CHANGING PATTERNS OF RESIDENTIAL RENTAL PROPERTY
INVESTMENT IN HOLYOKE, MASSACHUSETTS
by
Thomas P. Kegelman
B.A. in U.W.W.,
University of Massachusetts
(1986)
Submitted to the Department of
Urban Studies and Planning
in Partial Fulfillment of the Requirements
for the Degree of
Master of City Planning
at the
Massachusetts Institute of Technology
September 1991
Thomas P. Kegelman
The author hereby grants to MIT permission to reproduce and
to distribute copies of this thesis in whole or in part.
Signature
of
Author___
Deprtment of Ur
Studies and Planning
AuIwt.9, 1991
A
Certified by
Professor, Department of Ur
i/f'
PhillipAClay
, Studies and Planning
, ,TlesiiAtwrvisor
Accepted by_______________
Chairman, Department Committee
SEP 05 1991
CHANGING PATTERNS OF RESIDENTIAL RENTAL PROPERTY
INVESTMENT IN HOLYOKE, MASSACHUSETTS
by
Thomas P. Kegelman
B.A. in U.W.W.,
University of Massachusetts
(1986)
Submitted to the Department of
Urban Studies and Planning
in Partial Fulfillment of the Requirements
for the Degree of
Master of City Planning
ABSTRACT
low-quality
inhabit low-cost,
The resources of those who
years.
twenty-five
last
the
rental housing has declined over
has
costs
operating
combination with increased
in
This,
to
investors
many
led
created a cash-flow crisis that has
This
uses.
other
to
them
abandon their buildings or adapt
relieved by the use of
crisis was partially and temporarily
the
benefits outside
tax
and
income
sources of
marginal
sources
new
These
stream.
income
cash rent
traditional
while
patterns that,
the ownership
encouraged a shift in
ultimately
profitability,
short-term
some
providing
This
units.
these rental
accelerated the destruction of
the
and
its neighborhood
a building,
study of
case
to
attempts
City of Holyoke, Massachusetts
surrounding
implications
its
illustrate this evolutionary process and
for current residents.
Thesis Supervisor: Professor Phillip Clay
Title: Professor of Urban Studies and Planning
CHAPTER I:
Introduction
Homelessness, overcrowding, and unaffordable rents are
expected part of our
nations's urban
an
The
landscape today.
roots of this disaster in the economic and political changes
the last quarter
of
missing
What is
is an investigation into the social consequences of
these changes.
are
century are well-documented.
owners
The social effects on small property
particularly important because they provide most of the
Why
housing used by low-income households in this country.
investors choose to invest; where they invest;
who
rent
choose to
they
how
to;
they
for how long;
decide
make
to
improvements, raise rents, refinance, or sell a property are
not
What
simple economic equations determined on a spread sheet.
will find
we
complex
in the
case
is a
follows
study that
set of relationships that is strongly affected, but
in no way determined, by the economic and political
changes
that have given rise to a new set of social relations in the
operation and
tenancy
of
low-income,
low-quality
rental
housing.
On
Springfield,
Massachusetts
Union newspaper published a list of
landlords owing
January
Morning
21,
1991
the
taxes and sewer fees to the
Fifty-one
City of Holyoke, Massachusetts.
delinquent properties out
10,000 parcels
may
not seem
like a
of a tax
great
list of some
many, but
amount owed by landlords of apartment buildings was up
the
more
300% from the previous year,
than
from $19,000 to $72,000.
The Tax Collector, Terrence C. Ginley, believed the increase
was
estate speculators
caused by "real
market
when
declining
cash
payments."
is
hit a
it
peak
flow
(and
are
and
into the
who came
faced
with a
difficulty
making
now) are
having
Mr. Ginley wasn't too sympathetic, however.
"unconscionable that
apartment owners
would raise
It
the
rents, take the profits during the rising market and not pay
when the income from the
list
of
properties
housing drops."
were
554-556
Streets, owned by South East
only one
and
Included in
558
Summer Trust.
trustee, an investor who
South
this
Summer
This trust
lists his address
has
in an
upscale Boston suburb.
South Summer Street
is located in a
200 acre
Holyoke known as South Holyoke, or Ward II.
the two
also
This is
one of
areas often referred to as the "Lower Wards"
with Ward
city's
section of
I, or
It
"The Flats").
contains
(along
much of
the
original commercial district lining Main Street.
includes some factories
several
acres
of vacant
apartment blocks
and warehouses, a
land,
and
a
great
built before the Depression.
It
few parks,
many
In
brick
1980 92%
of the 1,073 rental units were found to be in buildings with
5
or more units.
lots of
These
those demolished,
apartment blocks, and
form the core
neighborhood covering 35 acres.
of a
the vacant
residential
on
St. and driving north
on Sargeant
Turning the corner
South Summer Street one is immediately struck by a series of
are
sidewalk
virtually
fastidiously swept
yard standing
clapboard duplex with
from a four
a few feet away
piled
into
obviously
a fenced-in
story apartment
The first
recent
some
undergone
a
there is
of the
four story buildings from
Sargeant Street down to the ne xt corner.
has
and
right hand side
The
of blackened brick.
forms a continous line of
street
side
the left
On
clean.
new, two story,
building
street
gutters and doorways while other parts have been
alleyways,
bright,
litter
with
covered
the
of
Sections
visual contrasts.
curious
in line
rehabilitation,
including clean brick, new win dows, and a modern glass entry
way.
The entrance is flanked by two planters with spreading
This
The building next door has also been fixed up.
yews.
building
holds
the
community development
are 558
Esperanza,
Nueva
offices of
The
corporation.
and 554-556 South Summer
a
next two buildings
The
St..
Inc.,
stone stairway
leading up to the second building has been reduced to a pile
of rubble.
A plywood covered door stands ajar and a glimpse
inside reveals a grimy, unlit
has
recently been paved.
The street
itself
new trees rise
out of
interior.
Healthy,
cuts into the new sidewalk at regular intervals.
Across
the street
South Summer Street.
from 558
South
Summer street
is 563
Plywood covers the first floor windows
and several upstairs windows are broken.
This building
now
subsidiary of the Bank
belongs to a
after a foreclosure auction failed
it from the bank
bought
to bring
an outside
They
of New England.
Prior
bidder.
to this,
sold
F. Lemire was
a
three times between 1984
and 1987.
tenant
in
for almost
1984.
She "can't believe it, what can happen to a building
in just
the building
a year and
rent for 24
$4,000 per
a half."
prior to
five decades
landlord collected
Her last
1984 for
sold the building in
When he
years.
Irene
it was
apartment he had no idea that the building would
sell for $12,500 per apartment the following year.
years later the
At
building sold again
the time observers
income such
paid
off.
remarked that
for $26,000 per
there was
unit.
not enough
that repairs could be made and the debt service
"Someone
will be
real estate developer
foreclosures.
In
Then two
an age
stuck paying the
Richard Courchesne.
bill", said
"We'll
see some
The ultimate threat is demolition.""
of
serious threat.
expanding
homelessness,
demolition is
a
In a city whose downtown neighborhoods have
traditionally provided the poor working class with thousands
of inexpensive
housing units,
more disappear each year.
most
recent
in a
nineteenth century
water
power
of
long
are now gone
and
This current threat is only
the
history of
industrial
the
LTranscript-Telegram,
11/30/87.
over half
deterioration.
city built
Connecticut
"Flip
side
to
River
of
the
As
exploit
in
a
the
Western
buying
boom",
60,000 in the
Massachusetts, Holyoke's population peaked at
1920's and has now declined to about 40,000.
a major part of
Loss of economic advantage is, of course,
mill
Aging New England
this story.
And,
problem in one way or another.
transportation,
and
This changing
landscape
has altered
the shape
I use
housing,
as well.
low-rent
or low-income or
low
quality for
low
modern
of
distribution
communications,
land.
uses of
failure to adapt
demands
changing
the
to
successfully
of course, many cities
weakened by their
Holyoke have been
like
suffer this
towns all
of services,
economic
political and
the term "low-grade"
low quality because
confirming
rent without
rental
its low-grade
of
instead of
it suggests
that it
is
either affordable or necessarily substandard, which might be
implied by
these other
rental properties
scale
and would
adjectives. It denotes
at the
that lies
bottom of
considered
typically be
preferable apartment choices available.
on the
investment strategies of
grade rental
property (those
city
surrounding it.
investigation:
Home Versus Investment
the grading
least
among the
this low-
small owners of
with under
300 units),
this
of an apartment
of South Holyoke and
Two major
of
Focussing primarily
case study examines the evolution over time
building, its neighborhood
a class
the larger
themes arise out
of this
What
becomes
tension
between
investment or
and
apparent
a way
the
throughout this
uses
as shelter.
to make
of
residential
Rental
money.
These uses
providing decent shelter and vice
or neither.
Without attempting
one would certainly
is
the
property
property is both
A property
contradict each other.
history
can
as
a home
complement or
may earn money
without
versa; or it may do
both
to define an ideal balance,
prefer a situation where
earning money
is, at least in part, dependent upon the provision of decent
shelter.
And yet we
elements
of
will find
that the
income-producing
low-grade rental property investment have often
been divorced from the practice of providing shelter.
This should
in no
way reflect
negatively
have provided decent
shelter and
also made
investors skilled in
the practice of providing
shelter are
and deserve much (though
perhaps not
an important resource
always all)
critical
of their financial rewards.
review is
enables those with
(and sometimes
a
system
of
financial
capacity to
money.
who
Those
What is worthy of a
the least interest in
the least
on those
rewards
that
providing shelter
do so)
to reap
the
greatest financial benefits.
Marginalization of Low-income Renter
Another
income
important theme
that
numbers of
has occurred
derives from
in
the
the segregation by
post-war period.
The
households at the bottom of the income scale has
inner-city
Older,
reach.
communities far
beyond their
rental properties
increasingly
suburban
to many
admission"
of
"price
the
raised
have
prices
housing
escalating
and
regulations
zoning
when
time
a
during
increased
the only remotely affordable shelter available to the
offer
income
average
markets, the
other
the shrinking
on
depend
that must
remain
who
those
of
to
tenants move
affluent
As more
household.
low-income
declines.
Buildings
resources of
inner-city residents are likely to deteriorate,
further encouraging the flight of those able to do so, in an
escalating cycle.
As
household
proportionally
of
smaller
than
those
sharp
economic divisions
surrounding communities,
have-nots create
the haves
and the
political
tensions.
It
the
in
live
who
between
and
disturbing social
an
imagine
to
harder
becomes
become
residents
inner-city
incomes
economically integrated community.
conclude that
They
income
investment often
encourage private
base and
low-income households
cite marketing
unwilling to move
households
want
investments in
to what
they consider
Further,
they
to maximize
property taxes.
to offer.
have little
most
group they
find
their
to
lead them
show potential
that
studies
residents (The
neighborhoods.
tax
city boosters to improve their city's
The efforts of
middle-
want to
attract.)
to be
low-income
that
middle-income
personal returns
Communities
from
that spend
a
high proportion
of their taxes on services for the poor are
considered poor investments.
Finally, the demand
for low-
skilled labor has shifted to the retail and services sectors
located away
from the
neighborhoods.
dependent on
traditional,
Hospitals
and
inner-city,
regional
a concentrated supply of
but rather
recruit from
homemakers
and
young
a wide
low-income
malls
not
low-skilled workers,
area, including
workers still
are
living
at
part-time
home with
parents.
When, on top of
grade
all of this, the residents of these
low-
rental properties do not participate in the political
process, they may find that city leaders not only can afford
to ignore them, they are encouraged to find ways to displace
them, as well.
People
Of course
don't disappear,
further out
of
displacement is not
they are
the way.
simply
Being pushed
extinction.
pushed a
to the
little
edges
of
mainstream society, is what I mean by marginalization of
the
low-income renter.
It is an important housing issue because
it
political discussion
underlies
the
housing assistance programs.
issue cannot be
over
land-use and
However, it is clear that this
approached without attention to
the larger
questions of race, class, and social justice.
These
two
themes--"Home
Marginalization of
bring into focus
vs.
Investment"
the Low-Income Renter"-some of the important
will
and
"The
hopefully
changes that rental
housing has undergone in Holyoke since the construction mill
the most
century ago--especially
almost a
housing
worker
dramatic changes which have occurred in the last twenty-five
been strongly shaped
For Holyoke these changes have
years.
and political
by economic
boundaries.
outside its
forces
unique local history and
But they are also the product of a
of the
actions of those who owned, managed and tenanted its
rental
housing.
residents and planners for decades.
They have led to bitter
challenged fundamental
They have
riots.
disputes, even to
Holyoke's
have confounded
These changes
notions of what housing should be, whom it should serve, and
responsible
be
should
who
fundamentally,
have
they
scarce housing
put
combined to
our most disadvantaged households
resources for
most
And
fate.
its
for
at extreme
risk.
a
Following
history
Holyoke's
of
neighborhoods.
nineteenth
Chapter 3
theoretical
this
of
with
continues
thesis
the
2,
in Chapter
framework
discussion
further
worker
mill
century
traces the shifting
the
patterns of
investment, ownership and tenancy in HOlyokethat combined to
allow (or prevent)
up
1960's.
to the
examination of the
attention
to
decisions of
conditions
the
the provision of shelter from the 1840's
Chapter
last twenty-five
effects of
those who
include:
4 then
the
moves
years with
changing
own that housing.
local
market;
closer
into a
particular
on the
conditions
Those
state
changing
and
local
regulation;
and
housing
national
policies;
financial
demographic shifts; and the national economy.
In Chapter
through the
5 the paper
traces those
history of 558 South Summer and how its various
owners used that property, ie:
service
to the community,
occupancy,
shifting conditions
capital
as an investment, a home,
etc.
Indicators
improvements,
refinancing, and resale in addition
a
such as owner-
equity
investment,
to management practices
such as tenant screening, turnovers, and rent increases will
hopefully reveal the landlord's overall use of the property.
The effect will
array
be to show the individual investor facing an
of choices
and
pressures
and
the
decisions
that
resulted.
In
Chapter
6,
we will
investors and the
us with
makers
makers.
views
exploit
the range
Using the
reference point, Chapter
might
the
of current
responding to
The variety of the responses should
some sense of
available to policy
as a
at
various ways that they are
the current conditions.
provide
look
7 will
historical analysis
suggest how
these opportunities
years.
12
of opportunities
in
the
policycoming
CHAPTER 2: The Discussion in the Literature
housing affordability and the
Much has been written about
lack
thereof-- especially for our lowest income households.
at the lower end of the market have been facing a
investors
Often this
market entirely.
for
the
remain and their
housing
inexpensive
relatively
loss of
the
has meant
But the people
housing units themselves.
of the
of them out
that has forced many
cash-flow squeeze
search
property
argument that rental
This literature supports the
unabated.
is
Recently, a new wave of investor has been able to respond to
They have bought, financed, and managed rental
this demand.
properties
done so
to house these
that has
in ways
they have
However,
households.
the long
often threatened
term
viability of that housing.
To
these events
help clarify
term
trend in
which
profits, but they
reveals
Low-Income Renter",
Marginalization of the
touch with their
"The
a long-
not only
have
property owners
have also lost
One,
lenses.
theoretical
two
through
them
consider
useful to
it is
lost
tenants
and their shelter needs.
The
reveals
sought
they
second
lense,
the
"Home
another dissociative trend.
to improve
looked
marginally
to
As the
profitability of
the
income-producing
dependent
Shelter"
vs.
on
new investors
their properties,
were
only
shelter.
The
that
means
the provision
conflict,
of
social
between
contract
implied in
the first
landlords
that
and tenants
two-thirds of
the twentieth
deteriorated markedly under these new investors.
was
century
Instead of
depending on the satisfaction and long term tenancy of their
tenants, these
financing,
benefits
new investors
generous
discovered that liberal
subsidy
programs, and
were more important
debt
lucrative
tax
sources of income
than their
is
these
two
in this process
has
impoverished tenants.
The
following
discussion
divided
into
themes:
The Marqinalization of the Low-Income Renter
The most significant economic factor
been
the
spreading gap
between what
it costs
to operate
rental housing and what the tenant has available to spend on
it-- The Affordability Gap.
The Affordability Gap
Perhaps
one of
housing crisis
the
most often
in recent years has
quoted documents
been A Decent
of the
Place to
Live: The Report of the National Housinq Task Force of March
1988.2
This
report,
alternatively
Commission Report has been credited for
2
called
the
Rouse
much of the impetus
National Housing Task Force, A Decent Place to Live,
(Washington: The Report of the National
Housing
Task Force,
1988).
14
for the new federal Cranston-Gonzalez Affordable Housing Act
This report points to
of 1990.
housing
Its
housing
were fast
earnings
was that
outstripping
to
$15,300, while
in
growth
those households
grew substantially.
approximately half of
with incomes
The Task Force
At the same
found that
all renters were paying half of their
income for their rent, an
between 1974 and 1987.
household
by 1986 it had
(1986 dollars),
under $5,000 (1986 dollars) had nearly doubled.
time rents
costs of
While in 1982 the median
used to pay those costs.
income of renters was $18,000
declined
increases in the
the
of
country today.
families in this
problems faced by
principle finding
a number of indicators
increase of 2 million
households
Single parent households found their
rent burden had increased from 35% in 1974 to 58% in 1987.
Another way to state this
William Apgar.
affordability gap is offered by
"Even adjusting for inflation, the number of
units renting for less than $300 per month dropped by nearly
one million
between 1974 and
the number of poverty-level
1983."
"From
1983
to 1987,
renter households increased
by
300,000 to 7.5 million." "
Ibid.,
pp.11-13.
William C., The Nation's
"Apgar,
(MIT
Future Prospects,
and
Trends
Development), p.37.
5 Ibid.,
p.29.
Housing: A Review of Past
for Real Estate
Center
The reasons
for the
impoverishment
central to this thesis.
that this
or
a
of
renters are
not
What is important to recognize
is
condition is not simply the result of a recession
"downturn
in
the economy".
This
is
a long-term
that grows out of the way we organize our
structural change
economy
and distribute
economy
currently guarantees
the wealth
a
that
large
is created.
Our
population of
low-
income households who must use extraordinary means to afford
the least expensive
housing.
This has
an important effect
on the investment choices of rental property owners who have
found
that the
limited
rents
they
can
charge
increasingly
by the shrinking income of their tenant households.
In traditional economic theory, if
then
attract
capital investment and
supply is in
demand is greater than
Rising
should rise.
prices
supply,
where
are
prices should
expand supply to
equilibrium with demand.
the point
Particularly
when discussing housing, demand has to be distinguished from
need.
mean
Just because people
that they
which
current
(ie:
can afford it.
the buyer
market,
production as
can afford
rising
much as
homelessness,
conditions).
need and want
Demand is
to effect
prices
they have
housing, doesn't
have
led to
overcrowding,
only the demand
via cash.
not
led
In
to
the
more
under-consumption
and
substandard
Estate
Real
Real Estate
significant
cause for
comes from households
demand
today's new,
for
those
slowed growth
in
apartment demand:
to compete
They
argue that
class of moderate income"
This failure to generate an
for
the
previously
loss
in
the
market.' As tenants'
households"
"empty nesters" and a
renter households. *
effective demand may
absolute number
available to
are those
attracting investors
as "affluent younger renter(s)",
"growing
renter
that can't afford
which serve the needs of "higher-profile renter
such
renters at
the
of
account
units
housing
lower end
ability to pay declines to the
of the
point
where they are unable to afford the minimum operating
of
their housing,
the owner
a
finds
report
the
market-rate housing."
apartments which are
In
opportunities.
of traditional
high proportion
important, a
"Most
market,
residential
the
analysing
investment
industry's
estate
real
the
assessments of
their annual
1990 reports
Trends in
Emerging
Corporation's
Research
of rental
apartments at
costs
the
lowest end of the market is faced with the choice of pulling
out or trying to redirect
his marketing to a different
"Real Estate Research Corporation
Real Estate: 1990, October, 1989.
set
(RERC), Emerging Trends in
seem
It would
linked.
argue that these are
One could
in the absolute number of
to assume that a decline
reasonable
low-rent rental units is linked with the increasing difficulty of
After all,
to pay for their housing costs.
low-income renters
why wouldn't landlords logically withdraw from such a problematic
market?
producing
The
tenants.
of potential
producers' response is
units for those households.
between 1973 and 1983, 4.5
the rental market
to stop
Observers noted that
million units were removed
through conversions or
from
demolitions, half
of those estimated to be occupied by low-income households. a
Privately-owned,
non-subsidized
housing
available
and
affordable to low-income households is becoming a "vanishing
resource... (that) continues to be either lost to abandonment
or upgraded to serve higher income households."" Though the
homeless may
lack housing for
various reasons, independent
of their ability to pay the rent, the evidence that
the current homeless population is made up
children
and
employed
workers
underlines
much of
of families with
the
economic
sources of the homelessness problem.
Widening Social and Cultural Gaps
The marginalization
refer only
demand a
to
of
the lack
the
of the
low-income renter
economic
need
power needed
place in the mainstream of the community.
not
to
Health,
"National Housing Task Force, p.12.
cApgar,
William, "The Declining Supply of Low Cost Rental
Housing",
Testimony presented to the U.S. Senate Subcommittee of
Housing and Urban Affairs," June 5, 1987. Cited in Keyes, Housinq
and the Homeless, 1988, p.7.
and social
developmental,
homeless
housing
the
by
perceived
are also
substandard
otherwise
or
vermin-infested
poorly-heated,
indicators of some personal or social
the
lead-painted,
in overcrowded,
living
those
and
by
problems** experienced
community
larger
defect.
as
Indeed, when
the inhabitants of such housing are of a different racial or
often attributed to that group.
ethnic group, the defect is
The marginalization
generational poverty",
suggest
social
implied in
that is
"inter-
the terms
or "culture of poverty"
"ghettoized"
go well
devaluation that may
isolation and
beyond simple economic status.
Home vs. Investment
Marginal Profit-making
for
low-income
increasing
their
Despite
households.
market
remains a housing
Although it is shrinking, there
difficulty finding adequate housing, many low-income renters
continue to
small
do so.
rental property
Much
owners who
financial opportunities in
it is housing that receives
more,
it is
housing
of those
where
units are
have
operated by
continued to
rental housing.
In
some cases,
In
many
order
that
government subsidies.
overcrowding
tenants can afford the rents) and
(in
find
low maintenance
(in order
1979.
Omar Galle.
Hughes, and
Walter, Michael
'Gove,
"Overcrowding in the Home: An Empirical Investigation of Possible
Review 44:59Consequences." American Sociological
Pathological
80.
19
that
landlords can
maintain
the cash
flow) may
make the
units temporarily affordable, but such abuses also guarantee
accelerated deterioration of the units.
Another
means that
has
recent years includes
benefits to
This
outside income and
substitute for the disappearing
includes tax
point here
benefits (or
is
most
income stream.
from
banks and
thrifts.
business of
offering
households in
exchange
simple
to low-income
reasonable rent check is no longer profitable.
with this challenge
opportunities
in
other
recently) cash
by aggressive
that the
decent accomodations
for a
especially significant
the use of
lucrative loans provided
The
been
Faced
investors are discovering profit-making
on the
"margins"
of
their rental
property
investment.
This change in the way of doing "business" has
had
(and often
various
provision
marginal
of
decent,
disastrous)
affordable
profit-making
implications
rental
opportunities
for the
housing.
include:
These
speculative
inflation, debt-leveraging, and tax benefits.
Speculative Inflation
An
investor
property
analyzing
partly bases
inflation: inflation of
interest rates.
the
earnings
his measure
of
potential
return on
of
a
expected
expenses, income, appreciation
and
The price he is willing to pay anticipates
growth or decline
period.
the
in his
net
return over
the holding
Buyers in the 1970's and 1980's were generally very
20
optimistic
in their assessment
financed by
were then
These purchases
were buying.
they
the properties
buyers to bid up
anticipated returns caused
These
returns.
of overall
that also anticipated appreciation in values and thus
banks
felt assured that the amount of the loan would be covered by
the
resale value of the property.
repayment
schedules
operating costs of
properties,
that
These mortgages demanded
significantly
the properties.
especially during
increased
Every resale of
an inflationary
the
these
period like
the 1970's, ratchets up the cost of housing another notch.
When
a significant
proportion of
the return
is derived
from the gain on the appreciation of the property, investors
must sell in order to realize that gain.
intensifies
the trading
musical chairs
with
becomes
each
new
As the speculation
almost
buyer
like
eager
a
to
game
reap
of
his
benefits before the music stops and values fall markedly.
Speculative
short
depreciation
Investors
hold
turnovers
seeking to
were
further
schedules
encouraged
available
maximize their
returns
by
before
the
1986.
would rarely
their property beyond the depreciation period if there
was any possibility
housing
prices
increased rate
were
for sale.
At a time
reaching
of turnovers
historic
due to
when increases in
proportions,
short holding
the
periods
only served to exacerbate the inflationary spiral.
The
inflation of the '60's and '70's
also led to banking
reforms that further contributed to this speculative cycle.
Debt Leveraging:
Banking Deregulation and the Credit Boom
Prior
the
to
administration,
small
the
most
mortgage
financing
the
Roosevelt
was provided
In many cases
significant share of
the financing.
The innovative housing finance programs of the New Deal
only
facilitated
availability
of
and profitability
fixed-rate,
but
homeownership,
rental market as well.
by
short periods.
investors lending for
seller provided a
of
reforms
banking
One of
long-term,
also
increased
debt leveraging
not
the
in the
those innovations was the
level-payment,
self-amortizing
mortgage.
As inflation increased in the late 1960's, these
mortgages,
over time, returned
rate less than
the
to the lenders
deposit rate after inflation
same time the primary vehicle
an interest
L.L
At
for these home mortgages, the
nation's savings banks, were constrained by regulators
offering
Neither
competitive interest
were they
able
to
the
rates
invest
to their
in
other
from
depositors.
potentially
lucrative deals, currently being used by those competing for
depositors' cash.
in 1981,
the
When the crisis
led to record losses
Congress moved to provide
The Depository Institutions Act of
legislative relief.
1982 both provided new
"'This contributed
still another source of
income to
the
investor.
When interest on a mortgage was less than
inflation,
the real, after-tax interest rate was often negative.
22
aid and new flexibility in
government
time
rates each
a house
interest
bank industry
The new
its
flexibility
in
assets
several areas up to
a total
This new competition moved the
of 90'4 of its total assets.
local
prevailing
increase
to
commercial-type investments in
savings
clauses,
was sold.
thrift
federal
a
allowed
"due-upon-sale"
"catch-up" with
to
thrifts
allowing
restricting
laws
overruled state
It also
investment.
out of its
depositors' savings deposits
post-war era
of turning
into home mortgages and
into a new high-stakes player in global capital markets.'2
In this competition for capital,
for mutual savings banks
to
As the savings banks began
to
new legislation made it easier
convert to s tock ownership.
amass huge n ew
sources of
to feel
also began
that capital .
another provision of the
capital
by
issuing stock,
increasing pressure to
Stockholders now became
earn income
regulat ory
traditional
doors were
investment
opened
on
intensely interested
in the thrif ts' ability to earn a high return on assets.
the
they
to
all sorts
opportunities,
they
of
As
nonwere
simultaneous ly under pressure to exploit those opportunities
quickly.
were eager
Fr om junk bonds to skyscrapers,
the savings banks
to put their newfound capital quickly to work in
high earning investments.
Housing
"Deregulation, Restructuring of
2Meyerson, Ann,
Housing,
on
Perspectives
Critical
in
System",
Finance
(Philadelphia: Temple University Press) 1986.
23
attitude had a
in the
significant impact on the real estate market
mid 1980's.
underwriting
Lenders
standards.
depositors' money at
loans
the
experiencing,
appraisals
trusted",
did not change
Nor
their official
did they knowingly
increased risk.
made without
were often
visiting
source, this aggressive lending
to one banking
According
property.
And yet, he
the
admits,
bank ever
from the
anyone
"With
put their
volume
we
loan officers didn't have the time."
were
taken
he says.
at face
"You
value.
have
were
Outside
"Developers were
to remember that
been over 10 years of continuously appreciating
there had
real estate.
Many of these loan officers had never experienced a downturn
in the real estate market."3
Developers readily took advantage of this situation.
sellers being offered
to
take back a
price.
unheard-of prices, they could
second mortgage for a
The total of
manager who assisted
in the 1980's told me
table
price.
in dozens of real
afford
fraction of the sale
that mortgage plus
loaned often exceeded the sale
With
what the bank had
One Holyoke property
estate transactions
that a buyer rarely left
the closing
without some cash, in effect a negative down-payment.
A former banking commissioner writing about some of the more
egregious
lending
and, perhaps, criminal
examples of this
kind of
found that developers were able to obtain mortgages
"Interview with Roy Scott, 5/15/91.
24
thousands of
for tens of
on properties
than
dollars more
their market value.""
The
properties (a)
them,
(b)
these
lending
this liberal
purchase
without any demonstrated capacity
to manage
for
possible
investors
the
(c) enough easy capital resources to
investments on
doomed
if
to themselves
risk
financial
with no
properties failed, and,
make
quite
were
to
was
it
climate,
investment
With
disastrous.
and quite
simple
property
for
implications
scale, buying
grand
a
hundreds of units at a time.
Tax Benefits
Tax benefits
rental
constitute the third
prior to
These benefits,
gains exclusions,
a period
during
profitability
major contribution
1986, took
accelerated
of
lagging
three forms:
to
rents.
capital
depreciation schedules,
and
income sheltering.
(1) Up to 1986 60%
taxation.
of the gain on
By 1988, however, capital
differently than other income.
enhancing the
sale was excluded from
gains were treated no
Capital gains exclusions, by
value of the income from the eventual sale of
the property, enabled investors, in
to forego operating
an appreciating market,
income and still maintain
a reasonable
return on income.
"The
Ada,
Focer,
Business, March 1991.
Bank Robbery",
Great
25
in
New England
(2) The depreciation
for
as a business
federal
expense to
government
investment in
rates
has
offset taxable income.
attempted
housing by offering
for
asset can be accounted
of a capital
residential
in
the
past
The
to
spur
accelerated depreciation
properties.
In
1960,
that
acceleration was further enhanced, cutting the straight-line
depreciation period to one half its previous rate.
this rate
was lengthened in successive years,
Although
it was still
considered a significant benefit until the 1986 reforms when
residential
properties were increased to 27.5 years with no
acceleration options available.'"
(3)
Prior to 1986 it was possible
from one
source by
applying losses
source, often real estate.
income
professionals
income
by investing
paper).
The
activity.
new
to offset one's income
tax
from any
other
Doctors, lawyers and other high-
could
in
taken
effectively
properties
law
that
"shelter"
lost
significantly
their
money
restricts
(on
such
However, in the past, the paper losses engendered
by acclerated
depreciation
schedules
and
large
mortgage
interest payments made real estate a particularly attractive
investment.
interested
Those
in
seeking
the actual
tax
operation
shelters
of
were
rarely
their properties.
"It should also
be noted
that accelerated depreciation
schedules increase the likelihood of short ownership periods. As
owners "use up"
this tax benefit more quickly, their
financial
incentive to hold on to their property is proportionally reduced.
26
knowledge
little
had
often
They
its
building,
the
of
tenancy, or even its location.
sources of income: speculative
These marginal
leveraging, and tax benefits allowed rental properties
debt
to
inflation,
where that
generate income
physical shelter for
providing
knowledge of one's
Intimate
budget, and
the
hand with
viability of
knowledge
of
market trends
key
the
The
strategy.
his tenants and
new
loan
this
long-term
requirements,
to wealthy
investor
new
on
instead,
depended,
underwriting
a
laws,
tax
investors seeking
to
was not profitable
The old strategy
shelter their income.
a tough
surrounding neighborhood
elements in
strategy
and access
his partners.
to the
a commitment
of
instead to
property and tenants,
the property and the
longer
no
the business
away from
providing income shelters to
the business of
were
investor
of the
many successful
many areas was to shift
developments, the overall effect in
the attention
been
otherwise have
contributed to
Although this
impossible.
might
and those who used it soon gave way to the new investors who
prices based on their enhanced
were able to offer high
use
of these marginal income sources.
The reforms
market
soon
and the
of 1986
after
has
crash
removed
most
in
the real
of
these
estate
marginal
incentives.
As these new investors are forced to return to
traditional
investment strategies they are finding that the
legacy
of
deferred
maintenance
27
and
high
debt
service
payments is
more
traditional
investment strategy may
well,
than
these
properties can
bear.
The
been working
not have
but the new solution has proved even worse.
Not
only
are these properties financially untenable, but a generation
of investors who might have held on for a little longer have
all disappeared and their replacements seem ill-prepared for
the return to the difficult
and unrewarding job of managing
low-grade rental property.
Marginal Versus Rent-Driven Profit-Making
I believe the term "marginal
because it
makes
profit-making" to be
an important
distinction in
useful
the way
an
investor earns income from the use of his property.
This
method
is
contrasted
with
method which I call
"rent-driven".
is
his
dependent
for
collected every
time of sale.
basic
the
operating the
self-sustaining
can only earn
building.
because it relies
Ideally, when
strategy that ensures
as
at the
willing to pay a rent that
strategy is "rent-driven",
from rents.
either
by a buyer
In this example, the landlord
costs of
traditional
rent,
month or as capitalized
than the
cash income
more
The rent-driven landlord
income from
income so long as people are
greater
the
is
This
on the
this works, it is a
a long life
for the
building and a prosperous return to the investor.
What
the findings
operating
below will
income from rents
show is
that, as
declined over the
28
the net
last twenty
landlord was
supplanted
rights and
regulations
of finance, expanding
As these owners failed or sold out to
outside
investors,
saw their
never
whom
some of
properties
of their
intimate knowledge
the
owners
shifted from local
rental property-owning community
toward
composition of
the
sophisticated buyers,
relatively
at a
property owner
small
put the traditional
with a
and safety
increasingly vigorous health
decided disadvantage.
financially
"marginal"
these
using
by those
Increasingly complex rules
sources.
tenant
traditional rent-driven
a period when the
years, there was
buildings and even refused to visit them.
Declining Commitment to Public Housing
private
the
As
profitable uses of
market
discovering
was
the most
that
little to
low-grade rental property had
as small
do with fulfilling the needs of low-income tenants;
were deciding
investors
upgrade it,
or use it
ultimately reduce the supply of
public
come,
however,
the trend
has
property,
making choices that would
low-income housing for years
sorely
action was
the
benefits described
for the marginal
as the private sector was
above;
to
to abandon
either
not been
to
needed.
Nationally,
increase the
public
commitment to subsidized housing, but rather the opposite.
For
many
low-income
households,
the
availability
federally-subsidized housing assistance over the last
years
of
fifty
Despite significant failures,
has been an equalizer.
29
public
assistance
housing
has
given
disadvantaged households a badly needed opportunity
in decent,
safe, affordable housing.
of
millions
to live
Perhaps predictably,
the initial generosity of federal housing programs peaked in
the early
1970's and has now waned for almost twenty years.
Following
a brief resurgence
Reagan administration
during the Carter
sharply applied the
years. the
brakes beginning
in the first term.
"Since
1980,
slashed
by
billion,
73
the
(federal)
percent
largest
housing assistance
...
from $33
cut
of
any
has
billion
domestic
been
to
$9
program
Chester Hartmann's 1986 piece in Critical Perspectives
Housinq cites three elements
in
of the Reagan administration's
attack:
1.
Termination of existing new construction
programs
for lower-income households.
2.
Sloughing
developments
off
through
existing
lower-income
deterioration,
housing
demolition,
or
sale.
3.
Extracting ever
households' budgets as
larger
portions of
a price for getting
lower-income
federally-
subsidized housing (increased from 25% to 30%).
Dreier, Peter and John Atlas, "Mansion Subsidy Revisited",
Shelterforce, May/June 1991.
30
He goes
starts with
income housing
28,000 in
cite the
on to
1985.
in HUD's
lower
in 1980 to
only
decline
steady
183,000 units
He lists cuts in the Community Development
Grant (CDBG) program, cuts to existing public housing
Block
expenditures and cuts
operating subsidies and modernization
to other housing-related programs.
new
goes beyond the demands of any
This dramatic decline
austerity that might be demanded in a period of low economic
in other
increased spending
Even ignoring
growth.
areas
(ie: military programs) or wasteful spending (ie: the Pierce
it is
scandals),
clear that the Reagan
administration made
political decisions to get government out of the
deliberate
business of increasing housing opportunities for
households.
low-income
has done little to
The new Bush administration
reverse that trend.
I
would
contributed
that
argue
low-income
the
of
marginalization
the
to
further
have
policies
these
household and the small property owner who has traditionally
provided
might
The loss
their housing.
have been
built during
contributed to the
surely
out onto
the streets.
living
in substandard
budget
went to pay
The
a period
exorbitant rents must
of
many
deterioration
of
public
of
pushed people
cumulative effects of
most
our
housing
nation's
from
units that
growing demand
of
tight market that
units where
chances
life
of housing
of the
years of
household
have reduced the
children.
underfunding
The
has
the public perception that
certainly contributed to
public
housing is fundamentally impractical and that those who live
in it are unworthy of public support.
The declining
resources of
investors that
their buildings
was
partially
has led many
or adapt them to
and
who inhabit
owners to
other uses.
temporarily
relieved
that,
encouraged a
while
ultimately
providing
shift in
accelerated
the
the
of
patterns
profitability,
term
destruction
use
However, these
the ownership
short
some
abandon
This crisis
by
marginal sources of income and tax benefits.
new sources
low-grade
a cash-flow
post-war era has created
rental housing in the
crisis for
those
of
these
rental
units.
Although
the existing
literature emphasizes the economic
effects
on rental
housing
effects
have also
been powerful.
and
its
tenants,
the
The traditional
rental property owner, able to make a decent living
the
provision of a socially acceptable service
low-income
households),
Neighborhood residents
powerlessness,
mutual
and the
accountability.
familiar
with
might
threatened
experience that
loss of
through
(ie: housing
with
extinction.
loss as
isolation,
and
This should sound familiar to those
whose
attention to
problems is often as strong
for improved housing
do well
small
neighborhood identity
community-based groups,
these abstract social
support
is
social
and city services.
to consider the
32
importance of
as their
Planners
these social
effects as they attempt to "rehabilitate" neighborhoods with
shiny, new buildings and larger, more distant investors.
more closely
period
post-war
the
we examine
Before
I
believe it is important to establish the historical roots of
forces which
the
with both
the present
provides
That history
it.
shaped
and
South Holyoke
of
neighborhood
the
(1) a
physical and abstract legacies that cannot be ignored:
built
be
must
that
environment
be accounted for;
demolition must
even
accomodated--
its
(2) a way of doing things
that presupposes what can and cannot, should and should not,
done--
be
evolution of interpersonal
of the buildings of
complex
set of
exchanges into a simpler
The
be easily reinvented.
social norms and cannot
a
summarized
have
that
traditions
origins
traditional ways
South Holyoke and the
that they have been used is covered in the next chapter.
Methods and Data
for the information in
The sources
from
three sources.
experience
years;
The
rental
as a property manager
as a member
Association;
The first
of the
this case study
is the
come
author's personal
in South Holyoke for four
Greater Holyoke
Rental Housing
and as an owner of rental housing.
second source
property
is a
investors,
series of interviews
property
managers,
with small
lawyers,
housing advocates and bankers both during the Summer of 1990
and the
Spring
of 1991.
For
33
most
of these
interviews,
confidentiality
was
a
pre-condition
and
therefore
Interviews with
quotations are attributed.
few
six investors--
each holding investments in rental properties totalling less
than 300 units -discuss how
what
were
conducted.
they decided
Investors were asked
to invest
in rental
to
properties,
changes they had seen in the regulation, financing and
profitability of their
properties over the years,
and what
they saw for the future.
The remaining
information was
unpublished reports,
culled from published
and
newspaper clippings
and
Census data,
the files of the Holyoke Planning Department.
I
had
hoped
financial
to be
able
to
have
available
the exact
records of investors for the purposes of explicit
analysis.
The
reluctance of
investors
and the
confused
nature of their bookkeeping combined to make this impossible
for
this
report.
research, I
detailed
am more
financial
However,
after
convinced
analysis
having
of the
and would
attempts to do such an analysis.
concluded this
usefulness of
encourage
more
further
CHAPTER 3: The Early History of Holyoke's Low-Grade Rental
Housing, 1846 -
1965
Introduction
the
of
turn
the
around
built
of
buildings
the apartment
Most of
South Holyoke
Their
century.
were
size,
configuration, placement and density were primarily designed
within
The
large supply
provide a
was to
plan
The original
the millworkers and their families.
to house
of inexpensive
units
an easy walk of the surrounding manufacturing mills.
of local manufacturing jobs '
subsequent loss
increased
challenged
and the
use of the automobile for commuting has seriously
the underlying
few of
that
observers
report
continue
to
buildings
remain.
work,
to
walk
premise for
South
today.
plan.
this
Holyoke's
Local
residents
Nevertheless,
the
And, regardless of the changing economy,
people have continued to buy them and make use of them-- for
both shelter and profit.
Comparing
strategies,
to promote
these
investors
we will note how,
the
provide shelter.
these buildings
long term
and
their
investment
at times, their efforts seem
capacity of
these buildings
to
Furthermore, we will see how the owners of
may
have even
nurtured a
self-sustaining
the
and
Census Bureau
1988 the
1970 and
Between
Massachustetts Department of Employment Security reported a total
of nearly 4,000 manufacturing jobs lost in Holyoke.
35
At
community.
destructive
other
can "work" to
and the
Understanding how
provide
to
promote
clues to
period
sustainable shelter
setting
the former
been
neighborhoods that
can become useless or
important
have
a building in one
provide a sustaining and
and in another period
designed
interests
those
of these buildings
they comprise.
can
times
even dangerous
public
condition
policies
and
avoid the
evolution of
Holyoke's
latter.
In this
mill
chapter we
worker
examine
housing
from
the
its
original
conception
and
construction through World War II up to 1965.
Sheltering the Mill Worker: Landlord As Mill Owner
From its
shores
very beginnings,
of the
"housing
acres of
industrial
has
been plagued
a group of
Company
city on
Falls, the
in 1846
New England.
water and
water
attraction of
was expected
With a
and bought
from the
cheap and
to draw
upper canals
with a
1200
the 57
plentiful
manufacturers from
massive dam to
direct into canals, mills
the
Boston industrialists
land to build an entire city at the site of
hydraulic power"
that
When
Hadley Falls
foot Hadley
all over
Connecticut River
problem".
formed The
this
were to be
would flow
capture the
located so
through the
MWater
power
charged
to mills
at
the
rate
of
$4.62/horsepower in
1887 while steamcost at
least
$19.89/
horsepower. From Holyoke City Directory, 1887.
36
Original
so on to the river.
mills to the canal below and
canals.
drawings showed 25 cotton mills located along the
of the construction and mill work
Most
was low-skilled and
Irish
as conditions
to the States
had begun flocking
immigrants
a problem.
labor was not expected to be
Attracting
To plan for an adequate
worsened in Ireland in the 1840's.
supply of housing for the workers in the anticipated
mills,
immediately adjoining
the owners set
aside parcels of land
the mill sites
to be used for housing the
workers for that
particular mill.
early period the
In this
earning income
as a
means for
was directly tied to the supply of labor for
factories.
the local
use of housing
The purpose of housing was to shelter
workers in order that their work might provide income to the
mill owner.
Housing was
not seen, as yet, as a
commodity in and of itself.
During this period mill
wages
workers were "little more than enough to live on".
for most
The average
week with
company
profitable
wage at the
Lyman Mills in 1871
was $3.24 per
board costing an average of $3.00 per week in the
boarding
houses23
income, the investor with
With
so
little
disposable
capital at this point would
have
A
Holyoke, Massachusetts:
*"Green, Constance McLaughlin,
in America, Archon
Revolution
the Industrial
Case Hisotry of
Books, 1968.
-Green,
p.105
37
found
comparatively little reward for his investment in the
production and rental of housing for these workers.
"Cornering"
The
in
the Land Market
transportation and the location
lack of
the
crook of
a
alternative housing
allow other
major
river
with
sites scarce.
The
no
of the city
bridges,
owners refused
available land in this "corner"
to
of the western
shore to
be used for housing.
They felt
and best
use for the
manufacturing mills,
land was
made
that the highest
which
they felt sure would flock to the City.
In 1855
there were
families.
In
only 514 dwellings to
the
neighboring
townspeople pointed out that
common while
city
accomodate 778
of
Chicopee,
small, comfortable houses were
Holyoke offered
only brick
blocks three
and
four stories high and the rent for apartments in such places
was higher than any surrounding town.
in
the local paper
capitalize on the
"create an
that the
owners, instead of
attractive manufacturing village"22
option was to build a
the river.
2LGreen,
2Green,
p.41.
p.
hoping to
anticipated boom, should instead
who were unable to find housing in
the other
One observer reported
41.
38
seek to
For those
the available tenements,
shanty along the shores of
out
a
When
windowless shelter.
better
This
available.
"Patch",
collecting
shelters,
baking ovens
and
an
provides
sidelight
historical
to
in.
moved
often
called the
pumps
few water
the
sharing
firewood,
was
building
together
worked
often
newcomer
in what
neighbors, living
These
move on
possible to
it was
another
accomodations,
a one-room,
built
boards and
a few
up
hole, put
dug
newly arrived poor Irish
land, the
Squatting on the
ethnic and community-based self-help
interesting example of
in the face of mainstream neglect that may have implications
for Holyoke's most recent newcomers.
Many
the
the housing
townspeople blamed
the
of
shortage on
Company's directors who still owned all the developable
to the neighboring
bridge
use
their
of
the construction of
landowners had opposed
These
land.
land
for
South Hadley and
housing
a
restricted the
development,
preferring
overcrowding to lowering real estate values.
Crisis and Accomodation:
The
Rise
of
the
Independent
and
the Owner-
flourish, paper
mills were
Investor
Occupant
When
cotton mills
introduced
with
commercial
banks
failed to
great success.
aided
railroad
expansion.
to an increasing
demand for
Though the mills often provided housing for
39
and new
economic
overall
the
Growing employment contributed
housing.
A new
their
mill hands, there was not enough housing for
households, much
less for
merchants and others.
a block with
find
and
the laborers,
clerks,
In 1866 public health officials found
105 people
people in one
those of
these workers'
living in 17
room alone2
Health
rooms, some with
10
officials continued to
appalling conditions in Holyoke, even for those times,
found
infant
mortality
rates,
residents/room occupancy ratios
death
rates,
that rivalled the worst
and
in
the nation.
But the political complexion of the town was changing.
The
new
paper
involved in
absentee
the life
of the
often
local businessmen
community as
opposed to
the
The wage scale in the paper mills was higher
that for cotton.
industry,
Industrial growth
fed the building
including contractors, lumberyards,
brickyards.
They,
in
residential construction.
of Holyoke millworkers
demand for
were
owners of the cotton mills, derisively called "the
cotton lords".
than
mill owners
turn,
sought
sawmills and
orders
for
new
Combined with the rising earnings
(among the highest in the state),
new housing opportunities for
could no longer be ignored
the
Holyoke's workers
by the Company's successor,
the
Holyoke Water Power Company.
In
the 1870's
1872, a bridge
their policies were relaxed
was built
Green, p.116.
to South
Hadley.
somewhat.
In 1873,
In
the
in conjunction
only
mills.
with specific
developed
sites be
that housing
company stopped requiring
was more
Land
apartment
easily bought by small investors, who constructed
in which they often occupied one of the units.24
buildings
The Die Is Cast
that required thousands
Built around a manufacturing center
within easy
inexpensive housing units
of
walking distance
space necessary,
amount of
the least
while occupying
peaked.
of Holyoke had
By 1923, the downtown development
its
neighborhoods were filled with densely constructed tenements
was higher
ratio
Boston.
In 1880
it was 10.52 per dwelling, in
1900 it was
In South Holyoke, the
unit, in 1910 it was 11.9.
10.9 per
except
in Massachusetts,
city
than any
occupancy
years Holyoke's
many
For
few amenities.
with
ratio was 22.3 per dwelling unit in 1915.
"Tigertown", as South
were
units
the
lowest rung
unchanged to
of
the
this day.
ladder,
ladder.
24Green,
172.
those
with
That status, of
has
remained
What has changed
particularly in recent years,
on that
to
available
the lowest rents.
resources for
originally, was
It was a neighborhood whose
its rough character.
known for
rental
Holyoke was called
the
least
being on
virtually
so dramatically,
is the gap between
the rungs
The earlier residents of South Holyoke may
most
only slightly less
they were
been poor, but
have
of the other immigrant
so than
who made up over 75".
2nfamilies
of the City's population in 1920.
The
ethnic
construction
of
Holyoke's
established as well by the 1920's.
that
restrictions of
society
was
With the new immigration
decade there
were
waves
no new
of
ethnic groups to disrupt the social fabric of linguistic and
cultural enclaves.
Industrial Stagnation
Holyoke's main advantage as
power,
was
diminished
generation.
Local
sell
power
their
an industrial center,
with
the
advent
of
hydro-
electrical
power stations on the river were eager to
to any
manufacturer
anywhere.
Though
delayed by the temporary increase in demand for goods in the
first World
peaked as
War,
by 1922
it was
clear
a manufacturing center.
closed their doors
that Holyoke
had
As manufacturing firms
and thousands of workers
were laid off,
the population began to decline.
World War II provided some
but the trend reappeared
in the 50's and continued,
relief
slow but
height in
2sNon-native
steady,
through the
1923 of 63,094 the
60's.
From
its
estimated
population fell to
53,065 in
born plus native born of foreign parents.
42
The number of wage earners in Holyoke's factories in
1960.
1957 was 65". of its 1923 peak.24
The Consolidation of a Neighborhood
familiar
Those
often describe
period
the
during
Holyoke
South
the Depression
following
diverse
with
strong,
as a
it
They remember the variety
and stable neighborhood.
halls
of shops along every street, the churches and meeting
which residents widely attended, and especially the extended
tenures
The sense
of residents.
wanted to move away.
people rarely
was that
Households living in the same building
for twenty years were not considered uncommon.
school,
easy
With church,
family, friends, work and stores all located within
walking distance,
families to
stay
there was
strong incentive
possible where
as
as long
a
for
lived.
they
Landlords rarely advertised in the paper.
It was a
common practice for an
for" some time in advance
made arrangements
next
strong
of a vacancy as existing
for family and
vacant apartment.
demand for
friends to move
Force
Base
rental units
often
tenants
into the
practice was supported by the
This
following the
especially during WWII, when soldiers
Air
be "spoken
apartment to
lived
in
Depression,
stationed at Westover
apartments
in
the
neighborhood.
"Saunders, M.O.,
Planning Board), 1961.
Master
Plan
43
Report,
(Holyoke: Holyoke
The
ethnic
their own
and
religious groups
neighborhood
their status quo.
rivalry
had
that
enclaves found
By the 1950's
long subsided.
little
established
to
disturb
the Irish/French-Canadian
South Holyoke's Irish residents
no longer dominated it by the 1950's.
however,
had
The French Canadians,
remained within easy walking distance of the local
French-language parish
largest ethnic group
southern
church.
by 7 to
They outnumbered
i.
Aside
African-Americans (3.5'4 of
challenges to
this ethnic balance
"gateway" neighborhood.
number of census
foreign born in
the next
from a handful
total),
of
there were few
in Holyoke's traditional
Throughout the City as a whole, the
respondents who reported themselves
to be
1950 was less than half what it had been in
1910 when it was nearly half the population.
The result
individual
was a close
buildings
knit social
and
Tenants were obligated
throughout
to pay the
obligated to fix what broke, but
structure within the
the
neighborhood.
rent and landlords
that was only a small
were
part
of the relationship.
Children were cared for
by neighbors,
whether
tenant.
elderly could
depend
landlord or
on
healthy
The sick
neighbors
to
run
and
errands,
purchase
groceries and provide transportation.
The Owner As Occupant
The
predominance
buildings
is hard
of
the
owner-occupant
to document.
44
However, the
in
apartment
most recent
publishers of
the Holyoke City Directory began in the 1930's
to indicate when a resident reported that they or someone in
the household
also an
was
with more than one
Simply counting those addresses
just
one street
Holyoke
in South
found that 11 out of
will see
listed.
558 South
Summer Street
limited to
was not simply
either
owner-occupant or absentee landlord.
Summer
St. buildings often
Like 558 South
the owner as
held relatives of
This, however, becomes less likely as the economic
tenants.
status
18
2
range of relationships
that the
had
number had
3 in the
there were only
example of
in the
I
This increased to 14 in 1940 and
In 1980
apartment buildings still
We
Street),
(South East
However, by 1960, that
returned to 11 in 1950.
only 5.
unit on
the 28 apartment buildings listed
an owner-occupant in 1935.
dropped to
at least.
of the trend,
some sense
afford us with
should
accounting
This rough
owner.
and ethnicity
diverge.
Although there
appears
document
this
"owner-occupancy,
evolution
over
time,
I
can
population
and tenant
owner
of the
to be
no
easy way
once-removed",
relate
some
or
examples
to
its
from
personal experience.
I
personally
was
involved
in
the
purchase
of eleven
occupied buildings in South Holyoke in the mid 1980's.
two
included relatives
as tenants.
In one
Only
building the
2'The Price and Lee Company, Holyoke South Hadley Directory,
New Haven, CT.
45
owner's
father-in-law
had
lived
recently
his children had
out.
another case, it was the
In
for many
been trying
families who occupied the building.
years,
to get him
I interviewed
to move
young children and their
In both these cases the
owner had bought the buildings many years ago.
the investors
though
still maintains
Only one of
this practice
and she has been doing this for almost 30 years.
Maintaining
"a
good building",
for the
owner-occupant,
does not always correspond with a good return on investment.
Landlords were constrained from raising rents often by their
own
only
friendships with tenants.
in
the
financial
construction, operation
investment in
Their "investment"
dollars
and their
the structure
that
paid
profit, it
of social
was not
for
was also
the
an
relationships which
became as life-sustaining as the flow of rental dollars.
The Suburbs: The Shift to Homeownership
After World
War II,
the
exceeded the loss of jobs.
Holyoke blamed the
the suburbs.
decline in
Holyoke's population
The authors of a 1961 study
of
decline in population on the movement to
Their report speculates that the population of
Holyoke was likely to be "unusually mobile" due to the large
numbers of single person households and
with
"a
large
homeownership.
The
amount
of
multifamily housing
tenancy"
report suggests that if
as
opposed
to
more Holyokers
they would
their own homes,
owned
be less likely
to seek
a
densely
those opportunities elsewhere.2B
of
The implications
this
recommendation
urban neighborhood are not encouraging.
for
Prior to the advent
neighborhoods
suburb, Holyoke's downtown
of the automobile
were considered by many to have been strong, vital places in
opportunities in aging
wisdom of
popular
found
8-unit brick tenements was
South Holyoke's
era, these
Renewal
the Urban
be
to
housing
not what
much of
with
Consonant
advisors recommended.
these
the
homeownership
Providing
out.
move
to
inner
its appeal to those with
city rental tenure was losing
resources
the suburbs,
of
expanded homeownership opportunities
the
highways, and
its
car,
With the
to live.
which
outmoded
the
advisors
and
they
recommended turning South Holyoke into an industrial park.
Others
refuted
emphasize the
this
of
line
thinking,
traditional values of
industry.
to
the urban neighborhood
and the importance of inexpensive rental
residents and local
preferring
housing to both the
Nevertheless, the
trend was
unmistakeable.
In
an
declined.
to cuts in
age
of automobiles,
the value
of
proximity had
In an escalating spiral, bus ridership losses led
bus service.
Cars choked the streets.
permit records indicate that landlords had begun
""Holyoke, City of, Master Plan Report, 1961.
47
Building
(beginning
as the 1920's) to
as early
garages
and
was
turning to
of Holyoke's
inner-city
Convenience
areas.
parking
backyards with
their tiny
fill
annoyance and the suburbs were the escape.
as the
But even
residents
began
farmlands,
the
most
to
affluent
new
buy
in
the
demand
post-war
immediate
apartments remained high.
homes
surrounding
for
rental
As returning soldiers created new
households, rental apartments offered them an opportunity to
live
inexpensively and
it often
enough for
a down payment.
decline in
the mill-worker
took many
years to
However, by 1955, the
neighborhoods
save
rate of
was higher
than
ever.
Aging in Place
By 1955,
these neighborhoods had
peak populations.
those
Census
reports in
wards were continuing
that people moved
census reports
indicate that
fewer
new
1960 indicated
that
in greater
However it is not simply
away.
Some did.
the household
while the median age increased.
attracting
20% of their
to lose population
numbers than other neighborhoods.
the case
lost over
These
same
size decreased
This aging neighborhood was
families
with
children
and,
increasingly, consisted in older and smaller households.
The post war years in
South Holyoke are
with fondness by the previous residents.
even
as it
was
undergoing
profound,
48
often remembered
It is ironic that,
if at
times
slow,
change, the neighborhood's
memory to this day.
order remains a strong
health
sanitation improvements. The crushing overcrowding had
eased by the exodus of
proportions
of families
still
Storekeepers
Lawyers,
doctors,
foreign
and professionals
Economic stagnation
labor
and
formed, the
numbers of
children.
foundations on
49
be found
demand for
had reduced the
ethnic conflicts,
being destroyed.
still could
door to mill-hands and day-
eliminated, were less prominent.
being
been
lived in an apartment behind their shop.
living with their families next
laborers.
large
and
decreasing
jobs and workers and the
with
and
squalor of
The
reduced by
been
era had
boom
the industrial
post-war image of stability
though
by
no means
But even as this image was
which it was
built were
CHAPTER 4: THE LAST 25 YEARS
Introduction
The
environment
for
Holyoke over the last
several
factors.
decline
in
rental
property
owners
twenty-five years has been
The
median
small
loss
of
shaped by
jobs,
manufacturing
household income,
the
in
recent
the
wave of
Puerto Rican immigration, banking reforms, declining federal
commitment to housing and social programs, expansion of nonproject-based, deep rental subsidies, local efforts at urban
renewal,
expanding
liability
tenants'
for tenant
rights
damages from
poisoning, all led to
and increasing
discrimination
owner
to lead
significant changes in the nature
of
rental housing in South Holyoke between 1965 and 1990.
Accelerating Decline--Fewer and Poorer Residents
Vacancies
increased
tenfold
during
continued to swell through the 60's.
the
1950's
and
As the skilled workers
left for better jobs and/or suburban communities, there were
fewer and fewer new households
the
neighborhood.
willing to set up a
home in
The traditional closed system of filling
vacancies--word of mouth and personal
referrals-- failed to
work adequately to fill the units.
Those who remained
the
less
wealthy.
neighborhood
represented those with
fewer choices,
In keeping with the "filtering" model
change,
the
aging
50
of
neighborhood
of
housing
decline in income of its residents.
paralleled the
South Holyoke's
citywide median.
fell
By 1970
further
still
neighborhood by
rate for
family median
to
the
almost twice
the
With household formation in the
the city overall.
fewer and fewer job opportunities
stock that was
an aging housing
in the city,
in
fell
Population
this decade,
the
In 1980 it
it had fallen to 61%.
26% during
1960's at its lowest ebb,
at 85% of
income stood
41%.
In 1960
increasingly
outmoded by newly constructed housing in the suburbs, and an
aging class of property owners who were beginning to abandon
for lack
their properties
South
Holyoke
residential
was
new generation of
of a
increasingly perceived
neighborhood.
most
And yet
as
buyers,
an unviable
original
of the
was still standing in 1970-- filled with vacancies,
housing
but standing.
New Immigrants Fill the Vacuum
Nineteen sixty-five
the post-war history
in Holyoke.
Their arrival
migration.
"Pull"
minute
was due to
many causes.
massive
urban areas
as "Push" factors
factors include
and the opportunity to live
new ethnic
as a major
renewal in other
caused by urban
South Bronx are cited
like the
the flow of
Puerto Rico, and the
The high unemployment rate in
displacement
point in
the turning
In this year
of Holyoke.
immigrants introduced them
Hispanic
group
marks for many
for this
farmworker recruitment
in cheap housing within a
five
ride of farmlands, fishing, and fresh water beaches.
the urban
specifically,
More
North End of Springfield (less
in
the mid
They found
than 15 miles to the
displaced many
60's
that South Holyoke
hit the
that
redevelopment
families.
Puerto Rican
held a ready
supply of substitute housing and the
South)
and affordable
number of Hispanics in
South Holyoke grew from 287 in 1970 to 1,879 in 1980.
What
they
expanding
did
not find
source
of
in
Holyoke
employment.
was
The
a
stable and
agricultural
and
manufacturing employment that had been their primary sources
of
income were
sectors.
paid.
What
also the
region's
jobs they were
By 1979 seventy-six
most rapidly
able to find
declining
were not
percent of all Hispanic
well
workers
in the Springfield-Holyoke-Chicopee Labor Market Area worked
in
janitor or
cleaner jobs.
They held
90% of
all such
jobs. *
Holyoke's
considered
expanding
incomes had
apartments
low-grade
unviable
2'Leveille,
for
many of
housing
the
may
have
working
incomes and rising expectations.
been
class with
For those whose
not kept pace, who were finding fewer and fewer
that they could afford, Holyoke's housing was an
opportunity to at
decent
rental
employment
Karen,
least find a place to live
would
follow.
For
and hope that
whatever
reason,
"South Holyoke Housing Development Plan",
1985.
*Massachusetts Division of Employment Security, Analysis of
Employment Trends: Hampden County Service Delivery Area, 1989.
52
Holyoke's housing vacuum was beginning to fill with the most
economically
groups
ethnic
depressed
identified at
that
time.
For
rental
investors
seeking
the
in
opportunities
low-grade
housing market, these changes did have some rewards.
But it would be hard to appreciate the changes in the market
without first discussing the role of the local government.
The City Intervenes:
Disinvestment, Demolition and Displacement
Disinvestment.
Holyoke observed
The
Plan for
1968 Master
South Holyoke's
the
rising vacancy
City of
rates and
abandonment and argued that, "As the standards of living for
Holyoke's
industrial workers continues to rise many old and
be
obsolete multiple dwelling structures will
Therefore, they
argued, South Holyoke
abandoned."
*'
should be eliminated
as a residential neighborhood, demolishing the old buildings
to make room for increased industrial use.
Community
activists
were successful
in challenging
South Holyoke as
Master Plan and halting the elimination of
a
residential neighborhood.
ignore
recommendations
deterioration.
Instead
However,
that might
the
have
City chose
53
to
prevented further
its actions convinced many
Master Plan: City of
*zHolyoke, City of,
1968.
Associates,
by Candeub, Fleissig and
the
that it
Holyoke, prepared
was attempting
do by plan.
to do through
South Holyoke as a neighborhood simply
"official"
future.
Bankers,
caution, withdrew the
building
neglect what it had failed
The Flats is
predictable
Meanwhile
the
Flats added to South
to make
City's
housing
Holyoke's problems.
another millworker neighborhood just
South Holyoke.
had no
credit that investors sought
improvements.
demolition in The
responding with
to
Together they are sometimes
north of
referred to as
"The Lower Wards".
Demolition.
face
of
escalating
destabilizing
above, the
Official neglect
areas.
imposed
1961 Master Plan
With
South
deterioration
influence
South Holyoke and
of
Holyoke in
was
by the
not
neighborhoods were
abandoned,
choice
vacant
targets for
only
As noted
recommended that
The Flats be transformed
their
the
City.
for the City
the
into industrial
buildings
these
the
urban
was
to reduce
renewal
programs that had come into prominence.
The 1968
population
Master Plan
for The
density
the
of
substandard housing.
The
The
many
Flats
destroyed
typically only two
units torn down.
Flats
neighborhood
while
City's designated
recently
occupied
units being constructed for
Between 1970
the
removing
developer for
units
with
every eight
and 1980 The Flats lost
41%
of its total housing units, 50% of its rental units.
Displacement.
crowd
Displaced tenants from
The Flats began
to
into South Holyoke, where the conflagration peaked in
Holyoke's astounding
the attention of the nation.
captured
Resistance
City".
"Arson
fire statistics won it the label,
and
seven lives
that claimed
a fire
1981 with
August of
to the establishment of an arson squad; understaffing of the
an
fire department;
demolition
aggressive condemnation and
effort in minority neighborhoods combined with their efforts
establishment
against the
of
housing
emergency
shelters
convinced many that Holyoke's leaders were at war with their
poor
successful
the
Despite
minorities.="
city (where it
lawsuit against the
a full-time
funding for
in
still standing
recorded in 1970
arson squad),
one new
union's
finally won
were
by 1985 there
only one
South Holyoke
and not
firefighters'
half the
units
in all
unit built
that
time.
From Obsolete Buildings to Obsolete People
It is
hard
appreciate
in
era of
this
declining
to
the confidence in economic progress reflected in
the planning documents of the 1960's.
see how the
expectations
With hindsight we can
City's planners' predictions of
population growth largely
employment and
overshot the actual growth.
But
perhaps, at the time, there was some justification for their
conviction
that
the
"older
City's
housing
units.. .are
of
The Potential
the Way:
"Uphill All
Tom,
Harden,
Thesis,
Master's
Holyoke",
South
in
Community-Based Development
Tufts, 1986, p.80.
55
difficult to
out".
maintain and
In the
accept such
believed,
bright new
living
who lived
these
in South
not
had come,
they
make room for the new
and housing.
However,
for South
the entire neighborhood.
Holyoke felt
plans and they
"phased
simply would
The time
to clear the dead wood and
this meant razing
should be
future people
conditions.
growth of modern industry
Holyoke
upgrade" and
Those
personally threatened
fought hard
to save their
by
homes and
their neighborhoods.
During the 1970's
the rhetoric
of progress changed.
By
1983, the President of the Board of Aldermen was calling for
the
refusal a moratorium
City,
"Because chronic
labor
force,
settling in
refusal
of
justify the
for
it
deters
Holyoke.'"
housing
on new housing
poverty also
implies an
high-technology
This public
subsidies was
subsidies for the
unskilled
industries
explanation for
used
elimination of a much larger
less
from
the
publicly to
source of housing
these households, ie: the unsubsidized low-grade rental
housing stock.
"Cleaning out the
dead wood" had
new meaning.
Who Would Buy a Building in Such A Neighborhood?:
Investors Respond
Harden, p.66.
taken on
avoid
buildings and
steadily
been
dramatically during the
fell
decades
were
Flats, they
In The
1970's.
the
Vacancies that
previous
in
rising
their
elimination of
condemnation, the
cheaper competition was a boost to business.
had
up
keep
could
who
owners
property
those
For
reduced by 66%, in South Holyoke, by 24%.
competent investors
For
Holyoke
supply
during
in low-grade
the 1970's
rental housing
of shrinking
combination
this
in
Landlords
and expanding demand could bring rewards.
who could pick up distressed, but salvageable properties and
manage
them
through
expanding legal
found
that the
new
elderly residents
on
storms
of
redlining,
arson,
protections for tenants and ethnic tensions
higher rents for their
many years.
the
willing
immigrants were
paid the same
While sellers often based
the existing
cash
much
and primarily
units than the native
many of whom had
to pay
rent for
their asking prices
flows, enterprising
buyers realized
that these older tenants would soon be moving on and the new
you
could say about
housing advocate,
rent
to anybody."
"One
of the property.
rents would enhance the value
these new speculators,"
"They rarely
The result
commented one
discriminated.
was
thing
that South
They would
Holyoke's
median gross rents increased by 144% during this decade, the
largest gain of any neighborhood in the City.
57
The
Squeeze:
More
Taking
From
the
Tenants
and
the
Buildings
During that same period, however,
only 21%.
Holyoke increased
increases,
not with
more affluent
were
destabilizing.
causing
becoming
share of
In this
or a
more
case the
housing
did not
decent sheltering
serious
more
Overcrowding
and
all
the
problems of people living close to the edge
problems.
difficult
conditions of these
than
but with
a very large
of the rental
rent
It would be an understatement to say that such
attendant social
were
tenants
either financial success
environment.
changes
were fueling
for a housing opportunity.
improved financial viability
guarantee
Landlords
ones willing to pay
desperate ones,
their income
family incomes in South
to
Maintenance
control
and
the
60-80 year old buildings
the "subsistence
diet
of
repairs"
costs
were
"fragile"
required more
that
they
were
receiving.
Building Inspectors
low-grade
waiting to
their own.
were
rental
reported that,
properties
be ordered to make
increasingly
capital
represented
subsidize their operations.
New Hope for South Holyoke
seemed
repairs, rarely doing
It would seem fair to say
using the
generally, owners
to
of
be
so on
that these landlords
in
the
building
to
The baby-
change.
a time of fast-paced
The 1980's were
They were
been turning 30 and seeking housing.
boomers had
market
the
up
heat
beginning
to
especially
in Massachusetts, and
around
country,
the
to get
Holyoke was about
warm.
abilities
In Massachusetts, Proposition 2-1/2 limited the
affordable housing
increasing demand for
administration
raise taxes
cities to
of Massachusetts
funding
cut
drastically
to respond
to the
while the
Reagan
aid
local
for
programs.
A liberal governor responded by making affordable
housing a
key part of his
program.
funding was
Increased
available for those communities that wanted it.
deteriorate
The City's determination to let South Holyoke
faced
Community
had
who
activists,
the
on
mounting challenges
local
successfully
well.
as
front
obtained
an
ammendment to the 1968 Master Plan allowing South Holyoke to
remain
as a
neighorhood, were again
pressing the
city to
stop its destruction.
Nueva Esperanza, Inc.
formed
by
Development
providing
housing
(NEI, Spanish for
advocates
Corporation
"decent,
residents of South
with
safe,
in
the
1982
In the
as
primary
affordable"
Holyoke.
"new hope")
Community
a
purpose
housing
face of
was
to
of
the
overwhelming
opposition from City leaders, they actually began to buy and
fix up
buildings in South Holyoke.
ambitious project
Their second
and most
was a 28-unit tax-delinquent property for
59
which
they
commitment
Mayor
had
just
from the
received
a
preliminary
Massachusetts Land Bank.="
financing
While the
was assuring the organization's staff that they would
not interfere, a wrecking
ball was secretly ordered to
the
site and a large chunk of the building was torn out before a
court
injunction
obtained.
was
consequently demolished,
but not
the condemnation
local
of the
The
building
before the
media and
was
City received
local and
state
officials.
NEI went
income
on to
develop 119
housing within
residential
units
their 10
of
low and
block target
core of South Holyoke.
moderate
area
in the
Their mission statement
includes these goals:
1)
To
deliver
more
affordable
housing
to
low-income
neighborhood families;
2) To develop community leadership;
3) To encourage neighborhood economic development;
4) To
promote the
availability of
appropriate community
education and human service programs.
Community participation
this agenda.
and
and control are
Though they began
(and
continue)
mortar" development projects, many of
efforts have been designed to give
resources
to
determine
their
Harden, p.82.
60
at the
heart of
with "bricks
their most recent
residents the skills and
own
futures.
From
an
outreach
educational
publication of
bilingual community
a
to build social
attempted
to
the
NEI
has
pregnant women
for
program
newspaper,
residents are
networks in which
more able to help themselves and each other.
the enthusiasm of participants
their stabilizing impact, to
annual Family Day Festival, NEI is today widely seen
in the
as a
who recognize
City leaders
grudging respect of
From the
in
its inception
At
success.
1982, however,
many
wondered if it would be just another in a long line of South
Holyoke community groups fighting City Hall.
City
the
with
struggles
NEI's
reinforced
Holyoke's
reputation as a place where the poor minority residents were
This, in turn,
being driven out.
advocates to circumvent the
local housing
and
directly
appeal
lent support to efforts by
housing assistance.
officials for
federal
In 1984 NEI completed rehabilitation on
16 federally-subsidized units
more
and
to state
local government
under
and obtained commitments
for
Chapter
707
the
Massachusetts
rehabbing
32
program.
The City's plan to vacate South Holyoke seemed to
be crumbling.
in
built
South
Corporation and
rebuild
this
In 1985 the Mayor allowed two duplexes to be
Holyoke
by
announced that the
and rehabilitate" South
renewed commitment was
2"Transcript
Olde
Telegram,
Holyoke
City was "coming
Holyoke. "
61
in to
For investors
an encouraging sign
9/5/85.
Development
that they
intended to take advantage of.
Federal Housing Assistance
In
the early 1970's
programs
provided a
the federal
substantial source
assistance to the City of Holyoke.
between 1970
units were
and 1975, 739 new
rehabbed under
building permits
for
averaged
50%
nearly
unassisted market.
programs.
than
that
of
City's real
a whole,
while 289
The value
during
public investment
to the
rental housing
units were built
these
more
of
and 221-D3
In the City as
assisted housing
This
significant boost
Section 236
these
the
of
years
private,
was seen as
a
estate values
which
project was located in
South
were otherwise declining.7"
Only one federally-assisted
Holyoke, just a hundred
yards from 558 So. Summer St.
This
project rehabilitated 127 units for
a cost of $2.5 million.
Completed in
buildings were
1975, the
signs that South
cleaned up
Holyoke might remain a
visible
viable residential
neighborhood despite the continuing destruction.
This
much-needed
however.
The federal
federal
assistance
commitment to
was
short-lived,
housing that
had, in
26 million new units
over 10
years was abruptly curtailed only five years later.
In 1973
1968, set a
national goal of
Curran Associates,
Inc.,
Reinvestment Opportunities:
A
Housing Work Program for Holyoke, Summary Report,
(Northampton,
MA) 1976.
62
use of
diminished the
President Nixon drastically
federal
monies for housing assistance.
move
The
opportunities, but
that commitment.
The old
make a project
needed to
of
for renters
placed
use of
an
financial incentives
Developers
of
large
programs, while
these
owners were largely unable to do so.
smaller apartment
new Section
the form
homeowners,
for
profitable.
to make
were able
projects
to
also in
developer the
on giving the
emphasis
committed
Section 236 Program
Program
235
the section
monies
of
amount
the
in
only
not
improving housing
and
and
Grants
Block
Development
Community
housing allowance payments in 1974 was a dramatic
Section 8
shift
to
The
8 programs that sought to enhance the effective
renters moved
demand
of
giving
subsidies
away from
the
to
directly
the previous
developer
of
model of
housing
projects to a method of providing rental assistance directly
to
the tenant,
instead.
landlord now
small, private
The
could benefit by simply providing
a suitable apartment to a
subsidy
subsidized tenant.
It also
allowed for
a deeper
payment for poorer
tenants.
Whereas the
previous programs
market rents for low
guaranteed lower than
the rent levels did
income tenants,
not vary according to each
household's
income.
This
innovation
of
deeper,
non-project
three prominent effects for Holyoke's small
63
subsidies
landlords.
had
households with almost no
One: it allowed them to rent to
other source
and,
of income,
independent of
thus,
the
deteriorating household incomes;
two:
allowable rent levels
(since the
on the
were based
and more expensive, Springfield metropolitan area
larger,
rental
market) it
allowed them
to
charge a
rent above
what the local market could otherwise support;
and three:
proxies
it invited
into
the
the
federal
operation
bureaucracy and
of
even
its
the
smallest
very
poor and
properties.
Landlords
still
could, in
make money.
theory, now
In fact
house the
the subsidized very
poor were
often a better market than the unsubsidized working poor. On
the
other hand,
landlords
had
to
meet
often
arbitrary
standards of housing quality and comparatively complex
lease
provisions.
Those
"work
best-suited to
the
lawyers
system",
the new
arrangements were
bending the
when the need arose.
rules,
and
able to
hiring savvy
The fellow handy with a pipe
wrench, responsive to his tenants' racist fears of non-white
subsidy
holders, and dependent
reliable tenants
program.
On
businessmen who
was unlikely to
the
other
hand,
saw in the new
upon word of
take advantage of
there
were
such a
professional
certificates a way
seemingly unviable rental housing profitable.
64
mouth to find
to make
As
financial viability
managemant also increased.
legal
Tenant
eviction proces s.
of
language requiring
months
added
Appeals procedures
counsel.
the
Subsidies came with numerous new
D etailed leases contained
requirements:
the costs
rental property,
of the
to
important
more
became
programs
subsidy
selection procedures
to
These and other
requirements demanded a more
had to
be
parctices.
non-discriminatory
prove
well-documented
to the
sophisticated
and more expens ive form of management.
mediation often meant
improved housing
the improvements were not
necessarily what
Although this new
for the tenant,
the tenant
wan ted,
rather they
subsidy agent.
administering
were made
to a contractor working
bureaucratic government agency, the
directed his attention away
new role again
the
From a landlord entering into
a private agreement with his tenant
for a large
to satisfy
investor's
from the actual
resident to a new client-- the state.
to the savvy property
Another source of public assistance
owner came
indirectly through the
new Block Grants.
City's designated non-
Holyoke Development Corporation, the
profit agent
for
for housing programs was
the administration of
under the Block
Assistance Program (IAP),
repairs
on residential
given responsibility
the housing programs
One program,
Grants.
now funded
called the
funded one half the costs
properties
Olde
Interim
of the
housing income-qualified
rents
The
households.
not be
properties could
on these
raised for five years.
The Boom
In
estate developer
Boston-based real
1981, a
began to
take an interest in what he considered to be an under-valued
market.
When he tried to
buy some apartment
buildings in
South Holyoke, he found it impossible to get a mortgage.
asked
Nueva
Esperanza, Inc.
(NEI),
to
help him
make
complaint to the Massachusetts Banking Commission,
redlining
he began
by the banks.
to buy
A
developer's
investors
values',
to
began to
the
2%
charging
at 2-3 times
the going
local bank president angrily called
lender
a
After finally obtaining financing,
buildings in 1982
per-unit price.
He
complain, to
take note
vacancy rate,
of
no
avail.-'
the appreciating
the
extremely
low
the
Other
market
sale
prices, the new housing assistance programs being offered by
the
state,
the
easing credit
market
and
the increasing
likelihood that South Holyoke would survive as a residential
neighborhood.
South
Holyoke's (indeed
all of
Holyoke's)
real esate boom had begun.
"7 Interview with Ada Focer, 2/10/91.
"Mr.
Scott
was
impressed
by the ability
of a single
individual, buying large numbers of apartments to single-handedly
drive prices upward.
"He made his own market.
He could pay
those prices because he was setting the comparables against which
their value was determined."
66
watched with
Holyokers
properties at
record
its head.
turned on
reduced
investors
of
waves
as
to disgust
amazement that turned
buying
began
The
prices.
multi-family
up
whole city
The small conservative
being
was
landlords who
turnovers with low rent were replaced by aggressive
investors intent on maximizing the resale value by inflating
Minorities
the rent.
markets
paid the
restricted from
premium.
escalating
surrounding housing
While
white
all
buildings with aging, debt-free owner-occupants struggled to
rent their apartments
per month,
by word-of-mouth at rents
below $100
next door, the Puerto Rican tenants in the newly
purchased and highly-leveraged building
paid over $300
per
month for a comparable unit.
Their
often as once a year.
"flipped" as
through
often,
subsidies, or,
Each time the rent was
found to pay
tenants were always
increased and
Properties
term owners.
not long
landlords were
through doubling
it, either
and
even
tripling-up.
real estate industry was
There was one sense in which the
also feeding on itself-- in addition to the expanding retail
and
service sectors,
employment
area, which
construction
opportunities
in
and drew
turn stimulated
increased
more households
demand
Vacancy rates in 1986 were less than
67
jobs greatly
for
to the
construction.
1/2 what they had been
in
1981.
There
'
seemed to
housing inflation.
be no
end to
the spiral
Meanwhile, several investors
of
watched as
their balance sheets recorded enormous profits.
The
story of
admittedly an
the
Omni
Corporation
extreme example
described below
of the
problems that
when credit is easy.
It is not isolated,
advocates
are finding
in Holyoke
this
is
occur
however.
Tenant
story repeated
in
dozens of buildings throughout the City, including 558 South
Summer.
Where
inexperienced
leverage exorbitant
debt burdens,
properties
the
lacking
investors
acquisition
result
has
minimal
were allowed
prices with
been
unsupportable
financially
services and
to
upkeep
stressed
leading,
ultimately, to receivership and foreclosure.
The Omni Story
Directly
across
investors paid
early
1987
$8 million
young
street
$26,000 per
at the
Massachusetts.
the
height
of
558
for 563
the
real
They bought 12 buildings
over a
period of
Hartford investors
Hartford's
largest
Zubretsky.
The
was only
unit
from
Century 21
founder of Omni
25 years old when
the
Summer,
South Summer
in
estate
in
boom
and 364 units for
10 months.
including
South
The owners
head
real estate
Group Inc.,
of
one
68
Postal
of
agencies, John
Mark
Shapiro,
he convinced Zubretsky
=Federal
Home Loan
Bank Board,
Springfield SMSA, 1981 and 1986.
were
Vacancy
to join
Survey,
At
Hartford building.
officer and a
College.
form a
1986 to
winter of
the
him in
a
loan
a bank
Shapiro was
the time
and buy
company
Connecticut State
recent graduate of Central
Within two years Omni invested over $15,000,000 in
35 buildings including theose in Holyoke.
held approximately 70 units
Buying buildings in lots that
Omni created separate business entities to hold them.
each,
Holyoke, each building belonged to a limited partnership
In
formed by an agreement that prohibited using the income from
one
property
investor/partners
violating that
used
to be
in a Hartford property accused Shapiro of
properties
Hartford property.
being paid
Other
checks
with
from his
were issued
checks he found
to
Clemens claimed that Omni
Shapiro and a fictitious tenant.
milked the property to provide
on Omni's
that insurance
found out
was
residential
Curtiss Clemens, a
agreement.
investment specialist,
Holyoke
Omni's
of
One
another.
for
other
him with cash for his
investments.
In Hartford,
apartments must
be
by the
certified
before a new tenant can move into an apartment.
city
Without the
Clemens claims
certificate, a tenant may withold the rent.
that the 20 unit property had all its certificates when Omni
and Clemens purchased the
resold
in
6
certificates.
months,
In
property.
were
there
When the
only
the meantime the rent
7
property was
units
holding
had been increased
and Clemens felt certain that there was sufficient income to
69
cover the necessary repairs.
tenants
were not
receipts and
paying
When Shapiro told him that the
the
rent,
the partnership's
venture.
after
bank account.
sale, but
the
checked
tenants'
Rents
were
Clemens got back his initial
being paid, but not deposited.
investment
he
he
made
nothing on
the
Shapiro's original partner, Zubretsky sued Shapiro
and eventually
was able to regain
half of what he
said he
was owed.
The
banks were not so lucky.
purchased
bank
for $750,000.
A
for $450,000.
the knowledge
partners
of the
covered
One Hartford building Omni
They received
a mortgage from one
second mortgage was arranged without
first bank
the
balance
for $250,000.
with
$50,000.
afterward a third mortgage was obtained
property.
The
Omni
Not
long
for $350,000 on the
It wasn't until the second mortgage holder tried
to foreclose that the bank discovered that the level of debt
on the
This
property was $300,000 more than
building, by
serious
capital
the
way, had
improvements.
not
the purchase price.
benefitted from
According
to
any
the
news
reports, the $300,000 simply disappeared.
In
Holyoke,
deceit.
Omni
the
requested
Street for $22,000 of
This
Bank of
same building
New
England
a mortgage
on
the $26,000 per unit
was bought
only
could not
563 South
claim
Summer
purchase price.
two years
before for
$12,000 per unit or $10,000 per unit less than the value
the requested
mortgage.
The bank, nevertheless,
of
accepted
At this price, the seller was able to leave
the new value.
annual
equity
on
return
over
been
have
would
invested
his
years before,
equity two
his own
unit of
$3,000 per
seller had
the
Assuming
before.
two years
for
than he had originally paid
with $10,000 more per unit
it
walk away
mortgage and still
a second
per unit in
$4,000
150%,
a
generous return even if he never saw a penny from the second
The buyer,
mortgage.
the
in
equity
by the
building.
no personal
same token, had
Only
of
bank,
the
involved, had taken any risks and that was
all those
with depositors'
money.
Holyoke
Another
Shapiro to buy his
leave the
equity, but
dollars.
approached by
buildings.
By the end of
their meeting
was
amazed to find that Shapiro
this owner was
able to
also
property owner
without investing
closing not only
he would actually
was going to be
pocket tens of
any
thousands of
4*
Increasing
Liabilities:
Litigating
the
Landlord/Tenant
Relationship
Another major
factor affecting the
small property
owner
has been the expanding legal protections afforded the tenant
under
federal
judicial
4
and
decisions.
'oInterview
Massachusetts
Most
laws,
lawyers I spoke
with Leon Barlow, 5/4/91.
71
regulations,
and
with traced the
"revolution" in landlord/tenant law in
1973 ruling by
Authority
the Supreme Judicial Court on Boston Housing
v. Hemingway.
"warranty of
Massachusetts to the
This established
habitability' *
in which
the
so-called
landlords were
now
required to keep their properies "livable" as defined by the
Sanitary Code
State
further stated that
and
local
health
It
regulations.
tenants could withold their
rent while
the violations lasted.
In
1978,
further
regulations
deceptive acts
by landlords and
for
deposits
security
which
outlawed
presume
saw legislation
that retaliation
must
be
increases
or evictions
action by
the tenant
the
put
escrow
This
required courts
cause
occuring within
seeking to
into
to the tenant.
passed that
is
and
required separate receipts
accounts, with interest paid annually
year also
"unfair
behind
six
any
months of
enforce housing
to
rent
an
codes or
organize a tenants' union.
The
State revised
stricter
appeals
its
standards for
that
health
court ruled that
responsibility unless
same
Mass.,
year
sanitary
code
in 1981,
and safety.
utility costs are
otherwise specified
a law
293 N.E.2d 831
regarding
eviction
setting
In 1987
the
the landlord's
in writing.
In
procedures set
when a an eviction
restrictions on exactly how and
further
could be carried out.42
equal
list has
this
been
It makes it illegal to refuse housing to anyone,
expanded.
one
in
membership
their
on
based
Recently
housing.
to
access
allowed
must be
who
of individuals
categories
protected
established
has
legislation
rights
civil
Nationally,
these
of
protected
categories.
The above is not intended to present a comprehensive
list
regulations and judicial rulings.
The
of applicable laws,
point
that this
is
intended
protect
to
of these new
Although many
easily
obeyed,
they
improper
the
With the availability of legal
intent and
both the
attention to
it is
expanding and
against
compelled
is
the landlord
is
tenant
the
the landlord.
activities by
redress,
of law
body
to
the letter
rules are good
do add to
pay
of the
law.
commonsense and
of property
the complexity
management and increase the risks
closer
much
of being sued for a
lack
of proper care.
One
landlord
lawyer
spoke
with
summed
this
thinking
about
buying
rental
I
up
succinctly when he said,
My
advice
property
to
today
anyone
is,
"Don't.
4 2Springfield
Unless
you
are
very
Sunday Republican, "Court rulings have changed
tenant-landlord relationships", 2/5/89.
73
familiar
with
the
laws
and
can
afford
to hire
a
scrupulous management agent, it's not worth the risk.
Technical
knowledge,
professionalism,
precision and risk avoidance
litigious environment.
administrative
take on increasing value in
Although there is
a
still a place for
personal attention to the needs of one's tenants, the modern
manager of
more likely
low-grade rental
housing will
find that
he is
to survive if he views his tenants as potential
plaintiffs than as long-term guests or trusted customers.
This
evolving
relationship
dissociation
in
the
landlord/tenant
over the last twenty-five years is illustrated
in the following discussion of 558 South Summer Street.
CHAPTER 5: THE HISTORY OF 558 SOUTH SUMMER STREET
1887 to 1923
After
stringent
its
to relax
began
controls on housing development in the 1870's, it
South Summer
558
stands at
building that
own.
of its
housing development
with some
then joined in
The
Company
Power
Holyoke Water
Street was
built in 1887 by the Company and sold immediately to Damasse
Chatel, a
carpenter employed at a local thread company.
At
the time of the sale he lived in a house just up the street.
Upon
purchase, he immediately moved into
five room apartments
also
moved into
Alfred Gelinas, a
Sale prices,
the building.
years, were not recorded directly in
However,
a
during those
the registry of deeds.
Mr. Chattel when he
bought it.
The
Directory begins listing residents of 558 South Summer
St. in 1915 and, judging
from the surnames, the ethnic
of tenants was French and German.
were
grocer, who
the registry does note that Mr. Gelinas did assume
$4500 mortgage from
City
there
building and stayed
in the new
it in 1910 to
until he sold
one of the eight,
"laborer",
shop), and "employee(s)"
The job categories listed
"mechanic"
"painter",
mix
(owner of
of a lumberyard and
machine
a steamboiler
works.
Between
building
1922 five
1915
and 1922,
experienced only six
out of the eight
than 7 years
and the
sold it,
the
turnovers of residents.
In
when Mr.
Gelinas
tenants had lived
average length of
75
there longer
tenure was over
6
In 1922, the tenants included two widows in addition
years.
to the painter, laborer, boxmaker, and paperworker.
The
next
Buying
owner
at
the
Phillippe Denis
He
only held
peak
of
the
building
Holyoke's
bought 558 S.
for 5
population
Summer
in
months.
expansion,
the fall
of 1922.
obtained financing through two new mortgages, one from a
local bank and one from Mr. Gelinas, the seller, in addition
to assuming Mr. Gelinas' earlier mortgage.
building to Napoleon
When he sold the
Labrecque, a paper mill
next spring, he had tripled
employee, the
the debt owed on the
building.
Though it is difficult to determine the exact sale prices at
that time,
the tax
stamp values
added to
the debt
would
indicate that Mr. Denis sold 558 S. Summer for 15'. more than
what he paid for it,
1924 -
five months earlier.
1965
During
this
Holyoke's
period
shrinkage
of
economic
provided
some
overcrowding of the previous 50 years.
end
of that
period, the
stagnation,
softening
relief
South
for
the
However,
toward the
demand for
apartments
turned to a serious vacancy problem and the viability of the
entire neighborhood was put into question.
In the meantime,
this period represents almost a golden age for many of those
who lived in the neighborhood.
Mr. Labrecque,
also moved
the new owner
of 558
S. Summer
in 1924,
into the building-- to an apartment on the first
76
floor.
lived there for 9 years until his death in 1933,
He
When she died, her
while his wife stayed on for another 11.
the property and
son, a resident in the building, inherited
complete
Labrecques
made substantial renovations in 1927.
1948, there were only 21
until the next sale in
it was
In 1930
Labrecque's ownership.
From 1927
turnovers.
the
only 3 years.
In
and 11 years
in
building peaked
in
to 7, 9,
5 years, expanding
1935, it was
the
that
long during
grew quite
of tenure
average length
The
records and
suggest
apartments
of
turnover
the Labrecques'
Water utility
years.
ownership lasted over 25
the
In all,
it for still another 5 years.
ran
1940, 1945, and 1948.
The long
1960 with an
the
tenants in
tenures of
According to one tenant
average of 13 years.
(1948-1965) the
reasons for
most common
the
turnovers in
building toward the end of her tenancy were either for older
tenants
moving closer to their children or younger families
She also recalls that, at
purchasing a home in the suburbs.
most,
twelve
apartments.'V
children
Judging
lived
in
the
eight
from the City Directory,
3-bedroom
there was
always at least one single person household in the building.
If seven apartments held
were 15 adults
little
more
couples, then we can assume
for a total
than
3
of 27 persons.
persons
per
unit.
there
That yields
The
age
Conversation with Mrs. Wilfred Desmarais, 5/23/91.
a
when
apartments in that same neighborhood averaged over 20 people
per apartment
seemed hard to imagine for a resident of that
later era.
When
Ray Marion
bought the
oilman with his own business.
investors
in
the
building in
1948 he
He was part of a new
neighborhood
consisting
was an
wave of
of
young
businessmen who bought several adjoining or nearby buildings
from
aging landlords or
Summer
their children.
He found
558 S.
St. available for sale when Napoleon Labrecque's son
decided to return to his native Canada.
Marion's sister and
her husband moved into the Labrecque's apartment immediately
and they
stayed there
until Mr.
Marion sold
it in
1965.
Marion kept an office on Main Street where the rent could be
paid
once
collect.
can't
a
week,
Marion's
or when
Mrs.
Marion
sister/tenant, Mrs.
remember problems with
came
around to
Wilfred Desmarais,
rent collection, much
less a
single eviction, during her seventeen years in the building.
These problems, according to
by the traditional
those who were
the
landlord)
tenant recruitment process, in which only
personally referred by existing
were
Communication among
related
often
hot
Mrs. Desmarais, were avoided
considered
the tenants
or had lived
summer afternoons.
was high
together for
afternoon gatherings on
78
the
some time.
each
apartments.
where many
the back porches
Tenants
awnings to protect their section
for
tenants (or
bought
were
There were
during the
their
own
of the porch and they
sat
below.
children played in the yard
sipping iced tea as the
family member in the building, the landlord was also
With a
assured
a
in
those
services
of an
to emergency
calls
discussed
issues
to
line
direct
gatherings.
contractors
the
by
and he
after the small repairs to windows, doors, linoleum,
himself.
etc.
"quite handy" himself
Mr. Marion was
the tenants.
and yard work was shared
Cleaning
from Mrs. Desmarais.
looked
would respond
plumber who
experienced
the
primarily in
consisted
Maintenance
back
A
repair jobs
few major
and these
porches,
included the complete
the
the
Everyone had their own
key
for maintaining
roof
the
tenants
were kept and
where the fuseboxes
were responsible
renovation of
and
and
hallways
installation of storm windows.
to the basement
required outside
or gas
their oil
stoves
themselves, including hot water boilers.
Rents were $8.00
$10.00 in
1953 after the hot water was centralized and some
The rent did
major repairs had been made.
that
Census
until the
bought it
next owner
annual rent at
in
not change after
1965.
for South Holyoke
reports median income
With total
increased to
and were
per week in 1948
$520,
the rent/income
The 1960
at $4,914.
ratio was
only 10.6%-- very affordable by today's standards.
In
the
meantime
reliable income to
"my rule of
the
property
continued
its owner, Mr. Marion,
to
return
a
who claims that,
thumb was always to make a twenty percent annual
79
return on my investment".
exact figures, but,
Mr. Marion would not reveal
the
according to the registry of deeds, Mr.
Marion paid $7,000 for the building and immediately obtained
a $10,500
mortgage.
seventeen year
This he
ownership.
Assuming a
self-amortizing note,
year
have been $1,063.
paid off sometime
during his
6% interest on
debt service
his annual
Collecting over $4,100
a 15
would
in annual rents,
the balance available for operating expenses was over $3,000
or almost 75% of the
additional
gross income.
mortgage
capital
Assuming the
paid
for
all
$3,500 in
the
major
improvements he was reported to have made in the first three
years, Mr. Marion could count on this balance to pay for his
expenses and to keep whatever was left.
Mr. Marion
low
insists that his
vacancy
rate
and
(2)
keys to
success were
self-management.
(1) a
Though
he
acknowledges that the process was very demanding personally,
he
insists
that
buildings full
he was
and
he did
maintain a decent return.
reason
been
than
he "had
which
address, only once
1947 and 1962.
so
long
most of
the
kept
work himself,
of i'.'He may
of rising
annually surveys
the
to
have also
vacancies.
the
recorded a vacancy
In 1963 and
as he
His sale in 1975 was for no other
grown tired
feeling the pressure
Directory,
able,
The City
residents
at each
in any unit
between
1964 the Directory reported two
**Interview with Ray Marion, 5/15/91.
80
Of two of the households that left
year.
vacancies in each
factory
in a local shoe
lost his job
left when the father
that one
Mrs. Desmarais remembers
those two years,
during
and the other when the elderly mother died.
1965 -
The Present
However, the late 1060's were
1980's in this neighborhood.
a
as
early
characterize the 1970's and
depopulate South Holyoke
remembered
efforts to
and City-led
abandonment, arson,
Demolition,
period
of
little
change
the
despite
ominously rising vacancy rates measured by the 1970 census.
nearby South
lived in
His
to a couple who
1965 Mr. Marion sold 558 South Summer
In
did
sale
not
however.
property,
the building
year, 6'4
mortgage.
Dube's
$100,
subject
Roland and
was covered
Due to
Marion
mortgage.
Sawyer, held
Ellen
but the
health problems, the
year for
following
property the
to the
Marion's twenty
by Mr.
promptly moved out
His sister
to move in.
resold the
in the
interest
According to registry records, the full
price of
new owners failed
all
from
remove him
Dube.
and Margaret
Hadley, Fernand
The
the property
under
new owners,
years.
for 6
They also did not move into the building and their ownership
witnessed a period
rates.
vacancy
vacancies
year.
One
of sharply increased turnovers
According
averaged over
household that
to the City
two out
of the
left in 1970,
and high
Directory's survey,
eight units
bought a home
each
in
nearby Willimansett after
having lived in the
building for
over 27 years.
The Sawyers
sold the
building in 1972 to
who continued to struggle with
time
they
sold
it
again
new
the high vacancies.
in
condition.. .six months from
teachers
Mr.
who at
Holyoke.
1975,
it
condemnation",
owner, Charles Desmarais
Desmarais).
was
his
owned up
partner
to
By
in
the
"poor
according to the
(no relation to
Desmarais and
one time
another couple
Mrs. Wilfred
were school
36 units
in South
They decided to purchase 558 because it was close
to the other buildings and this made the maintenance easier.
The City's plan to turn the neighborhood
park did not
deter them.
the drastic shortage
"Despite
of rental
them."
The large
were in
especially high demand
moving
into the
purchases,
into an industrial
the talk, we could
units.
We didn't
three-bedroom units in
by the new
neighborhood.
Unlike
see
believe
558 South Summer
larger families
all
their
other
558 South Summer was acquired by simply assuming
the existing mortgage.
Their
general plan for each of
the
buildings they bought at this time was basically this:
Step One: Buy buildings in
trouble but still
salvageable
for as little as possible;
Step
Two: Make improvements
to vacant units and rent for
as much as possible;
Step Three:
Wait for
long-term "elderly
to move out and repeat Step Two;
82
French" tenants
When
Four:
Step
use the
then
adequate,
flow is
repairs
(eg:roofs,
porches, boilers,
mandated five
year limit
expires, raise
substantial
more
make
to
program
improvement
residential
City's
After
cash
etc.)
rents to
market levels.
in the discussion about
This illustrates an earlier point
Even though household income was
general trends in Holyoke.
not keeping pace with the costs of providing shelter, it was
still possible to increase rents as long as those households
to pay a larger percentage of their income for
were willing
desperate
country,
such housing
where
bolstered the
rental
remained.
They
to
to
unable
or
unwilling
cities
emigrated to
opportunity
an
like Mr.
to
his
others,
where
doors
their
open
Desmarais and
profits
make
the
those
households
provided investors
market and
partner
being demolished around
low-rent units were
As
rent.
the
new
immigrants, had failed.
much of
two
investments.
years
investments
Marion
generated by
plumbing.
and old
profit
spent
from
their
After that the income was more than sufficient
The key to success
Mr.
little
they saw
their time and
the first
themselves and
repairs
replacing floors
their summers
The first
to cover
smaller
all the
They did
expenses.
Retained
buying other
went into
earnings from
properties.
for these investors, as it had
low
before them
was
the cash
flow of
83
vacancies.
the property.
been for
Income
They
was
never
refinanced
been
their
properties even
paid off.
"cash out" on
because
Mr.
after the
Desmarais argues
that
their properties, despite the
the interest
rates on
mortgages had
they couldn't
tax advantages
mortgages had been
during their time in business.
so high
They reasoned that interest
payments only cost them money.
558
South
repairs
Summer
received
during the
building.
a
number
10 years that
The roof,
the
of
badly
Mr. Desmarais
needed
owned the
windows, the floors, and the
rear
porches were replaced with the help of an assistance program
provided
by the City
Corporation.
thourgh the Olde
"All the major
Holyoke Development
repairs had been done when
we
sold it in 1985."
It
also
Nineteen
experienced
a
seventy-seven
eight unit
At least two
building.
significant
shift
welcomed seven
Six
year at
addresses
vacancy
appears for the
in the
tenancy.
new tenants
of these with
of these households
in
Spanish surnames.
were living the
embattled Ward
to the
One.
following five years,
previous
Only
one
after which
the City Directory has no record.
The practice
new
of
letting the
tenants didn't
work,
existing tenants
according
to
weren't very
good at
"We had some
trouble with bad tenants
professional
screening
service
screening" new
couldn't reduce
service to
Desmarais.
"We
applicants, he
says.
and we later used
help."
the wear and
recommend
a
The
screening
tear that
these new
The new households paid
households brought to the building.
had replaced,
was still
they
smaller households that
than the older,
more in rent
It
in services too.
but they demanded more
possible to make a living with the buildings, but
it was clear that increasing liabilities from lead paint and
other
hazards, were going to make it increasingly difficult
to manage
with
offer
in 1985
to
twenty apartments)
their buildings
of
buy three
was, therefore,
partners received
two
that these
great surprise
It
future.
such housing in the
an
(holding
By retaining a
at over $9,500 per unit.
unit two year balloon note, they still were able
$2,500 per
to pocket over $7,000 per unit at the sale.
We
couldn't see how
since
Especially
He
himself.
he
he could
wasn't
make a profit
going
to
not only underestimated the
on them.
manage
them
fragility of
those buildings, but he also was depending on increased
the market
rents that
couldn't bear.
just
Not
for
long.4
The new owner, Mr. Sheedy, was not
investment
strategy.
Information
Registry of Deeds, however.
willing to discuss his
is
available from
These indicate that the
the
banks
had more confidence in the value of Mr. Sheedy's investments
than
did
mortgages
Mr. Desmarais
on
Holyoke
his partner.
and
properties
for
the
"Interview with Charles Desmarais, 5/15/91.
65
Examining his
period between
his first Holyoke property
1985 when he bought
10,
January
to November
1, 1989, when he added a third blanket mortgage
to his entire Holyoke holdings, I found that the outstanding
debt
on
his
buildings
of
as
November
1989
properties that
was on
$2,150,000 in mortgages.
This
bought
earliest only four
for $921,000, the
He told
one
can
additional
that the
not
account
capital
that
for
the
Sheedy
debt
$5,500
has
he
years before.
owed on
the
unit.
The
St is $15,000 per
558 South Summer
building at
tenants
interested buyer
totalled
per
borrowed
unit
since
in
the
building was bought for $9,500 per unit 5 years ago.
The
management
contracted
out to
firm, but
now it's
of
the
properties
a "cut-rate"
local
managed through
was
property
originally
management
Sheedy's own
company.
Residents I talked to in his buildings say that requests for
repairs go unanswered for months at a time.
558 South
Summer St.
have begun witholding
The tenants of
their rent with
the help of local Legal Services attorneys.
According
have
Their
to the
not received
bank holding
interest
discussions with Mr.
the first
payments
Sheedy seem
mortgage, they
for several
to have
months.
failed to
reach an acceptable agreement and they are currently seeking
to have the properties placed
in a receivership.
The
bank
has begun negotiations with a large property management firm
and the likelihood is that the properties will be foreclosed
and sold once the buildings are stabilized.
86
Lexington, Massachusetts.
address as
lists his
known whether he had any real estate
to Holyoke.
experience before coming
It's
not
or property management
obvious question
The
rental
Holyoke's
in
interest
whether his
is
He
Sheedy's background.
about Mr.
known
is
Not much
properties
like Mr. Shapiro's, from the availability of risk-
derived,
free credit and the promise of pyramid-like leveraging.
of 558
The deterioration
Mr.
other of
St. and
South Summer
Sheedy's buildings attracted the attention of the owner
of buildings that stand on
Street
(NEI).
either side of his South
was
That owner
property.
Esperanza, Inc.
Nueva
tenants and
met with
for NEI
An organizer
their
Conversations
solutions to the crisis.
lawyers to discuss
Summer
with Mr. Sheedy and an examination of the building, together
members
and utility
of tax
with reports
the group
of
that
company liens,
did
Mr. Sheedy
capacity to manage the building.
convinced
not have
the
This "Group" was concerned
that something would have to be done quickly or the building
(and possibly those
on either side) might
be irretrievably
lost.
The next
step was to
their intentions.
the building.
risk.
and try to
gauge
This brought a visit by a bank officer to
He was "shocked" at the state of the building
and was concerned
at some
contact the bank
that their interest in the
The Group then
met to
buildings was
determine what
the
likely course would be for the banks and to see if there was
then turn the buildings over to them at a nominal
The bank
large
price.
instead decided to seek a receivership through a
property
properties.
but
and
to foreclose
the banks
they could encourage
some way
management
The
firm
that
bank was unwilling
handled
NEI's
to commit any
further
its stated intent was to allow the receivership several
months to stabilize
the buildings and clear
up any serious
health hazards before it foreclosed.
This bank had also just committed itself
of
the financing of another NEI
across the street from 558
felt
that
commitment
interest
housing project with units
South Summer Street.
in that
to preserving
project
558 South
might
Summer
feeling was confirmed when they learned
put up
to a large piece
The
Group
enhance their
Street.
That
that the bank would
$250,000 for financing the receivership.
As I write
this, the management agent is seeking liability insurance to
cover the properties.
NEI's
interest
commitment to
South
Furthermore,
development
It
property
would
choosing to
unless it was
residential
the
stems
preserving existing housing
Holyoke.
organization
in
be
hard
demolish
there is
little
their
resources within
to
imagine
a residential
completely unsalvageable.
"density" or competing
from
this
building
Considerations
of
land-uses are secondary.
consideration given
to
the
of housing or neighborhood amenities that might
attract more affluent residents.
88
The focus is on
providing
In all
the greatest support for those in the greatest need.
housing
their
the
benefits
and thus
contrast to another non-profit
households
lowest-income
the
to
provided
advocacy role
This redistibutive,
possible.
sought to
have
they
deep operating subsidies
the numbers of
maximize
to date
developments
sharp
is in
housing developer in
Holyoke
to be discussed in the next section.
The Evolutionary Process
The
illustrate
the evolution
Originally
South Holyoke.
investors
were forced
558 South
Summer Street
of rental property
investment in
years at
last seventy-five
by
owned by owner-occupants,
these
to
their
proximity
These earlier landlords were
tenants as neighbors as well.
a reasonable profit by simply
able to obtain
from moving out.
tenants
small
relate
to
their
portions of
landlords
employed
safeguard
their
Earlier tenants
for
income
and
informal
investments.
keeping their
paid relatively
These
their rent.
personal
They
put
mechanisms
to
a premium
on
personal contact.
Whereas Ray
the same
Marion put his sister into the building, kept
tenants for long periods, worked in an office down
the street and sold oil to others in the neighborhood, later
investors
served.
were much less connected to the neighborhood they
They were
their tenants
from out of
and often
town and knew little
distrusted them.
89
This
about
evolution
reached
its pinnacle
demonstrated
personal
in
little
the ownership
interest
contacts with
in
of Mr.
Sheedy who
effective management
tenants and
other
members of
or
the
community.
Significantly,
year
Sheedy bought
before the
new tax
the property
laws would wipe
supposed incentives for this investment.
in
1985, one
out much
of his
Perhaps he was not
simply looking to shelter income, reap speculative gains, or
cream off refinancing proceeds.
managers
and
his
deterioration
of
thoroughly
failure
his
Nevertheless, his choice of
to
respond
buildings
unprepared for the
to
the
indicates
that
rigorous demands of
serious
he
was
a rent-
driven rental market.
While
while
Desmarais used
Desmarais kept
in
Sheedy's tenants had
kept
costs down by
little debt,
close
Sheedy loaded
touch
with
never heard of him;
doing his
his
it on;
tenants,
whereas Desmarais
own repairs, Sheedy
hired a
low-budget manager.
In order to
be successful Desmarais
vacancies and turnovers.
and
prompt attention to
needed to reduce his
That required tenant satisfaction
the needs
of the tenants.
Still
property owners during those years were finding the business
difficult to maintain.
edge in
order to
As tenants were living closer to the
make their
rental payments,
collections
became more difficult and, as the overcrowding took its toll
on the buildings, maintenance costs soared.
90
The rewards for
hard work for these traditional
investors were shrinking and
they began to wonder whether the headaches were worth it.
market and tax
credit
with the
familiar enough
like Sheedy were
New investors
lucrative opportunities
laws to see
available despite the increasing difficulty of managing lowTheir
rental properties.
grade
market
the
into
entry
allowed traditional owners the escape they were looking for.
traditional
The
grew
market
owners' retreat from the low-grade rental
of
out
worse.
far
the problem
has made
investment
this particular
However,
it.
investment would replace
form of
other form
Perhaps it was inevitable that some
conditions.
of
deteriorating
of
history
long
a
By
redefining the investment value of these properties as a tax
those
collateral,
generally
commodity,
appreciating
an
shelter,
more
who
skilled
attracted
were
financial
in
effective property management.
had
property
unwilling
prepared
management
a
skills had
of
were
markets than
cost-
gotten
like
piece
invest
to
In the meantime,
Investors
to return.
or
those who
and were
out
Sheedy
for the resumption of business-as-usual
were
ill-
in a rent-
driven market.
These
under
properties
the best of
had
proven very
conditions.
difficult
Their new owners
manage
to
not only
brought few skills to the problem, but they had also created
further
problems by adding on
Resale became nearly impossible
91
layers of unsupportable debt.
without foreclosure.
With
noone
willing
them
to buy
out
at
any
price;
possibility of being able to work the problem through;
new owners had taken these
no
with
these
properties down a dead end
road
with no way to turn back.
Though the
extreme
a
case of
558 South
Summer
Street
convincing
illustration
in
traditional
role of
low-grade
of
the
rental
the
changing
real
landlord as
the renter household
one
to contribute to
the availability of rental
increased.
opportunities
emphasizing
further
the use
Those
pattern
estate.
service to the tenant was weakened by the
making
an
example of this evolutionary process, it does offer
investment
of
may be
As
weakened
of their
took
the
rather than as a home to their tenants.
92
a
declining ability
operating costs,
advantage
traditional
buildings
the
who provides
properties for marginal
who
of
as an
profitof
these
role
by
investment
CHAPTER 6: CURRENT CONDITIONS AND FUTURE TRENDS
When The Music Stops
surge of residential real estate development
Northeast, the
inevitably
had
demand.
the market
overshot
continued
the
combined with
economy
empty rental units.
originally
of newly-built apartments
Forty-six percent
rented
still not
were
in 1988
Northeast
included units of the relatively
These
sale, were then rented out when they failed to
produced for
sell.
housing
led to a glut of of
product--condominiums--which,
housing
A slumping
delivery of
units put in the pipeline years before,
new
All over the
the mid 1980's could not last.
boom of
The
3 months
in the
after
This was the lowest rate in at least 8 years.
completion.*
renters changed their addresses to take advantage of the
As
soft buyers' market, moving up to accomodations in the newly
apartments
constructed
process
eventually
most
the
left
the
filtering
marginal
properties
condominiums,
and
unoccupied.
In
some
nearing
sections
throughout Wards
"How
could
Holyoke
Plywood-covered
25"..
to wanted
of
the
vacancy
windows
began
rates
were
appearing
Many landlords whom I talked
One and Two.
"to kick themselves for not getting out in time".
I have
known?"
they often
asked.
They
4U.S. Bureau of the Census, Current Housinq Reports
H-130 and H-131.
93
saw
series
themselves
as losers
without a chair
their holdings.
willing
of
left
when the speculative "music" stopped.
Many
their losses
by selling off
pieces of
With very few buyers, landlords were often
to simply give
mortgage.
a game
musical chairs,
trying to cut
were
in
Even that
up title
in exchange for
has been difficult
a second
to do, especially
when the property is in very poor physical condition and has
a very high vacancy rate.
simply
is no one
One investor claimed that
willing to
buy these properties
there
at this
time, at any price.
Tenant advocates in Holyoke estimate
buildings
are in some
form of serious
Everyone
I spoke
years of
experience, were
represented
that over 50
with, including
recount other properties
financial distress.
landlords
convinced that
just the tip
of the
rental
with over
50
these properties
iceberg.
"just on the brink"
They
all could
and likely to
fail in the coming months.
Overleveraging was
factors
offered by
mentioned as only one
observers for
Overleveraging
does have
capturing the
interest of
the
the
respond to
the
real estate
unique
large and
institutional lenders.
investors
the
How
changing
in a series
of
crash.
effect, however,
of
influential players--
they
and
market
their
will
debtor
have
an
important impact on the future of South Holyoke and the City
as a
whole.
After a discussion of lenders' strategies this
chapter examines investors' strategies and, finally, that of
94
Development Corporation, a
Olde Holyoke
well-tuned
are
policies
whose
developer
non-profit housing
current
to the
climate of conservative government and declining commitments
and plans
policies
household.
Their
the current
crisis
low income
the very
housing of
to the
for responding
to
should be instructive of the future role of public officials
in many other localities around the country.
The Lenders' Options
increasingly active
lenders become
With no wish to own
properties.
exchange for
renewed commitment
If
payments.
foreclose
England
a
and sell the
attempted
to
in the
fates of
the owner
by
properties.
auction
owner where
service or defer it
bank
fails, the
that
these
these troubled properties,
reduce the debt
the bank agrees to
the
mortgage payments,
"workout" with the
seek to reach a
they first
timely
their
in
behind
fall
As owners
off
the
make
to
may seek
When the Bank
foreclosed
in
to
of New
Omni
properties in 1990, only four out of the six parcels brought
a price
there
family
accept.
they were willing to
have been
few such
rental properties.
foreclosure
Perhaps
that is why
auctions of
multi-
Buying properties back through a
95
holding
company,
as
the
Bank
of
New
did,
England
is
considered a poor option by bankers I spoke with. 'The remaining
option is
ask the court to appoint
investment in the
and
the receivership.
on
building until
to
receivership
means
to
it
option
protect
bank may
a receiver who will protect
they can
sell it for a better price.
holding
The
without
their
safely foreclose
Stabilizing a property and
accepting
offers the
lender
his investment,
liability,
a
the
relatively safe
while
waiting
for the
market to heat up again.
According
to one
banker,
the
decision
workout, file for receivership, or
calculation of the various
to
stay
in
a
foreclose is based on
a
returns for each strategy.
For
example, where the current market value of a property is one
third
the value
of the
guarantees interest
mortgage balance
Without
payments on
balance, a
one half
may seem the best
other hand, the
property,
mortgage
a change
the
improved
in management,
management
that
spending
$3,000
team would forestall
original
deal possible.
terms
the
likely to further deteriorate in value.
conclude
of the
owner may appear incapable
despite
workout that
per
On the
of managing the
of
the
workout.
property may
appear
The lender may thus
unit
under
an anticipated
a
new
$5,000 per
Although a former Massachusetts banking commissioner did
say
that many
banks are, in
fact, buying
their
foreclosed
properties at
inflated values.
In
this way the
banks' balance
sheets appear healthier than they actually are.
96
unit deterioration in property value, yielding a net savings
money
In this scenario, spending more
of $2,000 per unit.
makes sense.
Though the
lenders, as I have said, prefer not
its own management team,
does not
the bank
receivership,
Under
own property.
to
hire
foreclose and
conceivably
lender could
assume ownership or liability for damages arising out of the
are severely reducing their exposure to lead paint
insurers
claims and new legislation obligates the banks to
poisoning
remove
property
At a time when rental
operation of the property.
all
hazardous
property, the banks are especially
rental properties
as these.
to pay thousands of dollars
can
they
before
wastes
resell
wary of owning such
a
old
In fact they have been willing
per unit per year to
subsidize
the
continued operation of these buildings as they wait for
the
market to improve.
how this operated in
We have seen
the case of the property at 558 South Summer.
But what
happens to
properties
hope to recoup its losses?
when
cannot
the lender
when adding another $3,000
per
unit will not forestall deterioration and the lender refuses
to make
additional investments?
testimony given by
its
State Senator,
Holyoke housing
and the
judge,
Holyoke has suffered
vacuum
in management"
to legislative
According
Hampden
activists and
County housing
a great deal
court
recently from "a
arising from bankrupt
97
tenants,
investors and
liability-conscious
bankers
leaving
rental
properties
without basic services. *a
In one
we
of these cases, during the long period in which
searched for a
perhaps irreparable toll
heavy, and
arson.
receiver, the buildings
As
a
result
many
suffered a
from vandalism and
were
and
still
are
condemned.**
The
profligate lending
major role for lenders in
housing.
Although
the
of the
mid-1980's has
ensured a
the immediate future of Holyoke's
soft market
has
put pressure
on
property values to settle back to a price level more in line
with
the actual cash
resist a
flow of
the property, the
banks may
decline to prices that are far below their current
investment.
We have
seen in the
case of 558 South
Summer
how Mr. Sheedy was willing to sell his building for just the
**The Massachusetts legislature is currently considering an
"Act Clarifying
the Powers of Housing Receivers".
Support for
this legislation comes,
in part,
from
the difficulties that
receivers have had in obtaining the capital necessary to
run a
building or the
protection from damage claims that exceed their
insurance coverage.
These
problems have
been addressed in
this bill in
two
significant ways. One, it grants the receiver the right to place
a "priority lien",
which allows the reciever a first position
(ahead of the banks and other non-governmental lien holders) on
the assets.
This would provide the receiver some guarantee that
the money it
spent on
the property
for the purpose of making
necessary repairs would indeed be repaid.
Two, it would limit
the liability of the receiver to
the proceeds of
its insurance
and "in no instance... for negligence".
'Glassman,
Rick,
"Written Testimony
in Support of
3/15/91".
Western Massachusetts Legal Services, Holyoke.
98
S.627,
debt
prices are
that
is
Mr. Sheedy
like
investors
leveraged
him than
to
The combined effect of dozens of highly
on.
simply holding
at a
Selling
buildings.
more expensive
been
would have
price
lower
on his
bank held
that the
effectively set by the banks who control the debt.
the
housing,
rental
low-income
Holyoke's
investments in
substantial
with
institutions
financial
large
As
banks are carrying an unusually large share of the financial
future of
in the
risk
market.
Several
the
beyond
portfolio
the same bank.
Neighboring buildings may be put
borrow $1,000,000
a creditor;
$1,000 you've got
a partner," could
this case.
apply in
on
mortgages
with
neighborhood
will treat a delinquent
neighborhood differently
Though
it is hard
their investment in
least the
possibility that
closely
with
income housing, at
if
Large lending
in
the building
how the
a
neighborhood-based
is at
begin to
developers
least until their interests
were
banks will
a neighborhood, there
some banks will
99
and you've
loan on a building in
to predict
calculate
more
than
"Borrow
buildings
several
institutions
alone.
old adage,
The
or abandonment.
vandalism, arson
to
to fall victim
bank allows one building
at risk if the
that
question.
in
property
immediate
loan
their
for
implications
rental properties in the same neighborhood may hold
loans from
got
has
property
distressed
take over a
decision whether to step in and
Their
housing
private, rental
Holyoke's
of
work
low
are secure.
In any
event, as long as
other investors are
unwilling to
step in and current owners fail to make interest payments on
their mortgages, the banks will
be forced to carry a
great
deal of the burden of supporting these properties.
Beyond the Bust:
Investors Adjust to Rent-Driven Financial Management
Eventually,
everyone
bottom out
and a
low-income
housing.
expects,
recovery will
the business
bring new
Decreasing
operating deficits;
will
tenants seeking
vacancies
acquisition prices
cycle
will
will
reduce
be lower
(in
real terms); credit markets will re-open; and some investors
may again
find that it
is profitable to
operate low-grade
rental real estate.
The underlying problems will
disappeared however.
It will still be expensive to finance,
insure, maintain
and
family apartment
building.
what
they
saw ahead
secure
a
Responses
were
inner-city,
from investors asked
A
common
working with low-grade
rental
rarely
response from many investors
housing was
lead-painted,
not have
optimistic.
that they were "looking to get out of that line
of property" or that they
were "seeking to upgrade
(their)
portfolio".
Several
successful
entered the market
and
had
cashed
appreciated.
investors
I
had
spoken
when buildings were very cheap,
in
on those
investments
when
with
had
as now,
they
had
I asked them if they would encourage anyone to
100
new
avoid buildings
to
investors
had deteriorated too far.
or that
risks of
low-grade rental
told me
representing landlords
small
One lawyer
housing.
who drove
They emphasized that the
of the
to own much
it dangerous
being sued made
that
legal costs;
drove up maintenance and
out good tenants and
paint;
lead
with
held "bad" tenants
that
central heating;
lacked
They encouraged
Most were skeptical.
price for a building.
right
assuming they could get the
get into the market now,
who specializes
advising
has been
that he
in
investors to stay out of the rental market unless they
could afford a very good
estate tax
of real
shelters", said
loss
"With the
management agent.
one management
agent,
"investors will need to to be very conscious of their costs.
And costs for
the marginal
that
Now
these properties are high."
opportunities
profit-making
for
Holyoke's low-grade rental properties are gone, what are the
prices and more cost effective
will always search for lower
happening.
ways to manage them. To some extent that is
described the
investor
of
with lots
tougher
they
Investors
benefits of investing in these properties?
"real"
managers being
poor property
managers.
can cut costs
as a
current situation
However, there
and still
One
"shakeout"
bought out
are limits to
by
how much
maintain a building
for the
rents that
tenants
long term.
Similarly, there
are willing to pay.
is a
wide range of
However, the tenant
101
can not pay
more
than he or
at
the
she earns.
lowest end
particularly
lowest
on
expenses
Owners of rental properties that sit
of the
quality scale
sensitive to
the
and
the
earning potential
income scale.
their
How
sources
are going
of
investors
income
in
to be
of those
view their
these
rental
properties are important keys to future investments in these
properties.
Based
on
the
1990
operating
budgets
for
five poorly
maintained buildings with 38 units
in South Holyoke, I have
developed
characteristic operating
what I believe
budget
for a
budget
includes hot
marginal rental
cooking fuel. **
reflect
the
By
water
likely
building
Allowances
for
overall expenses
property in
but
no
reducing the
maintained
would equal
to be a
heat,
costs
and
of
Holyoke.
heat,
This
electricity
maintenance expenses
running
adding
electricity
the
a
more
Section
and
or
to
properly
8
Utility
cooking fuel,
the
for a two-bedroom unit in
such a building
approximately $3,800 per year.
This is in line
with other apartment buildings whose managers quoted figures
between
$3,000
properties.
at
$5,000
vacancy
and
$4,500
per
unit
for
comparable
These did not include any deleading (estimated
per
costs or
apartment),
mortgage
replacement reserves.
The Community Builders,
Budget", 1988.
Inc.,
102
interest
payments,
Neither do
"South City
they
Housing 1989
costs of
include the
be
which would
major rehabilitation
needed for any building with a long history of neglect.
landlord
For a
mortgage),
(without a
below
the line
is
per year
$3,800
clear"
"free and
the property
who owns
which the property must suffer or he must lose money, either
in his unpaid time
or the infusion of cash.
Assuming that
debt at 10%/year, the resulting
the unit carries $10,000 in
interest payments would increase the rent by over $1,000 per
The breakeven rent that
year.
have to
costs facing
today's
$400 per month.
charge is
are the
These
investor.
expected
operating
that covers these
is the
costs and
supported with
them.""
living
rental units that must
by the households
the rent paid
a
still allow him
Holyoke currently
obvious challenge.
approximately 5,000 unsubsidized
can
Finding tenants who
income?
What about his
pay a rent
profit
the landlord would
has
be
who occupy
It is also estimated that 1,750 AFDC households are
in
them, most
of
Holyoke and
South
them in
the
adjoining Churchill area.52 Even with doubling and tripling
up,
which one
housing
population represents
demand
for
advocate
a significant
unsubsidized rental
*'Donahue Institute
Housing Study", 1989.
estimated
for
at
portion of
units in
Governmental
this
the tenant
Holyoke's lower-
Services,
saDepartment of Public Welfare, "ET Managerial
Month of July, 1990, Holyoke".
103
30%,
"Holyoke
Information--
grade
properties.
A household of
4 on
currently receives $8,016 per year.
income
At
for South Holyoke should
The median
for
rent,
affordability
housing
Public
twice
ratio for
household
be approximately $8,600P4.
$400 per month an AFDC household
income
AFDC in Holyoke
would pay 60% of their
HUD's
recommended
total housing
costs
maximum
(30%).
activist in Holyoke familiar with the Department of
Welfare's efforts to place AFDC households in rental
housing
states
that
the
department's
Placement
Prevention Program is typically placing households in
that rent for
60 to 90%
has actually surpassed
who
has a
of their income and,
reputation for
80%
(and his
Department
of their
Welfare
in these
often has welfare households
rent one of
his apartments
rents range only between $375 and $525
of Public
units
One landlord
providing decent units
income to
and
on occasion,
their monthly income.
neighborhoods reported that he
paying
One
officials in
per month).
Holyoke report
that there has not been an increase in the payment standards
in three
years
and do
not expect
one
in the
forseeable
be reaching
the limits
future.
This suggests
of
their poorest
housing.
that landlords may
tenants'
abilities
to
pay
for
decent
It may also explain why the conventional wisdom is
Conversation with Department of Public Welfare supervisor,
July 1991.
54Extrapolated
from CACI's 1988 Sourcebook of Demographics.
104
at least
is little hope
income scale, there
higher on the
slightly
is
to those
can rent
Unless one
the property.
their income
financial failure
maintenance costs and defers
adds to the
to
and triple-up only
Allowing them to double
risky business.
of
80% of
to pay
are forced
households who
Renting
"get out".
or
holdings
one's
to "upgrade"
for improving cash flow.
is just getting a little bit worse.
a
No longer will
in
operating
losses
proceeds.
No
longer will
No longer
estate.
losses
for their
operating
They have
already fully
allow
cover
their
refinancing
government allow
with
can investors compensate
generous
exploited the
gains-on-sale.
increased household
and desperate housing needs of a displaced immigrant
group.
No
government
for
banks
investors to reap tax benefits from their passive
losses in real
income
federal
the
income
on
with
their profits
pad
or
to
housing
rental
low-grade
investors
riding
been
have
They
profit.
substitutes that are now gone.
individual
and running
properties with negative cash flows while still
these rental
making
What is strange is that
have been buying
10 years, investors
for over
anything it
If
new in this situation.
There is nothing
those
maintenance,
can
longer
they
housing programs with
buildings
suffering
expect
to
find
expanding
operating subsidies.
from
decades
And
of deferred
investors can no longer expect to collect rent
without paying for
repairs (even were
105
the courts to
allow
it).
Forced to
properties at
support
a
operate on
the
lowest
significant
a strictly cash
end of
basis, rental
the rental market
portion of
the
households
cannot
at the
lowest end of the income scale.
Investors are
responding
finding a way to
them.
trying
"making
to gauge
it"
Returning to the old adage
investors
report
their
criteria as "location,
and
economic
reality
the
get rid of
likelihood of
another
by
"being
one
lost".
of real estate investment, these
three
most
important
investment
location, and
location".
Investors
seek buildings where the
"scare away
this
upgrade their properties or to
Some are
neighborhood
to
surrounding neighborhood will
good tenants".
They
believe
that there
not
are
still some opportunities for the investor who buys wisely in
a good
location
successfully.
market to
will
be
and is
But the
able
to "clean-up"
emphasis here is to
the
property
move up in the
a higher grade of apartments in which the tenants
better
able
to afford
the
costs
of
their own
housing.
Olde Holyoke Development Corporation
This philosophy is nothing new
development
corporation,
Corporation (OHDC) in
to the non-profit
Olde
Ward One.
Holyoke
housing
Development
Although nominally
a non-
profit corporation, this organization strictly observes
bottom
line in
its
real
estate
106
activities.
the
Eschewing
operating subsidies for
minimum
strict
imposing
time
income
market cost.
At
they
are
minimum,
at the lowest
40'. of
a
$400 per
month with
largely
unaffordable
AFDC
to
even while charging some of the lowest rents in
recipients,
the
for
requirements
income
tenants, OHDC's units are designed to operate
possible
the same
their apartments while at
Their
City.
has
Courchesne,
Dick
Director,
no
apologies, however.
more
to provide
failing
criticized for
shouldn't be
and it
of subsidized units
a high number
Holyoke has
When people start
subsidized housing to the very poor.
demanding that Holyoke do more, I ask them, 'What about
Why can't they contribute a
Chicopee across the river?
number of
that
have the
them
poor people that Holyoke has and I tell
they
if
doesn't
Chicopee
say that
They
little?'
provided
more
opportunities
for poor
people in Chicopee, then they would move there too.
Holyoke does have a high
second only
one
to Boston in the
of the highest
State.
However, it
percentages of AFDC
housing.
subsidized
units,
percentage of subsidized
According to
DPW
also has
recipients without
officials, few
of
these households live in OHDC's Ward One neighborhood.
As the
lead housing developer
years, OHDC
is likely
to have
107
for the
City for
a significant
over 15
role in
the
future
of the
rehabilitate
housing policy.
City's
Their efforts
to
Ward One are widely regarded as successful and
although that review is by no means unanimous, most business
and government leaders with whom I spoke were impressed with
its work.
by
who have been distressed in the
Even those
the widespread
demolition
caused in Ward One are
and
displacement that
OHDC
expressing reluctant interest in the
One affordable housing developer
OHDC model.
past
told me that
housing sponsors are increasingly asking him to find ways to
structure deals
without
OHDC.
new
In the
using
of
era
operating
rent-driven
investment, the OHDC model may
Holyoke's strategy, as
subsidies,
rental
like
property
become an important part
the model for how
of
Holyoke's housing
problems should be dealt with.
Efficient, cost-effective
and
profit-seeking, OHDC is seen as
unburdened by
speculative
the cheapest way to provide
affordable housing to the greatest number of residents.
is
often contrasted with
Esperanza,
Inc.
(NEI)
the development efforts
in
South
competes for scarce CDBG funds.
funds
nearly
operating
all
Holyoke
The
of Nueva
which
NEI, in contrast to
its properties
subsidies.
with
with
state
search for housing
It
it
OHDC,
and federal
solutions in
the newest of Holyoke's blighted neighborhoods-- Churchill-has
there.
already led to the development of some OHDC properties
We have already seen what NEI's response has been in
the example of 558 South Summer St.
108
What follows is a brief
the OHDC model and
discussion of
responded, in
how it has
its way, to a failed rental property in its local Ward One.
cities
a model
as
began
OHDC
1970's.
in the
program
Their initial strategy was to start at the perimeter of Ward
At first they were able to
One and work toward the center.
they got
to the middle, prices were almost $30,000 per unit
"bad"
according to
neighborhood,
for
the
of the
Omni
problems
causing
were
who
tenants
number of
and held a
in many instances
physical condition
One
Courchesne.
worse
in
were
they
expensive,
more
remained were
buildings
Though the
afford them.
and they were unable to
that
time
By the
$3,000 per unit.
at less than
buy buildings
buildings discussed in Chapter 5 belonged to this group.
combined with the
properties and the deteriorated condition
bad tenants
its
foreclosed
and
to buy
decided
OHDC
to auction,
it
brought
New England
of
Bank
the
OHDC and
to
of irritation
a source
was
When
tenants.
rehabbed rental
one of OHDC's previously
sat right next to
It
it
without
knowing how they would eventually rehab it.
The
normally likes
on
around,"
to
buy a
tenants which
building,
tenant relocation
restrictive
money
with
building came
fixing
the
laws.
building
said Courchesne.
than
is
due to
not
expensive
were
consequently
and
"We'd rather spend our
moving
the
tenants
Since they had no specific plans
to begin rehab, they were under no such obligation.
tenants
how OHDC
evicted
109
for
The bad
on-premises
drug
The "good"
rent.
non-payment of
or
arrests
possession
better units at equal or better rents.
tenants were offered
Now the building sits boarded up and is kept secure.
being
landbanked.
There
plans
current
an
for
like
opportunity
There will always
Cranston-Gonzalez or something.
kind of housing program.
no
for
waiting
We're
development.
are
"It's
be some
just a matter of waiting for
It's
the right opportunity."
That meant OHDC
buildings with
they waited
had to put up
$156,000, then
virtually no rent
for
the tenants
for almost
to leave.
manage the
a year
Do the
while
existing
properties throw off enough cash that OHDC can use the extra
income
to capitalize
such
projects?
No,
according
to
Courchesne there isn't that much cash from these properties.
They
have
good reserves
minimum, around
like these
outside
the rents
$400 per month.
contracts.
OHDC has
a
drafting and design
This
income
is
are
kept at
The capital
comes not from other housing
inspections,
clients.
and
the
for projects
projects, but from
lucrative sideline
work for banks
major
the
source
doing
and other
of
their
capitalization fund.
Though they have no idea where
come from
getting
projects
for the
Omni building,
the money will
they have
things done with very little expense.
funded by major
eventually
a history
Though large
programs constrain the
amount of
cost-cutting that is possible, the philosophy at OHDC is
110
of
to
roadblock" that
"use every legal means to dodge every legal
"Currently
costs money.
for
a two-family
so
That's because
(Courchesne is
marketing,
drafting,
design,
lawyer),
legal
are in-house--
the costs
much of
costs.
in construction
under $100,000
put up
we can
a
construction
management and development.
Another reason
such low
costs is the administrative support
and as beneficiary of a
each year,
funds
project.
15 -
did.
market put
The
this
For instance, if
units would
20'. ."
But things have changed, according
is no longer possible for
all their
charge
rents of their
place, the
was not in
have to rise an average of
it once
of city
large commitment of CDBG
need not
OHDC's staff
expenses to the individual
subsidy
they get each
As administrator for a number
year from the city.
programs,
and tenants
charge projects
why they can
to Courchesne, and
OHDC to do the kinds of
acquisition prices of
it
projects
the
the units on
the rehabbed price of a property well above what
a potential tenant or home
buyer would be willing to
spend
in this neighborhood.
"In
1978 we bought two single family homes and an eight
unit block for $17,000.
We did some moderate rehab and
""Though this is a kind of operating subsidy, it amounts to
only a fraction of the average Massachusetts Chap. 707 operating
subsidy of $500 per unit, typical of NEI's properties.
ill
We then
sold the single-families for $10,000 a piece.
got them
program
and
into a
finished
the
rehab job
themselves.
The large
block was then rehabbed for only $10,000 per
only
are
the
Courchesne, they are
units
too
but the
great.
$70,000 and
more
expensive,
in worse condition.
properties that had
same neighborhood
been
loan
But you can't do that any more."
unit.
Omni
home improvement
where they borrowed $10,000 more for each unit
apartment
Not
low interest,
In
also been
There were other
up for auction
price that
one case,
complained
the
in the
the bank wanted
back taxes
had
equalled
the building's condition was such that it might
have required demolition
at a cost
of $130,000.
$200,000
was too much for
an empty lot, according to Courchesne.
the
one building that they
case of the
In
did buy, they paid
$9,000 per unit for a building that they expected would cost
over $15,000
per unit to repair.
But capital costs
were only
development
of affordable
Courchesne.
In addition
and
rehabilitation,
one of the factors
housing
at
to the high
limiting
OHDC, according
to
costs of acquisition
there are now a plethora of regulations
"The bank was holding a mortgage balance of $22,000 per
unit.
According to Courchesne, "The bank
had no idea what
was
going on.
They didn't know what the property was worth until the
day of the auction.
I never thought that these properties were
worth $22,000, but somehow Omni managed to get a mortgage."
112
that cost money to implement and there is no money available
lead pain t regulation in this state,"
With th e
happens with new
"Wait till you see what
to go wit h them.
increasing costs
he warned.
housing, OHDC
rental
of
has
little rental housing development in recent years,
done very
instead
choosing
homeownership
low-cost
develop
to
on lots made vacant
opportuni ties, typically duplexes built
when OHDC and others demolished the 4+ unit apartment blocks
that once stood
The construction
there.
of owner-occupied
also reinforces the OHDC goals of increasing owner
duplexes
occupancy and resident investment in the City's lower wards.
least
With the
of buyers and the resale
to see property
the incomes
possible restrictions placed on
of their units, OHDC also
values and household
expects
incomes rise in
Ward
One as a result of its activities.
concern
The
advocates
Ward
continuing
housing
simply
is
to
housing
displaced
South Hol yoke
destabilizing
Whoever
Churchill.
Holyoke's
of
One's "success"
poorest residents,
their
then
is that
many
by
expressed
for
Holyoke's
is an
important
blame
problems, displacement
and
concern.
OHDC's
"clean
the
success has
been attributed
up" a neighborhood.
household
incomes of
to their
a bility
to
By reducing density, i ncreasing
new
tenants
(who
are now
out
working during the day and therefore less often at home with
children
"wearing
out"
the
113
property),
and
increasing
homeownership,
a more peaceful and
they have made Ward One
prosperous looking
neighborhood.
To the
extent that
solution
to Holyoke's housing
economic
principle that residents should pay their own way;
that the
exclusion of
significant part of
step
toward
has
neighborhood
improvement,
then
on the
who form
a
a necessary
efforts
to
lead to increasing displacement.
other hand, one
cannot ignore
come to replace the private,
source
do
under-income residents,
the existing community, is
improve Holyoke will
On the
problems are founded
the
the way
that OHDC
for-profit developer as a
of moderately-priced housing.
Private investors who
not have the benefit of OHDC's sophisticated development
skills, their
profit
CDBG
funds,
City-donated
properties,
non-
status and government subsidized loans will be hard-
pressed
to develop and
what it costs OHDC.
subsidized
operate their properties
at nearly
At a time of shrinking commitments
housing,
especially
in
Massachusetts,
to
the
efficient use of government funds to create even moderatelypriced housing cannot be overlooked.
In this chapter we have seen how
responded
to the
whether they like
three major players have
current crisis.
it or not.
Lenders are
They are waiting
that the market will somehow improve.
choosing
and hoping
Private investors are
to drop-out of the low-grade rental housing market
by either up-grading
banks.
committed
The City's
or abandoning their properties
lead housing agency
114
is committed
to the
to an
upgrading
None
program that
of these
households.
it began
trends holds
They
nearly
out much
likely
will
two decades
ago.
hope
for low-income
see
fewer
housing
opportunities and increasing marginalization if these trends
continue.
115
CONCLUSIONS
CHAPTER 7:
The
recent
transition
financial
cash-driven
from
marginal
management
of
profit-making
low-grade
to
rental
properties has had and will continue to have a severe impact
future of those properties and of the households who
on the
live in them.
We have seen how the crisis in Holyoke's low-
grade rental properties
began long
before the
speculative
boom of the 1980's.
We
for
have seen
the small
management,
how
property investment
investor traditionally depended
close
turnovers through
ties
with the
tenants,
competitive rents and
minimal) service.
paid
successful rental
We saw
and minimizing
reliable (although
how tenants
relatively little of
on hands-on
in these
their income toward
buildings
rent during
the post-war years while the rent that they paid allowed the
landlord
tenants
the
a generous return
on his investment.
were abandoning these
suburbs.
Vacancies
Meanwhile,
aging buildings in
were rising
and it
favor of
was becoming
harder and harder to attract tenants.
This changed,
however, in the
late 1960's
as low-income
households, seeking housing and job opportunites unavailable
elsewhere, came to
1970's
and into
Holyoke.
This trend
the 1980's.
housing, they were willing to
income for
rent.
They
grew through
the
Increasingly desperate
for
pay high proportions of their
would double
116
and triple-up
their
households and suddenly units that were going for well under
tenant, were being rented to
the market rent to a long term
these new immigrant households for much more.
especially for the cost
From
insurance,
fixed
fire
to
of inflation.
were rising well ahead
housing-related costs
The
of providing rental housing.
disposal
waste
costs to
fuel
things but
for many
prices escalated
the 1970's
During
maintenance costs rose steeply as 30 children inhabited
Increasing
lived.
incomes of renters
deteriorating
to pay
The
City's
to get out.
housing (in
low-grade rental
of destroying
the
who were supposed
for them, led many small investors
de facto policy
obligations and
legal
costs, new
children had
only a dozen
where for years
aging buildings
keeping with the national trend) did
tighten up the market,
however.
Tax
benefits
briefly
credit
and
in the
1980's.
with
incomes
Investors
mortgage financing
opportunities
were
expanded
values
rose
sharply.
Property
shelter
to
a
and
knowledge
properties with
responded by purchasing
The
as shelter for tenants.
little attention to their use
of
loss of
those tax incentives and the collapse of the credit
markets
has
their
investors to
recently returned
tenants'
income
operating
for
has
only
further
dependency on
income.
eroded
In
the
and
the
meantime,
that income
increased
debt burden has made these properties financially
unfeasible.
The investors
are pulling
117
out in one
way or
another
original investors
and the
they
are
bought from
unlikely to return.
The "safety net"
currently
of state-sponsored housing assistance is
being unraveled
and the threat
of homelessness,
despite the high vacancy rates, grows every day.
Shelter by Ballot
The
traditional
market
arrangements
that
allowed
the
tenant to use a part of the household income in exchange for
a
decent
place
to
live
no
longer
households with lower incomes.
arrangements made it
now.
In its
adjustments
taxpayers
as
wake
who insured them)
buildings will
even
more tightly.
those
For a while a strange set of
to earn
their tenants' income, but
investors
some
for
possible for those properties
income independently of
over
function
we
will see
and
their
a
long
lenders
As investors
the
Meanwhile
tenants will
seek
period of
(and
take their losses.
be lost and
that is
be squeezed
to control
their
costs, they are looking for ways to get out of the low-grade
rental
market
altogether.
investors, it will
In
the
opinions
be those landlords who
of
many
can successfully
market to a higher income household who will make it
out of
this current crisis.
If housing
for the poor
short run, without
is infeasible,
at least
government subsidies, then
increasingly see their housing as a political
118
in the
tenants must
benefit to
be
Part of the
housing.
new social relationship necessary
to
opportunities for the poor must
be
the survival of housing
tenants'
in substandard
to live
subsidies is, increasingly,
public
the
To be poor and independent of
political means.
won through
on
built
organization,
political
the
that decent housing is built with votes as much
realization
as bricks and mortar.
Along with this politicization
a new set
there must come
of relationships between landlord and tenant.
The Seeds of Change
that change have
Broadly speaking, the seeds for
As
been sown.
Nueva Esperanza
already
move into
and OHDC
neighborhoods; as tenants of publicly-subsidized
these
properties
tenant ownership; as the courts increasingly move to
assume
protect
the welfare of
leaders
increasingly
"steward".
may see that
With more emphasis
the
ownership of
"proprietor" to
from
may change
rental housing
as political
responsible for
landlords
hold
their tenants, we
activities of
low-grade
lower-income tenants;
on providing a service than
managing a personal asset, these properties may increasingly
fall
into
the
hands
of
and
non-profits
quasi-public
institutions, accountable to the community at large.
Informal conventions
that
tenant/landlord relationship
disappeared) may be
once
in the
served to
119
the
(and have
since
formal ones.
From
past
replaced with more
regulate
mediation services in
provided
the courts to housekeeping
by landlords, to
counseling
and
on-site daycare
referral
services;
councils
screening applicants
revising
lease
provisions;
services, group
from
and
trainings
tenant-advisory
reviewing evictions
from co-ops,
condos,
to
and co-
housing to land trusts, mutual housing associations and nonprofit
or tenant-owned
rentals--
in
many
ways
the
new
tenant/landlord relationship may be redefined.
The
opportunities
properties
for
speculative
may be reduced or erased
provide lasting opportunities
struggles
times
of the small,
may
gain
these
as communities seek to
for affordable housing.
for-profit landlord hit
increasingly
on
be ignored
by
The
with hard
policy-makers
and
housing judges who see little to be gained by bailing out
profit-seeking
alternatives
landlord
when
available.
there
These
are
non-profit
non-profits,
demonstrate their viability and commitment to the
may be seen as the only "legitimate" owners
such
properties.
partnerships will
These
blur the
and
other
a
as
they
community
(or stewards) of
public/private
distinction between
public and
private housing.
The
community-based housing
provide
more
landlord, these
than a
conduit for
of their tenants.
include some tenants.
120
NEI,
redistributive aid.
organizations often have
easy walking distance
likely to
organization, like
The
an office
can
As
within
Board members are
natural intimacy that
to organize when one has a personal
are easier
Conversely, tenants
includes family, neighbors and friends.
who
may
programs
such
participate in
relationship
context that
a
especially within
participants,
the
the
of
Self-help and leadership development programs
organizaiton.
with
goals
development
community
the
reinforces
properties
their
manage
closely
owners
when
occurs
to
encouraged
be
develop positive relationships with their neighbors and take
Under these
more care with the building in which they live.
new
terms,
may
civic duties
one's
include
stopping the
graffiti in the hallway.
in
Street,
residential
of the
one
office
management
property
NEI's
is
Summer
South
on
Managers
buildings.
explain to the new tenants that an important aspect of their
new tenancy is
offer
are told that NEI could only
They
of the community.
community
apartments becaus
these
the life
an unwritten obligation to improve
to
in
members pitched
help.
advisory meeting.
tenant
The
employ
managers
the
is
All newly occupied buildings hold
The tenants at
meeting during the first month.
their first
that
NEI's
which
Another technique
meeting discuss what they expect from their neighbors.
title
put
question
question),
clearly
is
the discussion
of
to
"What
the
is
communicated
(sometimes
group
a good
set
taken
neighbor?"
of expectations
121
from the
is
it
The
initial
the
only
result is
that
a
forms the
foundation of
a new set of
"traditions" for life
in these
apartment blocks.
The
public
nature
reinforces mutual
often
refer
complain to
of
the
"good
accountability.
to the
list of
neighbor"
For
discussion
example,
self-written rules
each other and the
manger uses the
tenants
when they
same rules
when mediating disputes between neighbors.
Perhaps
the most important contribution provided by these
community-based
organizations is
their
recreation of
the
traditional commitment made by the owners of rental property
to the
shelter needs
definition
of their
residents.
they have undertaken
By their
that commitment.
very
If they
fail to live by it then there is recourse to force them back
to it.
The
de-privatization of
improve
low-grade rental housing need not
housing opportunities for
however.
The
OHDC model
those with
the lowest
model
proven
has
could
it
means remain
subsidies
for
The community-based,
NEI
help
of
the
as the political will and
the
can
population, but only so long
economic
worsen opportunities
incomes.
that
to
to finance it.
lower-income households,
transfer
this
part
wealth into
operating
Without public financial support,
these community-based organizations face the same impossible
struggle as
any other
For without some
and
wealth
owner of
low-grade rental
redistributive effort to
in this
nation,
122
housing.
equalize incomes
the "invisible
hand"
of the
low-income
any more than push the
market is unlikely to do
renter to the very edges of society.
there
back
fabric
social
a
reweave
to
implement
policy-makers could
local
that
some steps
be
may
redistribution,
to
critical commitment
from this
Aside
into
these
properties and their neighborhoods:
(1)
control
have
officials
foreclosure
improvement grants
grant funds, housing
proceedings, block
tax
tax rates,
over
Local
owner-occupancy.
for
incentives
Create
and low-interest loan pools, and fees for city services.
In
company
is
Holyoke
rates, better
utility
access
may
their cash-flow
improve
to
be able
to lower
to foreclosed
priority access
services, and
they
buildings,
the
owner-occupants have
If
publicly-owned.
cities
other
some
and
enough to make investment attractive.
(2) Create
and subsidize an owner-occupant rental housing
association with
that are
provided
and administrative
pooled legal
at a
to members
services
well below
price
the
market.
(3) Establish, perhaps
training
program
sophisticated
through the organization above,
capable
of
out
turning
owner-occupants capable of
a
relatively
understanding and
using modern property management techniques.
(4) Establish a loan pool
specifically directed at owner-
occupant acquisitions of properties.
123
(5)
Establish neighborhood
input
into
planning,
The key
that
certain
block groups which
political
traffic control, or
decisions--
have real
like
land-use
infrastructure improvements.
here is to encourage involvement by making it clear
those
who do
not become
involved have
something to
lose.
Whatever
unstable and
happens,
however, the
the future is
status
quo
seems
sure to be dynamic,
very
to say the
least.
The increasing
owners,
a sluggish recovery from the current recession, and
a lack
of
new
liabilities facing
government aid
in
the
rental property
forseeable
suggests that the small investor will continue
harder
times before
strong intervention,lost
put in
they are
to face even
likely to improve.
this social
resource is
future
Without
lkely to
be
and the the security of millions of low-income renters
jeopardy.
124
Y
'I
'S
,
*
S
\ 4,0000 0
V..
~ *-
\
~ t 0 h- 6
m
pt
-
*
0
e
8119
A1
1Seautb
H.
a 19
4..
Ny
Chu
k I
Soonb 1Azy
i
81
~The
FIiS
CITY OF HOLYOKE, MASSACHUSETTS
COMMUNITY RENEWAL PROGRAM
The preparton of thi. mo gpgo finesewlty e.e 41
tlreqh * Federe Orem from the Renewal Assa.....
Ad.l9tretlem
of t. D..Ir.e .. . .,01
.n# Urbon DeWeiepmmnt,
gwmeori.e9 by Sectwn 40',
of I Housing Act of 1959. .o.mj.
.
'I
~
CENSUS TRACTS
1970 .& 1980
IweIwg.eg
a
e&aa.usa:~
lo
L
2 Cq
.t4j
LUj
S.
S.
S-lSo
S U
E
M
A
S T
'S.
Playground
B
E R
& wading Pool
M
S T
R I
111
S. C
Fpige. rz6
R
D
A
A
E
E E
#4
G
ST
N
T
R
L
S
T
R
T
E E T
S
E
R
E
Diner
Tires
T
1
E E T
-4