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I
CITY LIMITS
COMMUNITY HOUSING NEWS
JANUARY 1979 VOL. 4 NO.1
BIG GAPS ARE REPORTED
IN DATA ON CITY HOUSING
CITY PAVES BUSY ROAD
. TO REALTY REDEMPTION
by Susan Baldwin
After a close look, it is hard to understand why people are still Jiving in
the building at 647-49 East 11th Street. But an equally close look at the
city's lax tax foreclosure policy makes it easy to understand how its absentee
landlord, notorious for generations on Manhattan's Lower East Side, holds
on to what is left of his crumbling empire there.
At 647 East 11 th Street, most of Irving Dankner's tenants are, like Dank-
ner, just holding on . While he holds on to the rent that they continue to
pay, they hold on to apart- Y
ments bereft of vital services.
Dankner, a landlord with a
68-year real estate record on
the Lower East Side, says that
he has watched his empire
dwindle from 60 to ten apart-
ment houses, mostly from
abandonment or fires, and is
quick to add, "But what I
haven't kept for myself, I let
the city enjoy. "
The main reason that
Dankner remains in a posi-
tion of authority to discuss
rental and services policy in
New York's poor neighbor-
hoods is that he has been able
to avail himself of the city's
easier-than-ever terms for re- No redemption jor this tenant 's toilet.
covering tax-foreclosed city-owned property.
[ A prime illustration of how easy redemption hurts tenants and
undermines other housing programs is the saga of 408 West 48th
Street. See page 5 ]
In its fiscal crisis, the city has attempted to speed up the collection of real
estate taxes by shortening from three years to one year the time that a land-
continued on page 4
Owners Still Collect Rent
In Some City Buildings
by Bernard Cohen
New York City cannot keep track
of the staggering number of proper-
ties it has acquired through tax fore-
closure, according to housing
officials who say that their records
are often inaccurate, largely incom-
plete and, in some cases, may have
been tampered with.
Glaring problems have been
turned up through the painstaking
process of cross-checking, updating
and coordinating data on more than
10,000 city-owned properties. Many
of the problems are attributed by
housing officials to the sad state of
their information. However, there is
also some suspicion of wrongdoing,
and at least one case of an occupied
apartment building in the South
Bronx that was listed for years as a
vacant lot is being investigated. (See
page 3).
Of the 10,222 properties now
owned by the city, the best official
estimate is that there are reasonably
accurate records for about 80 per
cent, leaving some 2,000 properties
that have not yet been accounted for
as to their identity, condition,
tenancy, etc.
"The problem is that there is not
one true perfect source of informa
tion so we are constantly dealing
with different reference points."
said a knowledgable source at the
continued on page 2
Department of Housing Preservation and Development.
"This has been going on for years. No one was system-
atically looking at it."
Interviews with many housing officials and indepen-
dent research by City Limits have revealed the following
findings.
-Some landlords have continued to collect rents from
tenants long after losing their buildings to the city
through tax foreclosure. One example is a pair of build-
ings at 112 and 114 West 134th Street in Manhattan.
(See page 3).
-Rent bills are sent by the city to thousands of non-
existent tenants. Out of more than 30,000 rent bills sent
out by HPD in one month, 5,700 were returned. A
check of 4,000 of those showed that 1,500 had been
addressed to tenants no longer living at the listed loca-
tion. Some 25 totally vacant buildings were being billed,
one survey showed. Other occupied buildings continued
to be billed after the former owner had redeemed the
property.
-Conversely, an unknown number of tenants living in
city-owned buildings are not being billed, although offi-
cials say the figure is probably fairly small. The city says
it owns 5,600 occupied buildings and bills 30,000
tenants.
-Residential properties that the city did not know it
even owned are constantly showing up-often when ten-
ants call up to complain about lack of services. One
HPD fieid office has compiled a list of 50 buildings
~ h i c h it believes are owned by the city but for which it
has no records. "Did a boxload of records get lost?"
wondered an HPD official. "It smells to high heaven.
Maybe a whole carton of stuff did get misdirected.
Needless to say, we don't have the information we're
supposed to have."
-As many as 100 residential buildings were mislabeled
as commerical in city records. As a result, those build-
ings were not included when responsibility for taking
care of city-owned residential property was transferred
from the Division of Real Property to HPD last
September 1.
"There are all sorts of different situations," an HPD
source said. In a widely shared view, he blamed the
problems on the chaotic state of records that HPD in-
herited from DRP. "We can never be sure that the
records transferred from DRP were accurate. "
Until September 1, DRP, a unit of the General Ser-
vices Department, managed and maintained all city-
owned properties. DRP's reputation for how it ran the
buildings was dismal, but HPD officials say that they
are only now discovering how sloppy DRP's record-
keeping system was.
"We have learned more about housing in the past
four months than .. . " said an assistant housing com-
missioner, interrupting himself in mid-sentence. Asked
if he meant "than DRP," he replied, "You said it, I
didn't. "
2
Cited as an example was the total lack of coordination
between management and billing lists for city-owned
properties. As a result, managers were in the dark about
the rent status of the tenants in their buildings.
Changes by DRP in some lot numbers (the city identi-
fies properties by lot numbers, not addresses) led to
confusion as to which properties were being foreclosed
for tax arrears. In some cases, DRP reportedly listed
wrong lot numbers entirely and sent rent bills to the sec-
ondary addresses of corner buildings.
City Limits interviewed a number of DRP staff who
denied that their records were in such bad condition and
said the HPD criticism was a continuation of a long-
time campaign to discredit the agency.
"We had no federal money and we never had enough
help," one DRP employee said. "They have $39 million
more than we had. If we had one-quarter of that to
operate with here we'd have been in gravy.
"HPD has undermined us to such an extent. They say
our managers are poor, our records are poor, and we
have to sit back and take all this. It's strictly politics.
We had one of the best departments going. For the
amount of buildings we had and the amount of money
to manage them, I thought we were doing pretty good. "
The current number of city-owned properties has
tripled since last April and is expected to jump to 12,500
by next April and to 18,000 by April, 1980. One
measure of the complexity of keeping track of them is
that there are four ways to identify every piece of prop-
erty depending on the system being used.
HPD says it is trying to create an information system
that will be both comprehensive, so that multiple lists no
longer have to be consulted, and manageable so that it
can be continuously updated. That way, if a tenant
moves out, or the building goes into non-profit manage-
ment or any of a dozen other changes occur, the city will
know about it. Another goal is to consolidate manage-
ment and financial information so that officials will
know the financial as well as the physical health of city
buildings.
"We want to be able to know the status of every In
Rem building," said HPD's Charles Flynn, who is help-
.ing to put together the information system. "We've
never had a clearinghouse before."
Another option that is being explored is sharing infor-
mation with Consolidated Edison and the Department
of Social Services to indentify tenants in city-owned
buildings. For example, DSS says it has a client living in
a Bronx building that is listed on city records as a vacant
shed.
HPD also has survey teams that are supplying
information through visual inspections.
HPD officials acknowledge that a certain grace
period exists because of the relatfvely small length of
time they have had to address such a complex problem,
but that the day is fast approaching when they will no
longer be able to blame bad administration on the fail-
ings of another agency. 0
L
557 East 169th Street
An occupied I8-unit apartment building in the Bronx
was listed on city records as a vacant lot, enabling the
former owner to collect rents for more than two years
after the property was taken by the city for non-pay-
ment of real estate taxes, according to well placed
sources.
The case has been turned over to the Inspector Gener-
al's office at HPD to determine if the alleged misidenti-
fication of the building was due to error or corruption,
the sources said.
The city discovered that it owned the building, 557
East I69th Street, in early December after the owners
finally gave it up, cut off the fuel and told the complain-
ing tenants that the city was their landlord. The building
had actually belonged to the city since October 27, 1976.
Anna Forte, the superintendent and a resident of the
building for 27 years, said that while the news came as
a should have surmised because we were being
cut down on a lot of things. I could see that neglect was
coming down."
Mrs. Forte said it took innumerable telephone calls to
different city housing offices before she could get con-
firmation that the building was, in fact, city-owned.
Meanwhile, there was no heat or hot water in the
building:Five tenants movedoutin the space of a month
while other tenants tried to cope with the situation. "It
was terrible," Mrs. Forte said. "It was like a panic-
heads going together for ways to save the building. "
The building had been managed by the Levites Realty
Management Corp., 341 East 149th St., the Bronx,
since 1962 according to Barry Levites. It was owned by
the Norhs Realty Corp., also of 341 East I49th S1. The
directors of Norhs, according to city records, are Louis
Schron, Sylvan Nathan and Robert Long.
Levites said in an interview that because "the building
was not earning a nickel," the owners first cut out pay-
ments on a second mortgage, then stopped payments on
a first mortgage and finally stopped paying the real
continued on page J 5
3
112 and 114 West 134th Street
For seven months after New York City acquired two
Harlem buildings through tax foreclosure, the former
owner continued to provide some services and collect
rent from the tenants, apparently unbeknownst to the
city.
On December 22, one day after City Limits asked
HPD about the discrepancy, the tenants were visited by
two city property managers and told their buildings
were In Rem (city-owned) and that they should now
start paying their rent to the Department of Finance.
The properties, 112 and 114 West 134th St., were
among 13 buildings owned by a Harlem real estate firm,
Deejay Apartments Inc., that were taken over by the
city on May 25, 1978, for non-payment of real estate
taxes. An estimated $30,000 was owed on the two build-
ings alone.
The tenants in the other 11 Deejay buildings were
apparently notified of the ownership change. However,
the residents of 112 and 114 West 134th St. said they
received no such notice, and the properties escaped the
usual procedures for setting up a city-owned building,
including the assignment of a real estate manager and
the hiring of a building superintendent.
As a result, Deejay, listed at 207 West 145thSt., was
able to collect thousands of dollars in rents between
May and December from two buildings that the corpo-
ration had lost its rights to. The official rent roll from
the 32 apartments in the two fully occupied buildings
totals $4,000 per month. Even if Deejay collected only
half that amount, they made $14,000 during the seven
month period while paying no taxes.
How did this happen? "I don't think we really
know," said a spokeswoman for HPD. "Possibly this
file got lost." She called the case "an anomaly" in that
the landlord continued to provide services and the ten-
ants had no reason to complain-one of the ways the
city finds out about buildings it owns.
She said it was illegal for Deejay to collect the rent but
continued on page 15
Redemptions continued
lord may fall behind in paying his taxes before the city
may begin proceedings to foreclose on his property.
This policy precipitated a flood not of tax payments
but of unwanted property coming into city ownership
within the past year. At the same time, tenant groups
have demanded a halt to the city's traditional way of
disposing of such property-the auction, on grounds
that the auction perpetuates slumlords and produces
little revenue and less taxes.
As a result, the city has begun looking for ways to
make it easier for landlords to recover the property that
the city has taken over. The City Council started with a
temporary revision of the Administrative Code last
September! Landlords are hoping it will finish the job
with Intro. 492, a City Countil bill slated for a hearing
at City Hall Jan. 24 at 10 a.m.
Initially scheduled for its first hearing in December,
Intro. 492 was rescheduled by Chairman Leon Katz of
the Council's Government Operations Committee after
more than 135 community representatives packed the
Council's chambers Dec. 11 to denounce this easy
redemption arrangement.
When Dankner entered into an agreement in June,
1977, since modified in his favor under the current
"temporary" law, to pay his back taxes to the city, he
had not paid taxes since October. 1970.
Under the current redemption law, agreements like
the one Dankner signed do not require landlords to
correct major violations on their buildings. And they
pay little or no money up front to set up agreements
with the Commissioner of Finance permitting them to
take twice as long to payoff their tax arrears as it took
for the taxes to pile up. Meanwhile, they can do business
as usual.
"Everyone is afraid of the landlord because they
think they will get dispossesses," complained Pedro
Castillo, president of the tenants' association at 647
East 11 th Street, whose constant challenge is trying to
get the landlord to remove major violations, now
numbering 121, from the building.
"This is the way it is with poor people," Castillo said.
"We tried to have a rent strike and, when we did it, the
landlord pulled the signs down almost immediately.
He's no good. I know him for 18 years because I have
been living here that long, and I can say that. We get
lousy service."
Castillo was asked why he doesn't move. "I want to
stay here," he answered, "not because I like it, but
because it's some of the housing still left. Maybe, if I
stay here long enough, I can get into city [public]
housing."
Dankner, the landlord, expressed another view of life
at 647. "I ~ m always losing money from my tenants
because the welfare [Department of Social Services]
doesn't cooperate with us and make them pay rent,"
4
Dankner asserted. "But," he went on," if the city took
the money that it gives to the welfare constituent and
sent a credit to the landlord, we'd all be better off. I
would pay my back taxes."
Intro. 492, would stretch out still further the sched-
ules for Dankner's repayment. It would require of him
an even smaller down payment (the longer the arrears,
the smaller the percentage of down payment), and it
would give him up to two years after the city took title
to his building to apply for an agreement to recover it.
Under present law, the Board of Estimate must approve
any recovery undertaken more than four months
following title-vesting in the city.
On Jan. 24, opponents of the easy redemption
practices built into Intro. 492 will be asking Council
members to reject these easy measures and to attach
some strong amendments to the bill.
"Among a number of reforms, we have recom-
mended that there should be a way to foreclose quickly
on a landlord if he does not keep up with an installment
agreement," said Sandy Bayer, a member of the Task
Force on City-Owned Property and an aide to Council-
woman Ruth Messinger (D-Man.). "As it stands now,
when a landlord signs an installment agreement with the
commissioner of finance, he is removed from the active
In Rem list, and then he is free to milk the building for
another year until the next [In Rem] action."
The Task Force is suggesting amendments to Intro.
492 that call on a landlord to sign an agreement to
correct major violations on his building and that order
his property to remain on the In Rem list until he has
completed making both the repairs and the installment
payments on his back taxes.
Another Task Force recommendation requires a land-
lord to sign an affidavit with the commissioner of
finance stating that he has informed his tenants of his
plans to redeem his property.
As a protection to tenant or community groups who
are participating in a city self-management/ownership
program, such as the interim lease, the Task Force has
recommended that the owner of the property in
question not be eligible to redeem that property during
the two year period after vesting.
In the meantime, Wilfredo Rojas and Sture Swenson,
who have been camping out in 647 East 11 th Street for
the last ten years, while paying rent and making
whatever repairs they can on their own, will continue to
be without a functioning bathroom.
"What can I say about this place? ," Swenson asked a
visitor. "Nothing, except that it is a roof over our heads
-sometimes." Both Swenson and Rojas claim it would
be a relief to have the city as landlord. 0
SHUFFLES BACK TAXES
AS CITY MISDEALS TO TENANTS
by Susan Baldwin
Tenants of the five-story walk-up tenement in the
Clinton district of Manhattan's West Side had just
about licked the leaky pipes and errant landlords, even a
roof that poured rain on halls and apartments below, in
two years of struggle toward legal self-management.
But the new year brought bad news to 408 West 48th
Street and to some 35 tenants who call its 20 apartments
home. The city, which last May took the building away
from the second of two successive landlords who
wouldn't pay their taxes, and in September signed an
interim lease with the tenants for them to run the build-
ing, in January seems bent on returning the building to
its last owner on the installment plan for the taxes owed.
He is a man whose claim to the property, the tenants
charge, is counterfeit.
The city's corporation counsel, Allen Schwartz, how-
ever, has rejected the tenants' request that he rule
former owner Robert Pinkerton ineligible to recover the
property, since he applied to do so last September,
tenants assert, only on behalf of new would-be owners
to whom he had sold his interest in it.
Pinkerton admitted to tenants and to City Limits that
he is a front for other interests. "I don't own that
building," he said recently. "I redeemed it but had sold
it to another party, a broker named Richard Marks. I
sold it to Marks and .the group interested in buying it in
June or July for a dollar and an agreement that I'm out
of the building and not responsible for it."
Officials at the city's Department of Housing Preser-
vation and Development (HPD) were among those
supporters of the 48th Street tenants who realized that
while these fighters were struggling to maintain their
homes they were fast becoming the victims of the city's
new el\sy In Rem redemption law.
Enacted last September, this law permits landlords to
regain immediate control of buildings up to four
months following foreclosure by paying only $100 to
apply for a long-term agreement with the city to pay old
tax bills. Only when the agreement is executed and filed
by the finance commissioner, a process which for the
48th Street building has already spanned four months
since the application was made, must the delinquent
landlord come up with the 25 per cent down payment of
the taxes due.
"We did everything we were supposed to do to enter
the interim lease program," said Richard Maeker,
president of the tenants' association. "I shopped
around to get the insurance policy, we already had the
bank account, and we already had a record of paying
our bills ... We did everything that was required, and
5
then we find Pinkerton back in the picture."
Maeker's comments reflect the feelings of other
tenants and HPD officials who were excited by the
prospect of tenants managing their own building under
this new city program.
Prior to the legal decision, the tenants rejected the
offer of Alvin Wilson, an agent of the real estate
company that bought out Pinkerton's interest, to sell
them the building for $3,500. The low and moderate
income tenants, who pay an average of $95 per month
for their small three- and four-room apartments,
couldn't afford to buy, anyway.
"They may have felt that they would wear us down,
drive us out, and take control of this building," said
Lesley Reynolds about the GDLR Realty Corp. "It's
like the Alamo," the young tenant spokeswoman said.
"I know everyone is going to stay here and fight to the
bitter end . . . We like our building, we have invested in it
by making certain necessary repairs, and we don't
intend to give up now. "
"I offered to sell them the building against my better
judgment," Wilson countered. "I have expended a lot
of money and time, and what has happened is that the
tenants have applied a lot of pressure, they have threat-
ened to picket my house, and their attorney has tried to
scare me. . continued on page 9
Tenants stand fast at 408: (left to right) Lesley Reynolds, Patrick
Kincaid and Richard Maeker.
RENT HIKE REVIEW SET
The Rent Guidelines Board, which is under court
order to reconsider lower rent increases it adopted for
about 300,000 New York City rent-stabilized apart-
ments, has set February 2 as the deadline for submitting
information by the public.
Until the board reaches a new decision, the rent
increase ceilings of 3 Y2 per cent for a one-year renewal,
5 Y2 per cent for a two-year renewal and 7 Y2 per cent for
a three-year renewal remain in effect as of July 1, 1978.
The ceilings for new tenants moving into previously
stabilized apartments were set at 8 Y2 per cent for a one-
year lease, 1OY2 per cent for two years and 12Y2 per cent
for three years under the new rules.
The board was ordered to reconsider the rent increase
maximums by State Supreme Court Justice Martin B.
Stecher acting on a lawsuit filed by the real estate
industry. Stecher said three of the four meetings held by
the board to determine the increase guidelines had been
closed to the public in violation of state law.
The Rent Stabilization Association, the self-regulated
real estate industry organization which brought the
lawsuit, is reportedly gathering data about the cost of
running buildings that it hopes will convince the board
to reverse its earlier finding and raise the ceilings.
Written material to support the reduced maximums
such as documentation of overcharges or inability to
pay higher rent must be submitted to the Rent Guide-
lines Board at its office at 100 Gold Street, Room 9047,
by Feb. 2. All information will be available for public
inspection at the board's office.
The board will hold a public meeting to decide the
issue on March 7 at 10:30 a.m. at One Police Plaza in
Manhattan.
Any changes upward or downward in the rent in-
crease ceilings will be retroactive to July 1. 0
Councilwoman Ruth Messinger (D-Man.), chairper-
son of the Task Force on City-Owned Property, will be
the guest speaker at the second Network/Forum lecture
and discussion series Friday, Feb. 9, from 5:30 to 7:30
p.m.
The program, sponsored by the New York Area
Planners' Network and the Forum on Architecture,
Planning and Society, will be held at 20 West 40th Street
in the third floor meeting room of the New York
Chapter, American Institute of Architects.
The topic for discussion is "Community-Based Re-
development: Progress and Prospects."
Ramon Rueda, executive director of the People's
Development Corp., and Douglas Moritz, director of
development at Los Sures, will join in the discussion
period. 0
6
SENIOR EXEMPTIONS
Senior citizens living in rent controlled apartments
and holding rent increase exemptions must renew their
exemptions in order to maintain their benefits in 1979.
HPD said it mailed out renewal notices in December.
The forms should be filled out and returned to the City,
after which tenants will be sent an order certifying the
continuance of their exemption.
Some 57,000 senior citizens have the rent increase
exemption. To qualify, tenants must be at least 62 years
old, live in rent controlled housing, have an annual
household income of $6,500 or less after taxes and pay
at least one-third of their income for rent.
While they may not also be receiving public assist-
ance, they can qualify if they are getting Supplemental
Security Income.
Senior citizens who want to apply for an exemption
can obtain an application at district rent offices, the
central Rent Control office at 110 Church Street or at
senior citizens centers. 0
CITY REVISES J 51
A recent change in the J 51 program permits owners
to apply quarterly for tax abatements. The next period
for filing an application with HPD is February-March,
1979.
The J 51 law allows owners who wish to rehabilitate
their multiple dwellings to receive a tax abatement of 90
per cent of the reasonable construction costs.
In the past, applications for the abatement could be
filed with HPD only once a year, between February 1
and March 15. The new schedule allows filing in
February-March, May-June, August-September and
N ovember-December.
The new law is designed to spread HPD's workload
more evenly over the year and is likely to result in faster
approval of abatements for many owners, according to
housing officials.
Filing for the 12-year exemption from any increase in
assessed valuation resulting from improvements to the
property will still be once a year under the revised law.
Sweat equity rehabilitation of housing is eligible for
J 51 tax benefits.
Other changes, all of which became effective Novem-
ber 17, include revocation of the J 51 tax benefits as
soon as the property falls more than one year in arrears
on taxes.
Copies of the new J 51 regulations are available at the
City Record, Room 22l3, in the Municipal Building in
Manhattan. Applications can be obtained from HPD,
Room 9166, at 100 Gold Street in Manhattan. 0
HPD WEIGHS NEW SALES POLICY
HPD is in the process of drafting a more rational and
uniform policy for selling New York City-owned prop-
erty to non-profit buyers, hoping to end the unsyste-
matic "case by case" method that resulted in long
delays and few sales in the past.
Although the policy had not yet jelled by early
January, HPD sources told City Limits that the latest
recommendation called for a flat selling price of
between $230 and $300 per unit for all city-owned
property. The exact figure, reportedly a compromise
between$I00-a-unit pressed by some HPD officials and
$500-a-unit supported by others, could not be learned.
The proposed policy was being re-submitted to HPD
Commissioner Nathan Leventhal as City Limits was
going to press, and aides stressed that further modifica-
tion was possible.
The housing agency has been under considerable
pressure to develop a sales policy. The City Comp-
troller's office released an audit in late October that
criticized HPD's failure to transfer city-owned buildings
in the Community Management program to tenant or
community group ownership (outtake). "Since the
inception of the program, no building has gone through
outtake," which the audit described as a "primary
goal" of Community Management.
An early HPD draft of the sales policy acknowledged
that the city's existing sales method had
been"established on an ad hoc basis, program by
program and sometimes building by building." Noting
that it took months and sometimes years to reach an
agreed price, the document said, "establishment of the
terms of sale was an administrative nightmare and a
major hurdle for participants in every case."
Assistant Commissioner Philip St. Georges said his
goal was to sell 100 buildings inl979,more than twice the
number sold in the past five years, and to sell 200
buildings in 1980.
The initial draft had recommended a two-pronged
sales policy involving a flat price for city-owned
buildings within CD-eligible areas and an income
approach for buildings outside CD-eligible areas. The in-
itial flat-price recommendation was $100 per vacant unit
and $200 per occupied unit. The dual system has re-
portedly now been scrapped in favor of the higher flat
price for all buildings.
In addition, deed and resale restrictions that were
recommended initially have reportedly now been
dropped because they would have created the need for a
monitoring function that HPD was not anxious to take
on. Officials said the higher price would make the re-
strictions unnecessary.
The draft had asserted that even the $100/ $200
pricetag was not a "giveaway" because that amount
was in line with the prices that were set for past sales.
7
Going further,the draft cited the failure of the auction
process to generate income for the city and suggested
that these buildings should not be seen only for their
cash revenue potential.
"The goal of generating income for the city from the
sale of properties in these areas should be, at best, a
secondary consideration," the document said. "The
amount realizable from the sales in these neighborhoods
is not large, no matter what policy is adopted."
"The city stands to gain much greater revenues in the
long run if the sale is to be to a group which is
committed to maintaining the building, thereby insuring
the continued payment of property taxes."
This view is in sharp contrast to the public stance of
the Koch administration, which has steadfastly
defended auctions as a way of getting city-owned
property back into private hands and has opposed
attempts by community groups and tenants to stop the
auctions.
Officials believe the fixed price serves an adminis-
trative advantage. "If HPD is ever to develop a volume
sales program for sales to non-profits, w.ith
standardized pricing, processing and title closing proce-
dures, estabUshing sales price cannot remain a time con-
suming obstacle," the draft said.
The draft was somewhat vague about who would
have responsibility for removing code violations-the
city or the new owners-and whether the city should use
CD funds in cases where the rents are not sufficient to
remove the violations quickly.
In anticipation of the new sales policy, HPD' s Divi-
sion of Alternative Management Programs is in the
process of selling 15 buildings in a demonstration aimed
at testing the forms and procedures for what it hopes
will be a much larger volume of business. 0
STATE IS SITTING ON $20 MILLION
TO ASSIST MITCHELL-LAMA HOUSING
Since April of last year, residents of Mitchell-Lama
housing have campaigned, demonstrated, and waited
watchfully for the liberation of $20 million in the
current state budget to apply to their day-to-day efforts
to keep the program available for moderate-income
people.
Now, under the leadership of the Mitchell-Lama
Council, which represents 69 cooperative deYelopments
with 47,000 units in New York City, they are stepping
up the pressure by calling for a moratorium on pending
increases in rents or co-op carrying charges.
"This $20 million is a cash asset in the state treasury
which we demand be released by quick legislative en-
actment of an acceptable formula to reduce or eliminate
. . . increases by some Mitchell-Lamaswhich are under
the gun," the Council said in mailgrams to state and
New York City officials.
There are some 420 housing developments
with 164,000 units built under the 23-year-old Mitchell-
Lama program in New York State.
The $20 million was heralded by Governor Hugh L.
Carey in his 1978 Local Assistance budget (L. 1978, Ch.
53). But expenditures were held up pending Jl bill
spelling out an allocation formula.
The struggle to maintain Mitchell-Lama as moderate-
income housing goes back to the early 1970s. It was
punctuated by a 1974 Carey campaign commitment to a
$30 million annual program of state loans to keep
Mitchell-Lama mortgage interest payments at I per cent
during the life of the first mortgage. "I believe in this
year of deceptions and cover-ups at the highest levels of
government, that we have had enough of politicians
who break commitments to the people," Carey said. "I
run for governor to honor the commitments we have
made, not to break them."
Carey failed to act, and the struggle was intensified by
a rent strike in 1975 and 1976 by residents of Co-op
City, the giant 15,372-unit development in the northeast
Bronx at which Carey had made his campaign pledge.
The 13-month strike was concluded by an agreement
in July, 1977, that acknowledged the need for a compre-
hensive program to address the statewide problem of
Mitchell-Lama housing and promised that Carey would
submit legislation. The program was to be unveiled by
January 15, 1978 and the Executive Budget for fiscal
year 1978-79 was to include a sufficient appropriation.
January 15 came and went without the promised
"comprehensive legislative program." The Executive
Budget did contain $20 million, but no bill to allocate it
was forthcoming. The budget also contained an
appropriation to cover the cost of conducting an
8
engineering survey of structural defects-a first step
toward state funding of necessary repairs. ,That money,
too, remained frozen for lack of an authorizing bill.
(Significantly, $9 million to keep increases in
Mitchell-Lamas built under the State Urban Develop-
ment Corporation to an average of 5 Vz per cent a year
was contained in a separate broadly-worded section of
the 1978-79 budget. That funding affects 110 UDC
developments with 30,755 units.)
Faced with inaction from the governor's office to get
the $20 million flowing, concerned legislators in both
Assembly and Senate formed a Mitchell-Lama coali-
tion. A number of them sought a meeting with
Governor Carey, but no audience was granted .
Finally, aides to the governor leaked details of an
impending bill to the New York Times. A day later, on
May 19, a demonstration called by the Mitchell-
Lama Council in front of Carey's Manhattan office
triggered a meeting between Council officers and
Governor Carey.
The draft bill, which had been modeled on a report by
Richard Ravitch, a contractor and former chairperson
of the UDC, was sharply opposed by the Council.
Murray Raphael, Council president, said it constituted a
formula for the abandonment of governmental
commitment to moderate income housing. While it
would have kept rent or carrying charges at no more
than one-quarter of the income of current residents with
less than $17,200 adjusted annual income, it would not
have automatically protected new residents. Residents
above the income ceiling would have been escalated on
annual increases until they paid "economic rent"-the
full cost of maintaining the apartment.
Council representatives left the meeting with the
governor on June 8 believing they had persuaded him to
abandon the Ravitch-type selective aid in favor of an
across-the-board formula that would maintain
moderate-income rent levels in the Mitchell-Lama
housing stock as a whole.
Nonetheless, he had the bill introduced in the
Assembly (A.13158) in what proved to be the waning
hours of the regular legislative session in mid-July. But
opposition to any formula rooted in the Ravitch concept
was so widespread that the bill lacked the votes
to clear the Assembly housing committee, and
it was never brought to a committee test.
Sporadic negotiations between the Council and the
governor's staff continued, looking toward possible
passage of a bill in a special session. A new bill
(A. 13243) was introduced on October 30. While it elim"
inated the Ravitch formula, in favor of capping rent
Mitchell-Lama continued
increases on a cost-of-living concept, the Council still
had 19 major objections, and it died without further
action.
The latest chapter of Mitchell-Lama is again being
written at Co-op City. Relying on a provision of their
strike settlement, the board of directors has been with-
holding mortgage payments to the State Housing
Finance Agency, which issued bonds to finance the
development, and using the money to finance needed
structural repairs. By December I, 1978, HF A had
drawn a total of $4.3 million against reserves to make
up this deficit at Co-op City. The legislature has until
March 31 this year to replenish the reserve and maintain
the state "moral obligation" which underlies the credit-
worthiness of the HFA bonds.
Ironically, of course, Co-op City's pro rata share is
already sitting in the state's general fund-along with
shares for all other Mitchell-Lamas which need it-just
waiting to be liberated. 0
408 West 48th Street continued
"I told them they could have the building for $3,500,
which is not an exorbitant amount for a whole
building," Wilson went on. "The city should not have
granted the lease, and it should not have ignored the
priority of redemption when it was dealing with
tenants," he charged.
"I can understand that the tenants are dismayed, but
they should understand the rights of redemption," he
added, noting that he agreed with the tenants "in
principle, but not in tactics."
Pinkerton's role in the 48th Street fight particularly
galls the tenants. He is a former tenant who moved into
the building in May, 1977, while the tenants were on
rent strike against the previous runaway landlord. He
refused to join the rent strike, and some months later
announced to the tenants' association that he had
acquired title to the building and would pay rent to no
one. The tenants continued the rent strike and the
operation of the building. Pinkerton moved out shortly
after the city foreclosed last May, only to re-emerge
Sept. II as the phantom owner for GDLR Realty.
But neither the tenants' association nor HPD knew of
this situation when they signed the interim lease agree-
ment Sept 25, the last day for the landlord to redeem his
building. Weekly and even daily inquiries, to the
Division of Real Property's redemption office at no
time turned up a clue that Pinkerton had made a
redemption application.
The tenants finally learned of the redemption
themselves in November in the course of assembling
documents re.quired by the interim lease program.
If a payment against the $22,000 in back taxes due is
to be made by this month's deadline, it will not, says
Pinkerton, be Pinkerton who pays. By his own account,
he paid the previous landlord one dollar for the prop-
9
erty and agreed to pay all outstanding debts. He claims
to have paid one such debt of $1,200 for fuel, yet the
tenants' association has proof that it paid the bill.
In fact, the tenants paid much more in their two-year
stewardship-thousands of dollars for plumbing
repairs, a new roof, and even $1,000 in back taxes,
which they paid last summer in an effort to forestall city
ownership.
Although the tenants claim that Pinkerton's only
plausible investment to date is the one dollar he paid for
the building, Pinkerton complained recently, "That
building, it was such a losing proposition. It ruined me
financially. Every time I walked down the hall it cost me
$200, $100, or $50. There was no end.
"Quite frankly," Pinkerton concluded, "all these
tenants want is a free building where they don't have to
pay rent."
In the brief prepared by their attorney, Robert M.
Hayes, in opposition to Pinkerton's redemption appli-
cation, the tenants argued before the corporation
counsel that the application was filed "on behalf of
persons ineligible under the law to r e c o ~ e r the
building. "
Under the city's administrative code, a person eligible
to recover property in tax arrears is someone "who had
an interest in property as either owner, mortgage, liener
or encumbrancer at the time of the city's acquisition."
"But," the tenants argued, "the application filed by
Pinkerton to recover the building was filed on behalf of
the speculators, none of whom had any interest in the
building when the city foreclosed on it. Pinkerton
already has conceded his inability to pay the city the
money due it-indeed Pinkerton has not even paid the
$100 filing fee himself. All Pinkerton's application
represents is a sham whereby Pinkerton acts as a front
for the speculators so that these speculators can gain a
quick profit by improperly exploiting a city law enacted
with the intent to stabilize communities."
Hayes's brief also charged that "sale of a residential
property efficiently managed by tenants to a group of
non-resident speculators is a sure way to undermine
community stability."
Many of these arguments would presumably consti-
tute the basis for further legal action, should the tenants
decide to pursue it.
An embarrassed HPD, which supported the unsuc-
cessful appeal to the corporation counsel, provided
possible additional grounds for a legal challenge of the
denial. It questioned the validity of the purported title
transfer to Pinkerton from the previous owner, and
pointed out that Pinkerton, during the year of his
asserted ownership, had in effect abandoned his owner-
ship rights by failing either to demand rent from the
tenants or provide services to his mUltiple dwelling.
HPD further attested to the good faith performance of
the tenants' association in carrying out the terms of its
interim lease. continued on page 13
LAW MAKING REDLINING 'ILLEGAL'
NOT ENOUGH TO CURB DISINVESTMENT
by Michael McKee
As the members of the New York State Legislature
headed out of Albany in the early morning hours of
December 8, one thing was certain: the bill they had just
passed and which within hours would be signed into law
by Governor Hugh Carey would raise the cost of shelter
for homebuyers and other consumers. Passed during an
all-night special legislative session, the new law increases
maximum interest rates on home mortgages from 8 V2 to
9 Yz percent, with additional increases certain in the near
future.
In a sample case prepared by legislative aides, a
homebuyer taking out a $40,000 30-year mortgage will
pay the bank $337 per month, compared with $307 at
the old usury rate - or a total of $121,320 over the life
of the mortgage, compared with $110,880. One legisla-
tor attacked the bill as a "1.2 billion dollar Christmas
present" to the savings banks of New York State.
What was less certain was whether the new law will do
anything to curb the pernicious practice of redlining, the
refusal by banks to grant mortgages or other credit
within particular neighborhoods they deem to be on the
decline. True, geographic discrimination in lending is
now illegal, and the State Banking Department can fine
banks up to $15,000 if found guilty of the practice. But
what's a potential $15,000 fine to a banking organi-
zation with several hundred million dollars in assets,
especially if it is not required to make the loan once
found guilty?
Instead, hope for meaningful sanctions against
redlining banks are contained not in the practically
Michael McKee is coordinator of Peoples Housing
Network, the statewide communications and training
network.
10
toothless new law but in promises by Carey of admin-
istrative actions to be taken by the Banking Depart-
ment. In order to persuade former Speaker of the
Assembly Stanley Steingut to pass the bill, Carey
pledged that the State Banking Board would adopt regu-
lations modeled on the federal Community Reinvest-
ment Act of 1977. These CRA regulations, if adopted,
will require Banking Superintendent Muriel Siebert and
the Banking Board to assess a state-chartered bank's
record of servicing the credit needs of communities
where it presently maintains branches before allowing it
to open a new branch, close an old branch or merge
assets with another banking organization. Groups such
as the New York City Coalition Against Redlining had
been pressuring Siebert for over a year to adopt such a
policy - which Siebert had maintained she lacked
statutory authority to do - because they saw the CRA
provisions as a real threat to the banks. If it could be
proved that a bank had redlined an inner city neighbor-
hood, its application to open a more lucrative (deposit-
wise) suburban branch could be stopped, at least until
the bank agreed to provide more mortgage money to its
older service area.
If the CRA language is adopted, enforcement will still
be in the hands of Siebert, her department, and the
Banking Board, composed of Siebert, six bankers and
six members of the "public." Anti-redlining groups are
under no illusions, and anticipate the need for ongoing
pressure on the regulators. In the meantime, housing
costs will go up significantly for persons who do obtain
mortgages.
Following the immediate rise to 9Yz percent, the new
law allows additional one-quarter of one percentage
point increases once every three months, to a maximum
of two percentage points above the index of interest
paid on long-term federal securities. If the federal index
holds at its current 8.2 percent, New York's mortgage
interest rate ceiling will climb to 10.2 percent within the
next year, with a further rise to 11 percent or higher
possible by mid-1980.
This "indexed" or "floating" ceiling system is
similar to that already in effect in Pennsylvania and
other states, while others (including Connecticut and
Massachusetts) do not regulate mortgage rates at all,
leaving them to the vagaries of the so-called free
market. The floating ceiling system will, according to
traditional economic theory, strengthen New York's
position in "competition" for mortgage funds. It also
means that usury rates will be set not by the State Leg-
islature as in the past, but by Siebert.
The new law empowers Siebert to hold a hearing on a
would-be borrower's charge of redlining by a lending
institution. If it is determined that a "prudent" loan
was denied because of geographic discrimination, the
bank can be fined. The aggrieved mortgage-seeker will
not get the mortgage from the guilty bank, but rather
will be rewarded with a "mortgage guarantee"from the
quasi-'public State of New York Mortgage Agency. The
.mortgage-seeker can then take the guarantee and shop
around for financing from another source.
Siebert has used the new law as a wedge to extract a
commitment from Carey for additional staff, complain-
ing in public that she lacked the resources necessary to
enforce the ban on red lining.
Passage of the December 8 bill ended a year-long
impasse between the Democratic-controlled State
Assembly and the Republican-controlled State Senate.
Speaker Steingut, under strong pressure from several
dozen New York City Assemblymembers concerned
about redlining (as well as an active greenlining organ-
ization, Bank on Brooklyn-East Flatbush, in his own
district), had refused throughout the 1978 regular legis-
lative session to allow the Assembly to vote on a usury
rate increase bill unless it included strong sanctions
against redlining. His counterpart in the Senate, Major-
ity Leader Warren Anderson of Binghamton, had re-
fused to pass anti-redlining legislation, insisting that it
not be tied to the usury rate increase but considered
"separately" -meaning never.
Democratic Assemblymembers from upstate cities,
re.sponding to the cutting off of practically all mortgage
loans by the banks, began pressuring Steingut to drop
his redlining demands and pass the increase-only bill
which had already cleared the Senate. Caught between
these conflicting pressures from his city and upstate
members, and faced with a primary challenge from dis-
affected politicians on his home turf, the Speaker dug in
his heels.
Steingut's surprising defeat in the September 12 Dem-
ocratic primary and his then-expected loss in the
November 7 general election should have cleared the
way for Carey to call the Legislature back into special
session for quick action on a mortgage increase bill.
Despite the predictable anti-redlining positions he had
taken in his own re-election campaign, Carey was not
expected to offer serious resistance to the banking
lobby. Now a lame duck, Steingut surprised everyone
further by continuing to insist on tying a rate increase to
curbs on geographic discrimination. Redlining would be
his last hurrah.
Throughout November and early December,
representatives of the Governor and the two legislative
leaders met again and again to negotiate; the principals
themselves met when negotiations had progressed
11
enough to warrant it; information was leaked to the
press as it became advantageous; representatives of the
banks (but not consumers) were brought in when the
deal had been cut; and then the leaders set about selling
the agreement they had reached to their rank-and-file
members. By December 5 features of the bill had been
hammered out. Anderson agreed to language outlawing
geographic discrimination, and the Democrats traded
away stronger enforcement provisions. But the real
sticking point was Steingut's insistence on including a
state CRA provision, anathema to Anderson.
Carey resolved this impasse by promising Steingut
that his Superintendent would do administratively what
could not be done legislatively: the Banking Board
would adopt CRA regulations. In writing Carey was
cautious: his December 7 "Dear Stanley" letter to
Steingut stated that "by using her best efforts" Siebert
was "confident of convincing the Board to adopt such a
regulation." In private meetings the Assembly
Democrats extracted an absolute commitment from
Carey and his staff. Because eight oLl3 votes are re-
quired to adopt regulations, the six bankers can veto
anything if they vote as a bloc; Carey promised that
Siebert would deliver two of the banker votes. To satisfy
Assembly skeptics, he further promised that should the
board decline to adopt the CRA language, Siebert
would refuse to refer branch or merger applications
from offending banks to the board, thus effectively
killing them.
As City Limits went to press, it was not clear whether
the Banking Board will vote on the CRA regulations at
its February 6 or March 6 meeting. Gary Brody of the
State Banking Department predicted that the language
will be adopted.
The anti-redlining sections of the new law expire
December 15, 1980, but not the floating interest rate
provision. Brody stated that this was a technical error
due to the haste with which the bill was drafted, and
that the Banking Department was preparing a chapter
amendment to terminate the rate increase on the same
date. Assuming this amendment passes, the legislature
-as well as the banks and anti-red liners-will have
another shot at the entire question of mortgage interest
rates and redlining in two years. 0
HUD has awarded a grant to the American Planning
Association Journal to prepare a special supplement on
important issues in neighborhood revitalization .
The supplement will contain articles prepared by
graduate students in planning and related fields and by
neighborhood-based planning practitioners.
Manuscripts should be submitted by March 1 to:
Professor Michael A. Stegman
Department of City and Regional Planning
University of North Carolina
New East Building 033A
Chapel Hill, N.C. 27514
HUD SECTION 8 NSA'S
SLATED FOR TEN AREAS
New York City housing officials are working under a
tight deadline to submit revised applications by the end
of January to HUD's area office for 5,000 units of
Section 8 rehabilitated housing in ten of the city's older
neighborhoods.
The housing, a special set-aside of Section 8 substan-
tial rehabilitation funds, is being offered to cities across
the country under the Neighborhood Strategy Area
(NSA) program, an innovative demonstration effort by
HUD to give local governments control 'over the distrib-
ution of federal subsidies, following locally approved
and conceived development strategies.
This grant will bring over $40 million annually to the
city for five years, the duration of the program.
HUD offered a total of 40,000 units in its national
competition, a 100 per cent increase over its initial
figure of 20,000 for fiscal 1978.
Neighborhoods in four boroughs will receive NSA
grants to provide housing units as follows: Bronx -
Kingsbridge, 300; Brooklyn - Sunset Park, 500; Bedford
Stuyvesant, 500; Flatbush, 275; Crown Heights, 750;
Manhattan - Hamilton Heights, 625; Washington
Heights, 500; Manhattan Valley, 500; Gateway to
Harlem, 750; and Queens - Far Rockaway, 300.
According to Alan Weiner, director of HUD's area
office, the ten applications will be submitted to HUD
in Washington sometime early in the spring.
"We received many more units of housing than we
ever expected," said Marvin Wilkinson, director of
development for Manhattan at the Department of
Housing Preservation and Development [HPD]. Last
summer city housing officials and the federal
government seemed locked in controversy over how
many NSA units could be designated for New York City
and in what neighborhoods, and were worried that this
difference of opinion might hurt the city's chances in
the national competition.
New York's allocation represents 12 Y2 per cent of the
nation's total allotment, which is substantiafly higher
then it might have expected on the basis of its popula-
tion alone.
Officials at HPD and the City Planning Commission
(CPC) have been conducting neighborhood surveys for
the past few months to develop concrete statistics about
the housing stock in each NSA neighborhood.
Asked if the backlog of old Section 8 plans already on
file at HPD will figure in selections for the NSA's,
Wilkinson said, "I am not at the moment in a position
to comment on that."
Some observers are concerned that community parti-
cipation might be ignored in favor of rescuing old
applications that were developed and submitted to HPD
a long time before the NSAprogram evolved. 0
12
PLANNING UNIT IS SET
TO INCREASE CD NSA's
The City Planning Commission is expected to
increase the number of target areas for federal
Community Development spending from five to about
ten after community groups protested that the original
plan of "one per borough" would deprive many needy
neighborhoods of funds.
The designation of target areas, the latest battle-
ground in the five-year-old program, is a critical issue
because of a shift in emphasis toward more concen-
tration and better coordination of CD funds. More than
a month after public hearings on the issue, the planning
commission was reported ready to double the number
but still vascillating about where the additional areas
will be.
Neighborhood representatives had said that while
they supported the more planned approach to commun-
ity revitalization, limiting it to only five areas of the city
meant surrendering to the concept of triage or "planned
shrinkage. "
In testimony before the CPC in late November and
early December, they said the city's plan ignored the
federal mandate to set spending priorities only after
assessing the needs of all neighborhoods; tilted policy in
favor of more stable neighborhoods at the expense of
more blighted areas and pitted one neighborhood
against another.
They attacked the city's notion of having a modest
"pilot" program in a "few carefully selected neigh-
borhoods" as foot-dragging. "Nothing could be more
destructive to overall health of the city than the artificial
deprivation of the majority of eligible neighborhoods
... while a few "pilot" neighborhoods are singled out
for improvement," said Brian Sullivan of the Pratt
Center for Community and Environmental
Development. He urged the commissioin to designate 25
areas.
New York City expects to receive $243 million in CD
funds for 1978-79. CPC estimates that about $60
million, or about 25 per cent, will be steered into the
target areas, called Neighborhood Strategy Areas. In
the future, certain CD funded activities will be eligible
only in NSA's. They include solid waste disposal
facilities; fire protection, parking facilities, code
enforcement, public services that meet certain criteria
and interim assistance such as street repairs, park
upgrading, playground construction, removal of unsafe
structures.
Citing "the size and complexity" of New York City,
HUD has approved a one-year waiver of the limitation
on public services to the designated strategy areas. HUD
said the waiver applied only to existing public service
activities, not new ones, that support CD-funded
physical development projects.
In proposing the "pilot approach," CPC cited the
"finite amount of money" available and said the small
number of NSA's would give a larger impact to the
spending.
Alex.Garvin, head of community development at the
City Planning Department, said another reason for
starting with only five NSA's was uncertainty about
whether city agencies could deliver the kinds of concen-
trated and coordinated services the program calls for.
"We are not interested in producing paper plans or
projects that are not do-able," Garvin said. 0
WHAT IS LOW INCOME?
Using a new formula, New York City has determined
that 843 census tracts, or 38.1 per cent, are low and
moderate income and therefore qualify for federal
Community Development Block Grant funds.
The complicated formula, developed in December
after many months of negotiations between the city and
HUD, is designed to reflect population changes that
have occurred since 1969 when data for the last census
was collected.
Large numbers of middle income families have
moved out of New York City during this period at the
same time that concentrations of low and moderate
income people have shifted within the city.
In addition to taking into account population
changes, the new methodology also attempts to measure
the increasing number of poor "unrelated individuals"
who are not included in family income statistics.
The city has been under pressure from HUD to come
up with a new measurement after community organiza-
tions charged that the existing formula permitted thf
spending of CD dollars in neighborhoods that did nOl
meet the criteria of low and moderate income.
"HUD forced us into it," commented one cit)
official, adding that the process of devising a ne\\
standard had been "needlessly time consuming" and
the result far more complicated than the city had
envisioned.
Alex Garvin, director of comprehensive planning in
the City Planning Department, said the 843 census
tracts compared with 1,283 tracts that were eligible
under the old formula. Areas that lost eligible census
tracts, according to Garvin, include Far Rockaway,
South Jamaica and Astoria in Queens; Flatbush and
East Flatbush in Brooklyn; the north shore of Staten
Island; the north Bronx around Pelham Parkway;
Inwood and the East and West sides of Manhattan.
Garvin said the new formula, which will be dropped
when new census data become available in 1980, was
something "we can live with" but added that "anytime
you reduce eligibility you reduce flexibility."
A HUD official noted that CD funded activities can
13
still take place outside the designated census tracts if the
projects primarily benefit low and moderate income
populations.
Under the new guidelines, a census tract is considered
to be low and moderate income if it meets one or more
of the following criteria:
1. Any tract in which the median family income
based on 1970 census data was less than 80 per cent of
the median family income for the New York SMSA.
($8,385)
2. Any tract in which the proportion of persons on
public assistance as of 1977 is 15.7 per cent or greater.
3. Any tract in which (a) at least 40 per cent of the
families had an income less than $8,385 in 1970 and (b)
the proportion of persons on public assistance doubled
between 1969 and 1977 and (c) the increase in the
proportion of persons on public assistance between 1970
and 1977, when added to the porportion of families in
the tract with an income below $8,385 in 1970 was 50
per cent or greater.
4. Any tract in which (a) the proportion of unrelated
individuals was greater than the national average (9.2
per cent) and (b) the median income for unrelated
individuals is less than the median income for unrelated
individuals in the New YorkSMSA ($3,218) and (c) the
number of persons in families with income below $8,385
plus the number of unrelated individuals divided by the
total population is 50 per cent or greater. 0
408 West 48th Street continued
Support for the embattled tenants has also come from
local elected officials. Assemblyman Richard Gottfried
(D-L, Man.) wrote to Corporation Counsel Schwartz
that, "The administrative code provision involved ap-
pears to be intended to give an opportunity to a stable
owner to recover a building. This 'grace period' provi-
sion should not be perverted into an instrument to allow
an owner who abandons a building to enrich himself a
little more by passing title to a string of speculators."
Gottfried also warned that a ruling in favor of the
speculators and against the tenants "would discourage
the vital efforts of tenants and encourage the return of
buildings to the grim cycle of speculation, milking, and
abandonment.' ,
Despite Schwartz's adverse ruling, the battle lines are
still intact at 408 West 48th Street, two blocks from the
bright lights of Broadway. On the one hand, the tenants
are prepared to fight to the bitter end. On the other, the
GpLR Realty Corp., says its spokesman Wilson, is
prepared to pay over $20,000 in back taxes and keep the
building long enough, removing violations and making
basic repairs, to sell it at a high profit. The city, for its
part, faces major policy decisions with respect to the
toothless terms and haphazard implementation of its In
Rem redemption laws. 0
-
_CITY LIMITS'
published monthly by the Ass.ociation of Neighborhood Housing
Developers Inc., Peoples Housing Network, Pratt Center for Com-
munity and Environmental Developmeilt, and the Urban Home-
steading Assistance Board.
Editorial Office: 115 East 23rd Street, New York, New York 10010
(212) 674-7610
Editor ............................... Bernard Cohen
Assistant Editor .......................... Susan Baldwin
Design and Layout ............... ' ....... Louis Fulgoni
Copyright 1979. All rights reserved. No portion or portions of this
journal may be reprinted without the express written permission of the
publishers.
This issue was funded by grants from: Fund for the City
of New York; Morgan Guaranty Trust Co.; Greater
New York Savings Bank.
SHIP PROGRAM RENEWED
After many months of uncertainty, HPD has decided
to fund a second phase of the Small Home Improvement
Program in the East New York section of Brooklyn,
Assistant Commissioner Jeffrey Heinz says.
In the second round, which will involve the rehabili-
tation of about 28 buildings, the East New York
Development Corp. will serve as the developer. ENYDC
was limited to marketing the 26 buildings that were
rehabilitated under the first phase.
Heinz also said he would like to see more money
going into sweat equity, noting that "there is a tre-
mendous degree of interest" in the new Direct Loan
program that provides 30 year mortgages at one per cent
interest. He said he has more than 20 "serious, sincere
proposals in hand. "
The new law removing the 8 Y2 per cent ceiling on
mortgage interest rates will put added pressure on the
Participation Loan program to be more productive,
Heinz said. He said that while the loan program will lose
some buildings as a result of the higher interest rate, it
The Lower East Side Coalition Housing Devel-
opment Corporation is seeking to fill the following
position:
DIRECTOR-overall direction of rehabilitation,
organizing, management and employment activi-
ties; supervision of nine-person staff and office
coordination. QualificationS-degree in social
work, housing administration, or related field; or
three years' administrative experience in similar
organization and knowledge of Hispanic com-
munity. Prefer bilingual, Lower East Side resident.
Salary: $14,000 per year. Submit resume to
Carmen Canales, 296 East 4th St., New York, N.Y.
10009. Applications due by Jan. 31, 1979. Equal
Opportunity Employer.
will gain many more that might have been convention-
ally financed when the rate was 8 Y2 per c ~ ~ t . .
He predicted that up to 10 new PartlclpatlOn Loans
would be closed by the end of January. 0
LOW INTEREST LOANS
A low-interest loan program created by the Fund for
the City of New York is helping many non-profit organ-
izations avoid the cash flow squeeze that often comes
between the award of a government contract and the
actual receipt of funds.
Although government contracts provide reliable
sources of long-term support, cumbersome processing
procedures often delay receipt of the money. As a
result, valuable programs are disrupted and in some
cases the very survival of otherwise strong organiza-
tions is threatened.
Through its three-year-old cash flow loan program,
FCNY has made 164 loans totalling $1.2 million to non-
profit housing, arts, youth, day care and other social
service organizations caught in this financial bind.
FCNY will lend up to $10,000 at 1 Y2 per cent interest
to organizations that have a contract commitment but
are stalled by a funding delay. The interest is deducted
in advance. However, half of it is returneq to the
borrower if the loan is repaid within two months.
To qualify, an organization must submit a description
of its program and the terms of its impending contract;
an explanation of why a loan is required, how much is
needed and how the funds will be used; and a definite
repayment date. Copies of the contract, non-profit
status of the organization, board of directors and most
recent financial report must also be submitted.
14
FCNY makes the loans out of a $275,000 revolving
fund and the money is generally available within a week
after the loan is approved. The average loan is $7,289
and is repaid in three months.
Organizations seeking additional information should
contact Nancy Castleman, Tina Kazan or Elaine Harvey
at the Fund, 689-1240. 0
The Prospect Lefferts Gardens Neighborhood
Association in Brooklyn is seeking to fill the
following two positions:
COMMUNITY ORGANIZER-must have
experience working with block, tenant and other
community groups and in the supervision of other
organizers.
DEVELOPMENT COORDINATOR-to supervise
and direct the development and implementation
of PLGNA's housing rehabilitation and youth
programs; must have experience in these areas
and in the supervision of staff.
Please send resume to PLGNA, 1198 Nostrand
Avenue, Brooklyn, N.Y. 11225 or call Michael
Leiman at 467-0400. Equal Opportunity Employer.
557 continued
estate taxes.
He said he first learned that 557 East 169th St. was
city-owned in January, 1978, when the lawyer for a pro-
spective buyer who was prepared to pay $7,000 for the
building informed him that it had been foreclosed on
for non-payment of taxes.
Levites said he subsequently notified Finance Admin-
istrator Harry S. Tishelman that 557 was city-owned. In
response, he said, he received a telephone call from the
Division of Real Property telling him that the building
was not owned by the city.
So Levites continued to manage the building and
collect the rents until December when he walked away
from the property. "How can anybody take over a
building without notifying anybody?" he asked. "If the
city took over the property shouldn't they have posted
it?"
City housing sources were skeptical that the owner
and manager of a building could have gone for more
than a year without knowing that it was city-owned.
They said the owner was liable for the rent for the full
period since the city claimed the building.
DRP was responsible for the building from October
27, 1976, until last September 1 when all residential city-
owned property was transferred to HPD. A DRP
spokesman referred a City Limits inquiry about how the
building could have been overlooked for more than two
years to HPD, although one DRP official said, "This is
rare, very rare. I'm surprised it went on this long, which
is extraordinary. "
HPD sources said that while DRP's central files listed
the property as a vacant lot, another set of records
based on a field inspection to appraise the building for
auction identified the property correctly. "Did DRP
appraisal tell property management?" the source said.
"Either there was incompetence, error or corruption."
Mrs. Forte, meanwhile, is very pessimistic about the
future of her building now that it is being managed by
the city. Like other building superintendents, she be-
lieves the city does not pay her enough ($170 per month
plus free rent). She said that when she complained re-
cently that important plumbing and other repairs were
not being made, the manager assigned by the city to her
building told her the city hires out for those jobs and the
contractors "come when they can get to it."
Said Mrs. Forte, "If the city does not send plumbers,
this building is going to go. rm 100 per cent for the
building, but nobody cares."
On the ground floor of the building, a busy restaurant
called Ray's is looking for another location because,
according to one of the owners, the city has raised the
rent from $150 to $550 a month since taking over the
property. 0 BC
15
112-114 continued
that the city would probably not attempt to recover the
money since the owner had been providing some
services.
The two buildings illustrate the city's general problem
of tracking down all of the property it now owns. More
specifically, the case is an example of the lack of coordi-
nation among various information sources-a problem
that HPD says it is trying to correct. In this case, the
two buildings were on a billing list but not on another
list of city-owned properties from which managers are
assigned.
Billing files provide a clue that might have tipped
HPD off to the problem. The files showed that while
both buildings were being billed by the city, no rent was
received from any of the 16 tenants at 112 West 134th
St. in November.
Deejay purchased the properties in 1959 and 1960,
taking out a $112,000 mortgage with the then Empire
City Savings Bank. According to city records, the pro-
perties were headed into tax foreclosure when the own-
ers made a standard agreement in August, 1977, to
redeem the buildings by making an immediate payment
of 15 per cent of the back property taxes. A year earlier,
according to an official of Empire, the bank permitted
Deejay to buy back the mortgage at a discount rather
than take a total loss from a default.
Unable to keep up with the tax payments subsequent
to the August, 1977 agreement, the owners lost all 13
buildings when the city took title last May.
"All the buildings we lost were good buildings where
people were getting services," said Allen Halpern, a
partner in the real estate firm of Halpern and Pintel,
also of 207 West 145th St. He said the tenants in the
other 11 buildings already being run by the city are
worse off now. "They get no services whatsoever.
They are completely neglected. "
The tenants at 112 and 114 said in interviews that they
had been getting plenty of heat and hot water, although
a number complained about needing repairs.
Halpern blamed over assessments for his inability to
pay the property taxes, saying that 112 and 114 West
134th St. are officially valued at about $80,000 each
when, in fact, they are really worth only $20,000.
He said two other buildings he owns, 124 and 128
West 134th St. have gone more than three years in tax
arrears without the city claiming them.
This reporter was in Halpern's office when he received
a telephone call from one of the tenants at 112 telling
him that two HPD real estate managers had just
notified the tenants that the building belonged to the
city.
"I feel sorry for you," he responded. "I'm going to
say a prayer for you." 0 BC
CITY'S IN REM PROGRAM
MAY BE A WAYWARD BUS
by Susan Baldwin
"A big bus, with windows broken and tires missing,"
is the way a New York City housing official recently
described the city's beleaguered program to manage its
tax-foreclosed (In Rem) properties. Sources in and out
of government now predict that the money to fuel the
program through the cold winter months may soon run
out, with tenants as captive passengers on a journey to
nowhere.
According to Charles J. Poidomani, assistant
commissioner of In Rem Property Management at the
Department of Housing Preservation and Development
(HPD), expensive contractors' repairs to boilers and
other essential systems - repairs that the city's own
work crews are generally not equipped to make - may
exhaust, by March, the portion of the $41.1 million
emergency federal Community Development funding
that was scheduled to cover maintenance of the city's
known 10,222 residential properties until next fall.
Since HPD took over the properties on Sept. 1, it has
been spending heavily - about $2 million a month - to
repair boilers and heating systems and restore adequate
plumbing in the largely dilapidated housing it has ac-
quired. "If we continue to spend moneiY at this rate,"
said Poidomani, "we will definitely run' out by March
and will have to get a transfusion from some other
source."
But even though the money has already been com-
mitted for the repairs, it has not been spent because the
city's ever increasing number of "open market" orders
for the work are stacked up.
"Oul' main problem is getting contractors to respond
for us," said Poidomani. "We have so much more work
than we used to have before we took over these
properties, but we only have the same number of con-
tractors. Also, the money hasn't been going out that
fast because there is a considerable lag time between
when the order is received and the work completed."
Poidomani said contractors are also reluctant to take
on these assignments because of the city's paperwork
requirements and its long-standing reputation for late .
payment.
In addition to the $41.1 million budget, of which $13
million is reserved for staff salaries, Poidomani's de-
partment has other sources of funds, comprising $12
million to hire handymen, $5 million for superin-
tendents, and $1.5 million for preventive maintenance.
It is possible, the commissioner explained, that one or
more of these untapped sources could be used to handle
some future cash flow crisis.
16
The budget in Manhattan and the Bronx,
critics of the In Rem program charge, have caused a
delay until March of taking title to properties in
Brooklyn that was originally set for early last October.
Estimates of the number of parcels there in tax arrears
run as high as 11 ,000.
"I hear March 15 as the date for the Brooklyn
vestings," Deputy Commisioner Charles Raymond told
City Limits. "But I can't really be sure that that is the
date. It changes all the time."
Asked for his assessment, Poidomani said,:"in all
honesty, we have done the best possible. We have de-
livered three million gallons of oil. We have responded
to boilers that are broken. And we understand that this
has been a learning process for us ... It is very hard to
deliver service and sustain it."
"If I were a cartoonist I would draw this [the In Rem
program] as a big bus, with windows broken and tires
missing .. . And we'd be pushing from behind ... And
Raymond would be pulling from the front. .. We would
also be repairing windows at the same time. And we
would make it," said Poidomani. "If we are allowed to
keep this program for four or five years, we would like
to make it desirable to move into city-owned property."
The present budget problems are in the foreground of
a potentially more severe future funding crisis.
Although HUD approved the $41.1 million CD grant, it
has instructed HPD to develop within six months a self-
sufficiency plan for operating its In Rem properties
without CD funds, beginning in September, 1979.
In addition, HUD told the city it must reduce the por-
tion of maintenance and management costs paid out for
CD funds.
The plan is due at HUD by Feb. 28.
Confirming the city's In Rem dilemma, HUD Area
Director Alan Weiner said recently, "They [the city] will
have to come up with an outtake program to show that
there is stuff moving through, that this is much more of
a brick and mortar program. But, it would be silly to sit
here and say that all these buildings must be rehabili-
tated in the next year. "
HPD officials recently embarked on a decentralized
area office plan with neighborhood outreach posts in
parts of the Bronx, Manhattan, and one small cramped
site in Brooklyn.
In the few months since it took on the In Rem proper-
ties, HPD has been regularly redepolying personnel and
reorganizing offices in an effort to catch up with its
promises. HPD presently employs about 2500 super-

. '
intendents; 260 handymen, including dispatchers and
clerical help; and 315 real estate managers.
Poidomani is trying to keep the real estate managers'
workload at between 225 to 250 units in a maximum of
25 buildings each, as he feels it is important for each
manager to make weekly visits to his buildings. Never-
theless, some managers have been assigned many more
units; one in the Bronx was working with 1198 units.
On another front, a special team working under As-
sistant Commissioner Manuel Mirabal, who is in charge
of HPD's relocation efforts, has targeted 50 heavily
vandalized buildings taken in the most recent- In Rem
action in the Bronx and is in the process of relocating
the 150 remaining tenants into better apartments in city-
owned properties.
"We have a very good handle on where those [better]
apartments are in the Bronx," Mirabal asserted, noting
that the "lines of communication" for consolidating re-
location efforts between his office and the real estate
managers are "straightening out."
A similar crew is beginning work in the East Harlem
office and plans to begin consolidation efforts on the
Lower East Side are being drafted.
Under HPD's official consolidation policy tenants
are supposed to be relocated in better-maintained
buildings in their neighborhoods, but tenant organizers
on the Lower East Side are finding that their dislocated
families are being assigned apartments in East Harlem
and the South Bronx.
In fact, some community groups are not impressed by
the city's maintenance operation, saying that service has
declined since HPD took over the buildings.
"We were a lot further ahead on Sept. 1 with the city
in making headway on identifying buildings and getting
services," complained George Ortega of Adopt-a-
Building, a community organization that applied for a
maintenance contract with HPD and was turned down
early in January.
According to Ortega, Gotham Maintenance Corp.,
the private company that was awarded the major con-
tract with the city in October, "doesn't want to come
into this neighborhood and does not go around to
follow up on our complaints."
Responding to this charge, Poidomani said, "If they
[Gotham] don't do the job, we have the right to ask
them to terminate the workmen who are not performing
. . . We have the right in our contract to provide ade-
quate supervision of the work teams, but we don't have
that capability right now. We're trying to build that into
our operation."
"The maintenance costs in our buildings are some-
times two or three times more than the rent roll,"
Ortega concluded. "But if we can't get intensive service
in the few buildings that are left down here, we won't
have any housing left. So much for the city's
programs." 0
HPD is presently operating six area In Rem Offices
under its new decentralized program. They are as
follows:
MANHA IT AN: East Harlem - East 126th Street and
Lexington Ave. Contact: Earle Murray, Leo Cooper.
Tel: 534-2807; 534-2783.
Lower Manhattan - 70 East 4th St. Contact: Gus
Paterno Tel: 477-9550; 477-9560.
Clinton (Satellite Office) - 552 West 53rd Street.
Contact: Isadora Burke. Tel: 265-2560.
THE BRONX: Bronxchester - East 149th Street and
St. Anne's Avenue. Contact: John Autorino and David
Rabinowitz. Tel: 665-8488.
BROOKLYN: Atlantic Terminal- 187 South Oxford
Street. Contact: Nerius Jackson. Tel: 636-1208.
QUEENS: York College - 158-09 South Rhodes,
Jamaica. Contact: Tony Quondamatteo. Tel: 658-5910.
TENANTS DISPUTE HUD COST LIMITS
by Lisa Kaplan and Frances Goldin
The tenants came out of their houses in Pueblo Nuevo
and Cooper Square on Manhattan's Lower East Side
last Dec. 14 and boarded buses waiting in the gray dawn
of a Thursday morning to take them to Washington,
D.C.
Sixty-two in all, they were bound for a meeting with
officials of the Department of Housing and Urban
Development (HUD) and determined to get the green
light to build the housing for Pueblo Nuevo and Cooper
Square that they had planned for many years.
Pueblo Nuevo needed large apartments to accommo-
date the families who live in the area of Houston and
Ridge Streets where its project would be built. Cooper
Square had been struggling 19 years for innovative new
housing and was now ready to move ahead with its plan.
But recently both groups had been told by the New York
Area HUD office to scrap their plans and, because of
arbitrary cost limitations, to prepare new plans for
"conventional" construction, which to the communities
meant unadorned boxes. The tenants' trip to Washing-
ton was one to answer to HUD's demand, one skirmish
in the long fight.
Pueblo Nuevo's fight spanned eight years and three
important milestones: recogintion of the plan by New
York City as an official urban renewal project; alloca-
tion of money for the city to buy the land; and commit-
ment of the necessary subsidies to build the housing.
In September, 1977, the Pueblo Nuevo project of 98
units received a $57,OOO-per-unit commitment of
Section 8 funds from HUD, later conditionally revised
to $63,000. This commitment was granted' on the basis
of an architectural plan that called for mostly two and
three bedroom apartments, the size necessary to accom-
modate the many large families in the area. The plan
also included duplex apartments among the large units
(four and five bedroom apartments) to assure that bed-
rooms would have maximum privacy.
Among the many appealing design features for the
building was through ventilation so that apartments
would have a cool breeze on hot summer days, elimi-
nating the need for costly and energy-consuming air
conditioning.
By the time the design was completed in November,
1978, the per unit cost had climbed above the $63,000
figure for a well planned building that fit the needs of
neighborhood families .
Only then did the community learn that the federal
housing agency had decided not to go ahead with any
projects whose average development cost per apartment
exceeded an amount that was far below what had
already been committed to Pueblo Nuevo.
18
A delegation of community residents met with local
officials of HUD and were assured that Pueblo Nuevo's
project would not have to meet HUD's most stringent
cost limitation because of the evident need to house very
large families, apartments for whom cost more to build
than smaller units.
A few weeks later, however, HUD reversed itself and
set a rigid cost limit of $55,000 per unit. HUD now
proposed that the only way for Pueblo Nuevo to bring
its project in under the cost limits was to give up apart-
ments for large families, replace some of the solid well-
built walls with flimsy piasterboard and drop many
other design features.
The needs of the people had to give way, in HUD's
view, to the need to produce the greatest number of
apartments at the lowest possible cost, and to the politi-
cal need to run up an impressive statistical tally.
Angry tenants of Pueblo Nuevo and Cooper Square
decided to take their problem directly to the source in
Washington. With the help of Rep. S. William Green
(R-Man.), a meeting was set up with Larry Simons, the
HUD man in charge of all federal housing construction
programs.
The conference room in HUD's Washington offices
filled with Lower East Side residents of all ages and
races who displayed an intensity of feeling that
appeared to unnerve Simons. He offered vague pro-
posals for three story construction in Manhattan,
where, he said, "there is pleanty of open space." He
offered the two groups more units if they would revise
their plans and build cheaper housing.
The tenants became infuriated by Simon's lack of
comprehension of the problems and frustrations they
were facing. They exploded with impassioned tales of
roach-infested tenements, cold winter nights without
heat and overcrowded quarters.
Finally, Simons assured Pueblo Nuevo that if it could
find ways to keep costs down, he would guarantee the
project's present large-apartment distrubution . . He
promised to put this commitment in writing in a letter to
the groups present.
Although Simons acknowledged that good design
features should be incorporated wherever economically
feasible, he said he would have to study the architectural
plan further before making a commitment.
At this writing, the end of the story cannot be told.
Simons has agreed to another meeting in New York City
and the community is re-dedicating itself to preserving
the integrity of the design plans in Pueblo Nuevo and
Cooper Square. 0
Lisa Kaplan is the director of Pueblo Nuevo. Frances
Goldin is a member of the steering committee of Cooper
Square.
(212) 499-4741 JOHN D. PARKER
Partner
D. & L. Plumbing Co. and
D. Parker and Sons, Inc.
(A JOINT VENTURE)
116 St. Marks Avenue
Brooklyn, N. Y. 11217
MORRIS LESNIK
Partner
A MINORITY JOINT VENTURE COMPANY
Engaged in general contracting, plumbing and heating - Has excellent
track record - Maintains $500,000 bonding - Currently working for
UHAB in Manhattan Valley - Community groups contact the above.
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IN THE NEXT ISSUE
South Bronx: Why Charlotte Street?
Sweeping Court Decision Against Low Income Housing
How To Find Your Landlord
19
City Limits
115 East 23rd Street New York, N.Y. 10010
IN THIS ISSUE
Too Many Buildings
Redemptions
408 West 48th Street
CD, Section 8 NSA's
Redlining
Mitchell-Lama