city limits magazine, february 1980 issue

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CITYLIMITSFEBRUARY 1980 $1.50 VOL5NO.2

SWEAT EQUITY



REHABILITATING SWEAT EQUITY-PART I

Sweat equity homesteading produces good quality housing, but can a program that takes on the city's neediest

buildings using the most shallow of subsidies survive in today's economy? In this two-part series City Limits

takes a look first at how double digit inflation and other factors have hurt the program. It's not cheerful reading.

But do not despair. There are remedies. Next month we will explore the variety of tools that can and are being

used to protect the program.

by Bernard Cohen

Sweat equity, an ambitious attempt to save seriously

deteriorated buildings in the poorest neighborhoods by

using voluntary labor to keep costs low, is being bat

tered by economic forces that experts say will probably

make the housing too expensive for low income people

unless the program is modified soon.

Inflation, astronomical fuel prices and high interest

rates have dealt a severe blow to an innovative program

that is relatively unprotected by subsidy and geared foran income group that is already at the limit of what it

can afford to spend on housing, many housing

specialists agree.

The rehabilitation and operation of housing are so

much more expensive today than anyone imagined even

three years ago, thanks to 13 per cent inflation and 90

cents-a-gallon oil, that architects of sweat equity are

facing tough questions about whether the cost savings

from contributed labor and other measures are suffi

cient to keep the housing affordable for low income

people. Terms such as "borderline feasibility" are

becoming common.Even at today's prices, sweat equity urban home

steading produces high quality rehabilitated housing at

remarkably low cost, compared with other programs.

But there is growing agreement in housing circles that

unless a deeper subsidy is incorporated, combined per

haps with lowering the sights of the construction effort,

sweat equity as it operates in New York City will either

go out of business or be forced to serve a moderate to

middle income population.

"We are getting blown out of the water by costs,"

said Charles Laven, director of the Urban Homesteading Assistance Board, adding that privately owned and

government assisted housing everywhereis

sufferingfrom the same economic woes, a conclusion widely

borne out by studies and statistics.He and numerous other housing experts interviewed

by City Limits reaffirmed their confidence in the

concept of sweat equity and said there were many waysto keep the housing within the means of lower income

people. Some of the cost-cutting tools are already being

tried out in other cities. "I really do believe in the design

of the program," Laven said. "It's the right set of

goals. "

CITY LIMITS/February 1980 2

Sweat equity has been a creative response to two of

the most scarring problems of the inner city: housing

abandonment and unemployment. For many years,

New York City has been losing housing through aban

donment at the rate of about 15,000 to 20,000 units per

year. The most recent job statistics show that unemploy

ment here is about 9 per cent of the general population

and more than 11 per cent for blacks and Hispanics.

As it is generally defined, sweat equity involves community-based housing development that uses primarily

untrained or newly trained labor for the construction

and emphasizes user participation in and control of the

project. Neighborhood residents form an organization,

buy an abandoned building, obtain a below-market

interest rate (1 per·cent to 3 per cent) loan and rehabili

tate the structure. Their sweat, or labor, reduces devel

lopment and operating costs and serves as their

"equity" investment in the building. For example,

homesteaders in the three buildings sponsored by the

Banana Kelly Community Improvement Association in

the South Bronx are required to put in 600 hours of free

labor and take turns guarding the buildings at night. Inthe early 1970s, homesteaders received little or no

income during construction. That hardship was later

eased with job training funds through CETA (Compre

hensive Employment and Training Act program).

continued on page /6

Sweat Equi ty rehabilitation of310 East 4th Street.



TAKING THE FIFTH

In contrast to that slogan of struggle, "One stepbackward, two steps forward," events in the WestSide Urban Renewal Area seem to shift an equal

distance backward for each movement forward. Atissue is the fullfillment of a 20-year governmentcommitment to lower income housing and preservation of economic integration in an area whereprivate market development is rapidly occurring.

Recent progress-the U.S . Supreme Courtdecision overruling environmental objections to

constructing 160 units of low income housing-has

been more than offset by the Board of Estimate'sdecision to delay indefinitely a housing management contract for the United Tenants Association, alow income group.

The latest version of the Urban Renewal Plan, theFifth Amendment, assured that 30 per cent of thedevelopment on the remaining sites within the

20-block WSURA would be devoted to lower incomehouseholds as part of the total renewal plancommitment of 2,500 such units. The UTA management of 90 units was part of that commitment. It isjeopardized by the Board of Estimate's inaction and

by efforts to obtain a court injunction by an organi

zation called CONTINUE that represents some middle-class homeowners and tenants.Things do not look good for the other designated

low income units in the Fifth Amendment plan,either. The majority are to be located in mixed

income projects consisting of 30 per cent lowincome units. Developers agreed to this mix in orderto be approved. There is substantial reason to fearthat these commitments will be reneged upon. The

increased market attractiveness of the West Side,the shortage of Section 8 subsidies and the possibility of further CONTINUE opposition will all serve to

undermine the developers' commitments.

Antagonism to lower income housing in theWSURA is fueled by The New York Times and MayorKoch. The Times, in a continuing series of editorials,argues that the urban renewal commitment to lowincome families has been fulfilled and that the city

should now capitalize on the current high values of

the West Side sites and sell them of f at maximummarket prices. It is a case of editorial writer andformer housing commissioner Roger Starr's attempt

to press a viewpoint in the media that has not been

3

sustained by the courts. Mayor Koch has repeatedlymade clear his sentiments that people should notlive in housing they cannot afford.

The battle for the West Side coincides with a peakdemand for Manhattan housing. Newcomers to theneighborhood seem unfamiliar with and hostile to

the traditional economic and racial diversity thatwas once considered an asset. They applaud gentrification while property owners cheer at the boom inreal estate values. Displacement of lower incomefamilies is sweeping through Upper West Side

blocks in order to accommodate affluence and

speculation.The WSURA is only one of many battlegrounds in

New York City where these competing forces arethreatening the development and preservation of

low income housing.

The private market does not and cannot serve anyexcept those able to pay $600 to $800 for a onebedroom apartment. Worse, people buying in at

private market prices do not want anything or any

one around who could jeopardize their propertyvalues. The consequence is the war of attrition thathas been fought on the Upper West Side. Armedwith money and lawyers, CONTINUE has blocked alllow income progress and watched the marketimprove. CONTINUE's partner, the private housingmarket, has attained a velocity that seems unstoppable. Clear-cut discrimination against the poor andminorities is cloaked in the holy shroud of objectivemarket forces.

The WSURA might be regarded as an anachronism, a vestigial urban renewal site left over fromoutmoded urban policies. But the implications are

continued on page 15

tCITY LIMITS.City Limits is published monthly except June/ July and August / Sep

tember by the Association of Neighborhood Housing Developers,

Pratt Institute Center for Community and Environmental Develop

ment and the Urban Homesteading Assistance Board . Subscription

rates: $20 per year; $6 a year for community-based organizations and

individuals. All correspondence should be addressed to CITY

LIMITS, 115 East 23rd St., New York, N. Y. 10010. (212) 674-7610

Second-class postage paid New York, N.N. 10001

City Limits (lSSN 0199-0330)

Editor . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . .. Bernard Cohen

Assistant Editor . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . Susan Baldwin

Contributing Editor . . . . . . . . . . . . . . . . . .. . . . . . . . Howard Burchman

Design and Layout . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . Louis FulgoniBusiness Assistant. . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . . Carolyn Wells

Copyright 1980. Al l rights reserved. No portion or portions oj this

journal may be reprinted without the express written permission oj the

publishers.

This issue was funded by a grant from the Fund for theCity of New York.

Coverphoto of 310 East 4th Street by Bernard Cohen.

CITY LIMITS/February 1980



BEDFORD STUYVESANT SUPERMARKET

DOING WELL AFTER A YEAR IN BUSINESS

by Tom Robbins

In early February, the Bedford Stuyvesant Restora

tion Corporation called together a group of 75 community residents to hear their problems, complaints andevaluations of the one-year-old Pathmark supermarketin the Restoration Plaza at the corner of BrooklynAvenue and Fulton Street. Complaints were surprisinglyfew. Some residents mentioned long lines, others spoke

of not being able to get the items they wanted, but most

criticisms were no different from those voiced by shoppers at many supermarkets."The people are generally ecstatic," said Ruth

Mitchell, assistant to the President at Restoration. "The

prices are the lowest in the area, it's clean, and it's nearby," she said. But what is different, in fact unique inthis area, is that the Restoration Pathmark is a jointventure of the Restoration Corporation and Supermarkets General (Pathmark's parent organization). WithRestoration footing two-thirds of the $2.25 millionpackage the store is one of a still very small, but growing


number of enterprises co-owned by a community development corporation and a private business.

With almost a full year of operations under their belt,both Pathmark and Restoration feel they are well on the

road to success and have built a relationship of mutualtrust and cooperation.

The Restoration Pathmark hasn't turned the cornerinto the black yet, although its first year of operation

was slated to break even. Anticipated weekly customercounts were 30,000 but actual shoppers have been running at the rate of between 19,000 and 21,000 weekly. A

big exception, Restoration officials happily point out,was the "great 39¢/lb. chicken sale" when shopping

surged . January of 1980 was also a better than averagemonth, thanks, Restoration believes, to both a big television blitz and the government heating rebates whicharrived that month. But despite the slower thanexpected customer rate, both halves of the partnershipare confident the enterprise will show a profit in thenear future.

"Things could not have gone better than they have,"

said Bob Wunderlee of Supermarkets General central'soffice in New Jersey when asked about his corporation'spartnership with a non-profit community group." fhen we were first approached we were hesitant on anumber of counts," said Wunderlee. "Foremost wasthe size of the projected store. With the square footage

available, there just wasn't enough room for a conventional supermarket. There was also concern about

security. Many people think a supermarket becomes an

island in a community-a world unto itself. But that's

not true. Whatever problems are out there on the streetare also going to be in the store. We had the concern of

how to control the external environment. "

That concern, said Wunderlee, has been more than

adequately overcome with the assistance of the Restor

ation Corporation. Pilferage, Pathmark says, has notbeen noticeably higher than at other stores, nor has

there been a problem with people hanging out in thestore.

What did draw Pathmark to Bedford Stuyvesant weretwo factors: the tremendous population base of potential customers and the track record and community

support of the Restoration Corporation. But beforePathmark could be brought in, the pot was sweetened

considerably.



An Anchor Store For The Plaza

Ten years ago when the shopping center was being

planned, said Gene Coleman, economic development

expert for Restoration, the intent was to get an anchor

store for the plaza . "our idea was that we were con

structing a convenience center-it was never designed to

compete with downtown Brooklyn. The original plan

called for a department store, and we were hopeful

Macy's or Gertz or someone else could be persuaded tobuild here; but no one ever expressed any interest. "

Despite the switchover to a supermarket instead of a

department store, Restoration felt that the added retail

food store was sorely needed in the Bed Stuy community. No new supermarkets had opened in almost twenty

years in the area, and, in spite of the presence of small

local markets , the nearest large economy grocery store

was a long bus ride away .

"The next phase was to identify a local or a minority

person to open a market, but there was really no wayan

independent could be cost competitive with the chains.

So that was where we looked next. We talked to the

Fedco people, but all their stores were in the Bronx and

it presented an immense logistical problem for them to

ship to just one store in Brooklyn. A&P at the time was

closing down a lot of their smaller stores and wasn't

about to consider opening a new one.

"And it was then," added Coleman, "that we ap

proached Pathmark with the model of the TWO-Hill

man store on the southside of Chicago." TWO (The

Woodlawn Organization) did the first joint venture

between a community group and a supermarket chain

when it opened its store in 1972. Smaller than the

Restoration Pathmark, the TWO-Hillman has been suc

cessful in its 8 years of operation, and offered a modeland experience to draw on. Pathmark, however, still

saw a risk, and it wasn't until the two-thirds l one-third

financing agreement was broached that they overcame

their reluctance.

Restoration was able to turn to Citibank and Chemi

cal Bank for the needed financing, and then went ahead

and built the market at the far end of its Restoration

Plaza. As owner of the store, Restoration signed a five

year renewable lease with Pathmark and also signed an

agreement giving Pathmark the management control.

At the end of the lease, either party has the right to pull

out, but Coleman says it is not anticipated that Restora

tion would want to take over the store. "We haven't gotthe management expertise," Coleman said, "nor could

we expect to sell at as Iowa price as Pathmark does. "

Pathmark brought in a twelve-year veteran of itsorganization, Dave Harris, as manager. Harris, who

had managed eight other Pathmarks before coming to

Bedford Stuyvesant, was pleased to be part of the

experiment. "It ' s a good thing for the community," he

said recently from his office perched above the crowded

checkout lines. "Aside from some of the usual problems

a store has when it's just starting out, it's working out

5

fine. "

Another 20 Pathmark employees were shifted to the

new store, and the rest of the 150 store workers were

taken from Restoration's lists of community people in

need of employment. All workers are members of Local1500 of the Retail Clerks Union.

While the marriage of Pathmark and Restoration still

appears to be in its honeymoon phase, there have been

and still are several kinks in structure and operationwhich both partners and shoppers agree need to beironed out.

Gwendolyn Kannett, a Restoration Pathmark

shopper for the past eight months, paused from her

weekday shopping after sending one son of f to find a ja r

of mayonnaise and another in search of cat food to give

her response to shopping at the new market.

"My only complaint," she said, "i s that I often can't

find the items I want. This is the third time I've been

here looking for Pathmark brand soup, and each time I

come they're out of them. There 's only this tomato souphere," she said gesturing at a shelf almost barren of

soup cans, while the one above it burgeoned with Camp

bell's brand soups. "Other than that," she continued,

"I love being able to shop here. I used to take the bus to

the Pathmark at Albany Avenue, but now I come here,and other than not being able to always buy what I

want, I like it."Shortage of items was a frequent complaint heard at

the community feedback meeting held by Restoration,

and Pathmark officials and store manager Harris

readily agree it 's a problem. The store has 30,000 square

feet of total space, with 18,500 given over to the

marketing area. Large Pathmarks, says Harris,are usual

ly from 48,000 to 56,000 square feet, and there is adequate room for storage and shelf space. In the Restoration Pathmark, as a result of the smaller physical plant,

goods tend to be piled higher and sales items exhaustedquicker than at other stores .

The store's smaller size also leads occasionally to lines

at the checkout counters that back up the aisles. Thir

teen checkout lanes are in operation during peak buying

times, and during a recent early afternoon weekday visit10 lanes were operating. "Some people have com

plained that the cashiers are too slow," said Mitchell,"but then many of them are still being trained. And as

one person at our community meeting responded to that

comment, ' I f we're not going to train our youngsters,who is?' "

According to Pathmark's New York area office, the

one identifiable problem that is still outstanding inrunning an inner city market is that the lines are erratic." I f you watch what occurs at a checkout counter,"

said Wunderlee of Supermarkets General, "you'll see

continued on page II

Tom Robbins is a former housing organizer and a free

lance writer who will soon be joining the staff of City

Limits.




CAREY DISMANTLES

STATE HOUSING UNIT

After months of rumors, Governor Hugh Carey hasannounced a major reorganization of New York State's

administration of housing and community developmentprograms. While a promised concrete plan had not beenreleased as City Limits went to press, interviews with anumber of sources indicated the general direction of the

proposed restructuring.New York presently has a number of agencies and

public authorities which deal with housing and relatedprograms, with confusing overlap of functions andoften competition between them. The principal agency,in title at least, has been the Division of Housing andCommunity Renewal. In its heyday, it supervised thedevelopment and construction of numerous stateassisted apartment developments, including Co-op City .

With the creation of the Urban Development Corporation by Nelson Rockefeller in 1968, however, DHCR

began to lose the money and the action, and with them aclear definition of purpose and responsibilities. Prac

tically everyone in state government agrees that DHCR

is a poorly-functioning agency. Frequent turnover at thetop, with three commissioners since 1976, hasn't helped.Neither did a state report last year that was stronglycritical of DHCR's past supervision of construction;correction of structural defects at numerous projectsremains a major political headache for Carey. (TheUDC bubble burst in 1975, triggering state and city

fiscal crises and a rapid decision by Carey to get the

state out of the housing production business. Some saythat was the last housing policy decision he made .)

Under the reorganization plan, some of which wouldneed legislative approval, DHCR would lose the Neighborhood Preservation Companies program, as well ascoordination of Federal Community Development programs to the Department of State. Traditionally alicensing agency, DOS recently opened a CommunityAffairs Division and has been given supervision of

several Federal and State grant-in-aid programs, including Section 701 of the Housing Act of 1974.

According to Judy Frangos of the Governor's staff,DOS is seen as the logical choice to administer "devel

opmental" programs and is being given all such in orderto coordinate them. DHCR will remain as a "regula

tory" agency, with such functions as rent-setting for thestate's Mitchell-Lama moderate-income housing developments. She described the "third component" of thereorganization as "the financing agency," but spoke of

several existing public authorities such as HousingFinance Agency and Project Finance Agency continuingto function separately.

Frangos denied that the reorganization represents


further fragmentation of the state's housing programs.

"This is an attempt to consolidate and put programstogether according to function," she stated. Coordina

tion would come from a new Council on Housing andCommunity Development, made up of the heads of

UDC, DHCR, HFA, PFA, DOS and other agencies,

with an outside chairperson appointed by the Governor.Frangos claimed that this Council will not only mesh

administrative gears, but will develop a "housing policyfor the 1980s" as well .

Other Albany sources expressed skepticism. Whilereluctant to criticize a plan they had not seen, manynevertheless predicted increased administrative

problems under such a structure. A common reactionwas that the Carey Administration should discuss housing policy before structure. One described the plan as"an attempt to look like they're doing something."

One critic pointed out that California and New Jerseyrecently reorganized in the opposite manner, by mergingseveral competing housing agencies into one . DHCR

could be upgraded from a division to a department, forexample, with strengthened rather than diminishedfunctions. Such an enhanced shop might attract a strong

commissioner who would stay on the job for more thana few months.

Staff morale at DHCR, which has been bad for sometime, is at rock bottom. 0

Michael McKee

COMMUNITY CREDIT UNION

The membership of five churches and two community

service organizations in Crown Heights has bandedtogether to form a community-based credit union, andafter one month's existence has raised $43,000.

Officially opened January 18, the Crown HeightsCommunity Federal Credit Union claims 290 membersand expects in one-year's time to be able to be paying itsmembers interest at the rate of five or six per cent.

Seed money for the credit union came from a grant of

$4,800 from the Campaign for Human Developmentand a loan for the same amount from the same source.

Commenting on the grant and loan, Sister MaryHegarty, diocesan administrator for the Campaign,

said, "This is number two. The North Brooklyn FederalCredit Union-that was number one-is about to opena second branch and its assets are over $140,000."

The five churches participating in the credit union areSt. Ignatius, St. Matthew, St. Joseph, St. Teresa and St.Gregory. The community organization sponsors are the

Crown Heights Pastoral Council and the CrownHeights Progress Council. 0



SECTION 202 FUNDSThe area HUD office is accepting applications for the

new construction or substantial rehabilitation of 1,190units to be funded with Section 202 monies for elderlyor handicapped housing.

The amount of the direct loan for New York City is

$58,463,000. March 31 is the deadline for applying for

the funding.Under this program, known as Section 202 of the

Housing Act of 1958, as amended, HUD makes directloans to sponsors of housing for the elderly and handicapped. It also provides Section 8 rent subsidies to beused in conjunction with the Section 202 program sothat no tenant falling into the low and moderate incomecategory will have to pay more than 25 per cent of his

income for rent.The head of an elderly household or applicant must

be 62 years old. A handicapped applicant must be at

least 18 years old to be eligible for the project.The mortgage loan is good for a maximum of 40

years. Eligible applicants must be private, nonprofitcorporations controlling a developable site who haveshown their ability to undertake development responsi

bilities.Under the Section 202 regulations, sponsors must

have a board of directors with at least 30 per cent of itsmembers residing "in the community in which theproject is to be located and may not be representativesof any national organization serving as the sponsor of

the project."

The largest number of housing units to be consideredfor anyone sponsor is 300. Also, the sponsor mustinvest five per cent of the mortgage amount, not toexceed $10,000, a figure that is repayable to the

sponsor.The application package and instructions are available

at:The Processing Controls and Reports Unit

Housing DivisionNew York Area OfficeHUD 26 Federal Plaza

Room 32-110New York, New York 10007. 0

The Middle Atlantic Regional Council of theNational Association of Housing and RedevelopmentOfficials is sponsoring a conference on the SouthBronx, including a tou r, on May 21-22 at the New YorkSheraton Hotel, Seventh Avenue and 54th Street, in

Manhattan.For further information, contact Eli Hankin at

488-7181. 0

7

FOUR BANKS COMMIT

TO NORTHWEST BRONX

After years of battling against redlining in its neighborhoods, the Northwest Bronx Community and ClergyCoalition has won a commitment from four savingsbanks to set a goal of financing the upgrading of 200

buildings in 1980.The investment commitments are described in a

"proclamation of cooperation" signed by each of thebanks, Eastern, Anchor, Northside and Dollar. Eachbank also agreed to aggressively advertise the avail

ability of mortgage funds, to provide financing for bothone-to-four-family and multiple-family buildings and toenforce the "good repair clause" which gives banks thepower to foreclose on the mortgages of properties thatare not being maintained.

The 200 "investment projects" will involve financingfor moderate rehabilitation of the buildings, includingsystems upgrading, replacement of windows and new wir

ing, according to Bill Frey of NWBCCC. The breakdown by banks is Eastern, 30 projects; Anchor, 20 projects; Northside, 50 projects; Dollar, 100 projects.

In addition, Aetna Life and Casualty, the nation'slargest diversified financial firm, has agreed to financemoderate and major rehabilitation of multi-familybuildings in the Northwest Bronx, part of a $15 millioninvestment commitment by the company in four cities.

Frey said the leverage provided by the federal Com

munity Reinvestment Act, under which banks can bechallenged if they are failing to meet the credit needs of

neighborhoods from which they draw substantialdeposits, enabled NWBCCC to win the agreements.Noting that current interest rates average about 12 percent, Frey said efforts would be made to reduce the interest charges for buildings that can't afford the marketrates by enlisting the participation of the city. He addedthat most of the loans could probably be done by thebanks alone.

The NWBCCC is made up of 11 neighborhood associations and 90 tenant associations. 0

MARION GRIMES DIES

Utica-Marion Grimes, executive director of Corn

Hill People United, died on February 3 at the age of 54.Grimes played a major role in helping found Corn

Hill People United and served from 1974 until her deathas its executive director, during which time the staffgrew from two people to nine.

She led the organization in its four-year struggle forthe incorporation of the Utica Neighborhood HousingService and was a participant in the New York StateTenant and Neighborhood Coalition and chairperson of

the board of Peoples Housing Network. 0




CITY -OWNED BUILDINGS: A HARD SELL

by Bernard Cohen

The sale of city-owned buildings to low-incometenant and community organizations skidded sidewaysin early February when the Comptroller's office faultedthe latest proposed policy. Representatives of theComptroller questioned the already-approved $250-perunit sales price and said the policy overlooked the possible recapture of funds invested by the city in the

buildings.

An executive session of the Board of Estimate waspresented on February 6 with a policy that dealt withconditions for resale of entire buildings and apartmentswithin the buildings.

The policy was hammered out after discussions be

tween HPD and housing leaders, some of whom calledfor strict restrictions to preserve the low cost whileothers urged a more flexible approach that would leavethe actual terms up to each individual co-op.

The policy is in the form of an amendment to a resolution adopted by the Board of Estimate on March 22,1979, approving the sale of city-owned buildings inlower income neighborhoods to community organizations and tenant associations, generally for $250 perunit.

There are approximately 200 buildings currently in

the pipeline to be sold, the major goal of a set of cityprograms created in the aftermath of an epidemic of

. -building abandonment in New York City in the 1970s.Sales have been thwarted by the inability to win agreement on a sales policy and the failure of dragged outefforts to come up with a prospectus or offering planthat will satisfy the state Attorney General's office at a

price lower income people can afford .The amendment, which was laid over until February

21 because of the objections raised by the Comptrolle r'soffice, provides that buildings coming through theCommunity Management program may not be re-soldfor 15 years and buildings coming through the TenantInterim Lease program may not be re-sold for 10 yearswithout the prior written approval of the housingcommissioner.

The amendment also sets conditions for the re-sale of

individual apartments. Because substantially morepublic funds have been invested in community-managedbuildings than in tenant-managed buildings, the re-saleterms are different.

The following are the proposed ,terms for communitymanaged buildings that are sold:

• In the first three years, a selling co-operator mayrecoup the original purchase price and his share of any


special assessments for building-wide capital improvements. Any additional profit will be retained by the co

op as a reverse for capital and operating expenses.

• After the first three years, a selling co-operatormay recoup the original purchase price, his share of anyspecial assessments for building-wide capital improvements, up to $1,500 for improvements to his individualapartment and up to 30 per cent of any additional

profit, if the co-op approves.The following are the proposed terms for tenant

managed buildings that are sold:

• In the first two years, a selling co-operator mayrecoup the original purchase price, his share of special

assessments for building-wide capital improvements,the documented amount spent for improvements to hisapartment and up to 30 per cent of any additionalprofit, if the co-op approves.

• After two years, the selling co-operator may recoupthe original purchase price, his share of any specialassessments for building-wide capital improvements,the documented amount spent for improvements to theindividual apartment and up to 50 per cent of any additional profit, if the co-op approves.

At a briefing on February 13, HPD officials distributed the incomplete draft of a prospectus containing 17

documents, of which 14 would be "boiler plate" or

standardized forms and three would be tailored forindividual buildings.

They said they hoped to have a finished version byApril or May and begin selling buildings after that.

The briefing was led by HPD's chief counsel, Robert

Robbin, Deputy Commissioner William Eimicke, andAssistant Commissioner Philip St. Georges. Among thepoints made were:

• HPD will have full legal and financial responsibility for preparing the prospectus, although tenant andcommunity organizations may incur legal and incorporation fees.

• No buildings will be sold unless the rent rollis

sufficient to meet operating expenses, meaning rent increases for most of the buildings.

• Agreement by 60 per cent of the tenants to buytheir apartments-a much higher figtl're than usual forhousing co-operatives-will be required for the sale tobe approved by the city.

• All purchasing tenant and community organizations will be required to retain a lawyer to advise themon the sale.

The major issue raised by the 60 or so community rep-



resentatives at the meeting was the uncertain viability of

these buildings after sale and the lack of any effort by

the city to provide follow-up assistance to them. "This

is a disposition program, not a housing program," Ron

Shiffman, director of the Pratt Institute Center for

Community and Environmental Development, said of

the sales policy. He and others cited the need to tie the

buildings into other available counseling and low

interest loan programs and to make sales an integralpart of a larger housing plan. "You've limited the

profits in these buildings," Shiffman told the officials,

"but you've done nothing to limit the risks. The total

risk is on them ."

Some suggested delaying the sales policy currently

before the Board of Estimate to provide additional time

to work out problems. In response, Eimicke said HPD

"is under enormous pressure" from HU D and city hall

"to sell buildings responsibly in a very short time" or

else they may end up back on the auction block.

Another problem raised by one of the tenants in a

building they want to buy is the lack of guidelines about

the level of repairs that will be made by the city in buildings prior to sale. St. Georges responded that inade

quate funding of the tenant management program made

it difficult to establish those kinds of guidelines.Among the issues left unclear at the briefing were

whether co-operators should have the power to evict

nonpurchasing tenants and what legal and financial

responsibilities will be incur red by community organiza

tions that buy buildings from the city to resell to tenant

organizations as co-ops.

Some of those who attended the February 6 executive

session of the Board of Estimate said the objections of

the Comptroller'S office came late in the meeting and

took many people by surprise. However, Robert Pam,

assistant to Comptroller Harrison J. Goldin, said the

issue had been brought to HPD's attention a few

months ago.

Pa m said the sales policy needs to address the

question of whether the city should be allowed to recap

ture some of the federal Community Development

funds that have been invested in city-owned buildings

after they are sold. He declined to say what amount of

recapture for what buildings his office had in mind.

"That is one part of a discussion that has to occur,"

Pam said. "There are a whole variety of ways that issue

could be addressed. "Asked if the city would consider the investment of

Community Development funds a grant, Pa m saidpossibly, bu t "I don't think it should be a given. It may

be appropriate for some funds and some buildings. I' m

not sure we should start with that assumption."

Some sources said the Comptroller's office wants the

city to get 50 per cent of any profit made from the resale

of individual apartments. Asked for a comment, one

high HP D official called the Comptroller'S move "typ

ically asinine, cost ineffective and probably administra-

9

tively impossible."

At a meeting between officials of HP D and the

Comptroller's office on February 14, Richard Wells,

another Goldin aide, reportedly objected to the $250

pricetag, which was approved last March by the Board

of Estimate. HP D officials stuck to the existing policy,

sources said, as a way to expedite sales to stable tenant

organizations with a stake in preserving the buildings.

The meeting ended, according to one person in atten

dance, with Wells indicating he would drop the demand

for recapture if the city replaced its $250 policy with a

formula that would set different prices depending on

specific market conditions. Wells could not be reached

for comment.

Whether the Comptroller's office can force that view

on the Board of Estimate is uncertain. "We're

opposed," one housing official said.

The issue may be settled before or at the next Board

of Estimate meeting, on February 21. 0

EIMICKE ULTIMATUM

Calling the official 40 per cent rent collection rate in

city-managed buildings "an embarrassment," Deputy

Housing Commissioner William Eimicke has named a

committee to be responsible for improving the record of

rent payments.

" I t is even questionable whether the totally inade

quate 40 per cent collection rate we now report is accu

rate (better numbers might show an even lower

number,)" Eimicke said in a January 28 memorandum

to the Office of Property Management staff. The memo

noted that rent collection in city-owned buildings that

are managed by tenant associations and community

organizations is closer to 85 per cent.

To address the problem, Eimicke said the Accounts

Receivable unit has been moved to 75 Maiden Lane with

the rest of the Office of Property Management. Eimicke

also designated Terry Krueger as project manager of the

Rent Improvement Program .

In addition, a Rent Collection Improvement Commit

tee was established to mon itor the improvement of rent

collections and implement changes in procedure. The

committee, chaired by Krueger, is made up of John

Autorino, Denny Kelly, Bob Moncrief, Bill Murphy,

Marty Paikoff, Shirley Unger, Joan Wallstein and

Howard Wasserman.

"I expect that major improvement in rent collection

percentages and dollars will be evident no later than

April, 1980, or drastic operations and personnel actions

will be taken," the memo said. 0




STUDENTS HELP SAVE A BUILDING

FOR SIX FAMILIES IN BROOKLYN

by A. Sandra Abramson

What does a neighborhood-based housing organization do when it is offered an abandoned, eight-unitmasonry building for the cost of approximately $5,000in back taxes? It accepts-and then works to develop a

viable plan for rehabilitating the fire-damaged buildingand to find local residents interested in owning it

cooperatively. That is what the St. Nicholas Neighborhood Preservation & Housing Rehabilitation Corporation did with 137 Guernsey Street in Greenpoint, Brooklyn, a neighborhood of light industry and small multifamily, often owner-occupied buildings.

St. Nicholas, a non-profit, non-sectarian organization, has been working for the past four years to

improve the housing, social and cultural conditions inthe Williamsburg-Greenpoint section of Brooklyn.Among the group's varied activities have been the cosponsorship of 150 newly constructed and rehabilitatedunits of senior citizen housing (Jennings Hall) and themanagement and rehab of city-owned buildings throughNew York City's Community Management program.

However, until last year, St. Nicholas had neverrehabilitated any of the smaller vacant multi-familybuildings that are the backbone of the community it

serves. So when the owner of 137 Guernsey Street

offered to donate the building to the organization inDecember, 1978, St. Nicholas accepted the challengeand began to assemble the financial, labor, architecturaland legal pieces that would make the puzzle of rehabbing the building fit together .

Through the Pratt Institute Center for Communityand Environmental Development, St. Nicholas learned

about the Adelphi Street project in Fort Greene, Brooklyn. There, 30 students from Westinghouse Vocationaland Technical High School in Brooklyn worked underthe supervision of their teachers and a general contractor as the construction crew to rehab an eight unit building into a four-unit tenant owned cooperative. A new

generation of workers was learning skills whilecontributing to the growth of a new generation of homeowners.

Excited by this project, we contacted NormanShapiro, then principal of Westinghouse, to discuss theprospect of helping students to expand their skills by

A. Sandra Abramson is the housing coordinator of

the St. Nicholas Neighborhood Preservation & HousingRehabilitation Corp.


working at Guernsey Street once Adelphi Street wascompleted. With formal agreement by the Board of

Education's Youth Training Program (YETP), which

administered the student's CETA program, we had the

labor piece of our puzzle in place.To make the project feasible, we needed architectural

and legal assistance. Several months earlier, St.Nicholas had been approached by staff of Con Edison's

"Renaissance in Brooklyn" project interested inworking with local community groups. After muchdiscussion, Con Edison agreed to provide the professional assistance we needed and to supply each of thesix new apartments with a stove and refrigerator. Inaddition, Con Edison also loaned St. Nicholas $5,000 to

pay the back taxes. This will be repaid after permanentclosing. Next, with the assistance of our local CityCouncilman, Abe Gerges, we negotiated a $115,000construction loan and permanent mortgage for 25 .yearsat 9 Y<I % with Williamsburgh Savings Bank. As with theAdelphi Street project, the bank waived most of its

normal processing fees.

Finally with demolition work begun by B & J General

Contractors and the Westinghouse students, but nobank closing in sight, we turned to the Consumer

Farmer Foundation to carry us through this lean time.That organization responded quickly and generouslywith an interest-free $10,000 loan since repaid in full,that helped us keep the students supplied with materialsthey needed to continue working and learning until theclosing in August, 1979. We also borrowed $5,000 from

the newly opened North Brooklyn Federal Credit Union

Studen t construction crewat 137 Guernsey Street.



to tide us over until the construction loan closing in

August.As work began, it became increasingly clear that

neither the short-term nor the permanent financing

from Williamsburgh would cover the actual project cost

of $157,000. Thus, in August, we began negotiating aParticipation Loan with HP D for $139,000, in whichWilliams burgh would provide 400/0 ($55,600) at 9 V2 %

and the City 60% ($83,400) at 1%. This reduces the

equity necessary ($18,00) by one-half to an average of

$3,000 per unit and the monthly carrying charges to

approximately $225.00 for a large 4 V2 or 5 Y2 room

apartment. However, after nearly six months of nego

tiating with the Department of Housing Preservation

and Development, we are still awaiting the finalcommitment letter and an agreement to place the City'S

share in escrow, a requirement of the bank.

Thus, in less than one year, Westinghouse students

completed rehabbing the Adelphi Street building andbegan work on Guernsey Street. The original students

have all graduated now and many have ',noved on to

jobs in the construction field. A new group is now

working with st . Nicholas and learning skills while

gaining valuable experience. One group of co-operatorshas moved into Adelphi Street-a new group is getting

ready to move into 137 Guernsey Street, hopefully by

April, 1980. 0

SUp"ermarket continued

sometimes the lines are 5-6.customers deep, and then 15

minutes later there is no line at all. The customers come

in waves, and we get a lot more walk-in customer tra ffic,making smaller purchases that we do elsewhere. Two

thirds of the difference between what we pay for an itemand what we sell for goes to labor costs. Since you can't

schedule workers in 15 minute increments we've got alabor cost problem, and right now, how to better

operate the front end of the Bed Stuy store is something

we have to figure out."

Other Communities Want InWunderlee says Pathmark has been approached by

other communities since the Restoration store opened,

11

but not by a community organization as deeply-rooted

and competent as Bed Stuy Restoration. "We've said

that our number one reason for going into Bed Stuy was

because we had a strong partner," said Wunderlee,

"but we're not in a position yet to consider another

joint venture. We still have to figure out the successfulformula for operating an inner city store."

But just as Restoration-Pathmark was inspired by the

example of TWO-Hillman in Chicago, the Bed Stuystore helped encourage a joint venture in Washington

D.C. between a community development group and a

supermarket chain. On October 10th of last year Giant

Foods and the D.C. Development Corporation opened

the doors to their jointly financed market and are more

than pleased with their experience so far.

"The store is doing tremendous," Barry Scher of

Giant Foods reported recently. "We thought it would bea high volume store-instead it's been a very, very high

volume store. We feel we owe a lot to the folks in the

community who take a lot of pride in the store." As in

the Restoration Pathmark, the D.C.-Giant Foods

venture has placed an emphasis on hiring people fromthe neighborhood . Sixty of the 90 workers there were

hired locally, and Giant Foods's Scher attributes a good

deal of the store's success to that move.

Community employment at the store itself was only

one of the hoped for benefits of bringing Pathmark into

the Restoration shopping center. Beyond immediate

employment, Restoration hoped the new supermarket

would increase sales at other Plaza stores as well as

along Fulton Street. This they feel has happened.

As an incentive for new retail stores to open on theirown, however,Coleman feels that time hasn't come yet.

"According to our research," he said, "Bed Stuy has as

much occupied retail store space as the community can

support. Right now we're looking towards labor-inten

sive industrial development in this area. We want to

retain the businesses that are here and get new ones in.

With industrial development the dollar turns over 4-5

times as fast, and by increasing industry we can increase

the amount of disposable income in the community."

The chances for other community development corporations to duplicate Restoration's example seems to

hinge on whether they can put together the kind of or

ganization that inspires the confidence of private

business the way Restoration has. With a long history ofinvolvement from such corporate magnates as Thomas

Watson of IBM, William Paley of CBS and others, BedStuy had a running start when they began their searchfor a joint venture partner. Their connections and

experience appear somewhat unique in the metropolitan

area. But with joint ventures underway with apparent

success in New York, Washington and Chicago, both

private businesses and community groups will be looking hard at ways of satisfying requirements of eachother. 0




1,000 BUILDINGS TO CLOSE BY FALL:TENANTS SHUN CITY RELOCATION SITES

bySusan Baldwin

"What do you think, Sarge. Should we move, and if

so where should it be? Around the corner, across thestreet? But, we're used to it here . I f only they would fix

up this building, we could stay here."Andy Wonczuk, an elderly Ukrainian immigrant who

has spent the last 17 years in a modest, three-roomapartment at 632 East 9th Street, spoke to his constantcompanion-a burly black dog named Sarge as he wondered out loud about an imminent move from his home.

"Sarge does everything for me," he continued, as heplayed with his two-and-one-half-year-old protector .

"H e gets my shoes, my money, he even carries my bags.Sarge knows everything."

Wonczuk is one of eight tenants left in this deteriorated city-owned building on Manhattan's Lower EastSide that is slated for consolidation or closing because it

is under-occupied and deemed uninhabitable by cityhousing officials.

According to Assistant Housing CommissionerManuel Mirabal, head of the city's consolidation unitsince it was formed in December, 1978,489 city-owned

buildings had been closed by December 31, and 1,729households were relocated during 1979. A total of 1,000buildings are slated for consolidation by September 1,

1980."In general," according to the city's first annual

report on In Rem housing dated September, 1978, toSeptember, 1979, "buildings selected for consolidationare emptied if they are unsafe or structurally unsound,less than 50 per cent occupied, the projected repair costis excessive, and the surrounding neighborhood will notsupport the continued maintenance of the building."

With a budget of $4 million for CD year V, theprogram, staffed by 60 employees, operates out of six

decentralized area offices-Bronxchester, East Harlem,Cooper Square, Brooklyn East, Brooklyn West, and

Manhattan West. This budget includes an allocation ofup to $2,500 per relocation apartment to cover rehabilitation costs. To date, the unit has spent about $2

million.The Lower East Side is one of the few neighborhoods

in the city where consolidation of buildings is takingplace. Although isolated instances of consolidation haveoccurred in the Bronx and Brooklyn, East and CentralHarlem are the only two other areas where city tenantshave been receiving notices announcing buildingclosings.


Inferior Apartments

Critics of the program have charged the city withselecting relocation apartments that are inferior to onesalready occupied by tenants, closing down viable buildings when tenants seek basic services and forcing tenants

to go through too much bureaucracy to be relocated."There are just too many bosses and too many steps

that people have to go through in order to find anotherapartment," Julia West, housing coordinator forNeighborhood Board 3 in Central Harlem, said of thecity's newest controversial program.

"They scare tenants with written ultimatums underthe door telling them to move out with no explanationof the situation, and they direct tenants to apartmentsthat are in a shambles, often with no front doors andwith rubbish all over the floors, and, of course, tenantsdon't want to move into these places," she added,asserting that the city's excuse naming potential vandalism of vacant apartments was "not good enough" tojustify showing tenants gutted apartments withpromises to fix them later if the tenants first agreed to

move in.

The tenants at 632 East 9th Street agree with West'sassessment of consolidation and have expressed their

resistance to the program by ignoring pressure from thecity to move because, they maintain, all the availablereplacement or resource apartments are worse than the

ones they now occupy.City-owned since May, 1978, 632 East 9th Street

shares a nonfunctioning boiler with 636 East 9th Streetand until May, 1979, was fully occupied. Following rentstrikes, a fire, and the discontinuance of basic services,early in October the remaining tenants received noticesfrom the city's consolidation unit telling them they must

move."We were happy at first to take tenants around to see

the resource apartments, but it got ridiculous takingthem to other places without water and stoves that weremuch worse than where they already were," said InezRoman, a housing organizer with Adopt-a-Building, a

community-based organization serving tenants on the

Lower East Side.Rats As Big As Cats

"Some of the resource buildings are unbelievable,"she added . "You should see 316 East 8th Street whereone of the tenants yelled out the window, 'Don't movein here. The rats are as big as cats.' They have pictures



to prove it. "

"Sure, my mom knows she has to move, but there'sno place to move," concluded Erasmo Duran, a resident for 12 years of 632 East 9th Street. "She wants tomove but not into another dump . She's looking for aplace that will be good for a few years, but everything

they show her is worse than this . . . Even welfare hasgiven up trying to help her."

Duran's complaint defines the central problem thatthe consolidation program must address: spending themoney necessary to provide livable apartments in the

resource buildings prior to asking prospective tenants torelocate .

Another Dump

A recent visit to one such resource building-121

West 133rd Street-revealed why tenants may be reluctant to move.

The small, dingy four-room apartment offered to

78-year-old Thomas Conyers and his wife for $90featured a front door pried loose from its hinges, rippedout light sockets, and no heat. Lined up in the dark

rooms were unopened cans of paint provided to theprospective tenant to cover walls badly in need of plastering.

How long had the building been without heat? "The

boiler's been down and has been like this for a couple of

years," one resident was quick to tell Conyers.But, a trip to the East Harlem In Rem office led to the

assignment of better housing for Conyers the followingday."A lot of seniors like him pay rent before they eat,

and some of the places they are forced to live are unmentionable," said Earle Murray, the area director, ashe discussed Conyer's housing predicament. "I think

you should ask the mayor about this housing crisis. Restassured, however, that Mr. Conyers will get a placebecause this has been brought to my attention. But howmany others like him," Murray concluded, "will cometo J;Ily attention or just slip through the cracks?"

There have been instances of buildings that were

closed and emptied out hurriedly when it was supposedto be used as a resource building.

In East Harlem, 112 East 102nd Street is such a building. Originally approved for management by a community-based organization, the building's populationwas reduced to four tenants after the real estatemanager left yellow slips of paper under doors tellingthe residents they had to move out.

"It's just crazy the way different departments at

HPD don't communicate with each other," said George

Aspata, director of community management at NuevoEl Barrio Para La Rehabilitacion de la Vivienda Y LaEconomica, Inc. (N.E.R.V.E.), the organization thatwas to manage the 102nd Street property.

"We tell the tenants that we're going to fix up theirbuilding and to pay rent for services while the real estatemanager comes around and tells the tenants to get out

13

because the city is closing the building," he explained."Then we lose the building for our program, and the

tenants lose their apartments and just disappear becausethey are frightened and don't know where to go."

Fully occupied a few months ago, 112 East 102ndStreet has been reassigned to community managementbut with only a handful of tenants left and few pros

pects of new occupants in the near future.

In an effort to avoid similar problems in the future,Mirabal's office is trying to work with neighborhood

groups and the community boards.According to Marian Fox, head of Manhattan Com

munity Board 3's housing committee, "We are scrutinizing each case and are hopeful that so many terriblethings that have happened in the past will not be

repeated. "Mirabal admitted that there are problems with

making the program run smoothly but asserted that itschances of succeeding should be increased significantlywith improvements scheduled to take effect within the

next few months."Under the new rules and regulations that we plan to

institute by Mayor June, we will spell out our authorityto impose a time limit for relocation of tenants out of

consolidated buildings and tie in a benefit structure thatwill provide an incentive to tenants to move out," he

explained.continued on page 18

Andy Wonczuk




BROWNSTONERS ASK COURT TO BLOCK

2,500 LOW-RENT RENEWAL UNITS

by Susan Baldwin

Manhattan brownstone owners, who for years havebeen predicting the flight of the middle class from theWest Side Urban Renewal Area, have filed a lawsuit in

the State Supreme Court seeking to block efforts by thecity and a local tenants' association to provide 2,500units of low rent housing and to manage city-owned

properties for low income residents.The suit, brought February 7 by the Committee of

Neighbors to Insure a Normal Urban Environment(CONTINUE), an organization of middle class home

owners and residents who claim a membership of 4,000,

names as defendants the city of New York, Mayor Koch,the Board of Estimate, the Department of Housing

Preservation and Development, and the United TenantsAssociation (UTA), the community-based organizationthat is currently monitoring maintenance and repairs by

HPD work crews to city-owned apar tments on 20 sites.Alvin C. Hudgins, who owns 27-29 West 94th Street,

and five other CONTINUE members have demanded arestraining order that would stop implementation of theFifth Amendment to the WSURA plan and would kill aJanuary, 1979, agreement (memorandum of understanding) between UTA and HPD under which the cityhas committed itself to correcting building violations onurban renewal properties occupied by low income

tenants.

Responding to CONTINUE's lawsuit against the cityand UTA, Robert Robbins, HPD's chief counsel, said,

"We think they're wrong'l and we're going to say so incourt." He also asserted that the city has no intention of

asking the court for a postponement to answer CONTINUE's charges, adding that the city plans to fight this

case to the end.

Neighborhood groups which support low incomehousing see CONTINUE's latest lawsuit as a renewed

attempt to prevent low income residents from remainingin the WSURA. [See editorial this month]

This suit comes on the heels of the January 7 Supreme

Cour t decision favoring the construction of160

units oflow income housing on the controversial Site 30-a casethat was argued for almost ten years in the courts.

Fifth AmendmentA reaffirmation of the original 1962 urban renewal

plan's commitment to low income housing, the FifthAmendment guarantees at least 2,500 units of low income housing in the disposition of the remaining

11 undeveloped sites in the WSURA.Proposed by Community Board 7, the Fifth Amend

ment, following the city's Uniform Land Use Procedure


(ULURP), was approved by the Community Board inJune and the City Planning Commission in September.After a stormy session November 15 when commun

ity testimony for and against the amendment ran lateinto the night, the Board of Estimate unanimously

approved this amendment which is presently beforeHUD for final consideration.

UTA members are concerned that CONTINUE's

lawsuit may figure in holding up the Board of

Estimate's approval of its $600,000 community management contract with the city, which was laid over indefinitely at the Board's January 24 meeting. Under theeight-month contract UTA would manage 90 units of

housing and rehabilitate 25 on 12 sites.According to UTA officials, "The 90 apartments in

the 12 UTA buildings would count as part of the city's

commitment to provide a minimum of 2,500 low incomedwelling units in the WSURA-a commitment not yet

realized. "In its case before Justice Richard S. Lane, CON

TINUE charges that the "original concept of the [urban

renewal] plan contemplated the development of abalanced community integrated ethnically, economically, racially and socially. However, because of the largenumber of low income housing units already built . . .[numbering almost 5,000], it has been infected with

serious problems of crime, vandalism, dope addiction,alcoholism, juvenile delinquency, etc . . .

Further Impaction"The further impaction of additional low income

units for squatters, welfare and other low income families," it contends, "can only make the situation worseand will eventually lead to cancelling out of the gainsalready accomplished by the expenditure of hundreds of

millions of dollars of public and private funds to

upgrade the area under the terms of the plan."

In response to CONTINUE's quest for a restrainingorder, UTA said: "The motivation of the Hudgins/

CONTINUE suitis

clear from Hudgins's affidavit .. .

Hudgins complains that repairs initiated by UTA in

buildings where its members live are a 'breach' of theurban renewal plan and that Cle presence of low incomefamilies in the area is 'causing the value of my property

to be reduced and my residency in the WSURA to beimpaired. '

"This contention echoes the usual CONTINUEstereotype of low income persons as the cause of mostsocial ills and as persons who-as CONTINUEattempted to prove in its suit to stop the construction of



low income housing on Site 30-are in effect environmental hazards."

Environmental Impact

According to Eugene J. Morris, CONTINUE's attorney, one of the reasons his client is seeking to impedethe Fifth Amendment is that it has not been approvedby HUD. For the amendment to go into effect, he

explained, HUD must rule on its environmental impact

on the neighborhood."We're reviewing it [the Fifth Amendment] right

now, and we should have a decision in about a month,"

said Alan Wiener, HUD's area manager.

He also said that HUD was currently seeking a "legalopinion regarding the implication of the SupremeCourt's decision" on Site 30.

Referring to CONTINUE's attempt to enjoin theFifth Amendment, Wiener added, "What are theygoing to enjoin? There's nothing to enjoin. We haven'tapproved anything yet. "

-oris Rosenblum, of Strycker's Bay Neighborhood Council, at

WSURA victory celebration.

Commenting on HUD's delay in ruling on the amendment, Morris said "From what I understand from Mr.Wiener, no decision has been made yet and that hewants to meet with city representatives first to arrive at

some understanding regarding the 11 unfinished sitesand also that the city has not made up its mind as yet"

about these sites.Supporters of the plans for 160 units of low income

housing on Site 30 and UTA's management contract areworried that the city will renege on its low incomecommitment to the area. ---

At a victory party hosted by Strycker's Bay Neighbor

hood Council, the community group that defended Site30 against CONTINUE's charges and appealed the caseto the Supreme Court, neighborhood residents wereexhorted to send telegrams and letters to Mayor Kochsupporting the low income housing plans.

Forest Hills"This is not another Forest Hills situation," said

William Price, a member of UTA and a long time resident of the WSURA. "What you have here and whatCity Hall should understand is that the community is

15

behind Site 30 and the Fifth Amendment. The majorityof the community wants it. I t is not being shoved downour throats. "

Unless the Fifth Amendment is approved by HUD,

the Fourth Amendment, which calls for the demolitionof the buildings on the 11 sites, will go into effect.

Meanwhile, CONTINUE member Roland Karlen,referring to the UTA contract, said, "A t first they [the

city] were talking about spending $5,000 per apar tmentto rehab these buildings. Now they're talking about

$15,000 each. Then, UTA can manage the buildings fortwo years and then, through the city's $250 sales policy,they can buy these apartments for this low sum of $250.

"This is ridiculous when you have private developerswho will pay $40,000 for these apartments 'as is,' " heconcluded, noting that the WSURA is "not eligible forCD funds anyway" because there is so much privatemarket interest in the real estate area.

" I f we have to start a new lawsuit and challenge thewhole urban renewal plan, we will," Karlen added."There are still 11 sites left, and we were supposed to

get 2,800 units of market level housing here. There isalready too much low income housing up here." 0

Editorial continuedfar broader than either historical curiosity or simply

20 blocks. The WSURA represents a prime exampleof what present-day planners and government officials would consider a highly successful publicintervention in a neighborhood. They might not use

bulldozers or construct new high-rise buildings, butthe underlying theory of Neighborhood Strategy

Areas and Urban Development Action Grants is precisely the same-the use of public resources toentice private development.

Amid constant references to limited resources,today's planners have developed an ideal scenariowherein momentum-building Community Development funds will lure and ultimately be replaced byprivate investment. Once this has occurred, a neighborhood can be declared "cured" and the publicdollars can proceed boldly to a new area. Oneglance at the WSURA will show the shortcomings of

this approach.

The WSURA represents more than just a chance

to make a few measly bucks, as The Times urges.And it represents more than a chance to fulfill an

outdated commitment. It constitutes the only opportunity to provide housing for the families that areevery day being displaced from the Upper WestSide. It is the chance to reaffirm a commitment to

racial and economic integration. The New York

Times should remember that the commitments of

the 1960s to equality of opportuni ty were about a lotmore than just 2,500 units of housing. 0




Sweat Equity continued

Homesteading of multi-family buildings has evolvedinto a complex, sometimes unwieldy process involving

the participation of at least two government agencies, aprivate lender, a community organization and a host ofsupport personnel. Attempts to generalize about the

success of sweat equity are difficult. Latest figures show50 buildings totalling 583 units either completed or at

some earlier phase of the rehabilitation program. Sincesweat equity was never institutionalized, however,buildings were all packaged differently, and each has itsown history. Most of the buildings have gotten high

marks from housing specialists for the quality of theconstruction. In addition, the program has provided

j ~ b s and training and stimulated the direct involvementof local organizations and individuals in rebuilding theirneighborhoods.

But many of the sweat equity buildings have sufferedserious economic problems. Relatively few buildings arecurrent with their mortgage payments, and some are far

behind. Others have defaulted on their taxes. And allof

the buildings are having a hard time making ends meet.

Many are having to think about raising rents.

"Honest questions have been raised about the abilityof the projects, once rehabilitated, to sustain themselves," says an unpublished study of sweat equitybuildings by Professor Robert Kolodny of the School ofArchitecture and Planning at Columbia University. Asurvey by Kolodny of seven buildings found that not

one was current with its mortgage payments. The bestperformer had met only two-thirds of its payments

during 21 months of operation. The worst had madeonly one payment in a similar period.

Although it is now paying regularly, 519 East 11thStreet, a Lower East Side tenement famous for the firstinner city application of solar collectors and windmillenergy,is 25 months in arrears on its mortgage. Other

buildings, such as 251 East 119th St. in East Harlem,have defaulted on taxes.

"We're feeling the pinch everyone is feeling," saidLuqman Abdush-Shahid, a member of the Mosque of

. Islamic Brotherhood, Inc., sponsor of the sweat equity

rehabilitation of two buildings in Harlem that are up todate with their payments. "Everything has gone up, andbasically our incomes are fixed. We find ourselves tightening a belt that has already been squeezed." Despite

savings from ongoing maintenance by the tenants andcooperative buying, rents will soon have to be increased,

he added.The mushrooming cost combined with the complexity

of the process and the relative inexperience of all of theparties with this kind of program has led to a visibleerosion of support for sweat equity. Chemical Bank, byfar the most active private lending institution for sweatequity buildings, is thinking very seriously aboutdropping out. The U.S. Department of Housing and


Urban Development, whose agreement to provide up to

$4 million in mortgages for the buildings greatly accelerated the rate of sweat equity rehabilitation, is now

talking in much more cautious terms about a modestprogram for the immediate future.

And a spokeswoman for the Department of HousingPreservation and Development said the city's sweatequity program is at a "standstill" because of the

current cost problems ."Most sweat equity has been marginally supported by

the powers that be as an interesting fringe activity,"Laven said. "The reason it got started was because thenumbers worked well and because we were clever at

putting together a wide variety of funding and support.Now, people can start backing away and have otherthan political reasons."

The reasons for the dramatic increase in the sweatequity pricetag fall into three clusters: inflation that has

sent costs soaring while incomes were increasing onlymarginally; problems coordinating separate governmentand private funding pieces; and the inexperience of all

the parties to a complicated, new program.Costs

Four years ago, the cost of materials alone for sweatequity rehabilitation was estimated at $10,000 per unit.That figure has risen to $17,000 per unit today and is

expected to be closer to $20,000 for buildings scheduledfor construction later this year, according to UHAB. Acomposite index of 100 different types of constructionmaterials, compiled by the U.S. Labor Department,

shows an overall price increase of 44 per cent between

1975 and 1979. Lumber rose 70 per cent in price andconcrete was up 43 per cent over the four years.

The cost of borrowing has also shot way up, mainly

because of the ways the federal government uses thehousing sector to curb inflation . Although the longterm mortgages have generally been subsidized at 3 percent or 1 per cent (an exception is the city's MunicipalLoan Program, which has a floating interest rate), theconstruction has been financed at much higher interestrates of between 10 per cent and 17 per cent. Except



where it has applied a cap, Chemical Bank ties construction interest to 1Yz per cent above the prime rate, theamount banks charge their most credit-worthycustomers. A look at what has happened to the primetells the story. In 1976, the prime rate hovered around6% to 7 per cent. In May, 1977, it was still at 6Yz per

cent. By January, 1978, it had risen to 8 per cent.Twelve months later it was at 11 % per cent, and on

November 16, 1979, the prime rate hit 15% per cent, thehighest in U.S. history.

Those buildings with long-term mortgages financedby the old Municipal Loan program, such as 251 East

119th St., have suffered financially as the interest rate

has risen from 4 or 5 per cent to 8Yz per cent.

When you add in the purchase price, architect and

legal fees, the standard contingency fund and othercosts, the total development pricetag, according tocurrent UHAB figures, is about $22,000 per unit, nearly50 per cent higher than was estimated in 1976 and 9 percent about projections of two years ago. For buildings

that go into construction this year, the total development cost is expected to be in the $22,000 to $25,000 perunit range.

Finally, there is the cost of maintaining and operatingbuildings. Here is where the leap in oil prices fromabove 45 cents a gallon in 1977 to 94 cents a gallon todayhas taken such a toll. For example, 519 East 11th Streetestimates consumption of 7,400 gallons ofNo.2 fuel oilper year. In June, 1977, when the cost was 46 cents pergallon, the total fuel bill would have come to $3,404 or

$261 per unit. Seven months ago, when the building'scurrent operating budget was planned, oil was projectedat 76 cents per gallon for a total fuel bill of $5,624 or

$432.60 per unit. At today's price of 94 cents per gallon,annual consumption would cost the building $6,956 oreach apartment $535. Further price hikes that couldincrease the price of oil to one dollar per gallon areanticipated.

The simplest way to measure the impact of costs onsweat equity housing is to look at how rents have risento keep pace. In 1973, when homesteading of multifamily buildings was really getting under way in NewYork City, rents of $23 to $25 per room were envisioned.By 1976, rents were up to $38 per room. The followingyear they rose to between $40 and $42. Today, it costs atleast $50 per room to operate one of these buildings and

payoff a rehab mortgage. That figure is already shakyand is expected to jump to as much as $60 per room forbuildings that go into construction this year.

Incomes, meanwhile, have stagnated in comparison.From 1973 to 1977, rents went up 9.6 per cent per yearnationally while incomes rose only 5.6 per cent, according to a 1979 report by the U.S. Comptroller Generalentitled "Rental Housing: A National Problem That

Needs Immediate Attention." New York City reported

in 1979 that for the first time in recent history, more

than half (57 per cent) of all tenants were paying more

than 25 per cent of their gross incomes for rent.

Interviews with representatives of six homesteading

organizations plus many others familiar with thehousing program revealed a general belief that residentsneed annual incomes of $11,000 to $15,000 to support

sweat equity housing, a sizable cut above the $6,000 to

$8,000 income group for whom the program was origin

ally designed. In contrast, the median income for theLower East Side, according to the 1970 census, was less

than $5,000 per year.

URBAN HOMESTEADING DEVELOPMENT COST,OPERATING COST AND MONTHLY

CARRYING CHARGE·

MaterialsSoft Costs

Contingency AllowanceTotal Mortgage Amount

Development Cost/Unit

Maintenance & Operation

Monthly Carrying Charge

$119,000

22,09814,109

155,207

22,172

9,06OIyear

49.1 01roo m

·Seven-unit building completed in 1979.

Courtesy Urban Homesteading Assistance Board

"I wish it was a low income program," said EulogioCedeno, director of the Renigades Housing Movementin East Harlem, one of the earliest sponsors of sweat

equity projects in New York City. "There should be asubsidy," he went on. "If the city is interested in savingneighborhoods and providing housing for poor people,this is what has to be done." As it is, "We are justholding the fort is what we are doing here," he added.At today's costs, the 3 per cent sweat equity loan

program "i s not for low income people," said HermanHewitt, a housing specialist with the Adopt-a-Building

organization. "It's more for moderate income people,those who are upwardly mobile and want to stay in theneighborhood and live in decent housing."

Other FactorsA great many other factors have contributed to the

escalation of costs. Most played delaying roles. Timingis critical in construction, and delays are very expensive.Since sweat equity is a relatively new program for multifamily buildings, all partners-government, banks andhomesteading organizations-have learned on the job.

All did things to slow the process.

A major delaying force has been the inability of thepartners to coordinate the various elements of the rehabpackage. Chronic processing snafus left sponsoringorganizations with no money to buy materials, idling

17 CITY LIMITS/February 1980



their workers and throwing the construction of f

schedule. In many cases, CETA funds ran out, cuttingof f a crucial source of labor and forcing homesteadersto finish of f the work themselves or hire outsidecontractors. Loan closing delays lasting months werealso common.

Part of the problem can be laid to the inexperience ofcommunity sponsors and the shortage of technical assis

tance. Weak administration, bookkeeping and accounting-critical backups for the rehab effort-hurts. And the

construction work itself was bound to take longer whendone by unskilled or newly trained CETA workers andhomesteaders. Low pay, high turnover and, in somecases, poor work habits, did not help either.At the same time, community organizations were con

fronted with delays in getting vouchers and budgetmodifications approved, leading to chronic cash flowproblems. One group leader said it took two or three

months to get approval for a burner that cost $2,000

more but better met the needs of the building. Anothersaid he could not accept delivery of cabinets because of

a delay in being able to draw down the money to pay forthem. "You take this one time and multiply it out and itreally has hurt us a lot," he said.

The organizations were also saddled with formidable

bureaucratic requirements, especially under CETA,

which was never designed for housing jobs and hasnever worked very well in this program. There are some

today who advocate scrapping CETA altogether.In addition, some contracts did not contain enough

funds to pay the real cost of materials or competitivewages for construction workers. The effect was to

reduce the pool of qualified talent interested in signing

on and, perhaps, the commitment of some individuals

to the projects. To stay within the budget, groups routinely had to scavenge for materials. "Society has to

keep pace with changing conditions," said Imam K.

Ahmad Tawfig, leader of the Mosque of Islamic Brotherhood, Inc. "You can't expect people to build in 1980

at 1970 prices."Moreover, homesteaders moved into many of the

buildings before the end of construction. Failure to

finish of f the jobs deprived them of the sizable property

tax benefits to which they would have been entitled.And in old buildings, there is always the unforseen. In

one, the rehabilitation was set back when a wall caved

in. The staircase in another building collapsed. Demolition of a building next door to a third sweat equity

building inflicted additional structural problems.As a result, many sweat equity buildings took longer

to complete and cost more than was originally projected, and some are in danger of not finishing at allunder the current program.

The two buildings rehabilitate<:f by the Mosque of

Islamic Brotherhood, 55 St. Nicholas Ave. and 132 West113th St., finished six months late at 10 per cent over itsapproximately $300,000 budget. Residents moved in


during the summer of 1978, but because of a few incom

plete items such as storm windows (not in the originalwork specifications, according to the Mosque) and

window gates, the loan was not closed out until January,1979. The organization attributes the $30,000 overrun

to inflation and delays that prolonged the constructionloan on which they were paying 13 per cent interest.

The original timetable for 310 East 4th St., a 16cunit

building on the Lower East Side, called for completionby September, 1979. Today, the building is about two

thirds finished. It will take an extension of the CETAcontract to do the rest. A nearby building, 518 East 11 thSt., was scheduled to be 85 per cent complete by June,1979. Today it is about 30 per cent complete. Hewittsaid Adopt-a-Building is committed to finishing both.

What all of this says to many is that eight to tenmonth construction timetables are unrealistic. Twoyears may be more like it. "No sweat equity group withCETA funds can complete a building at more than eightper cent a month," said Ted Ferguson of ChemicalBank. "Historically, we've found it's more like five or

six per cent."The cost problems, while worrisome, are far from in

surmountable, advocates of sweat equity believe. Thereare alternatives. While most of them involve a largerdirect or indirect commitment of public funds, the sub

sidies are still modest and nowhere close to the amountcalculated for the Section 8 program. 0

Next Month: What Can Be Done?

Consolidation continued

New RegulationsRight now, tenants frequently stay in consolidated

building's without being threatened with eviction. Under

the new regulations, they probably will be given anywhere from 30 to 45 days to move out and might beoffered a cash payment of an additional month's rent asan inducement to move.

Also, if tenants take care of their own movingexpense, they can be reimbursed up to $45 per room, orthis amount will be paid by the city to commercialmovers to cover their moving costs.

Referring to efforts to "tighten up " the program,Mirabal said, "We will put down formally in writing

with the tenants what our responsibilities are and whatthe tenants are responsible for so there is no questions

about whatwe

each must do."In addition, he pointed out that the city will not offerapartments to tenants who have a history with the cityof not paying rent and that his unit is arranging for the

reservation of extra slots of public housing and Section8 allocations, particularly for the handicapped andelderly.To carry out the program, the consolidation unit has

sent letters to community groups throughout the cityasking for their help.

In the letter dated December 31, Mirabal announced



the creation of a special social services unit, noting that

tenants of under-occupied, deteriorated buildings "may

be living in buildings without heat and other essential

services" and are "often reluctant to move for reasonsranging from lack of income to fear of new surround

ings." The letter also called on neighborhood groups to

provide caseworkers to visit tenants with problems, tohelp the elderly "pack and move their belongings", and

to "supply transportation to the elderly or handicapped

to inspect potential new apartments. "Commenting on the communique from the consolida

tion unit, Sandy Abramson of the St. Nicholas Neighborhood Housing and Rehabilitation Corporation,

said, "I can't understand why they're asking the groups

to provide these services. Isn't this supposed to beHPD's job?" 0

STATE NPC GRANTSThe state Division of Housing and Community Re

newal has announced first-year grants of slightly morethan $1 million to 38 community organizations engaged

in various neighborhood preservation activities. Half

the grants are for $25,000, with a high of $50,000 and alow of $15,000.

Liz Searles, new director of the Neighborhood Preservation Companies program, said of the funding, "The

grants are smaller than I would have liked. There weretoo many outstanding proposals and too little money."

DHCR had received120

first-year applications for thisfunding cycle.

A prime reason for the small grants is the recent impounding by the state Division of the Budget of almosthalf the extra $2 million appropriated last year by thelegislature above the Governor's $5 million budget re

quest. With the $5 million intended for second-year

grants to more than 100 organizations already funded,DHCR was left with limited ability to bring new organizations into the NPC program. (None of the $3 .5million in supplemental budget grants to politically-favored groups was impounded.)

DHCR seems to be making progress on second-year

grant decisions, with all but a few first-year grantees

having received letters of commitment. A few contractshave been signed and some groups have receivedsecond-year funds, but most still have to go throughthat process.

Searles reported that the Department of Audit and

Control has agreed to rapid processing of checks (normally four to six weeks) once contracts are signed.

The largest second-year grants are: Institute of Puerto

Rican Urban Studies, Bronx, $75,000; Central Bronx

Local Development Corporation, $80,000; St. Augustine's Center, Buffalo, $81,425; Flatbush DevelopmentCorporation, Brooklyn, $77,750; Community Planning

Assistance Center, Buffalo, $100,000; and BushwickStuyvesant Heights Rehabilitation Center, Brooklyn,$72,500.

The 1980-81 state budget unveiled last month by Gov

ernor Carey requests $6,786,500 for the NPC program,down from last year's appropr iation of $6,925,000. Thelegislature has until March 31 to adopt the budget.

Legislative sources have reported that the prospectsfor increasing the NPC appropriation are dim.

Michael McKee

For four years, City Limits has been giving its subscribers in New York andother cities:

• timely reports and analyses on critical issues affecting low and moderateincome neighborhoods.

• important information about the pioneering steps being taken by tenant,neighborhood and other non·profit groups to revitalize their endangered commun·ities.

A tripling of our readership in one year is testimony to the growing interest inthe grass roots movement to save housing and preserve neighborhoods. Beyondhousing, City Limits brings you the latest news on community development, banklending, alternative energy and many other related issues.

Published 10 times a year, City Limits is perhaps the most important pipelinebetween the inner sanctums of government policy makers and the neighborhoodswhere programs are implemented.

Because City Limits covers both theory and practice it is an invaluable aid toboth planners and community organizers, government officials and neighborhoodleaders. City Limits exposes the problems that stop programs from working andhighlights the successes that can be used as models for other efforts.

To give you that coverage, City Limits brings you reports by its own staff andexperts in the field, as well as interviews with top officials.

City Limits is only $6 a year for individuals and $20 for organizations. To sub·scribe, just fill out the form.

19 CITY LIMITS/February 1980



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IN THIS ISSUE

Sweat Equity, Part I, p. 2Bedford Stuyvesant Supermarket, p. 4Sales, p. 8

137 Guernsey Street, p. 10Consolidation, p. 12

West Side Housing Battle, p. 14

Second-class postage paid New York, N .Y. 10001

city limits magazine, february 1980 issue

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