
self-help
undertaken
in
currency
housing.
on
the Housing and Development Act
the
of
Known as Section 235, this program consisted of payments on
of
the low-income homeowner by the federal
46
government
to
mortgage holders in'order to reduce the interest rate to as low as
6
1.
.
One goal of 235 housing was to provide poor families with
alternatives to segregrated,
same
institutional
expenditure [as for public housing]
could
purchase
(about $25,000
"The
a
unit)
a
house in suburbia and a new car for
the
poor
7
who could live much like anybody else"
.
Another
goal,
family
based
public housing:
on
the
assumption that an owner-occupant
would
inclined than a tenant to keep up his or her home,
improved housing within the inner city.
stressed
the financial
benefits of
more
was to promote
The program's proponents
home ownership,
deductions and equity accumulation,
be
such
as
tax
as well as the psychological
benefits:
"Owning
a home can increase responsibility and stake out a man's
place in his community.
The man who owns a home has something to
be proud of and good reason to protect and preserve it"B.
With each summer -bringing a new wave of racial
cities,
a
program
encouraging
the
poor
to
unrest to the inner
invest
in
their
neighborhoods was welcomed.
Because section 235 was exclusively a program for
of
single-family
(Interestingly,
project
in
Bronx--are
in
it had little impact on New York
however,
East
using
factory-built
homes,
two
current
New York and Charlotte
projects--the
Gardens
235 mortgage subsidies to erect
houses on vacant
land.)
in
conversion projects.
as the New York City equivalent
47
City.
Nehemiah
the
South
single-family,
But the ideas
Section 235 housing were considered by the sponsors
cooperative
purchasers
represented
of
early
Cooperative ownership was seen
of homeownership, and the benefits
ascribed
to
homeowners
9
shareholders as well
were
B.Self-Helg Housing and Sweat
believed
"participation
by
accrue
to
coop
new,
being
EgUity
The concept known as self-help housing
simply
to
is hardly
the
maintenance of
family in
the
construction
and
10
their dwellings"
.
Its application by
planners
in
1960s to the creation of
the
late
however,
was
application:
occupation
the
push
innovation.
urban
Two
homesteading,
trends
emerged
from
this
the
The
second
was
which substitutes labor for cash in the acquisition
rehabilitation of property.
habitable,
housing,
which generally involved
west by nineteenth-century pioneers.
undoubtedly
urban
of vacant inner city houses in much the same spirit as
sweat equity,
and
an
low-cost
used
in
While many
urban
some form of sweat equity to make
this
homesteaders
their
homes
section sweat equity specifically refers
to
organized, multi-family efforts.
Urban
se,
in
homesteading is not a low-income
and often
the
housing program
per
homesteaders are more affluent than the inhabitants
neighborhoods into which
they
move.
HUD,
which
sold
buildings on which it had foreclosed to homesteaders for as little
as
a
dollar,
throughout
the
conducted
a
study of
241
program
country in 1978 and found that
were more affluent,
more likely to be white,
the
participants
homesteaders
better educated and
less likely to be on public assistance than their neighbors.
differential existed even though the program was executed only
48
The
in
11
areas that had not fallen into deterioration
In
New
thought of
The
considerably
thrust
of the New York
City
which
program
from other homesteading initiatives.
projects,
emphasis
was on
resulting in cooperative ownership.
often
homesteading,
was
as a program for homeowners, was extended to multi-unit
buildings.
family
City the concept of
York
sweat
possibilities
as
by
rehabilitation
While other homesteaders were
their need for shelter,
projects were comprised of
In the multi-
equity
income people motivated as much by
middle
differed
the
the
investment
Equity
Sweat
low-income families, and the coops were
Whereas
structured so that participants would not earn a profit.
in
homesteaders
purchase price of
other
cities were subsidized only
in
the
low
sweat equity homesteaders received
their units,
more extensive public subsidy.
early
1970s
"pure"
sweat
which relied completely on participants' volunteer
labor.
New York Sweat Equity projects in the
Original
were
of
equity,
Later
The earliest kind was
varieties.
three
projects built labor stipends into their mortgages so
that
participants could devote themselves to renovation work full-time.
Still
later,
residents
CETA funds were used to pay participants.
could
continue
to afford
these
assistance of subsidies at many levels.
from
the
financing
Program.
city
at
The
for $100
below
a
unit,
and
projects,
Loan
49
Program
with
the
They purchased buildings
received
the market rate through the
Municipal
Low-income
was
rehabilitation
Municipal
Loan
by
the
replaced
Participation
Loan Program,
which mixed Community
Funds, lent at 5%., with a conventional
low.
There
were
coordinated
loan to keep
Development
interest rates
was no contractor's or developer's fee;
Professional
by
a
services
city
were
agency
usually
and
the projects
non-profit
donated
by
sponsors.
lawyers
and
architects who were excited by these projects.
C.EarEly New York City Cogati yes
A
5200
the
1973 study identified 72 New York City projects
containing
units that either had attained cooperative status or were in
12
conversion
process
.
The
projects
ranged
from
those
initiated
by sponsoring organizations to prevent disinvestment in
transitional
initiated
neighborhoods
("preventative conversions") to
those
by tenants in landlord-abandoned buildings situated
severely deteriorated neighborhoods.
While many of the
in
projects
involved sweat equity renovation of vacant buildings, as described
above,
others,
like today's in rem buildings,
were comprised of
current tenants more concerned with gaining control
in the absence
of
in
a
responsible
landlord than in participating
renovation
work.
Since programs and funding sources have changed since
case-by-case
More
look
relevant
at
early coops is not useful
to
1973, a
this
study.
is an understanding of both the motivation
behind
the cooperative conversions and the factors contributing to
success.
individual
Recognition
and
of
the benefits of homeownership
their
to
the
to society motivated some of the sponsors of
the
50
preventative conversions,
model
Not
but
it was assumed that the cooperative
would not work for the very poor in
only
stock
were
was
prospective sponsors concerned that
too
rehabilitation,
deteriorated
dilapidated
to
lend
itself
housing.
the
to
housing
low-cost
but they were further convinced that poor tenants
lacked the motivation and organizational
skills to pull off
such a
1973 defied these assumptions.
Most
project.
The projects studied in
were precisely the kind viewed by experts as unworkable;
located
run
they were
in deteriorated buildings in neglected neighborhoods
by tenants with little formal
training.
These
participants
were
not even attracted to the presumed
they
were interested simply in improving their living
without
forgoing
affordable rents.
homeownership
Their efforts,
and
benefits;
conditions
as
Kolodny
explains,
"owed little to a petit bourgeois interest in
ownership
for
its own sake or alternatively to a radical ideology that
advocated
expropriation of private property
and
community
control.
The
central
issue has been control
at
a
level
sufficient
to remedy painful housing conditions"(13).
That those seeking remedy worked
struggles
in other buildings,
in isolation,
unaware of similar
further suggests that
cooperative
conversion was a spontaneous response to desperate conditions.
These pioneering cooperatives,
public
programs designed for that purpose,
principles
official
formed without the benefit of
and
lessons
offered a
that were important in the
tenant-management programs.
of
creation
of
The early projects of
1970s marked the beginning of the age of moderate
51
number
the
rehabilitation,
a
necessity at a time when the billions of
federal dollars needed
for clearance and new construction were becoming scarce.
previously
in
away
from
the
big
on
the
part
willingness
rehabilitation
project
of
relied
involving
a
financial
package.
on
different
was
in
Some
halted
have
been
management
scant
to
ad
work
This willingness was critical
isolated cases until
hoc,
group
of
experimental
participants
low-
1979.
Early
programs,
each
and
a
different
to
the
since participants could not move in until
complete.
municipal
Indeed,
many
of
the
projects
fiscal
delays.
crisis,
loan programs collapsed.
delays prevented some tenants from realizing
conversion,
internal
factors accounted
into trouble after conversion.
lack
a
modify
renovation
in mid-renovation by the 1975
While official
that fell
officials
1973 never achieved conversion due to such
during which all
goal of
denoted
Perennial delays were most perilous
sweat equity projects,
identified
also
the
and publicity they generated,
income coop conversions remained
rehabilitation
However,
of sweat equity methods.
In spite of the excitement
their
mentality
standards so that less extensive
to the development
conversions
expensive.
housing
would be eligible for public funds.
were
had
been thought that moderate rehabilitation with tenants
place was cumbersome and therefore
move
It
of money and lack of
for
The two biggest problems
training.
The
expertise in many of the cooperatives is due
attention given to pre-conversion
those
training.
dearth
to
of
the
Cooperatives
that
mismanaged
by
sponsors
outside
by
initiated
were
by inexperienced
but even those established
tenants,
"persons
who
landlords Ebut]
did
the tenants themselves were later mismanaged by
leaders of struggles against
14
management"
in
leaders
good
to
be
not prove
excellent
were
number of
high
later
often
were
unfortunately
An
early coops have fallen into financial difficulty,
loan
with the majority owing property taxes and falling behind on
15
repayments
D.Early City-Sggngred Cooeratives
the early grassroots interest
of
spite
In
In
city sponsorship came slowly.
conversion,
Consultation
was
Unit
Administration
formed
within
the
in
cooperative
1970 a Cooperative
Housing
Development
tenants
low-income
(HPD's predecessor) to advise
considering conversion, but the city itself did not sponsor
the
early cooperatives.
evolved, in fact,
Program.
Estate
This
Its support for conversion efforts first
by default, with the failure of the Receivership
Real
in which the city's Department of
program,
stepped in by court order to manage properties no
longer
was in charge of
twenty
receiving services from their landlords,
buildings
any of
in
1970;
by
it
1972
was
burdened
with
over
200
buildings. The DRE managers were especially ill-equipped to handle
these
troubled properties.
clout and sophistication,
Community groups,
buildings
gained
persuaded HDA to contract with them for
the management of buildings in Receivership.
Receivership
which had
began
Management Program was conceived.
to
go
in
As community-managed
rem,
the
Community
The
CMP's
transfer
the
receive
initial
the
community
follows:
Loan for rehabilitation,
building
groups
unrehabilitated
uncertainties
would
balked
at
properties.
of
be
sold
the
these
municipal
buildings for an
the Municipal
CMP
group
would
the
notion
work
tenants.
of
funding
to
was
But
purchasing
suspect
that
the
the
leaving them responsible
indefinite period.
The program
Between the
was
cut-off
Loan funding and the uncertainty and red tape of
the program's administration,
1979.
would
and when
to
changed to provide for repairs before sale.
of
the
city
They were familiar enough with
rehabilitation process might take years,
for
The
building to the community group,
a Municipal
completed
plan was as
however,
An example of the kind of
is the fate of
no sales took place until
delays encountered
149 South 4th Street,
a
in the early
Southside
building.
The first building to enter Community Management as a Receivership
building in
the
1973,
program
1982.
As
buildings are conveyed directly to
the
it was not sold to the tenants until
exists now,
tenants after rehabilitation.
Community groups only rarely become
owners themselves.
In
rem
1975 the Direct Sales Program was established to enable in
tenants to purchase their buildings directly from
Simple in theory, this program was impossibly complex
before
for
sale,
control
the
city.
in practice:
tenants were expected to sign a management contract
16
of their building consisting of some 32
documents
Disposition procedures were never clarified and sales prices never
determined.
In
short,
the record of city sponsorship
54
of
low-
income coops before 1978 was dismal:
Thus,
in
two coops in five years.
spite of the growing interest through the 1970s in
cooperative conversion as a response to landlord abandonment,
officialdom
remained aloof.
rem
management programs had no significant
long
The
tenant
The predecessors of the current
impact
after the cooperative movement had gained its own
programs
that
did
city
exist,
programs for vacant buildings.,
along
with
other
in
until
momentum.
homesteading
were understaffed, underfunded and
underestimated as viable solutions to the shortage of decent
low-
income housing.
Notes on Chapter Three
DiRienzo
and
1.
Harry
(New
York:
Housing EEogram
Joan Allen,
The New York City- In
Urban Coalition, 1985), 10.
ECgggsal
1974) 2.
Urban Homesteading Assistance Board,
2.
(New York:
Homesteadi ng Asistance Board
for the
3.
Robert Kolodny, "Self-Help Can Be an Effective Tool
the Urban Poor," Journal of Housing, (March, 1981) 139.
4.
Ronald Lawson, Owners of Last Resort (New York:
1984) 10.
Housing Preservation and Development,
5.
Ibid,
6.
U.S.
Families:
Urban
in Housing
Department
of
5.
Commission on Civil
Rights,Hgeownershi2 for
A Regort on the Racial and Ethnic
235 ProgCaM,
(1971),
ImpAct
Lower
Income
gf the Section
5.
7.
William Tabb, Ihe Political Economy g
York:
WW Norton &Co., 1970),18.
8.
Rem
U.S. Commission on Civil
(New
Rights, 2.
in
gelf-del
Robert
Kolodny,
9.
United Neighborhood Houses, 1973),9.
the
Inner
Organization
for Social and Technical
10.
(Cambridge, 1969),1.
Housing in the U.S.A.,
55
the Black Ghetto,
City,
Innovation,
(New
York:
Self-Hel2
11.
U.S.
Department of Housing and Urban
Development,
Analysis of the Urban Homesteading PCggam(1978),34.
12.
Kolodny,
"Self-Help Can Be an Effective Tool ",
13.
Ibid.
14.
Lawson,, Owners of Last Resort,
15.
Ibid,
Baseline
139.
35.
36.
16.
Susan
Baldwin,
City Limits 3 (March
"Red
1978).
Tape Threatens Direct Sales
56
Success,,"
CHAPTER FOUR:
CREATION OF CURRENT
IN REM HOUSING PROGRAMS
A.
The Office of
By
the
crisis.
had
Progerty Management
late
1970s the City of New York was
Abandonment was at
faced
with
its peak and the fast foreclosure law
made every residential property with a four-quarter tax
-- tens of thousands of units,
foreclosure.
properties
favored
The
debt
many of them occupied--eligible for
traditional
had been to sell
a
means
of
disposing
them at auction.
because it enabled the city to return
of
in
rem
This approach
was
the building to the
private sector quickly, absolving the city of extensive management
responsibilities
the lost
and generating
income that could compensate
tax revenues.
But
New
troublesome.
York's
A
experience with auction
sales
had
1978 report documented that properties
proved
sold
auction more often than not ended up back in city ownership.
years
after
sale,
94% of former
city-owned parcels were
arrears;
54% were at least four quarters
eligible
for
foreclosure,
and
Perhaps a worse indictment of
the
for
buildings
in
in
at
Four
tax
arrears and therefore
25% had paid no
taxes
at
the auction program was that 44%
that had been occupied at sale no longer
all.
of
afforded
1
adequate
housing
responsibilities
.
While
some
purchasers,
of property ownership,
57
naive
about
may have gotten in
the
over
their
heads,
purchasers
were
intention
"the
the
of
assumption
slumlords
who
of
the
properties
(see the
in Chapter One for more details).
the disastrous consequences of
moratorium on them in 1978.
by
sold
bought
properly maintaining them
Operator"
been
was that many
auction.
auction sales,
defaulting
without
description
of
In response
to
the city declared a
Since then no occupied buildings have
Sales of vacant
have
properties
with the added stipulation that bidders file
resumed,
statements
revealing
they
had or currently have an
have
any
been
disclosure
the condition of other properties in
interest.
The
which
failure
of
auction sales underscored the disintegration of the private market
in
poor
neighborhoods,
and left the city owner of
thousands
of
properties without any means to dispose of them.
Before
1970
buildings.
owned
By
areas.
management
had
administration
handled
by
Division
Services).
ownership
been
limited
to
When
the
been
seen as just another
and,
in
like all
rem
Real
Property
stock
had
been
aspect
under
the
(later
city-
small,
of
to
Department
municipal
had been
become
of
abundant
the
General
and horror stories of
tenants
freezing in city-owned buildings became distressingly common.
same
its
But the logarithmically increasing workload proved to
be beyond the capacity of the DRE,
the
few
previously
city property management,
Estate
a
by
and tax delinquency was spreading to
the Department of Real
of
had
1978 some neighborhoods were dominated
property,
stable
city
time,
community
city-owned
organizations in
stock
were insisting
58
neighborhoods
that
this
At
with
landlord-
abandoned property presented an opportunity for
alternative
response
1978,
of
the development of
management and ownership for low-income
to these pressures,
City Council
tenants.
passed Local
shifting responsibility for the management and
in
rem
residential.properties from
bureaucracy,
to
Development,
the
council
member
supposed
to
the
Department
EHPD's]
area
officials
administrative
policy
of
expertise.
2
the DRE3'"
agency.
shift:
We
"'That's
they
of
housing
They were potentially responsible
for up to 30.000 substandard buildings sheltering the city's
and
information
them;
became
coverage of
same
these
Had they been
sixty
properties
all
the
front page news in
who
problems
agency that had
few
for
trained
As the fate of tax-foreclosed
1978 and
this issue conveyed a sense of
managers
real
experienced
buildings would have posed
and no management system.
personnel
housing
to another.
they worked for a public
and
most
about these buildings was somehow transferred from one
managers
estate
They had to see that
troubled families.
bureaucracy
large
and
One
figured
hard to convey the confusion and anxiety
during this period.
indigent
in
disposition
Preservation
explained the rationale for the
be
is
an
Housing
recently created housing
couldn't do a worse job [than
It
of
DRE,
Law 3
In
early
impending
are now incapable
(100 properties per person) will
of
1979,
press
doom:
"The
managing
now try their
6,000
skills
housing
or nearly 3 ,800 units of
upon 534 properties per person,
3
manager!" .
The resulting crisis facilitated the creation of
per
the
institutions
necessary
to
carry out
uncomfortable responsibility as landlord of
59
the
city's
last resort.
new
and
Ta-ble 4. 1
OCCUPIED IN REM BUILDINGS
FY 1979
'IIAL
FY 1980
11,717 (166,184)
'Ibtal Occup. 4,092 (34,779)
(UNITS) BY PIOGPAM,
FY 1979 - FY 1983
FY 1983
FY 1982
FY 1981
8,800 (NA)
8,289 (NA)
9,580 (NA)
4,197 (38,950)
3,870 (37,462)
3,727 (36,229)
3,945 (38,677)
3,547 (23,745)
3,223 (22,675)
3,204 (25,292)
3,430 (26,739)
NA
DPM
3,681 (26,512)
DAMP
411
(8267)
645
(15,205)
647
(14,787)
523
(10,937)
515
(11,938)
CMP
TIL
130
POMP
230
316
33
66
(5645)
(7058)
(1302)
(1200)
219
333
48
47
(4409)
(8082)
(1363)
(933)
165
311
47
(3535)'
(7458)
(1471)
158
291
41
(3402)
(6636)
(1469)
OTHER
NA
NA
(2500)
(5683)
(820)
(735)
SALES
0
5
(82)
50
(1632)
112
(2263)
104
(3049)
226
I
Frcm New York City Department of Housing Preservation
and Developmnt, "In Rem Program Annual Report" numbers
1 through 5.
Department of Housing Preservation
and
Development
Office of Property Management
DIVISION OF P10PERI
MAGEMEN
DIVISION OF ALTENATIVE MAGEENT
Responsible for all Central
Management buildings.
Tenant Interim Leasing
Private ownership and
Managenent Program
Comnunity Management Program
Although programs have been altered and
today's
4.1,
In Rem Housing Program,
is essentially identical
outlined
improved since
in Figure 4.1
1979.,
and Table
to that which emerged at that time.
Most tenants in city-owned buildings continue to be managed by HPD
through
its
Division of Property Management
were before 1979.
all
occupied
Division of
But
(DPM) much
13X of these buildings,
dwelling units,
are in one of
Alternative Management Programs
they
containing 31%
three areas
(DAMP).
the Private Ownership and Management Program
as
of
of
the
One of these,
(POMP) hires
private
real estate professionals to manage and purchase in rem buildings.
The
other two,
Interim
the Community Management Program
Leasing
(TIL) are outgrowths of
the
"self-help" housing movement discussed above,
sell
B.
(CMP) and Tenant
grassroots,
urban
and are designed to
buildings to tenant cooperatives.
The Division of Progerty Management:
Public Landlord
Buildings administered by HPD are managed tra'ditionally, with
the
Division
of
Property
Management
Immediately after the city takes title,
is
known
as
Alternative
selected from
Property
Central
Management.
managers,
located
at
landlord.
eventually
(in the case of
TIL)
CMP and POMP) Central
nine
responsible for a list of buildings.
repairs are done as needed.
as
all buildings enter
Those that
Management must apply to
(in the case of of
acting
site
offices,
what
enter
or
be
Management.
are
each
Basic services are provided;
Tenants pay their rent to HPD either
60
by
mailing
it
the several
traditional
centrally
rental
some.
managed
housing,
Tenants
buildings
are
operated
have
complain of
a point.
like
they encounter the same difficulties,
poor
services,
and
managers complain of dismal rent collection figures.
sides
of
banks that accept these payments.
Because
plus
or by delivering it to the site office or one
property
Indeed,
Centrally managed buildings are the
both
least
desirable buildings in the in rem stock, and their rent collection
is by far the poorest.
a
program
but
properties
This is because Central
a default
united
only
landlord or tenant group,
Since
buildings
there
option.
Its
Management is not
portfolio
in their inability
to
consists
inspire
of
anyone,
to want to own them.
is no data comparing the conditions of
across programs,
in
rem
much of the information regarding the
comparatively deteriorated state of Central Management property is
anecdotal.
Certain statistics,
however, do suggest factors that
would lead to the their troubled state.
fewest units
(4.2
(16.1 per building) and have the smallest
rooms per unit) of all
commercial
spaces
in rem stock.
city-wide
apartments
vacancy
rate
of
vacancy rates,
2.04%,
and
renting for under $250 a month.
apartments
They have the
and the lowest commercial
They also have high residential
a
These buildings have the
occupancy
fewest
(72.2%).
23.4%, compared to
close
to
1.0%
for
It is not surprising
to find that they have the lowest assessed value of all city-owned
4
buildings
.
Yet Central Management buildings are expensive
to
run.
An estimated $3300
to $3400 a year,
61
or nearly
$300 a month,
is
spent on each dwelling unit.
than
the
real
conditions
cover
estate
necessitate frequent emergency repairs.
expenses:
$184.80
industry
Although this is
150%
higher
5
standard ,
the
poor
building
Tenants pay on average $44 a room
for an average
estimated
at
(4.2 room) apartment;
$70 a room,
Since
city-owned
rents
could
be
Rents do not
monthly,
break-even has
or $294.00 for an average
buildings are not subject to
legally increased;
but
or
rent
because
been
6
apartment
regulations
HPD
officials
believe those in centrally managed buildings are among the poorest
of all
7
year ,
50%
in
rem tenants,
whose median
income is
just
over $8,000
a
they are probably the least able to absorb a rent increase.
of them are on public assistance--compared to 25% of those in
8
alternative management buildings,
25% of
all
NYCHA tenants
,
and
9
14.3% of
renters city-wide
.
Therefore Central Management runs
a
deficit which was as high as $11.8 million in FY 1980, and is down
10
to
$6 million in FY 1983
.
The deficit is made up by federal CD
funds and city tax
If
its
the centrally managed portfolio weren't troubled
position as unwanted stepchild of
exacerbates
motivated
away,
Central
its difficulties.
by
have
planning
their
levy revenues.
the belief that
until
City
if
in rem
enough,
management
policy-makers,
further
seemingly
you ignore a problem it will
recently refused- to engage
in
any
go
long-term
for the approximately 32,000 occupied units currently in
Management.
reassurances
In every policy statement
that
the objective of
return buildings to private ownership,
62
officials continue
in rem
policy
is
to
but seldom acknowledge the
existence of some 30,000
Unwillingness
private
York
traditional
such
officials
is
no
is in part due to the notion that a
should not be a landlord.
City
Management.
to invest in buildings for which there
or community interest
municipality
New
units stuck in Central
have
functions of municipal
been
Since the fiscal
reluctant
governments,
to
crisis
overstep
believing it was
benificence that depleted the city treasury ten
years
ago.
The further assumption of policy-makers is that the private sector
can run things more efficiently than a public agency;
those in the
real estate industry seem especially eager to point out the city's
11
management
shortcomings
.
HPD should therefore be seeking ways
to
rid
itself
of its management responsibilities as
quickly
as
possible.
In spite of these arguments,
responsibility
for
the city must accept
its large rental
stock.
long-term
The simple fact
is
that HPD owns this property, and this is unlikely to change in the
foreseeable future.
the
city,
it
potential
could
With the shortage of affordable apartments in
would
of
behoove housing
A moderate
these units.
prove
cost
attract
program,
discussed
opportunity
"creams"
it
to
back
rent
Most of the Central
has been rejected by the private sector,
without
below,
which
to
the
strategy
collections
and
Management stock
and has few features that
massive
offers
purchase in rem properties,
subsidies.
private
The
managers
succeeds because
the most attractive of these buildings and
63
examine
rehabilitation
effective by improving
decreasing operating costs.
would
planners
ignores
POMP
the
it
the
others.
The fact
size,
their
is that there are properties which, due to their
layout,
uncooperativeness
of
the
of
extent
their
tenants are
or
disrepair
neither
the
attractive
private owners nor suited to tenant self-management.
to
Yet tenants
in these buildings are entitled to adequate services, and
it
is in
the city's interest to provide these as efficiently as possible.
In
the
management
Annual
past
few years the city has in
capabilities.
Each
fact
improved
year the In Rem Housing
its
Program
Report proudly documents increased productivity among
workers and
fewer heatless days in
its buildings
(in 1981
its
it took
an
average of 2.1 days to restore heat,
compared to 14
days
in
12
1980)
.
When
DPM
first
began managing
buildings
in
1978,
hardly
were
anyone paid rent;
sent
insisted
tenants never got
to
tenants
who didn't exist,
that
tenants
mail
unworkable
cash,
legal
in
for
checks
to
and
a
billed,
the
system
central
Today,
better
flexible rent payment system,
record-keeping
that
office
people who were accustomed to paying
person.
bills
a
was
landlord
and
a
more
along with better service delivery,
have led to an improvement in rent collections from a meager 36.9%
13
in FY 1979 to a barely respectable 72.0% in FY 1982
.
Tenants in
some
buildings have even begun to organize through the
City
Tenants,
pleased
to
and
managers
deal
of some of the
site
with these tenant groups rather
14
having to respond to individual complaints
These
part
of
Union
offices
than
64
seem
constantly
improvements point to a tacit acknowledgement
some HPD officials that
of
centrally managed buildings
on
are
the
a
long-term
city
responsibility,
underscore this commitment.
and several
The
Mayor
funds for in rem buildings
opening up a new revenue source for repairs.
dramatic plight of the homeless has inspired HPD to renovate
vacant
apartments
clients
have
initiatives
In his recent budget request,
Koch included the allocation of capital
(see Chapter Eight),
recent
living
been
thousand
in Central
Management
in shelters or hotels.
completed;
the
buildings
for
So far 4,000
per unit renovation
apartments
cost
dollars represents a.savings for the city,
Welfare
of
a
whose
few
Human
Resources Administration pays over $1000 a month for an inadequate
hotel room.
While
program
families,
any
is
renovation of
these buildings is
welcomed,
designed primarily to address the needs
and
is a program for in rem housing only
of
this
homeless
secondarily.
Long-term tenants express frustration at the fact that in New York
you
have to be homeless to raise public concern over your
living
15
conditions
.
tenant
A
who has lived with
leaking
pipes
and
peeling
paint for years,
perhaps struggling against a landlord's
neglect and pressuring the city for repairs,
must be puzzled
see
the apartment next door completely renovated for a
The
homeless program is a necessary one,
step
toward
the acceptance of
fixtures in the New York City rental
In sum,
city policy toward
some ambivalence.
advocates
newcomer.
but it is a very
city-owned buildings as
to
small
permanent
housing picture.
its management portfolio
denotes
Responding on the one hand to tenants and their
who demand decent housing,
65
and on the other to critics
who call
for a withdrawal
of the city from the housing
management
business, public officials continue to provide management services
but
are
reluctant
rental
property.
expensive.,
repair
to plan for the long-term
this
by
for
the
buildings will
the
centrally
growing
managed
numbers
of
of
its
shortsightedness
as high maintenance costs are the result
plans
spurred
Unfortunately
viability
of
inadequate
buildings.
homeless
Perhaps,
families,
begin to be maintained as a resource for
is
these
low-income
families in years to come.
Notes on Chapter Four
1.
Susan Baldwin,
"City's Auction Sales:
City Limits 3 (September, 1978),1.
2.
"Property
March, 1978.
Seizures
Going, Going., Gone?
in City are Chaotic,"
New York Times
3.
St.
George, Philip, "City-Owned Buildings:
1978," City Limits 3 (January 1978), 8.
4.
Brian Sullivan,
2-16.
Allen,
6.
Ibid.
7.
Michael Stegman, Housing In New York,
8.
DiRienzo and Allen, 39.
9.
Stegman,
Hgusing in
12.
New
Owners'
York
The New Issue of
New York,
The New York City In
Newsletter
City Dept.
of
66
Rem
236.
10.
10.
New
York
City
Department
of
Housing
Development, Eifth Annual In Rem Housing Program
ProgCty
19
Division of Alternative Management PrggCams,
5.
Harry DiRienzo and Joan B.
Housing Prgam,
43.
11.
"
Preservation
ReggEt.
and
1.
HPD,
Eifth Annual
In
Rem
Housing
Program Beg~t.
13.
Ibid.
14. Dave Robinson interview.
15. Dave Robinson interview and Sue Reynolds interview.
CREATION OF THE DIVISION OF ALTERNATIVE
CHAPTER FIVE:
APPLICATIONS OF SELF-HELP
MANAGEMENT PROGRAMS:
HOUSING MODELS TO MANAGEMENT OF
CITY-OWNED PROPERTY
The large in rem actions
on
auctions,
in
1978, coupled with the moratorium
a backlog of
created
city-owned
became
interested in any program that could
load.
So
DAMP was established,
Community
Management Program,
renamed Tenant
was
the
Private
another
was
similar
to
its
and a staff
portfolio
housing
Program
(POMP),
Program
Management
one
and
(HAMP)-was
contractor--which
When DAMP opened its doors on September
consisted of
By the end of that year,
units.
reinvigorated
of self-help
Ownership and Management
1982.
a
two new programs were started:
POMP but with NYCHA acting as
in
lessen its management
consisting of
the Housing Authority
terminated
1978,
Soon after
HPD
an overhauled Direct Sales Program
Interim Leasing,
movement leaders.
buildings.
1700
containing
85 buildings
1,
responding to pressure from HPD
Management as possible, it
1
In the midst of
expanded to 413 buildings with 8200 units .
to get as many buildings out of Central
had
this
crisis
city
officials
were
willing
of new forms of housing management:
suspicion
to
their
overcome
"After
initially
viewing these initiatives with great skepticism, the New York City
government has begun actively encouraging tenant takeover,
because the city doesn't know what else to do,
2
being a slumlord itself"
In
the Southside,
are currently
14
in TIL.
24 of the occupied,
partly
and doesn't
enjoy
city-owned buildings
in alternative management programs--ten in CMP
and
An addition 14 have completed either TIL or CMP
and
are
now
legal
buildings
cooperatives.
are.,
buildings,
on
average,
one-third of all
probably
Southside,
where
and
This is a higher than the city-wide figure
the
a
degree
local
of tenant
community
organization
group,
This
in
Southside
the
United
Typically, large
city-
therefore their entry into alternative management
of
is
Approximately 760 Southside households now live in
city-sponsored,
ten
Management
have tenant associations by the time they become
quite natural.
from
Central
has been active for over twelve years.
buildings
owned,
than
management
occupied units in alternative managment.
indicates
Housing,
larger
alternative
most likely more than half the city-owned units are in
alternative managment.
of
Since the
tenant- or community-managed buildings.
these buildings were interviewed
for
Tenants
this
study.
Their comments are interwoven throughout the following sections.
A.
The Community Management Prgrgam
Community
programs
Management and Tenant
based
on
self-help
Interim Leasing are the
housing
models.
Management, community-based organizations
to
Community
(CBOs) receive contracts
manage and rehabilitate city-owned properties in their service
areas.
Generally
buildings,
a,
contract
will
include
five
to
twelve
or 100 to 300 units, providing operating subsidies and
a management fee.
CBOs
In
two
with contracts.
As of Fiscal
Year
1983, there were twenty-two
Under the contract terms the groups hire a
management and maintenance staff
to collect rent and make repairs.
Rehabilitation work of up to $20,000 per unit
69
is
usually done
by
subcontractors.,
house
although recently,
in a money-saving effort,
maintenance crews have also been doing
renovations.
inWhen
rehabilitation is complete, tenants are expected to purchase their
apartments
Appendix
for
a
predetermined price of $250
CMP becomes not just a housing
one with secondary functions of organizational
job creation.
comparisons
of
for
a
attractive
to
(87%)
.
moderate
apartments.
provide
residents.
by
high rent
lends
level of rehabilitation
it
spent
on
maintenance
any program with multiple goals,
far
and
the
highest per unit costs of
over
portfolio
and producing only 11%
statistic
programs
$16,000
those
than
per
of
have
the
Community
Management
sides.
CMP is
all
DAMP
the
rehabilitated apartment,
At an
Tenants and
of
Of
of
community
the
course,
the
average
CMP costs are
also
programs,
28%
of the sold units.
costliness of CMP.
70
local
economy.
more about the underfunding
private developers.
to
been
rehabilitation
60% of the budget for management of
says
produce
It has the largest budget and
receiving
this
can
secure employment with good benefits
Money
and
sufficient
Through CMP community groups
itself to extensive criticism from all
by
(88%)
Because the program provides
most expensive DAMP program.
has
development and
collections
materials and salaries is circulated in the local
Like
program,
life under Community Management with other housing
demonstrated
occupancy rates
able
(See
Measures of its success include tenants' favorable
experiences,
funds
unit.
3 for a detailed explanation of sales terms.)
By involving CBOs,
but
per
other
cost
lower
of
than
activists
complain
that
landlords,
CMP contractors behave too much
performing
possession
run them,
traditional
adequately as managers but failing to train
tenants to assume responsibility themselves.
take
like
As a result,
tenants
of their buildings without any notion of how
and CBO staff struggle in their uncomfortable
to
landlord
role.
CBOs
complain
es@Fatie@
Ap@6t§ 9f th@iF
as
a
CMP
that management responsibilities
contractor
it
affect
all
a group to be rated well by HPD
FP
must be prompt
and
accurate
in
its
reporting, achieve high rent collections, and dispose of buildings
4
quickly
.
Success
by
these measures could force
a
group
to
abandon the role in which it most likely gained credibility in the
neighborhood--that
Some
groups
portion
will
of
make
activities
This
of
depend
tenant advocate and
on their CMP
their budget.
a
It
conflict of
contracts
for
a
organizer.
significant
is unavoidable that this dependence
group think twice
that
community
before
engaging
in
organizing
may lead to confrontations with city
officials.
interest can ultimately damage the group in
eyes of neighborhood residents.
One original
CMP
the
contractor,
a
Manhattan group called Housing Conservation Coordinators,
decided
not
reason,
to
renew
its
management contract
for
just
this
stating:
'The basic
philosophy of HCC has been to
educate
tenants
with
the aim of tenant
self-help.... Community
Management'
has
instead made HCC into a typical landlord's agent and has
impeded efforts in developing tenant self-help management'(5).
While
other
HCC
CBOs
is the only group that refused to renew its
have
voiced
71
similar
complaints
contract,
about
their
participation in the program.
6
B.
Tenant
In
Interim Leasing
the TIL program tenants sign a
gives them management control
the
lease,
lease with the city
over their building.
tenants must also sign a
Upon
which
signing
letter expressing intent
to
purchase.
As manager, the tenant association collects rents, and
uses
money
this
to
cover operating
operating subsidies available.
will
expenses.
weatherization
replacement.
repairs
The
is
to
and
tover
extent
between
DAMP
the
of
associations
institution,
organizations
technical
of
HPD-funded
and
tenant
and
may
assistance.
in
depend
HPD
Homesteading Assistance Board
many are
on
has
(UHAB),
them
window
pre-sales
leaders,
TIL are not formally
although
enough
but
The
unit
(See Appendix 3)
sales price for all TIL buildings is $250.00.
community
cost
seldom exceed $2,000 to $3,000 per unit.
Tenant
no
During the term of the lease, HPD
money
nature
negotiated
expenditures
tied
involved
for
contracted
various
with
to
with
any
local
kinds
the
of
Urban
a city-wide group well-known
its work with low-income cooperatives, to provide training for
tenants.
entering
Association leaders are expected to attend classes upon
the
program,
management skills,
at
are
generally replace one or two faulty systems and find
state
for
There
which
associated
time
with
at which time they learn bookkeeping
and
and before finalizing the building's purchase,
they become familiar with
ownership.
72
When TIL
the
additional
buildings
are
tasks
clustered
together and have a working relationship
connection
with a CBO),
(usually through a mutual
UHAB can arrange training classes within
the neighborhood.
TIL is considered successful
on several
counts.
First,
it is
the most cost effective DAMP program, producing the most units for
sale at the lowest per-unit cost.
DAMP
portfolio,
It currently handles 55% of the
accounting for only
tenant satisfaction is
high,
19% of
its
budget.
often in spite of what appear to
oppressive neighborhood and building conditions.
satisfaction
it
Second,
in a tenant-run building
Measuring tenant
is tricky, since essentially
requires asking tenants to rate themselves as managers.
collections
and
occupancy
be
rates are
both
over
90%,
Rent
offering
objective proof of success. Interviews with TIL tenants all convey
the
pride and commitment that these people bring to their
environment.
housing
They seem convinced that,
options available to the poor,
self-management.
housing
"They
Said
one
respondent,
considering the
in
limited
they are better off under
asked
to
situations of friends and relatives in the
live
-living
[tenant-run buildings) or they
are
discuss
the
neighborhood,
exploited
by
7
landlords"
Major
problems
confronting most TIL buildings fall
not unrelated categories.
The first is leader
into
burn-out.
two,
Since
TIL leaders often have functions beyond typical tenant association
members--negotiating
with contractors,
attending endless meetings,
waiting for the
plumber,
and all the while incurring the wrath
73
the uninvolved who blame them for anything that goes wrong--it
of
is not surprising that many begin to feel
That
few
buildings have sufficient
bookkeeper
on
the
or a professional
elected
money.
leaders.
income to hire a
exhausted.
manager,
superintendent adds to the
It follows that the second
a
pressure
problem
is
TIL is the only in rem program in which the rent roll
is
expected to cover all
other
isolated and
than Central
component.
When
envisioned
TIL as
ready
for sales,
roll.
In fact,
better
off
operating expenses.
It is also the only one
Management that doesn't have a
DAMP
was designed,
rehabilitation
its originators
a program for buildings that were
with few structural
may
have
practically
defects and a healthy
rent
TIL buildings are not, on average, significantly
DAMP
either financially or physically than the other
buildings.
Since
TIL is the in rem tenant's only "as of
right"
alternative
to Central Management--entrance into POMP and CMP
is
conditioned
upon selection by the contractor--to restrict
to
sales-ready
buildings is to deny the option of self-managment and
it
ownership to most in rem tenants.
C.
Why Oelf-Hel?
and
CMP
tenant
TIL represent two means of arriving at the
cooperative
ownership.
But
is
this
direction for the city's in rem housing policy?
raises
help
some of
model
discussion
the
goal
appropriate
The next section
the arguments for and against reliance on a
to preserve low-income housing.
of how well
self-
It is followed by
current DAMP programs realize their
74
of
a
goal,
the
and
program that
of an alternative
outline
be
could
more
effective.
1.Critigues of Self-Helg:
Critics
on
I
right,
the
among
them
professionals, do not attack the efforts of
to
Instead,
run their buildings.
many
tenants who are trying
they question the efficacy of
around
a housing rehabilitation and management program
centering
that model.
First, the success of
Their argument has two parts.
cooperative depends on the confluence of so
one
estate
real
factors--e.g.,
the
many
unreliable
the lawyer's willingness
tenants' good will,
from
to volunteer services, etc.--that success is never guaranteed
They question
to the next.
project
one
circumstances,
is replicable,
success
If
market is still
or whether such
these
projects
These critics claim secondly that
will be only token efforts.
private
under
whether,
of
the most efficient provider
the
housing.
landlords were given the same boosts that the city now gives to
such as grants for rehabilitation,
coops,
low purchase price, and
then they could produce more units
adjusted rent
levels,
cost with far
less difficulty.
at
lower
The first argument, concerning the replicability of the selfhelp model,
has some validity.
management
buildings,
that
its
When one talks to tenants in self-
one is struck by the effort
has gone into maintaining the building.
story,
patched
usually beginning before city
75
Each building
ownership,
boiler functioning through the winter,
and dedication
has
of an oatmeal-
or a
contractor
finally
repairing a collapsed roof after the
tenant
association
president's grandmother gave him a piece of her mind.
Each tenant
association
scrapes
special
skill.
success
can't
by
The
be
because someone knows someone or
"extras"
that may
predetermined.
Perhaps
orchestrate
than
good will of
the building residents.
coop
won't
least
leave
dealings.
the
luck or special
last too long if
their
All
a
cooperative's
more
skills is the
difficult
to
cooperation
and
Even an economically viable
its members can't get
personal
a
differences out
along,
of
or
at
their
business
business relationships are conflictual,
but when
participants
especially
allow
has
also share their living space they
contentious.
may
become
When tenants are forced into
collective
action at the time the landlord abandons'the building,
they share
only
the
fact that at some point they all
apartment at the same address,
of
similar
tenant
association
disaster
into
ethnic
movies,
and often,
happened
to
rent
an
the fact that they are
and economic backgrounds.
To some
resembles the cast of
of
one
degree
those
a
formula
in which an unlikely group of people are thrown
a life-threatening situation,
escape from which depends
on
their ability to work together.
In
than
spite of
a
having
these obstacles,
few cases.
DAMP programs do work in
They are now being applied to
already sold an additional
10,000 units.
11,000
Not even in
more
units
New
York could a program that is providing housing for 21,000 families
be
considered a token effort.
in
spite
Comments
of
made
experts'
by
Why the model works so frequently
skepticism
is
difficult
tenants reflect the spirit noted
76
to
in
document.
the
1973
of
survey
with few housing options are willing to work hard to keep
tenants
their
neighbors'
had
they
to
which
interest,
should
seem
surprised
extrordinary
their
and
self-
necessity
one
Observed
others.
to
that
"Too often people are disposed to deny as soft-headed
interviewer,
that the poor
reports
sentimental
and
These tenants were proud of
is motivated by
them
arson,
inspiration
seemed to draw
but seemed
accomplished,
behavior,
and
to
due
displacement
those around them.
from the plight of
what
of
fears
or exorbitant rents,
abandonment
continually
Those I interviewed referred
their buildings going.
to
that
simply
suggests
which
early cooperatives
the
people--protecting
vital
their
are
other
like
acting
and
can
interests as best they
8
banding together when the going gets rough"
The second criticism--that with similar incentives the private
could provide housing more efficiently--can
sector
more
concretely,
managers
Ownership
repetory
mechanism
for there is an HPD program that gives
private
The
Private
an opportunity to operate in rem housing.
and
for
management of
Program,
Management
1979
in
addressed
be
or POMP,
after Mayor Koch suggested
tapping
private
in rem property.
real
estate
the
entered
be
there
that
in
expertise
DAMP
a
the
Initially there was little private
program
but
today it attracts more private firms than it can accommodate,
and
award
for
enthusiasm
criticism
innovative
much community skepticism about the
and
has
The winner of a
been muted.
use of CD Funds,
well-administered
1984 HUD
POMP appears to be a
well-designed,
program and is therefore a good model
77
by
which
to test the effectiveness of
Under
POMP,
private in rem management.
HPD contracts with real
and
purchase in rem buildings.
for
Proposals;
estate firms to
Firms are solicited by
manage
Requests
last year there were eighty applicants from which
9
HPD
Applicants are carefully screened.
six firms were chosen .
looks for
firms that are already involved in management of similar
buildings in the area,
six
more
for whom the additional
to eight buildings,
than
or
200 to 300 units) will not
one-third of their portfolio.
made payments on city repair agreements,
harrassing tenants,
buildings
chosen.
like
workload
(usually
represent
Managers who have
who have been accused of
who have neglected code violations,
or whose
do not appear well-maintained upon inspection
HPD
the
wants above all
are
to avoid any intimation that
abandoned auction program,
not
is reselling
not
POMP,
buildings
to
at the end
of
At the beginning
of
owners that had once milked them.
POMP
sign a one-year agreement,
contractors
which the terms of purchase are negotiated.
the
expected
with
and
expenses,
plan is determined;
Community
repairs
help of
the
A
shortfall.
deficit and
income
and
determines
the
the manager documents the anticipated
contract,
POMP
staff,
"rent restructuring"
increase)
(or rent
in the meantime, HPD subsidizes any operating
pays a management fee as it does to contractors in the
Management Program.
that
come
to
HPD also agrees to
an average of $3500 to
make
$4000
subcontractors are chosen and supervised by the manager.
end of the year,
the real
estate firm is
78
systems
unit;
per
At
the
expected to purchase the
entire portfolio it has been managing.
used twenty-two contractors,
their portfolio.
levels
are
Since 1979 the program has
and only two have failed
to purchase
Restrictions extend beyond purchase:
determined
by
Rent
Stabilization
new rent
guidelines;
and
buildings cannot be resold for five years without HPD approval.
While
as
this program does not handle the same volume of
CMP or TIL,
less
it succeeds in selling buildings faster and
effort than the others.
At the end of Fiscal
Year
POMP buildings containing 4,000 units had been sold.
the
program
generally
TIL).
units
are closely monitored by DAMP staff,
well-managed,
with 87X rent collection
with
83,
75
Buildings in
and
they
are
(second only to
However, a 1982 study found a sample of POMP buildings were
not as well-managed as might be expected considering the expertise
10
the professionals bring to them
.
There has been one court case,
Laureano v.
Koch, in which tenants in one POMP building challenged
the arbitrary way in which HPD implemented
plan,
and
himself.
POMP
But this legal
purchasing
attack was aimed at
HPD
it did not question the effectiveness of the POMP manager
There
buildings
have been no complaints about the maintenance of
from tenant or community groups,
could be expected to be vocal
The
restructuring
charged that they were denied the option of
the building themselves.
policy;
its rent
success
both
of
if criticism were deserved.
of POMP so far proves that
carefully
screened
managers,
given adequate rents and new building systems,
buildings
well.
Does
this mean that the POMP model
79
which
can run
should
be
expanded while tenant self-help is de-emphasized?
we
consider not what POMP does well
must
but how
To answer this
long
and
how
extensively its measures can be applied.
POMP will
not work in most in rem buildings,
not meet the contractors' requirements.
real
of
estate manager,
Peter Burgess, a Brooklyn
has a POMP contract of seven buildings,
which are in the Southside;
potential
because most do
buildings,
most of
he chose these from a
two
long list of
which he deemed inappropriate.
To
attract contractors, Burgess says, buildings must contain at least
30
units plus commercial
commercial
other
POMP
succeeds only in those
distinguishing
qualities
would
and preferrably be located on
street so that storefronts can attract good rents.
words,
of
"cream"
space,
them
the in rem stock.
require
as
buildings
potentially
The typical
that
In
have
profitable--the
city-owned
more substantial subsidies to
a
attract
building
a
private
owner.
Burgess
Mr.
because
vacant
prefers
buildings with a number of
apartments can be renovated using HPD
then rented for much more than current tenants are
rents
paid
Extension,
actually
owned.
been
a
thirty-unit
money
paying.
by new tenants allow the manager to make
money
Southside
building
that
run by a tenant association before becoming
In September
rent roll was $5197.
and
High
even
An example is 145 Grand
though old tenants continue to pay less.
Street
vacancies,
had
city-
1983, before it entered POMP, the building's
In January 1985,
program, monthly rents totalled $8114.
80
after nine months in
Mr.
the
Burgess takes pride in
the
fact
the rent of a single tenant
increasing
tenants.,
$170
was
this 150% improvement
that
without
accomplished
in place.
old
But while
nearly all of whom are on public assistance, pay between
and $220 for three- and four-
whom Mr.
room apartments,
Burgess admits are "a different kind of
new tenants,
11
tenant"
,
are
paying $375 for one bedroom and $425-450 for two bedrooms.
Two
of
also
survey
successful
said
was
tenancy
in
managers
successfully
change
in
rent levels,
hinges
on
the
gradual
rent
the
the
apartments to
to
and
or
no
buildings
people
paying
Whether these apartments will remain available
higher rents.
to
housing
little
the long term success of
turnover of
1982
Burgess
improving
frequently with
tenants in place,
of
to
and
are
a
important
a reluctance
indicated
12
.
So although Mr.
public assistance
POMP
conditions
a change in
that
buildings,
on
families
other
the three other contractors interviewed
to
the
poor depends on the continued availability of rent subsidies,
and
on
the
new owner's willingness to keep
rents
at
a
level
acceptable to the subsidy programs.
POMP
buildings
produce
management,
them.
can,
with
an income,
Thus, only the good will
POMP's success.
Mr.
management
of
in
challenge.
After
rem
Burgess,
HPD-funded
but no one will
politics.
for example,
good
rich
from
years of managing upper
But he is
guarantee
has undertaken the
buildings because he is
81
get
and
of private managers will
excited
by
income cooperatives
another neighborhood he claims to be tired of
cooperative
repairs
meetings and
a businessman and as such
the
in
intramust
If the intuition that led
look for ways to increase his profits.
him to choose 145 Grand St. Extension is correct and the Southside
then in five years, when
becomes a more attractive neighborhood,
rent and resale restrictions end,
sell the buildings at
he will have the opportunity to
a good profit to a
landlord who may not have
If his
his commitment to ensuring old tenants an affordable rent.
intuition is incorrect and the neighborhood deteriorates,
he will
be faced with the same situation that caused the original
owner to
abandon
in the first place.
reluctant
In spite of
his enthusiasm he
probably
be
management
if operating costs begin to exceed
to
provide
the
present
will
high-quality
income.
While the short-term success of POMP has been convincing, for
reasons the units it has produced probably won't constitute
these
a
long-term low-income housing resource.
Because the program
is
new,
there have been no follow-up studies done of buildings after
they
are sold;
since none of
year period of HPD-monitored period of
no way of
knowing
how they will
five-
those buildings are past the
restricted sales,
there is
fare without government oversight.
Two conditions are necessary for these buildings to provide a more
temporary resource:
than
and
profits,
a landlord willing to forgo large, quick
a neighborhood where the housing market is
stable.
these conditions more prevalent than the existence of
groups
of tenants willing to work hard to preserve their housing?
Policy
Are
must be based on the assumption that people act out of
interest.
always
their self-
The provision of adequate housing for the poor may not
be in the interest of the private realtors on
82
which
-POMP
relies.
It
is,
on the other hand,
always in the interest of a
building's inhabitants to help themselves.
2. Critiguges
f Self-Hel2 II
Other criticisms of self-help housing for low-income
focus
and
on both the political
on
its
concerns
and
ability
implications of this
to produce
housing.
tenants
housing movement
The
first
of
these
is that encouraging tenants to purchase their apartments
undertake management discourages them from radical
political
involvement, both by changing their position in the housing market
and by distracting them with managerial tasks.
self-help
merely
program
The second that
without adequate support and
convenient
way
for
government
to
funding,
absolve
is
itself
a
a
of
responsibility to house the poor, is addressed in Chapter Six.
The
first
criticism addresses the concern that
the
latent
purpose of programs encouraging the poor to own their dwellings is
to
trap them into having a financial stake in status quo
and in this way mute their opposition to those in
the argument goes,
to
his
or
society
power.
First,
ownership changes an inhabitant's relationship
her living space,
and thus to
society.
No
longer
propertyless, the homeowner has something to protect, a reason not
to throw a brick through someone's window.
has
a
from
a
homeowner
new set of responsibilities that may keep him or her
community
ownership,
forces
Second,
while
tenant
organization
activities.
Critics
argue
that
promoting contact between immediate
leaders
rather
cooperative
neighbors,
to arrange the complex affairs
than use their
energies to
away
further
of
their
broader
all
too often, when workers erupted in
political
struggles:
strikes,
organizers collected dues cards;
pay
".
.
formed
organizers
marshalls,
and stood off
rent
when tenants refused to
building
when people were burning and looting, organizers used
committees;
13
':moment of madness' to draft constitutions"
that
as homeowners,
confront
each other;
order
turn
owners
cooperative
they
issues
the
toward
their energy
Not only do
.
but they are often forced to turn
it
on
leaders must exercise authority over others in
elected
to fulfill management obligations,
to the extent of
being
called upon to evict their neighbors.
In this view, tenant self-managers are accepting the rules of
"housing as a profitable commodity" system.
the current
been
They have
property of their own to cultivate as they wish
handed
are
busying themselves with that
the
fact
addressing
activity rather than
their
adequate
considered not a right but a privilege,
and that
that the system is still unjust,
housing is still
that
they must earn the right to keep it by sacrificing their time
money.
programs
Some
radical
housing
that
analysts believe
divert pressure from society's powerful,
development
of
and
a
movement
mass
advocating
and
self-help
hindering
the
government's
responsibility to provide housing for all.
The
day when our government acknowledges its
shelter all
people
through
have
its citizens may be long in coming,
to
live somewhere.
The in
a combination of public rental
84
rem
obligation
to
and meanwhile poor
housing
program,
housing and tenant-managed
cooperatives,
realized
offers
today.
several
housing alternatives that
The question for those who both advocate
help housing and share the goal
is
whether
can
of
a public commitment to
the self-help aspects of
the IRHP run
be
selfhousing
counter to
the
efforts to reaffirm public responsibility for the poor.
Those
tenure
who
status
But
change
in
235
implied that homeownership opportunities would turn
disenfranchised
values.
a
are basing their fears on the rhetoric of the
program, which
the
fear the deradicalizing effects of
it
poor into upholders of
American
capitalist
is far more probable that
many
disadvantaged
households
place
a
value
on
a
permanent
homestead
and the holding of property
that
has
little to do with more mainstream, market-oriented standards
of the goodness of investment(14).
Low-income
minority
cooperative
participants
characteristics,
society's
attractive
been
of
equally
They
rental
housing.
235
similar
were
option of home ownership,
offensiveness
in
have
of
stakeholders.
substandard
others
purchasers
housing,
as
ethnic
and
disinterested
not
their community,
becoming
toward
as much as "pushed" out
Participants repeatedly cited
of their previous living situations,
as reason to pursue
family or cooperative ownership,
and those
either
without expressing any
to
are
people in
low tax brackets,
structured so that
85
of
the
of
interest
The
deductions mean little
and many subsidized
little capital
the
single-
in altering their social status or improving their finances.
financial benefits of ownership such as tax
as
economic
in
"pulled"
well
gain can be
cooperatives
realized.
In
sum,
are
"low-income
really
renters indicating interest
expressing
a
desire for
improved housing quality,
15
dwellings"
Interviews
evidence
of
with
people
sensibilities.
Those
in
better
owner-occupancy
neighborhoods
and not simply a fee interest in
DAMP
participants provide
"selling out"
questioned
or
little
abandoning
mentioned
and
their
further
their
tenant
affordability,
good
services,
and the power to maintain those benefits as the factors
16
made their present situation preferable to
renting
.
Even
that
residents
of coops that were unsuccessful by objective
standards
such
as fiscal health and management performance still
preferred
17
cooperative
ownership
for these reasons
.
Tenants in
several
Southside
buildings
mentioned the dismal
conditions
housing
in the neighborhood as sufficient motivation
18
takeover
;
a
tenant
in
a
TIL
building
in
a
in
private
for
tenant
gentrified
neighborhood
felt that self-management was the only way she could
19
avoid being forced to move
;
a tenant in a city-owned
building
which
has
between
been
city
preferred
mishandled by HPD and a local
programs
still
stated
CBO
and
unequivocally
shunted
that
her current predicament to the exploitation of
she
private
20
ownership
.
In
Harlem,.
residents of
TIL buildings
"could
not
answer
TIL
the question,
'What would you have done if there were
no
21
program?'"
The
statement
of
a member
of
a
recently
purchased
DAMP coop illustrates the continuing sense of
among tenants turned owners:
"We started several
Desperation Tenants Association.
struggle
years ago as the
Today, things have changed, and
22
we are the Desperation Cooperative".
86
The
claim
prevents
not
that
the responsibility of
running
tenants from engaging in other community
borne
out
periodically
emphasize
by
feel
the
the
evidence.
overwhelmed by
lessons
of
many
participating
in
a
coop:
23
situations
Surely
these
you must fight to gain
"
something
"Working
"In
.
Furthermore, the impact of
has been profound.
All
interviewed
felt
gained
from
involvement.
they
had
other
participation on
especially women,
skills
the
24
positive"
individuals,
building.,
they
sentiments would encourage participation in
community struggles.
is
leaders
responsibilities,
together you can accomplish more than working alone
worst
building
activities
Although
their
a
personally
leaders
their
Aside from their pride in their ability to manage a
they
have
gained confidence in
and the value of
president
spoke
something
useful,
of
their opinions.
the
even
"satisfaction of
if
the
their
organizational
One tenant
being
issue being
25
association
able
to
discussed
offer
is
not
directly related to your building"
By
yirtue
officially
leaders
or
of
the
fact
that
many
informally associated with
buildings
a
local
are
either
CBO,
tenant
may get involved in other community issues.
The CBO
in
the Southside is run by a Board on which every tenant-run building
in
the
result
neighborhood is entitled to have a representative.
of
this initial
association.,
several
tenant leaders
become active Board members and community spokespeople on
issues.
In the Southside and in Harlem as well,
study by Leavitt and Saegart, many of
87
As
a
have
diverse
according the the
the men in tenant
leadership
roles
had
activities,
for
the
previously
but
first
been
involved
in
community
most of the women were drawn out of
26
time by tenant issues
.
Some women
or
their
participate
public
in
job
assistance
Another
challenge
its
to
the
participants
Critics
the oil.
communal
Several
who were
previously
claim
that
the
self-help
nature
on
housing
of
cooperative
would argue that cooperative housing is just
except everyone has to chip in to pay
While New York City coops are not
living
Owens' utopias,
the
services
get their Equivalency Diplomas, or
is
like single-family housing,
for
in
are now employed.
depoliticizes
ownership.
training.
homes
involved
their tenant associations were thus exposed to community
and inspired to study English,
church
along the lines of
an Israeli
experiments
kibbutz or
they can be an alternative--even a
in
Robert
challenge--to
"dream house" ideal popularized
and promoted in this
country
27
government policy and private market advertising
.
Such
an
by
alternative becomes more important as the nuclear family for which
the
traditional
Making
cooperative
indifference
have
of
detached home was designed becomes less
ownership
work
in
the
and skepticism and appreciating
of
official
its unique
benefits
opened the eyes of some DAMP participants to the possibility
"redesigning the American dream."
As tenants in a building band together,
their
landlord,
or in his absence,
nature of their relationship
and
fac'e
common.
services
are
88
to run their
to each other
informally
either to
exchanged;
challenge
building,
is transformed.
older
the
Skills
residents,
for
example,
provide
childcare for the younger ones,
read or translate important letters.
are
in basements and courtyards.
out
while
months of tenant
this
in another the superintendent set
and
their
organization in another building,
one of
between
and
children
played
in
white
a
few
the few
(primarily
apartment doors
the
up
basement
After
Jewish) and Hispanic tenants,
unlocked
in
An @y@ on the troublesome boiler.
study that was equally split
elderly
left
making one room into a brightly
he and his friends could hang out
kept
h@
commodity,
In one building the tenants cleaned
colored meeting/party room;
so
Together
the scarcest urban
the garbage-filled basement,
weights
them
Families without telephones
connected to the outside world by those with them.
residents create recreation space,
in
who help
hallways.
were
Older
residents commented happily that it was "like the old days."
Certainly people don't need to own their building in order to
cooperate
with
successful
they
because
before
ownership
gives people a sense of
brings
the
build
developed
that
some tenant-run
their neighbors;
this
collective activity.
landlord
contact
on
walked
beyond
As renters,
close
relationships
away.
owners,
The
would
are
that
But
cooperative
control over their
environment
casual
friendship
and
into
they can't decide who moves in
next door or how often the halls get cleaned,
basement
buildings
or decide that
be a great place to have a Christmas
the
party.
As
with
the
they can.
pride
of
the
tenants
89
interviewed
coupled
objective
rates
indicators
and good
suggests
that
buildings.
rent
of management success
collection)
tenant
Whether
for these efforts will
found
in
self-management
this
can
(e.g.,
and
low
other
save
studies.,
abandonned
the HPD programs provide sufficient
be addressed
vacancy
support
in the next chapter.
Notes on Chapter Five
1.
Sullivan, Division of Alternative Management fggrams.
2.
Schur,
3.
Sullivan.
4.
Ibid,
5.
Ibid, 4-13.
6.
7A Leasing
There are actually three tenant leasing programs:
(in
which a court-appointed administrator
runs the building)
and Tenant Ownership Program, for
buildings
of one or two
by far
the largest.
units.
TIL is
7.
Cosme interview.
8.
Kolodny, Self-Helg
9.
Alter
"Growing Lemons",
43.
4-30.
in
the
Inner City
177.
interview.
10. Sullivan, 8-20.
11.
Burgess interview.
12.
Sullivan.,
8-13.
Pgor
Richard
Cloward,
Frances Fox Piven and
13.
Books,
.1977).,xiii.
(New
York:
Vintage
Movements
Peoles
14.
Victor Bach,
"A Chance to Own," Ph.D.
Dissertation,
Department of Urban Studies and Planning, (1977),256.
15.
Stegman, Housing Ineystment., 195.
16.
Sullivan.
90
M.I.T.
17. Lawson.
18.
Melendez
19.
Cabrera interview.
20.
Cosme interview.
interview.
21.
Jacqueline
Leavitt and Susan Saegert,
Buildings:
A Feminist Approach to Housing,"
(Summer 1984) 35.
22.
Speech
given
by
tenant association
reception
marking
the
sale
of
the
February 6, 1985.
"
Women and Abandoned
Social
Policy
15,
member
at
City
Hall
10.,000th
DAMP
unit,
23. Cabrera interview.
24. Cosme interview.
25. Melendez
interview.
26. Leavitt and Saegert, 37.
27.
Dolores Hayden,
Norton & Co. 1984).
Redesigning the American Dream
91
(New York:
WW
CHAPTER SIX:
DAMP'S EFFECTIVENESS IN
CREATING TENANT COOPERATIVES
Given
the. conclusion that the self-help model represents
good blueprint for preservation of
personal
development
and
low-income housing, encouraging
community
involvement
as
providing alternatives to the depressed rental
market,
section
DAMP
I will
currently
look at whether
structured,
a
the specific
encourage the long-term
well
as
in the next
programs,
stability of
as
the
coops.
Whether
section
will
created
in
this
viable.
If,
as some critics charge, the city is merely practicing
all
mean
its own brand of
the
benefits described
in
a thing depends on whether
program are
financially
lemon socialism,
optionless tenants,
the
the
and
preceding
cooperatives
organizationally
dumping hopeless. properties
on
then self-help is no more than fancy rhetoric
for allowing the poor to fend for themselves.
Interviews
organization
approach
and
staff
to
with tenant,
point
self-help
city officials
to three areas of
which,
if
not
lack
buildings;
the
policy--both
purchase
areas
and
alternatives
second
the
is
the
for
general
pressure put on tenant
of
pysical
the
cooperatives,
tenants
seriously
in
is the
city-owned
about
groups by HPD
sales
staff
strong
and the third is the
which often
HPD's
The first
confusion
defects and increasingly without
92
in
addressed,
the policy of treating buildings in
differently than the others;
underfunding
serious
of
community
weakness
jeopardize the long-term success of the program.
perceived
and
are
to
market
chronic
sold
assurances
with
of
rental
A.
subsidies.
Lack of Alternatives
Not everyone wants to live in a cooperative.
cooperatives
maintenance
payments are usually adequate to
the services of a building manager,,
to
ensure
In upper income
adequate upkeep.
cover
and are certainly high enough
Because
upper
income
cooperative
dwellers
can
renters,
while enjoying ownership benefits of equity accumulation
occupy their
and
tax deductions,
New
York City.
still
the
In spite of these advantages there are
that
business.
how you live and with
expenses.
Monthly
individual
apartments,
ownership
whom
brings
is
someone
with
carrying charges don't cover
and
it
additional
repairs
building-wide emergencies
personally
prefer to rent,
sometimes
rents one would certainly choose the former.
This
agree to an alternative management program,
While
improvements in HPD's management standards has been
performance
is still
Central
Management.
noted,
too uneven and the future too uncertain
tenant group to feel
is
the result of
is cooperative ownership,
or opt for
at
They must
which
any
inside
if faced with.the
the situation of most tenants in city-owned buildings.
either
else's
joining a cooperative or risking substandard housing
uncertain
who
assessments.
While one may
choice of
many
in
objecting to the meetings and rules and to
Furthermore
require special
were
coop apartments have become very popular
choose to rent,
sense
apartments almost as though they
that chosing to remain a rental
will
for
not
be regretted shortly.
of
a
permanent
promulgate
The city's ambivalence about the existence
rental
stock.,
manifested
in
its
clear policies about rent levels or commit
rehabilitation standards, has the effect of
failure
to
itself
to
driving tenants to the
alternatives.
Why should this be a problem?
After all,
one of
of
this thesis is that the self-help model should
as
many
tenant
desirability
is
groups
as
that
model's
tenants
are
As long as there are no options there
These non-enthusiasts range from those who pay
their rent but resent any further involvement,
don't
tenant
evict
the
be those in DAMP buildings who would rather be in a different
housing situation.
who
be available to
However,
predicated on the assumption
participating voluntarily.
will
possible.
the points
pay rent,
don't
keep up their apartments,
leaders to use expensive,
them.
In
to problem tenants
time-consuming legal
some cases tenant associations,
future under Central
Management,
and
force
means
wary of
agree to alternative
to
their
management
evem
though they lack solid support from the majority of tenants.
(TIL
requires that 75% of all
the
program,
understanding
When
tenants sign an agreement to
but experience shows that people will
the
implications and later refuse
they are unable to run their building,
sign
to
leaders
enter
without
cooperate.)
feel
they
have failed.
Tenant
groups
should choose alternative management
the concept of control
and eventual
94
because
ownership appeals to them, not
it's their only way of assuring adequate services
because
secure
future.
opting
for
Furthermore,
self-management
cooperative
individual
buildings
who don't wish to participate
building nearby.
Perhaps HPD and a local
work out some kind of exchange,
DAMP
opportunity
to
in
a coop by can't
interest
in the idea could be referred to local
Since
is
important
ultimate control
that
DAMP
tenant
could
elsewhere.
her
DAMP
or
his
buildings.
associations
retain
over tenant selection it would not be possible to
assure such a tenant a DAMP apartment,
to
another
CBO
apartment
neighbors
it
a
Management building who wants the
in a Central
live
in
whereby a household in a building
could be offered a suitable
Similarly, a tenant
useful
in
should have the option of being relocated to
city-owned
entering
tenants
a
and
DAMP
buildings
but such a system could be
looking
for
prospective
coop
participants.
B.
Sales Policy
Another shortcoming of current HPD tenant-management programs
is their vague and arbitrary sales policy.
has
been
Sales,
Some
tenant
groups
complain of
being
purchase their buildings before they are ready.,
are
confusion
about
tenant
what
or
"outtake,"
the most contentious DAMP issue since the division
created.
purchase
or
unclear about the cause of
stems
from the lack of
delay.
pressured
managment,
Much
consensus among city
consensus about DAMP's purpose.
goals were articulated:
traceable to
to
others waiting to
should be accomplished during the interim
community
was
further
of
this
officials
period
of
lack
of
During its first year., three DAMP
one, to provide decent housing to tenants
95
of
in rem buildings;
two,
to train organizations to manage
and
thereby test their ability to eventually own in rem buildings;
three,
and
"to ultimately convey title of
upgraded
through
1
a period
of
the properties,
responsible
and
stabilized
management,
to
private groups"
Early
statements also emphasized the subordination of
sales
goals to the larger aims of neighborhood stabilization:
The success of the In Rem Housing Program will be marked not
by
short
term
revenue
gain
at
the
expense
of
future
deterioration
of the existing stock.
Rather,
the Program
will have achieved its goal if neighborhoods where there are
presently
large numbers of City-owned properties have
been
strengthened
and if buildings once sold remain on
the
tax
rolls
and
do not return to City ownership
several
years
after sale(2).
By
and
1981 program participants noted a new emphasis
less
concern
Forgetting
while
the
training
Report
would
stated,
be
on
initial
an
appropriate
DAMP goals of
new managers,
"The
whether
stabilization
providing
the Fourth Annual
true test of
on
the success of
they could achieve volume
period.
decent
In
sales
housing
Rem
DAMP
Housing
programs
rehabilitation
and
sales"
Ideally, for a coop to be successful
things
must
occur before the tenants
While
some
enter
organizations
period
to
developed;
must
reach
and
achieve
city
ownership
secure finances,
these ends.
its members must
in the long run, several
purchase
with
their
sophisticated
most require
A tenant
an
tenant
incubation
association
must
learn how to manage a building;
a consensus on organization by-laws and
96
building.
learn
be
they
enough
about
the
decisions
legal
principles of
about
their future.
cooperative
ownership
Meanwhile,
to
make
the renovation
work
A continual
agreed
to
tenant
leaders is that HPD's pressure to purchase begins
or
not
by HPD must be completed.
these
processes
have
been
complaint
A
completed.
of
whether
1982
study
confirmed these impressions, finding that a building's position in
the
in
sales "pipeline" was correlated only with
the
program,
its length of
and not with buiding conditions
or
time
management
4
ability
The
development of
a cohesive sales policy has been
further
hindered by the Koch administration's fear that tenant cooperators
in gentrifying neighborhoods will resell
profit.
Concern
situated
Here,
plus
centered
around
their apartments at great
the
Chelsea-Clinton
on Manhattan's West Side between 14th and 59th
the
real
estate boom that has affected all
Streets.
Manhattan,
the development of a the new Jacob Javits Convention
and proposed commercial
development for Times Square,
what had been New York's toughest neighborhood,
as
of
area,
Hell's
Kitchen,
$100,000 coops.
into an area of $1,000
City's
hands.
strengthening,
Management
this
would
have turned
previously
By
some
1982,
dozen
as
the
real
buildings were
known
a month rentals
Ten years ago the old housing stock of
had been considered undesirable, so much of
Center
this
area
it had ended up in the
estate
market
completing
was
Community
and Tenant Interim Lease and preparing for sales.
time HPD
informed the tenants
have to purchase their
in
these buildings
apartments at a "fair
97
and
that
market
At
they
rate".,
which would certainly be beyond the means of
An
unprecendented
management
tenants,
city-wide
most of
mobilization
them.
of
alternative
all of whom felt their future threatened
if
the Clinton-Chelsea tenants were displaced, succeeded in restoring
the
$250
per unit sales price.
exchange
for
earned
efforts
to
C.
this
was
gained
resale restrictions that require a portion
profits
by
work
Appendix 3)
However,
sale of
shares to revert to
out the details of
this
the
of
in
any
city.
The
plan
(see
cumbersome
have held up sales on a number of buildings.
Financial Viability
The
whether
last
and
most critical test
it provides the financial
long term viablity of
of
the
DAMP
program
resources needed to ensure
is
the
its cooperatives.
DAMP sales are too recent
for there to have been any longitudinal
studies at this point, but
pre-sale
financial
data
and follow-up studies
on
cooperatives
developed under other programs suggest that many DAMP coops
be head for trouble.
stability
of
implications
management
In this section I will
projects
of
under
insufficient
TIL
and
funding
could
examine the financial
CMP
for
and
discuss
future
the
alternative
efforts.
In 1982, Pratt Institute surveyed twelve Community Management
and
eleven
Tenant
Interim Lease buildings
other things, their financial viability.
buildings
to
determine,
They found that to bring
up to acceptable standards in the Community
Program, in which up to $ 2
0
,
0 00
98
among
Management
per dwelling unit may be spent for
rehabilitation,
low-interest
a
loans
combination of
was sufficient.
required a $9,418 per apartment
amount going
buildings
range:
located
investment,
in the Southside were at
systems
repairs and
$2222
for
after
each
sales
building
with the bulk of
this
The two survey
the high end
South 2nd Street required $12,070
for
repairs);
On average,
toward building-wide systems repairs.
227
($9848
program funds and
of
per dwelling
cosmetic
the
unit
apartment
and 263 South 2nd Street needed $11,938, with $7642 for
5
systems and $3756 for apartments
In
$1500
TIL buildings,
per
dwelling unit
where the maximum investment in 1982
(since raised to $2,000 to
situation was very different.
study
investment needed came to $9211
$5355 needed for
per apartment
systems repairs.
between the needs of
the program.
the
the eleven buildings in the
required repair work beyond the scope of the program.
average
of
Ten of
$3,000)
was
per dwelling
This left
unit,
The
with
a gap of some $8,000
the building and the provisions
The study concluded that
Any projections for successful long-term disposition of TIL
buildings
to
their
tenants must be based
on
the
rather
tenuous
assumption
that
this
mismatch
will
be
overcome....The
failure
of the TIL program to
succeed
by
this critical measure undermines completely whatever success
it achieves by the other...criteria(6).
On
carrying
the whole the Pratt analysts were satisfied that
costs
were within the rent-paying range of
tenant population.
the
the
monthly
in
rem
CMP buildings required post-purchase rents in
$35-50 per room range.
The two Southside buildings
99
in
the
sample
were at the high end of
was $40 a room,
a room,
were
this range:
227 South 2nd Street
or $208 a month, and 263 South 2nd Street was $55
or $273 a month for a two-bedroom apartment.
affordable
to
families
earning
These rents
$8,303
or
$10,928
respectively, assuming a family could pay a rent equivalent to 30%
of
its
income.
building
to
TIL rents fell
into the
same
range;
the
located in the Southside that was studied was
require rents of nearly $50 a room,
apartment,
affordable
7
family earning $10,098
Pratt's
(assuming
questionable
comfortably
assumptions.
projected
or $252 for a two-bedroom
a 30". rent/income ratio)
concludsion that the rents needed to
buildings are affordable to most
TIL
to
support
a
these
in rem tenants is premised on two
First,
it assumes
that a family can
pay 30% of its gross income for rent.
figure used by the federal government,
but
This
in fact it
is
the
is high for
B
a
family with children
,
especially since monthly rentals do not
include electricity and cooking gas, which could add $25 to $45 to
a family's monthly budget.
the
assumption
systems
operating
If
they
monthly
repairs,
that
Second,
the renovations
in TIL buildings will
expenses
borrow
projected rents are based on
needed
to
somehow be made.
repair
If they are
for these buildings are likely to be
to make repairs,
they will
debt service to their expenses.
If
have
faulty
to
not
higher.
add
their
they don't make
the
their operating expenses will reflect the fact that
they
will be making constant emergency repairs.
100
I have therefore reviewed the monthly financial statements of
several
TIL
buildings
assumptions.
in
the
Southside
in
different
The two presented here are fairly typical--one is in
good condition, the other in fair condition.
program
under
August,
1982
Both entered the TIL
after of period of
unofficial
tenant
management, and both are expected to be sold to the tenants within
the coming year.
various
the
rent
assumes
I
25% to 30% of its gross income for rent.
have
given three sets
of
mechanical
they
will
projections.
the building envelope is weathertight;
has
working
a
projections
borrows
HPD
In
first
will
makes
no
repairs and
remain constant;
considered
repairs,
In
the
inspection,,
too
sale:
income lost to rent arrears.
the
possibility
of
HPD
hard
to extimate
and second,
the
third
set
of
tenant -association
replace
two
collection
to
In neither case have
undertaking
without
first,
a
non-system
because
thorough
the
building
because that is the kind of work tenants
are most capable of accomplishing
Unfortunately
that
fifteen
projected rents are high endugh
except for appliance replacement;
are
today.
and each apartment
both cases I have assumed that the rent
compensate for
costs
stove and refrigerator.
another
money from a low-interest revolving fund to
systems.
I
The
systems are in good enough working order so
function without major breakdown for
in
each
needed repairs before
years;
rates
For
that the building is sold to the tenants as it is
The second assumes that HPD makes all
all
support
levels assuming that a family can pay somewhere
range of
building
I have calculated the income needed to
themselves.
it is hard to evaluate the potential
1C)1
fiancial
succes of a building from these income and expense statements.
would
appear,
high
monthly
for instance,
It
that a tenant association that
expenses could anticipate more
financial
had
problems
than one that didn't spend so much, when in fact the former may be
more
diligent in making repairs.
information
from
monthly
information from tenant
expenses
would
included
the
I have therefore combined
expense
and
income
statements
interviews to get a sense of
be incurred over the course of
additional
projected
a
expenses
the
with
what kinds of
year.
I
associated
have
with
ownership.
195 South Fourth Street
This
apartments
is
(see Table 6.1)
a 35-unit building with no commercial
have either 3.5 or 4.5 rooms.
units.
All
some
rent
It has had
collection problems, mostly due to one or two delinquent families.
The
tenant
month)
New
association pays 7% of
to one of
its
members,
windows and a recapped roof
are the only
designed
oversized, and
to
heat
inefficient.
102
two
major
$300
a
functions.
improvements
All other systems- are faulty,
the boiler has been a constant source of
originally
(around
who performs management
undertaken over the past few years.
and
the rent roll
anxiety and expense;
buildings,
it
is
ancient,
Table 6.1
195 South Fourth Street
Monthly Income and Expenses
(based on reports for November and December,
1984 and January, 1985)
Income
Rents Billed
Rent Collected
$5300
4660
(87.9")
EX~e sesm
Fixed Costs:
Super's Salary
Manager's Fee
Liability Insurance
Debt Servic-e
$150
300
90*
135**
675
Subtotal
Variable Costs:
Oil
Electrical
Repairs
Supplies
Service
2400***
115****
600
200
Subtotal
TOTAL
3990
*Not actually paid this quarter
**On
no-interest
loan
taken
from local
repairs.
***Adjusted to reflect winter months.
****Covers
electricity
for common
areas
boiler)
103
fund
to
(halls,
make
boiler
basement
and
In
made,
Projection
195
South
Plumbing repairs.,
1
(see Table 6.2),
Fourth
Street
in which no
is very
repairs
expensive
to
are
operate.
boiler maintenance and fuel make up the bulk of
the monthly expenses.
To make ends meet the tenants would have to
pay $68.00 a room or $240 for the 3.5 room apartments and $306 for
the 4.5 room apartments.
25% and 30% of
incomes of
Since
all
its income for rent, these apartments would require
$8655 to $11,520 and $11,016
tenants
between
in
Assuming a family pays somewhere between
the
in this building probably have
$6500 median
rem tenants in
subsidies to pay this
Projection
the Southside
most of
incomes
somewhere
and $8000 median
them would require
2 assumes that HPD has repaired
require
an approximately
building.
At
195 South Fourth
$7000 per unit
In
all
for
rent
systems before
Street
investment.
would need a smaller reserve
expenses are lower.
respectively.
rent.
the
building
for
the city,
selling
the
to $14,688,
this case, minimal
fund.,
rent
that
would
As a result
and
operating
increases would be
required.
Projection
repair
debt
3 assume that the tenants have borrowed $90,000 to
their plumbing system and replace their
service
obligation of $622 a month,
boiler.
they must raise
rents to $52 a room:
$182
4.5 room apartment.
Some tenants would require rent
A
With
a
their
for a 3.5 room apartment and $234 for a
susbsidies.
large reserve fund would be needed to cover emergency repairs to
those systems not covered by the loan money.
104
Table 6.2
195 South Fourth Street
Projected Monthly Expenses and-Required Rents After Sale
Ec::2d.L
1
Pr
PriA2
Fixed Costs:
Fire&Liability
Corporate Taxes
Prop. Taxes
Salaries
Debt Service
$ 416.60
75.00
625.00
450.00
135.00
416.60
75.00
625.00
450.00
135.00
416.60
75.00
625.00
450.00
757.00
Variable Costs:
Plumbing
Electrical
1500.00
350.00
350.00
150.00
350.00
350.00
350.00
75.00
100.00
Painting
Appliances
Extermin.
Boiler
Elect. Serv.
Fuel
Misc.Supplies
Misc.Repairs
Reserve
80.00
400.00
75.00
200.00
115.00
2400.00
150.00
200.00
700.00
80.00
200.00
75.00
100. 00
115.00
1700.00
150.00
100.00
300.00
80.00
400.00
75.00
100.00
115.00
1900.00
150.00
150.00
700.00
TOTAL
6520.00
5096.60
4470.00
68.00
42.50
52.00
Plaotering
Required Rent
per room
240.00
3.5 Rm Apt
Required Income 8655-11,520
150.00
5365-7200
306.00
4.5 Rm Apt
Required Income 11,016-14,688
190.00
6885-9120
182.00
6552-8736
234.-8424-11,232
*Projection 1--Building sold as is.
**Projection 2--HPD does all needed repairs
***Projection 3--Tenants borrow $90,000 at 3%,
Appendix
(See
calculated.)
4
for
an
105
explanation
of
15-year pay-back.
how
figures
were
167 Havemeyer Street
building has twenty apartments,
This
rooms,
four
and
stores.
the
tenants
rents in
own
their
pay no management fee.
building;
or
stores,
the
rents
at Havemeyer Street has always been
collection
their
keep
to
each with 4.5
The rents paid by the
compared to other commercial
modeset
allow
(see Table 6.3)
5.5
while
neighborhood,
low.
rent
The
They
excellent.
They have made a number of
improvements in
only their plumbing and electrical
systems
pose
problems.
Projection
Under
1,
tenants would have to
the
4.5 room apartment would rent for $245
$10.,692
to
Many
$14,256).
commercial
rents
difficulties
repairs.
physical
need
rent
its costs by increasing
(see Table 6.4).
these
if
would
of
Under the other two projections,
analyses give us only a partial
of
$8820
(requiring incomes
tenants
167 Havemeyer Street could cover
These
viability
the
of
subsidies to pay these amounts.
however,
(requiring imcomes of
a 5.5 room apartment for $297
to $11,760);
Thus a
rents to $54 a room.
rents by 20. and their own
commercial
the
raise
they
cooperatives.
had
167 Havemeyer,
condition,
could
sense of the potential
Clearly
to buy their
both
manage
without
buildings
thanks to its commercial
any
rents and good
with only access
interest loan and no HPD-funded repairs.
have
would
to
a
low-
195 South Fourth Street
would require at least some combination of city-sponsored repairs
106
Table 6.3
167 Havemeyer Street
Monthly Income and Expenses
(based on reports from November and December,
1984 and January, 1985)
Income
$4409
1150
Rents billed
Commercial
Residential
3259
Rents collected
4075
Fixed Costs
Super's Salary
Liability Insurance
74.00
84.00
Variable Costs
Fuel (gas)
Electrical
Repairs
Supplies
Service
(92.5%)
1340. 00*
60.00
1533.00
579.00
4210.00
TOTAL
*Adjusted to reflect winter months.
107
Table 6.4
167 Havemeyer Street
Projected Monthly Expenses and Required Rents After Sale
Ecgd..L
Fixed Costs:
Fire&Liability
Corporate Tax es
Prop. Taxes
Salaries
Debt Service
Io
1
.3
..-
500. 30
60. O0
833. 00
74.00
691.00
74.00
-- O--
500.30
60.00
833. 00
74. 00
-- 0--
Variable Costs:
Plumbing
Electrical
Plastering
Painting
Appliances
Extermin.
Boiler
Elect. Serv.
Fuel
Misc. Supplies
Misc.Repairs
Reserve
1500.00
200.00
200.00
50.00
229.00
75.00
50.00
60.00
1340.00
150.00
200.00
500.00
200. 00
100.00
50.00
50. 00
116.00
75.00
50.00
60.00
1340.00
150 . OO0
100.00
300.00
200. 00
100.00
50.00
50.00
116. 00
75.00
50.00
60. 00
1340.00
150. 00
100.00
300.00
TOTAL
60210.30
4058.30
4749. 30
54.00
35.00
35.00
20%X
10%
20X
$500.30
60. 00
833.00
Required Rent
per room
Commercial rent
increase
245.00
4.5 Rm Apt
Required Income 8820-11,760
5.5 Rm Apt
Required Income
297.00
10,692-14,256
157.50
5670-7560
157.50
5670-7560
192.50
6930-9240
1?2. 50
6930-9240
*Projection 1--Building sold as is.
**Projection 2--HPD does all needed repairs
***Projection 3--Tenants borrow $100,000 at 3X, 1 5-year pay-back.
Appendix
(See
calculated.)
4
for
an
explanation
108
of
how
f i gures
were
and
access to loan money to survive in the long run.
neither
of
these buildings has the resources to survive
emergency.
not
Since
low-interest
emergencies.
repairs
out
a
course,
a
major
tenant cooperatives in slum neighborhoods
likely to get conventional
the
Of
loans
bank loans,
provided
by
are
it is important
HPD
be
that
available
for
One problem with relying on these funds for systems
before sales is that once a tenant association has
loan it will
be hard-pressed to find funds to deal
taken
with
an
emergency.
Whether and how cooperatives will
financial
pressures
be able to cope with future
is of concern to
their
participants.
previously cited follow-up of the projects studied in
that
debt
for
that
all
of the 46 cooperatives had very serious tax
and
9
service arrears .
Since DAMP cooperatives are not eligible
tax
abatements and are frequently borrowing to
HPD
will not do,
Division
through
the
same
Avenue,
a
the
confronted
TIL
difficulties as
their
program and been
will
predecessors.
104
purchased
raising
in
had
1982,
gone
is
now
the systems not repaired by HPD.
in order to borrow money.
also considering the possibility of
and
repairs
they
cooperative in the Southside that
with the breakdown of
units,
make
there is the possibility that
The tenants must raise their rents
the
showed
but 26.
experience
are
1973
The
capital
increasing the
when
people
by
They
price
into
of
the
10
cooperative
Low-income
.
cooperatives
may
discouraging
other
turn
housing
to this method
poor families from
109
advocates
of
fear
raising
joining.
that
many
money,
thus
Several
other
Management
good
the
Community
substantial
received considerably more
A few years after sale these buildings are still
physical
pressures.
and
and
Program,
rehabilitation.
in
had been produced through
cooperatives
Southside
condition
and
therefore
free
of
financial
Some of them, however, are experiencing organizational
management problems,
perhaps traceable to CMP's
failure
to
train tenant associations adequately.
It
housing
is the spectre of financial
failure that
cause low-income
advocates the most concern about the future of
management
of
in
rem properties in New
York
City.
self-help
They
are
worried that without proper funding these programs are doomed from
while desperate tenants run
the start,
them
work.
in circles trying to
tenants set adrift in
Images of
make
or
leaky lifeboats,
"cooperative ownership as 'judas-goat' . . . leading the proverbial
11
claim
critics
are evoked.
The harshest
to slaughter"
lambs
that the program is merely an acceptable way for the government
ignore
its responsibility to provide housing
income tenants respond
to the promise of
for the poor.
control
to
Low-
and security, but
without sufficient funds it turns out to be illusory.
The
lesson
of
the stories related
management can work, and when
above
is
that
tenant
it does it can produce benefits such
community involvement as well as improved
housing.
But the success of tenant-managed buildings depends on a
delicate
as
increased
balance of financial
cooperation.
support,
In several
technical
crucial
the confluence of these factors.
110
assistance,
and resident
ways, HPD programs fail
to ensure
By encouraging tenant control
in
landlord-abanondoned
opportunity
to
affordable
homes
buildings.,
create
a
using
the
network
minimal
City
of
of
permanent,
subsidies.,
buildings that would otherwise drain municipal
paying sources of pride.
doing
whatever
is
New York
has
the
comfortable,
thereby
turning
resources into
tax
HPD's efforts should be directed toward
necessary
to
make
these
projects
work,
especially
since their failure only results in greater management
burdens for
the city.
Notes on Chapter Six
1.
New
York
City
Development,
First
2.
Ibid,
Department
of
Housing
Preservation
Annual
In Rem Housing Fggam
Begort
and
30.
Department
of
Housing
Preservation
nnual
In Rem Housing Prggram Beggt
and
6.
48.
3.
New
York
City
Development,
Fourth
4.
Sullivan., Division of Alternative Management
5.
Ibid.
6.
Ibid,
10-52.
7.
Ibid,
10-45.
6.
Michael
Hartman, ed.
9.
Stone, "Housing and the Economic
America's Housing grisis.
PCgrams.
Crisis,"
in
Chester
Lawson, Owners of Last Resort 118.
10.
ii.
2-21.
Barbara Schliff
Sullivan,
interview.
Division of
Alternative
111
Management
Prggrams
CHAPTER SEVEN:
ASSISTED TENANT LEASING:
A PROPOSED ALTERNATIVE MANAGEMENT MODEL
Both
Community
programs
designed to create tenant
strengths,
ability
but
to
both
viable
Interim
cooperatives.,
have flaws that call
develop
development.
a
Management and Tenant
housing
into
while
Leasing.,
have
two
important
question
fostering
their
community
CMP provides jobs, renovates apartments, facilitates
relationship between tenant groups and knowledgeable
organizations,
and
offers
CBO the opportunity to
community
extend
their
influence in their communities.
It does not, however, adequately
prepare
running their building,
tenants
for the task of
and
it
compromises CBOs by making them middlemen between HPD and tenants.
TIL,
on the other hand,
management,
but
leaves
financial
support.
programs,
whereby
receive
gives tenants the opportunity for
them
Moreover,
the
with
insufficient
technical
buildings
arguing
less.
and
there is an inequity in these two
in
Community
Management
up to $20,000 of renovation funds per unit,
buildings receive much
self-
can
whereas
TIL
While tenants in CMP buildings
are
about the color of their new bathroom tiles,
TIL tenants
are making do with inadequate plumbing.
A.
ProCam Dsign
I
am proposing Assisted Tenant Leasing as an alternative
replace both Community Management and TIL.
The structure of
to
ATL
would
be very much
sign a
lease with HPD, accepting management responsibility for its
building
like that of TIL.
and agreeing to eventual
112
A tenant association
purchase at
$250 an
would
apartment.
HPD would contract with CBOs to perform services in support of
There is already a
buildings in their catchment area.
for this sort of
arrangement:
Currently,
precedent
HPD contracts with CBOs
its Community Consultant program.
through
ATL
Recognizing that
its
programs are only as good as their ability to reach those who need
that CBOs already have communication networks in their
and
them,
HPD
areas,
services
city
Community Consultant Contracts, funded by federal
bureaucracy.
dollars,
and
programs
city
as a liaison between community residents and
act
generally
pays groups to promote
are
usually sufficient
to cover the cost of
CD
one or
two
expand
the
staff people.
As
of the ATL program,
part
HPD would
Community Consultant program so that groups in areas with
current
city-owned stock could devote one or two
extensive
exclusively
working with tenant-run buildings,
to
parallel program to achieve the same purpose.
buildings
typewriter
and coops.
For instance,
up
a
The contract would
by
there might be money for
ATL
a
and funds to reimburse
the
its photocopying machines and telephones.
Tenant-
buildings might also be able to use the CBO's facilities
meetings.
for
Since new tenant associations are often unfamiliar with
organizational
with
or set
for
CBO for use of
CBO
people
or other office equipment that would be available
tenant" association officials to use,
their
staff
for staff and for overhead costs incurred
funds
provide
run
either
procedures,
meetings,
CBO staff
could be available to attend
help them determine agendas and set up
by-laws.
staff can also be indispensable in acquainting tenant leaders
government
programs that can benefit
113
their
building,
and
arr-anging
technical
could
bulk
purchasing
and
credit.
splitting
to
hire the professional
the fee.
of
with the
various
staff
performing
day-to-day
benefit that extends beyond its immediate
also
provides
Frequently
of
a
trained
repairs,
ordering
function,
maintenance
staff will
be hired
by
This is
since
employment for a dozen or so community
CMP
coops
provide
materials, and at times undertaking major rehabilitation.
a
staff
leadership.
the benefits of CMP is its provision
maintenance
require
And CBO staff would be available to
training whenever there is turnover of
One
buildings
architects or lawyers CBO
services of engineers,
arrange
If
it
residents.
TIL
tenant
associations to work in their buildings after regular work
hours;
this
provides
skilled
local
additional
income
for the staff
and
workers for tenant-run buildings.
site maintenance staff is one of
access
However,
to
an on-
CMP's largest expenses.
One of the goals of ATL would be to enable CBOs to maintain a
repair
HPD's
staff that was more or less
contract
maintenance
with
ATL
or
a CBO could include some
staff--perhaps
supervisor's salary.
already
self-sufficient.
Tenant
overhead
costs
To
provision
and
a
begin,
for
a
maintenance
associations, whether participants in
cooperative
owners,
could
hire
the
CBO's
maintenance company for repairs, paying them for their services as
they
could
would
pay a private contractor.
even bid on large renovation jobs;
The
if
maintenance
effective
company
it
would
most likely start getting requests from private landlords as well.
114
The
would be for the maintenance company to become
goal
profit
subsidiary of the CBO;
a
it ever actually made a
if
forprofit
the money could be used to fund other CBO activities.
Ideally,
buildings
their rent roll
while in city ownership. TIL buildings are already
self-supporting.
operating
tenant
would be able to support themselves from
In
Community
subsidy to cover all
Management,
receives
the buildings in its
have
it.
before adding the additional
Rent
subsidies,
building
is
currently
purchased,
a
idea
It is important for tenants
the experience of operating their building on
roll
an
contract;
association therefore buys its buildings without any
of what it actually costs to run
to
a CBO
burden of
its
taxes and
insurance.
available to tenants only
should be extended
into
rent
after
the
the
pre-sales
period as well.
HPD
should
(electrical,
envelope
agree to sell
heating,
secure.
buildings with all
plumbing)
Tenants
working
could
be
repairs sUch as replacing appliances,
Tenant
to
and the
responsible
painting,
for
and
systems
building
internal
plasteri.ng.
associations could decide for themselves whether they want
borrow money to attend to these matters,
individual
cooperators.
investment
by
$15,000
per
For some buildings,
HPD might be sufficient,
unit--HPD
should
be
permitted for these system repairs.
per
well
major
unit
amounts -of
cost
estimates.)
While
money being allocated
115
or leave them up
a $2 ,
00
0
for others it
flexible
about
per
unit
might
the
to
be
amount
(See Chapter Eight for average
ATL might result
to
different
in
unequal
buildings,
the
inequality
would
coincidence
interest
of
be
based
on documented need
having landed in one program
form
of
represents
currently
course,
a gradual
phase-in of
smaller
commitment
a
available
every
under
another.
of
funds,
soundness of
would
Community
the
Low-
and
tax
Such abatements could take
property tax
to
Community
building
as in
rehabilitation
dearth
or
than
loans should remain available for emergencies,
abatements should be offered as well.
the
rather
payments.
rehabilitation
Management.
receive
a
Mangement.
than
Ideally,,
complete
However,
it is preferable to attend
to
This
the
is
of
moderate
given
the
structural
many buildings than to completely renovate some while
others have major system deficiencies.
B.
Sales Policy
ATL's goal would be to enable tenants to complete the program
in two to three years.
allow
for
delays
management skills.
timetable
development.
remain flexible, to
in repair work and the development
of
tenant
Periodic meetings should be held with
tenant
association officials,
a
This time period must
CBO staff and HPD personnel
to discuss the
for
repairs,
HPD
and CBO coordinators could arrange appropriate
rent
increases,
and
management
training to address tenant association weaknesses.
Resale
restrictions
should
be
designed
to
ensure
the
continued availability of these units to low-income families.
The
law
for
under
which
these
coops are formed
116
(see
Appendix
3
details),
which
combined
forbids
the
income exceeds six
sale of
units
times the rent,
to
families
whose
is sufficient to
do
this, but enforcement mechanisms must be created.
The terms of resale restrictions are difficult, because they must
balance
with
the public's interest in maintaining
the
coop
investment.
owner's
After all,
affordable
right to earn a return
while
on
housing
his
or
her
"you've limited the profits on these
1
buildings,
.
.
you've done nothing to limit the risks"
.
The
.
current
HPD policy in "hot" neighborhoods--demanding a percent
profits
for
Sellers
will be tempted to charge more for their shares in
order
earn their expected rate of return after paying off the
city.
to
Given
the
situated
itself--seems
low
turnover
like
this "tax"
it.
Far
worst
in DAMP coops
in profit-making areas,
from
the
and
possible
the
C.
solution.
few
buildings
HPD is unlikely to earn
to pay the salary of the person hired to
enough
collect
more effective would be a system in which tenants
eligible for a predetermined modest rate of return on
of
were
investment.
Program Rationale
CMP
tenant
such
and
TIL
represent two models
of
groups and neighborhood institutions.
interaction
The former creates
a dependent relationship that it stifles the development
the cooperative and diverts the CBO from its advocacy
latter
their
CBO
sold,
between
role.
is so ill-defined that TIL buildings may be struggling
own in areas where the expertise of
staff
could be helpful.
there
buildings
are
other coop leaders
Once coops in either
few places they can turn to for
and purchased coops must purchase fuel
117
program
support.
and
of
The
on
and
are
TIL
materials,
contract
They
for
repair services.,
and perform
clerical
functions.
must develop mechanisms for training new leaders.
building to establish its own
For each
credit or buy its own typewriter and
xerox, machine is counterproductive.
There are many ways that time
and money can be saved by inter-building cooperation.
Why not use
the CBOs as a basis for this cooperation?
First
and foremost,
maintaining low-cost,
mix
best
after
of
standard housing.
develop its organization.,
sale.
Thirdly,
of
and continues that
it needs to
support
by working through established
it contributes to their organizational
even provides a means of
means
Second, it provides the
autonomy and support to each tenant group that
organizations
and
Assisted Tenant Leasing is a
generating additional
even
community
development,
revenues
and
creating jobs.
Notes on Chapter Seven
1.
Bernard
Cohen,
"City-Owned Buildings:
Limits 5 (February 1980), 8.
118
A Hard
Sell,"
City
'Part III
CHAPTER EIGHT:
FUNDING THE
. to
Proposals
improve
IN REM HOUSING PROGRAM
the
management programs and Central
need
to
budget come out of federal
(see Table 8.1).
of
began
in
1978,
between the City of
because CD
not the operation of
Management's
is
constant
total
in
funds were supposed to be for
the
low-income housing.
operating costs,
be cut.
The conflict
tax revenues to pay
for
applying CD funds to Central
(see Table 8.2).
little conflict with HUD about use of
worry that they will
funds
rem housing was a
Since
the
1980,
These days
funds,
the
but
city's
CD allocation has fallen from $260 million to $213 million.
At present it seems unlikely that this amount will
but even more unlikely that it will
the
At
the
Management buildings only for repairs
there
buildings.
New York and HUD when
resolved when HPD agreed to use city
Central
revolve around the
Community Development
Use of CD funds to support
conflict
renovation,
was
Management, all
alternative
the
the entire DAMP budget and half the Division of Property
Management
IRHP
both
find more money to invest in city-owned
present,
source
IRHP,
city's
improved
housing
be increased.
programs depend on CD money,
be cut further,
Since most
of
plans
for
an
share
of
IRHP must be based on the assumption that the
the CD budget devoted to in rem housing cannot be increased.
119
TABLE 8.1
Division of
Alternative
Management
Programs
Fiscal Year 1964 Budget
(in millions)
Community Management Program
Tenant Interim Leasing
Private Ownership & Management
Homesteading
After Sales Support (BA Loans)
$19.705
5.3
3.495
.842
.3
Technical Assistance and
Professional Services
Personnel and OTPS
.75
3.0
Total
33.392
Source:
conversation
DAMP Budget Director.
TABLE
8.2
with Eileen White,
Division of Proggerty Management
Fiscal Year 1984 Funding Sources
(in millions)
Community Development Funds
Tax
Levy Funds
Rent Collections
$44.8
41.8
28.8
Source:
Harry DiRienzo and Joan
Allen,
The New York City In Rem Housing Program
A.
How Much for
This
Program
section
Rem Housing?
calculates
consistent
section:
all
In
the
with
I
the goal
accomplishment of
in rem buildings.
managers.,
a budget for the
have
articulated
in
Housing
previous
the
systems renovations as needed for
Based on conversations with
estimated
Rem
In
the following repair
real
estate
costs
for
a
thirty-unit building:
Replacement of plumbing
$50,000
Replacement of electrical wiring
50,000
Replacement of boiler
30,000
Recap roof
10,o00
Replacement of apt. doors
7,500
Purchase new stove and refrigerator 21,000
Replacement of windows
50,000
Total
218,500
($7,283 per
While this estimate omits any structural
which
in
state
be
weatherization budget.
the $50,000 included
can be devoted to other repairs.
should
be
thought of as an average,
more and others less.
in
does
this
The $7283 per unit cost
since some
buildings
Of the two buildings reviewed
the previous chapter, for example,
whereas
it
If window replacement continues to
budget
major repairs,
needed,
which is currently provided out of the
supported with state funds then
require
or cosmetic repairs.,
some buildings admittedly are sorely
include money for windows,
unit)
will
in
167 Havemeyer Street needed few
195 South 4th Street needed everything but
a new roof.
121
At
the end of FY
1983 there were 11,958 DAMP
which 10,469 were in TIL and CMP.
additional
sold,
title
vestings
buildings,
of
The number of units gained
in
have been about equal
to
so this figure is about the same one year later.
10,469
units
Tenant
Leasing program
were to be treated as prescribed
unit expenditure,
by
yearly cost would be $38.235 million
$76.47 million.
to the technical
working
with the Assisted Tenant Leasing
provide
fifty
buildings.
8.1;
is $16
$2
million
assistance line to fund community groups
buildings;
with $40,000 each to hire
this
staff
would
and
pay
Each group would then have an average workload of
In
the
increased only slightly.
8.3
the program's
(see Table 8.3).
is added
overhead costs.
Assisted
each would receive the proposed $7283 per
for a total program outlay of
groups
number
If these
the
If repairs are accomplished over a two-year period,
ten
the
projected
The total
budget
other
are
projected DAMP budget in Table
million higher than the present budget
while additional
programs
funds have been allocated
shown in
Table
in the projected
budget, money has also been saved by equalizing the rehabilitation
levels
in
all
buildings.
Projecting
trickier,
since
a new budget for Central Management buildings
is
HPD's figures don't make clear how much of their
budget goes for operating expenses,
much for personnel.
how must for repairs, and how
For the sake of this calculation
122
I will
TABLE
8..3
Progosed
(in
DAMP Budget
millions)
Assisted Tenant Leasing
Private Ownership & Management
Homesteadi ng
After Sales Support
Technical Assistance and
Professional Services
Personnel and OTPS
Total
$38.236
4.0
1. 0
.5
2.75
3.0
49.486
33.392
16.094
CD funds
Other sources
TABLE 8.4
Progosed Budget for
the Division of Pro2eCty Maagement
(in millions)
Repairs
$77.685
44.8
32.89
Operating
Total
Total
(See
41.8
28.8
13.0
CD Funds
Other sources
Rent Collections
Other sources
Amount Required from Other Sources:
Amount
Already Allocated
Other
41.8
Sources:
Table 4.2)
Balance:
ignore
from
61.98
HPD's
20.18
personnel costs,
123
and assume that the part
of
the
budget
funded
while
the
8.4).
A
through tax
levies is
the
operating
part funded by CD money represents repairs
$41.8 million annual
operating budget for
32,000 units represents as $1306 per unit cost.
from Central
dwelling
Management
unit,
leaving a balance of
repair
Rents
or $900 per
spread
units.
out over three years.,
apartment,
Projecting
this
would
$77.68 million a year,
or $2428 a unit each year.
of
leaving $32.885 million for other
this is
sources.
cost
The
CD-funded,
Combined with the operating shortfall,
not
covered by rents or CD money would be
total
a
cost
$44.8 million
funding
the total
$45.89
city contribution for in rem housing under
would be $61.98 million,
each
in total.
funds were to be budgeted at $7283 an
schedule
Table
collected
$406 required to cover
then $233 million would be required for all
repair
(see
approximately
buildngs cover $28.8 million,
apartment's operating costs, or $13 million
If
allocation,
program
million.
this
plan
or $20.18 million more than is currently
budgeted.
B.
Additional
Both
of
Governor Cuomo and Mayor Koch,
federal
fiscal
Government Funding Sourges
motivated by the dearth
funds for low-income housing and
encouraged
by
the
conditions both state-wide and city-wide, have proposed new
funding
program.
sources,
Governor
all
of
Cuomo
which
could be used for
has suggested directing
the
the
in
rem
revenues
expected from the repayment of the Battery Park City bonds to lowincome
housing.
Since this income stream does not
124
begin
until
1991,
however,
it
must
be
considered a
possibility
for
the
1
future
Both
the Governor and Mayor Koch would
revenue coming from the World Trade Center,
real
estate
concern,
its
tax
payments if the complex
or payments made-in lieu of
current owner.
float
$1
like to see some
in the form of
is sold
to
either
a
private
tax'es by the Port Authority,
The Mayor proposes using these
billion in bonds that can be used to
revenues
support
to
low- and
modera'te-income housing development.
As
city
discussed
capital
buildings.
previously,
the Mayor is interested in
funds to renovate apartments in
In
his
million a year.
permanent
Management
current budget message he has asked for
million over five years for the renovation of
$15
Central
using
Since the capital
city property,
$75
9000 apartments,
budget is used
only
or
for
Koch's willingness to use it for in rem
buildings suggests a grudging acknowledgement of the city's
term
commitment
were
budgeted in addition to,
to.maintain this housing.
and not
If this $15
in place of
longmillion
existing
city
commitments it would cover most the $20 million shortfall shown in
Table
4.4.
It's possible,
however,
that the Mayor's
proposal
refers to the aforementioned program to renovate vacant apartments
for homeless Human Resource Administration clients.
$20 million would still
C.
be needed to upgrade occupied
Alternative Funding Sggurces:
In
In that case,
apartments.
Hosing Irust Funds
many cities confronted by the cut-back of
federal
housing
funds efforts have been made to raise revenue for housing from the
125
private market.
The notion that those profitting from real
estate
development in booming downtown markets should be contributing
the
creation of
already
housing units throughout the city underlies plans
implemented
in
discussion in New York.
of
San
The
Francisco
is
Boston
and
involve levying some form
justification for taxing
low-income housing
is
new workers to
making
contributions
creation commensurate
size of
their commercial
supply
instituting
and
to housing
projects,
demand
in balance.
That
the
the
The
such a charge is the extension of
powers.
city.
costs
and
legal
the
property
taxes
benefits
city residents
paid by middle-income residents of
construct
"linkage"
plan
a
Alternatively,
basis
for
downtown
is
another
neighborhoods
improvements
developer
one housing unit for every 1125 square feet
space he builds.
$6C,000
Francisco
the
Frequently.,
the downtown area fund the infrastructure
2
to facilitate downtown development
San
By
with
of
outside of
the
the
municipality's
justification for requiring developer contributions.
In
complex.
developers are helping to keep
development are not felt equally by all
needed
estate
the argument that commercial development increases
for housing by attracting
zoning
trust
various forms of real
demand
housing
under
to be contributed to a housing
activity to aid the development of
There
and
These plans all
surcharge on development
fund.
to
of
must
office
he may contribute from $4000 to
($3.50 to $5.30 per square foot) to a city fund used to aid
housing suppliers.
The San Francisco plan is designed to address
126
problems
units
of
housing supply,
and does little
to ensure that
constructed with this money are affordable to
low-income people.
$5.00
a
Since
the
square foot,
discount
foot.
In Boston,
tax
the
plan
actual
could
twelve
moderate- or
development
exempting the first
is payable over
rate,
This
commercial
100.,C000
years,
is taxed at
square
assuming
million
feet.
10%
a
payment comes to only $2.50 a
generate $37 to $52
the
square
over
ten
proposals
for
3
years
Planners
instituting
in
New York City have
levies.
similar
Action
Institute,
both
low-income housing,
include
revenues
entertained
The Pratt Center and the Metr opolitan
long-time advocates of publicly
have proposed a housing trust fund that would
f rom a numbe r of
sources,
existing
taxes and some of whi ch would need
Appendix
5
for
different
into
1 ist
aspects
development,
of SOL rces.)
of
The
comm ercial
some
of
which
new
and
or condomin iums.
collects $3
For
are
to be enacted.
sources
luxury
instance,
million a year in small
(See
all
tap
residential
as wel 1 as the pc pularity of converting rental
cooperatives
currently
funded
the
units
state
registration
fees
from real estate syndications, most of which are in New York City.
By
increasing
and restructur ing this
collected for the housing trust fund.
condominium
conversions
$75,000
appealing
would
because
$21
raise $8
million could
fee.
An
converted units selling
for
million.
These
filing
suggestions
they increase taxes that are already in
rather than levying new ones.
127
be
Sponsors of cooperative and
pay a similarly token
increase of this filing charge on all
over
fee,
are
place
The existing taxes also affect real
estate
transactions
that
are
extremely
lucrative
for
those
involved but don't directly produce new housing units.
The
Pratt-Metropolitan
contribution
provision.
proposal
includes
a
developer
Like the San Francisco and Boston plans
it posits a connection between
commercial development and
housing
demand,
and
housing
trust fund for every 1000 square feet of rentable
proposes
space they construct.
that developers contribute $6,000
other
units
in
production
their
development as low rent apartments
$420 for a two-bedroom apartment),
foot
trends,
programs.
builders have the option of setting aside 10". of
those renting within the HUD Fair Market Rent
square
office
excepting projects that are part
low- and moderate-income housing
Residential
the
Unlike the other plans this one includes a
levy on residential development,
of
to
an
to the housing trust fund.
(defined
Maximum,
or contributing
the
$6
as
currently
per rentable
Based on current
market
estimated $50 million could be raised each year
from
developer contributions.
These
in
combined sources could raise $200 million for
New York City.
funds
currently
leveraged
25,000
money
with
new
were
proposed
in
If this were added to the $200 million of
used to support low-cost
market-rate funds,
housing
it could
efforts.,
produce
and rehabilitated units each year.
If some
used for moderate rehabilitation of
in rem
the
housing
previous chapter,
further.
128
it could be
20,000
of
units
stretched
CD
and
to
this
as
even
Other
proposals
to raise money focus on
taxing
the
large
profits currently being made in the luxury housing market.
Marcuse,
who
benefits
of
"highways,
breaks.
advocates a luxury housing tax,
utilities,
Today those with higher
public
with
proposes
month,
lower
amenities:
services--and tax
income people, who
A tax
higher incomes helps to settle
the
on the housing of
score.
Marcuse
taxes on the income from units renting for over $1000
a progressive property tax,
units worth over $100,000,
adding 2". to the tax
and a speculation tax
from the sale of
units for over $100,000.
5
could raise $250 million a year
Whether
contributions
or
and
York in the near future.
rate of
on capital
up
of
gains
developer
miscellaneous taxes is an appropriate
is not
way
proposals,
such
dedicating revenues from existing taxes to the trust fund,
ability
money
from
generate
regard
however,
income
for the city,
or a luxury housing tax,
Administration.
Any proposals
such as
a
are not supported
divert
that
129
do
developer
by
The only official city initiative in
was the creation of a mayoral
do
city's
since they simply
one budget line to another.
additional
contribution
Koch
neither do they increase the
to provide services,
to
likely to be implemented in New
The less controversial
not invite much opposition;
a
Altogether these taxes
not a housing trust fund made
fund low-income housing, it
as
the
income and better housing obtain
more benefits from these public actions,
4
need such benefits more,
benefit less" .
those
believes that
good housing result from providing public
infrastructure,
Peter
commission to study the
the
this
use
zoning authority to extract concessions--low-income housing or
of
Study
Commission
achieve
some
housing
used
to
It did recommend the creation
of
that zoning should not
broader social goals.
sort
money,
concluded
of housing trust to support
development,
which
of
Commitments
This Development
public amenities--from developers.
low- and
be
moderate-income
but suggested it be funded with CD and UDA6
course is already the funding
source
for
the
housing programs.
city's
levy on
The Commission's reluctance to endorse any additional
developers is indicative of officials' squeamishness regarding any
policy
that
analysts
makes demands on the business community.
fear
that
their
debilitated by any additional
it
has
been
robust
apparently
burden.
tax
customary to extend tax
economy
Manhattan
the
area.
The last such
City
Planning
incentives to developers,
housing
to
abatements
trust
fund
Why
is
New
reluctant
York,
mid-
dismayed
in
But planners
to
lose
these
and believe that a disincentive such as
contribution
would
greatly
discourage
estate.
with its strong
Manhattan
to charge developers with some
for supporting low-income housing?
Mayor,
be
developers
abatement is scheduled to end
Commission are
investment in New York City real
market,
will
In fact, until recently
July of this year after pressure from City Council.
a
York
as-of-right--even to those building in the lucrative
almost
on
New
real
responsibility
Certainly the attitude of
whose position is reputedly pro-development, has
130
estate
the
influenced
city
policy.
crisis,
But
which
beyond
that looms the memory of
was evoked by every city official
the
fiscal
I questioned. All
New Yorkers dread the possibility of returning to those dark
of
job
loss and service withdrawal,
crisis" and their
New
influence on
York as the "lessons of
policy establishment.
that
the
fiscal
municipal
but the
"lessons of
the fiscal
city policy are as controversial
Vietnam" are within the U.S.
in
foreign
The Koch administration has taken the view
crisis was the result of
an
overextension
responsibilities and a climate unconducive
investment;
it therefore shuns programs that
and
to make the city an attractive place to
works
days
to
of
private
involve city dollars,
do
business.
Proponents of developer contributions and/or taxes are critical of
Administration
market
policy,
contending that
is so strong that additional
the Manhattan real
taxes can be
levied
estate
without
discouraging investment.
This
debate over development policy ultimately boils down to
a presumably empirical
question:
for office and residential
pass
along
from them,
Pratt-Metropolitan
of
a
$6
now
would
with the
residential
burdens to
those who buy
not be discouraged
trust
project.
from
fund proposal
anticipate
still
$6
They found that
pre-tax
be getting
contribution.
development,
a
internal
a
or
of
Rents would
the
131
contribution
increase
The
the impact
and
developer,
return
healthy 30-32% internal
rent
investing.
analyzed
commercial
rate
demand
If developers can
per rentable square foot charge on a residential
commercial
can
tax
housing
is the elasticity of
space in Manhattan?
any additional
then they will
What
of
rate
of
1.5-2.5%.
lowers
the
a
who
32-33%,
return
For the
pre-tax
internal
rate of return from
the
appear to have much affect
18.6% to 16.38%,
and forces rents to
6
increase somewhere between 2.5% and 4.2% .
In neither case
does
tax
Since it would be levied on all
be
disadvantaged.
the precise shape of
While these calculations beg the questions of
the demand curve,
of
a rent increase of under 5%.
D.
The Cross-Subsidy Program
fund.
has
The
section
the
to
begun its
produce
and
low-income
Hassidic
version of
and potential
location because
a
housing
about to be enacted
trust
in
one
contributes the income generated
from
improve low- and
moderate-income
idea was actually devised as a
Hispanic residents of
area and the more affluent
The large tracts of vacant
developers,
compromise
Hassidic
sale
cross-subsidy program,
the
increased
between
devastated
Jewish
community
who saw the oppportunity to create
of city-owned
The
land in the Triangle attracted
Low-income
their future in the Triangle threatened by
the
housing.
the Southside's
housing for their growing community.
protested
from
limited
rent
sale of vacant city-owned property in the area to a fund used
nearby.
saw
would be minimal,
program,
of the Southside,
"Triangle"
rate
own
cross-subsidy
cross-subsidy
the
they do suggest that
would be unlikely to give up a Manhattan
HPD
profitability.
developments, no one project would
increases as a result of a new tax
tenants
on a project's
lots for
marketresidents
development,
this
purpose.
and
The
which allows existing residents to benefit
market
132
value of
property
in
their
area,
succeeded in ending the stalemate between the two groups.
Approximately
$2
million will
be raised through the sale
the Triangle's city-owned property,
to
and
and this revenue will
bring down the costs of the Section 235 units
to
supplement
available
an
existing
to tenant-managed
revolving
buildings,
being
loan
of
be used
planned,
fund
that
is
including those in the in
7
rem
programs
East
Side,
vacant
.
A similar plan is being proposed for
which has a parallel
city-owned
land,
and
juxtaposition of
developers
the
Lower
poor residents,
interested
in
new
opportunities.
While
activity
good
the
to
way
allows
neighborhood,
it doesn't represent
property already
of
Management buildings.
the sale of
of
in
a
market
and is
the
Revenues from sale
go toward supporting operating
Contributing
a
particular
any absolute addition to
available for in rem housing.
Central
benefits
protect the interests of tenants
city-owned
Central
the
accrue to those it may negatively affect,
to
resources
cross-subsidy
of
costs
the proceeds from
certain parcels to particular projects only means that
Management's
operating
funds will
have
to
come
from
taxes
and
sources
for
another source.
E.
An Eguitable Tax System
While
developer
cross-subsidies
housing funds,
are
contributions,
worth
luxury
housing
discussing as potential
New York City should be able to raise the money it
needs for
tax
been
in rem housing from the tax base it has.
abatements on
built
millions
this
dollars.
added incentive
The
without
condominiums
estimated
a tax abatement;
sprouting
$582
have
midtown and Lower
expansions of CBS and Irving Trust,
built
past,
lucrative projects that would most surely
without
of
In the
cost
was
the
Manhattan
city
office
for instance, could have been
so could the
high-rise
up along the East Side.
million
have
given
up
by
In FY
the
luxury
1982
city
an
in
tax
these programs is ending
(tax
8
abatements
abatements
housing
Now that the last of
.
are
now available only for
low- and
moderate-income
and for developments outside Manhattan),
collect more taxes,
Sternlieb
has
making additional
the city
levies unnecessary.
suggested earmarking tax
revenue
from
could
George
new,
non-
9
abated developments for low-income housing
On
a
smaller
scale,
New
York
City
loses
money
underassessing property values in upgrading neighbhorhoods.
Marcuse studied
the
Upper
average
West
Side of
Manhattan--and
found
that,
while
assessed values rose only
decreased
In
that
sum,
each
mechanical
abatements,
it
is likely that
10
in these improving areas
with
of
an additional $20 million
its in rem buildings
systems.
While
there
untapped sources for this money,
134
net
at
are a
number
minimum,
of
also
revenues
a year HPD could
have,
in fact
tax
the
26.3%.
Since one-third of the buildings sold on the Upper West Side
tax
Peter
two such neighborhoods--Park Slope in Brooklyn and
sales price rose 177%,
received
by
ensure
adequate
previously
it could easily be found
in the city budget
if
existing taxes were equitably levied.
Notes on Chapter Eight
1.
Edward I.
Koch,
January, 1985, 8.
"State
of the City:
Housing
Initiatives,"
2.
Advisory
Group
on the Linkage between Downtown
and Neighborhood Housing, "Report to the Mayor on the
between
Downtown
Development
and
Neighborhood
October, 1983.
3.
Ibid.
4.
Peter
Marcuse,
(December 1983),16.
5.
6.
"A
Luxury
Housing
Tax,"
ity
Limits
8
Ibid.
Pratt
City's
Center
and Center for Metropolitan Action,
HousingQCisis:
(New York,
7.
Development
Linkage
Housing,"
Private Devel ogment
and
New
Public
York
Need.,
1983) Appendix.
Cathy Herman interview.
8.
Richard McGahey, "Whatever Happened to Enterprise Zones?" New
York Affairs 7 (1983), 57.
"Failure of Plan for Homeless Reflects
9.
Joseph
Berger,
Housing Crisis," New York Times 19 February 1985.
City
10.
Peter
Limits
9
City
Marcuse,
"Measuring
(May
1984), 26-27.
135
Gentrification's
Impact,"
Conclusion
CONCLUSION
This
thesis
describes
a model
promotes neighborhood stabilization,
development of
subsidies,
basis of
for housing the
poor
contributes to the personal
its participants, and requires only minimal
red
tape and agency involvement.
This
New York City's In Rem Housing Program,
represents a clear
that
alternative to private,
public
model,
the
in unique.
It
for-profit ownership.
It recognizes the importance of community.
And its
comes from the spontaneous actions of creative,
inspiration
desperate people
who., without official sanction or preconceived ideology, began to
seize
control of
property that no longer met the investor's need
to make a profit but continued to meet their need to keep a
over their heads.
squatters
pooled
their
who
Whether these pioneers fifteen years ago were
moved
into empty HUD-owned houses or tenants
their resources to manage their apartment buildings
landlord had walked away,
conviction
with
roof
that
their actions
once
reflected
their
the private sector was not going to provide them
satisfactory
housing
and
their
impatience
with
meager
government attempts to augment or replace private efforts.
ad
hoc responses have been formalized
urban homesteading programs,
York's In
into
These
government-sponsored
by far the largest of which
is
New
Rem Housing Program.
What
makes the In Rem Housing Program so interesting
ad hoc evolution, so different than that of
which
who
are
politicians.
carefully
The
IRHP
designed
by
is its
most housing programs
planners
that was created in
and
1978
debated
merely
by
tied
together
a
management,
years.
number
of
trends--landlord
is
a program that must therefore
comparing
it
not
advantage
of
pre-planning,
nothing.
the
responsibility
when
city
had
the
which
it
dubious
refused
to
is
assume
owners had
for
in
of
from
would have
we do compare it to
or
more
It's per unit costs
serious
and offers
mis management.
living in a tax-foreclosed
participate--it maintains a guaranteed
doing
low-income
not available to everyone--one must
distinction
the
away
government review,
corruption
of
by
management
walked
situation
But even if
had
e
is hardly appealing right now,
it demands minimal
opportunity
Although
evaluated
alternativ
housing programs it looks good.
are quite low,
little
to the
housing
completely chaotic.
traditional
but
thousands of
properties,
neighborhoods,
be
to other housing programs that have
If
been
city
and tenant sweat equity--that had been developing for
It
their
abandonment,
source of
enjoy
b uilding
the
to
low-cost rental
and cooperative units.
The In Rem Housing Program,
the
Assisted, Tenant
because
it
constructed
units,
for
which
standards.
homeless
in
its
does
its present form and in
Leasing proposal,
not
provide
bathroom
is
housing
frankly,
sinks,
low-income
may
open
to
comparable
Some
not
families
older
even
could
criticism
to
that
in
rem
meet
FHA
end
up
waiting for planners to develop more attractive housing
at a time when the federal
role
in
more affluent residents.
lack
But
both
in
government has all
housing subsidization.
137
A
program
but
that
abandoned
ensures
structurally
costs
adequate,
is one that can address the housing problems faced by
poor
today.
with
the tenants,
by
safe and sanitary living quarters at
Since control
further
their
funding become available in
and
buildings
should
years to come.
the
resides
be able to benefit
more
substantial
Meanwhile,
there's no
that a combination of city-funded systems repairs
tenant-funded cosmetic repairs,
cannot
ultimately
they are the ones who will
improving
reason to think
of the property
low
extend
and responsible maintenance
the life of these buildings for
ten
or
fifteen
years
A.
The Future of
In
Rem Housing
City-wide trends suggest that the rate of
decreasing.
Thus,
city-owned
than
it
housing units,
had
approach
while there will
in
been
tax foreclosure is
continue to be a net gain of
the rate of
a few years ago.
increase will
The
city
rem management without the sense of
be
can
crisis
slower
therefore
it
has
had.
This thesis underscores the importance of tenant control
a
way
devoted
to
ensure adequate housing for the
much attention to the role of
management
in the future of
The discussion of POMP
of
this
program,
poor.
I
have
as
not
private managers or public
in rem policy.
in
Chapter
Four
but questioned whether
1738
it
indicated the success
could preserve
low-
income
housing
the long run.
in
recommend that POMP be continued,
managers
and
For these
can
be
identified.
private management should continue to be the exception,
the
for in rem properties.
rule
would
qualified
and even expanded, if
properties
appropriate
I
reasons
But
and
not
Too many questions about
the
long-term availability of low-cost units under private management
remain unanswered.
of refusal"
Tenants should continue to have
"first right
to manage and purchase their buildings.
Since in rem
it is
programs do involve government grants to participants,
right
receiving
the
residents of a building should have
that
those
option
of
before
to improve their own housing
grants
only
a
profit-oriented private manager is called in.
Perhaps the most difficult task for in rem policy-makers
to
plan
become
for
its Central
easier
in
maintenance
if
more
these
money
is
buildings.
devoted
to
Because
HPD
responsibilities,. including the vesting and
all
the in rem buildings,
agency of
One
alternative
plan
has
so
be
to
shift
processing of
units.
Central
Mangement
stabilization period, to NYCHA.
was unsuccessfully attempted several
years
ago.
failure
been attributed to poor communications between
and
and
has
1
NYCHA ,
handling
to
to the inability of NYCHA,
pre-screened
accomodate itself
many
it might be advantagous to relieve the
might
initial
will
preventative
initial
responsibility for managing these 32,000
buildings, after an
a
This task
Management buildings.
is
which it
tenants in newly-constructed
2
tothe in rem situation .It
139
used
Such
It's
HPD
to
apartments,
is
possible
that
the improvement
attempt
shame
at
in HPD's intake procedures has made another
inter-agency cooperation worth pursuing.
that
New
York's in rem tenants should
benefits
of
housing
management
NYCHA's
cooperate.
fifty years of
because
Another
two
not
experience
agencies
It
a
receive
in
are
is
the
low-income
unwilling
to
alternative would be for HPD to create
its
own housing authority, which at least would leave the agency free
to vest properties more frequently
Landlord abandonment,
larger
market
control.
forces
Yet it
like plant closings,
over
which
is the local
a
municipality
has
its tax foreclosure laws,
the legal
landlord.
however,
the City of New
an
It thus has the opportunity to create an
housing market.
a
other cities
model
for
prototype of
municipal
in
Its
two
involvement
In
to
investment in industry.
weapon to seize housing from
to the private
little
Cities have been able
do very little to curb or replace private
York
has
government which must contend with
the results of private disinvestment.
By virtue of
is a symptom of
abandoning
alternative
Rem Housing Program
respects.
First,
can be
it
is
a
in
a declining
housing market.
While the precise structure of the in
rem housing
programs
not be appropriate to other cities,
play
a
role
in
disinvestment
relies
on
preserving
tenant
control
tenant
cooperatives
housing
for
are
low-income
the notion that the city
housing
in one from which
might
in
the
others can
families,
140
the
of
learn.
to achieve much of
now touted as a
face
its
can
private
Second,
success.
it
As
means
of
providing
lessons
of
the
DAMP
cooperatives--that tenant self-management can work but
public
support and
programs--are well
only
in conjunction with other government
with
housing
worth studying.
Notes on Conclusion
1.
"Exit, the New York City Housing Authority,"
Susan Baldwin,
City Limits 6 (March, 1981), 16-19.
2.
Sullivan,
Brian
PrograMs.
The
Division
3. Harry DiRienzo and Joan B.
Housing Engrm
of
Allen,
141
Alternative
Management
Te New York City In Rem
'Appendices
157
APPENDIX
ONE
Summary of Changes in New York City Rent
Regulation Systems, 1943-present.
Year
System
Type of
1943
Rent Control
Rents frozen except
for
15% increase on
vacancy.
All rental units in
buildings with 3 or
more units.
1950
Rent Control
Same as abovewith
15% across the board
increase in 1953.
All units
as above in
buildings built pre1947.
1962
Rent Control
City takes over system
from state;
luxury
decontrol in
1964.
As above;
decontrol
in buildings
units.
1969
Rent
Stabilization
1970
Maximum Base
Rent
7.5% annual increases
depending on costs.
All rent controlled
units.
1971
Vacancy Decontrol
All apartments decontrolled
upon vacancy.
All
1974
Emergency
Tenant Protection Act
Rent stabilization
applied
to all
apartments which have
reached market rents.
All
previously
and
regulated
subsequently
decontrol led
units.
Regulation
Rent increases according to formula tied
to CPI.
Buildings Affected
vacancy
for units
of 3-6
All
units
in
buildings built
1947-1969 with 6
or more units.
units
Source:
David
Bartlett
and
Ronald Lawson,
"Rent Control:
A Second
Look
at the Evidence," Journal of Urban
Affairs
4 (Fall, 1982).
1974-1984:
Structure of both systems remained unchanged.
Each year
allowable
increases for rent stabilized apartments are
adjusted.,
and
vacancy
allowances are adjusted.
In some years there
have
been no vacancy allowances.
In 1984 administration of the rent stabilization system moved from
the
Rent Stabilization Association to the New York
State.
Rent
Control is still administered by New York City.
142
APPENDIX TWO
The Redemption Process
The process by which the City of
delinquent
along
to tax
and there are ma ny
points
a slow one,
the way at which a landlord can bring it to a
terms of
c lose.
redemption are c omplicated and controversial,
ease
with
role
in
On
properties is
New York takes ti tle
since the
which one can get back one's property plays
determining how one will
the one hand,
handle property tax
a policy of easy redemption
a
would
enco urage
to
postpone
properties
at
the
redemption
is
difficult, property owners who defaulted on
payments
due
last
minute.
eager
further, there
home
In
and
On
the
redeem
deli nquent
other
to
their
their
keep
For every story of the rap aci ous
retrieve his building
in order
is the story of the elderly couple
to
the fact that there are at least
their
pay ments.
break
building,
and
elsewhere,
designed
down
into
those who own and
live
in
a
they
small
those who own one or more large buildings and live
the city has followed a bifurcated redemption
to
of
two kin ds
property owners who find themselves in tax arrears, and tha t
roughly
it
mi lk
losing
because hospital bills forced them to miss a few
recognition of
when
hand,
to some kind of emergency but want to
buildings cannot get them back.
landlord
payments
large
payments.
landlords
tax
The
facilitate
redemptions
by the
former
policy
group
and
discourage them by the latter.
Taxes
are
due the first day of
143
each quarter;
there
is
a
fifteen day grace period before penalties are levied.
interest
16.5%
charge on overdue bills is 7% for debts under $2750 and
for
process
other debts.
of
for
sign
agreement
an
property.
with
the
additional
redemption terms are
Brooklyn In Rem Action 33 of
action as a example.
compiled
a
In the winter of
list of all
quarters of property taxes.
vesting.
stop
until
the
Once a building has
penalties
to
been
full
redeem
or
his
The terms are outlined below.
the
action,
effect
foreclosure its owner must either pay in
Because
Finance
These terms are in
vesting title has begun.
selected
from
The annual
substantially
1982,
we will
their
building
vesting, called
buildings owing
four
These buildings were
1 -
30 to come forward.
from being included
"filing,"
Owner occupants of
April
use
this
1981-82, the Department of
or
more
"selected" for
Owners of these buildings were notified of
and given until
unchanged
the pending
In order
in the next
phase
to
of
they had to do the following:
5 family buildings:
-- Pay in full;
-- Pay 10% of arrears down and sign agreement to pay off
along with future taxes, over twelve years.
-- If total
16.5%.
All
arrears are under $2750 interest
is 7%;
balance,
if
over,
other owners:
-- Pay in full;
-- Pay
15% down and pay off balance over eight
same as for
small buildings.
In
both
cases,
years.
Interest
agreements could be made after the April
144
30
filing
date but before vesting with 25.5% interest.
Once
the
city
vests
title it
landlord to get his property back.
vesting
is
still
The four month
is the "Mandatory Release Period."
building
is
released to it former owner
Corporation Counsel)
also enter
all
the
owed,
filing fee,
whichever
owner occupants of
after
If
of
a
the
of the
Such
Services,
and a deposit of
is less.
a
A landlord can
into an installment agreement with the approval
taxes
approved,
period
(with approval
if payment is made in full.
an agreement requires a $100
for
During this time
Board of Estimate and the Department of General
or
possible
the
$900
agreement
is
one to five unit buildings receive
same terms as they had before vesting;
down and the balance within one year.
others must pay
Once the Mandatory Release
Period
is over,
during
which time a landlord can regain his property with
there is still
a two year Discretionary
of Estimate approval.
145
50%
Period
Board
APPENDIX THREE
The Legal Status of DAMP CoogeCatives
Before
purchasing
their
buildings,
tenant
groups
must
incorporate as Housing Development Fund Corporations as described
in
Article XI of
HDFCs
of
New York State's Private Financing
Law.
Only
are permitted to purchase buildings directly from the City
New York without undergoing some kind of open bidding process.
HDFCs
are
defined
required to provide housing
as
those whose annual
times the annual
rental,
issue
shares,
cooperative),
DAMP
which
therefore
the amount
is
utilities.
six
Because HDFCs
(a not-for-profit corporation
it
persons,
is not an appropriate form
cannot
for
a
they must pay corporate income taxes.
cooperatives
accumulate
low-income
gross income does not exceed
including all
are for-profit corporations
for
are also limited equity cooperatives
of equity,
restricted.
or profit,
The
resale
that an individual
restrictions
are
in
can
as
follows:
First
three
investment
assessments.
Any
cooperative.
years:
seller
recoups
(presumably $250)
plus
any
additional
profit goes
initial
special
to
the
After
three
yeaCs:
seller
recoups
initial
investment,
plus
special
assessments,
plus
any
capital improvements that had
been approved by
the
cooperative.
Any
additional
profit
is
split
between
the
seller
and
the
cooperative,
with
the
seller retaining 30'..
The cooperative board can vote to
further restrict the percentage kept by the seller,
but
cannot vote to liberalize the seller's share.
146
Cooperatives produced through the TIL program cannot vote to
sell
the entire building for ten years;
Management Program cannot sell
Residents
required
those from the
Community
the building for fifteen years.
of DAMP coops in the Chelsea-Clinton area will
to pay an additional
40. of
their profit to
the
No mechanism for enforcing this has been devised, however.
147
be
city.
APPENDIX FOUR
Assumgtions Used for
Calculating Prgjected Costs
for In Rem Buildings
Fixed Costs -
Based on similarly situated buildings
Variable Costs
Plumbing
- Assumes
each unit will have one to two leaks
each
year, each costing $500 to repair.
Electrical
- Based
on
electrical
repair
costs
for
these
buildings
over the past few years.
It's hard to
estimate
the
cost to a building of faulty wiring,
since the risk of
fire is more important than the actual cost of repairs.
Plastering
- Includes
repairs,
usually after
water
damage.
Therefore
plastering
costs
decrease
when
plumbing
and
electricity are repaired.
Appliances
- Refers to stoves and refrigerators.
If all
new
appliances
are purchased.,
each will cost $350.00 and
will
need
replacing
every ten years.
If used
appliances
are
purchased.,
they will cost $125.00 to $150.00 each, and will
have to be replaced every two years.
Painting
- Each apartment is repainted every three
years,
as
per New York State law.
Boiler maintenance - based on past experience.
Electrical Service - for building common areas;
based on
past
experience.
Fuel - based on past experience.
148
PfTai4t"V
AL.
4%4MJL
XVW*AM
WoCltos PWCf
04. V0 a
w
to
M
0000
U)
0
Title
r1
Ct
Description
Real Property Tr ansfer Tax - A levy charged everyties a deed
changes hands. In FY'83 40,944 deeds
Ifor schedule
changed hands resulting in collections of
see attached
97,88,469. The entire sue stays in NYC,
with 069.6 million going into the City's
General Fund
State Stamp Tax
4for schedule
see attachedl
Similar to Real Property Transfer Tax but
earmarked for the State. Small nominal
amount remains in NYC for adainistration.
FY'53 40,944 NYC deeds generated
6,326,743 in State revenues.
-
Capital Bains Ta x
0
0t
0
()
-
A charge on the sale of property over
*1 million. 10% charged on the gain difforence between the old and the new selling
price. Approximately 5000 transactions of
this type occurred in FY'83, generating
$14,703,145. This revenue currently goes
to the State General Fund and was recently
abolished from going to the City's. *43.5M
collected statewide.
A tax levied for recording a mortgage onto
Mortgage Tax the title.
37,697 NYC recordings occurred in
ifor schedule
FY'83, producing 079,769,961 in revenues
see attachedl
collected, 058W going to the State's
General Fund. The balance is earmarkeds
1% to the Cityg for obligations over 0.5"m
1/4 of 12 goes to MTAI and for mortgages
of $25K and above, 1/4 of 1% for the
SONYMA Mortgage Insurance Program for
rehabs. Statewide mortgage tax collections
last FY amounted to *159.7W.
Building Dept.
fees - A fee charged for building inspections.
Various fees charged based on size, type,
and kind, eq. 635 for elevator inspection
etc. FY'83 net fees $13,950,000.
Comments
Most of these funds are presently earmarked.
However, due to the enormity of the housing need
and its relationship to real estate transaction
that a setaside and/or surcharge totalling 10%
be instituted to contribute to a HTF.
Projected
Contribution
10
Million
Same as above - Create a State Stamp Tax Surcharge
of $15 plus 1/10 of It for amounts over 635K Surcharge would be targeted to HTF.
1.5
Million
Its estimated that approx. 100 million will
be generated this year. As above, we propose
that a surcharge and/or setaside equivalent
to 15% be instituted and that that amount be
contributed to a HTF
15 Million
This year we expect that SONYMA will receive
approx. 048.5 million. Of this they will retain
about 9% leaving $43.65 million. Of this, 65%
or 028.7 million - NYC's pro-rated share should be invested in the Housing Trust Fund
28.7 Million
Using this pot of 0 at present is not feasible
since an increase should go into increased
inspections
Title
Comments
Description
UDAS repayments
Repayments of federal Urban Development
Action Brants in FY'93 yielding *146,956
in principal plus $479,9046 in interest,
total *625,902. Current repayments supply
a revolving loan fund that is administered
by the Economic Capital Corporation and is
used as retension, expansion, machinery or
equipment monies for industrial and com-
mercial
companies.
I
1q&
bt
This year's total of $8.5 million seems
exceedingly low. We estimate significant
increases over the next few years. All
repayments should be targeted to the
Housing Trust Fund.
-
Repayments attributable to NYC's Participation Loan Program. .*2.7M for FY'93.
Article BA Loan Program repayments - Repayments attributable
to NYC's housing systems repair loan
progriam.
PLP repayments
0hftft
-
Sale of Non-Residential
City Owned Property - Proceeds from the sales and mortgages of
In-Rem commercial properties. 026M
for FY'93.
Sale of Residential
City Owned Property Proceeds from the sales and mortgages of
In-Reo residential properties.
*6,531,292 in sales and *689,665 in
mortgages for FY'93.
Coop and Condominium
filing fees -
Fees charged for incorporation of a Coop
or Condominium, payable to the Attorney
Seneral's Office. *3,646,307 collected
for FY'93, includes 6300K in amendment
fees. Schen
1/10 df 1% of
thefer4n-pric.....jxmum fee cannot
exceed $10K. Fees go to State.' -
Corporation filing fee - A fee imposed for the filing of
corporations in NY State. *7.Ett collected statewide FY'63. Payable to
Dept.
of State.
10 Million
In FY'53 a total $33.2 million was received.
We estimate that this level will continue for
the next few years. The total, minus administrative expenses, should be targeted to
the housing trust fund.
30 Million
These fees should be completely restructured.
Base fee schedule should prevail for all units
selling below $75K, the fee would be increased
by 50% for units offered between *75 - 100K,
and by 100% for units offered above $100K.
The cap of $10,000 per building should be
removed.
8 Million
Fee structure should be revamped and increased
with excess income estimate at *2 million
going to housing trust fund.
2 Million
Title
Registration for Limited
Partnership Byndications
Comments
Description
Real estate related limited partnerships are
a lucrative area that have not been tapped to
benefit NYC. We propose an intensive investigation of how this can be done. However, we
propose that the fee structure be revamped
to yield a total of $9 - 10 million with the
excess over $4 million going to the HTF.
A fee charged for the registration
of real estate syndications. Statewide'
FY'83 collections amounted to $3,650,174,
-
almost exclusively from NYC. Fees go to
State. 1/10 of 12 of dollar offering.
Minimum fee $250. Maxism cannot exceed
$10,000.
Interest Earned on Real
Estate Escrow Accounts - Interest earned on state aided or assisted
real estate endeavor.
H
u-I
Hj
Hotel Occupancy Surcharge - A sliding scale surcharge averaging
$.50 per room per night occupancy tax
imposed on every hotel room in the City -
-.
Tax Increment Finance District - A surcharge levied to those benefited
by a particular service or local improvement
in an area. Financing usually applied to redevelopment by a bond issue that will be serviced from the anticipated additional tax revenues following the redevelopment.
Big Mac Pay Back -
Defined from attached.--
This is being investigated by a Veatch
Foundation Study. We estimate that $10
million per year can be generated.
10 Million
There are over 06,000 hotel rooms in the City
averaging over 70% occupancy over the 365
days of the year. In most instances *.50 per
night would amount to less than a 3/4 of 12
surcharge to the cost of overnight lodging.
It
we estimate that about *10 - 15 million
per year can be generated by the increased
real estate values attributed to public
aetions. These would be harnessed under our
proposal by establishing a T.I.F.D. The
income of which would yield about $12.5
million per year to the H.T.F.
12.5 Million
Million
Interest earned on reserve accounts,
paybacks,
and unspent * from the proposal.
Big Mac Housing Investment Fund would
yield approx. *20 million per year.
Inclusionary Zoning Payment
Commercial Development Exactions
21 Million
20 Million
$0 Million
-
T ot al
$229.7 Million
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