CITY LIMITS

COMMUNITY HOUSING NEWS

MAY 1979 VOL. 4 NO.4
MARRIAGE, SECTION 8 STYLE
BEWARE: HPD MAY WANT
TO UDAAP YOUR BLOCK
by Bernard Cohen and Susan Baldwin
New York City has asked the state Legislature for new authority to
negotiate sales of tax-foreclosed properties to private owners and to offer
the buyers a tax exemption as an added incentive for development.
The proposed legislation, which opponents say is too loosely written and
has the potential to displace low income tenants, is one part of a coordi-
nated effort by the city to limit its rapidly growing role as landlord by
returning as many properties as possible to private hands. It dovetails with a
new law that permits higher rents in city-owned buildings sold to private
owners.
With some 37,000 occupied
apartments currently under
city ownership and projections
of 83,000 by 1981, the Koch
administration has taken the
firm stand that the city cannot
afford to be the long-term
landlord for all these buildings.
Negotiated sales, resump-
tion of auctions and private
management leading to pur-
chases are three of the ways in
which the city intends to dis-
pose of properties to for-profit
real estate firms and individ-
uals.
The legislation would em-
power the city to designate Police evict tenants moments be/ore scuffle.
"urban development action areas" within which the city could negotiate the
sale of its property for specific projects. The land-use designation would be
subject to community board approval under ULURP (Urban Land Use
Review Procedure) and the sale would require approval by the Board of
Estimate. A tax exemption of up to 20 years for new construction or
rehabilitation costing at least 100 per cent of the assessed value of the
structure would be authorized. However, the city could not sell to anyone
who had lost property through tax default in the previous two years.
continued on page 2
by Howard B. Burchman
The Section 8 Substantial Rehab-
ilitation Program has hardly a
romantic ring to it, but it is pro-
viding the dowry for a growing
number of interesting marriages of
convenience.
This component of the Section 8
program stimulates private industry
to restore housing for occupancy by
low and moderate income families.
Significant incentives are provided
in the form of tax shelters and guar-
anteed rents in excess of $500 for a
one-bedroom apartment.
The New York Area Office of
HUD is receiving national attention
for its attempts to reduce the costs
of Section 8 development. It has set
a $42,000 per unit ceiling on total
development costs for rehabilita-
tion. Multiplying this amount times
the 6,700 units available to the city'
means that $280,475,000 will shortly
make its way to New York neighbor-
hoods.
This is likely to be the peak of
Section 8 rehab in this city. Section
8 national funding levels have been
steadily decreasing. And one of the
most popular features to private
developers is under threat. Tax syn-
dication proceeds under Section 167
(k) of the Internal Revenue Code
run frequently as high as 30 per cent
of the total project mortgage. Leg-
islative provisions allowing for these
deductions are due to expire in 1982,
and sentiment is growing in many
Washington circles to rule them out.
In the past, the role of community
continued on page J J
Sales Policy continued
Negotiated sales would include occupied buildings,
vacant buildings to be rehabilitated and vacant land for
new construction. In some cases the city plans to adver-
tise specific property to be sold according to a devel-
opment plan. More often, the city will respond to
inquiries from private interests. "There are not going to
be that many projects, by projects I mean big planning
type things, at least initially, until we get used to it,"
said Deputy Housing Commissioner Marvin Markus. "I
think the bulk of them are going to be individually
negotiated. Our feeling is that this land is marginal and
if anybody's willing to do anything we ought. to take a
shot at it."
The bill says little about criteria for designating urban
development action areas and projects, other than that
the property must be city-owned and in blighted sur-
roundings. Action areas can be as large as many square
blocks or as small as one or two buildings. The property
must be appraised within six months prior to sale, but
the role of the appraisal in setting the price is undefined.
The two issues of greatest concern to tenant and
community organization advocates are the lack of
explicit controls over the negotiating process (the
normal rules of competition and best offer don't apply)
and the potential impact on low-income tenants of city-
owned buildings that are sold. This bill creates a rela-
tively simple disposition tool. A companion law, Intro
594A, permits rents to be raised freely by the city and to
remain at the higher level when the building is sold.
How high will rents go? Will the buildings be fixed?
Will the city use its consolidation power to empty a
building it wants to sell? Should there be guaranteed
subsidies such as exist for other programs? Will there be
widespread displacement of tenants unable to afford the
higher rents?
Markus acknowledged that "we are very loose with
this thing," but insisted that to tie the bill down with
guarantees and restrictions would make it impossible to
have a workable sales program.
Asked about fears that in negotiating with private
interests, HPD will gauge the rents at whatever level
potential buyers say they need, Markus said, "It's a
scenario you can draw, a scenario opponents of 594
drew, but it's not a scenario that Nat Leventhal or
Marvin Markus chooses to draw. It comes back to the
two words I uttered before, which is 'trust us.'''
Markus said he doubted that the two laws will cause a
displacement problem. "We are concerned with viable
communities with people living there. And if people are
living some place we're not going to go out of our way
to get rid of them."
He said the interim lease and community manage-
ment programs give tenants a first option to retain
control of their buildings and noted that HPD is trying
to simplify and reduce the cost of creating low income
2
cooperatives. Moreover, HPD intends for now to
restrict the sale of occupied buildings to private owners
who have shown competence while managing property
under a new city program.
"If tenants want to manage and can manage the
buildings, we do it. But to say to us on the other end
that we may not raise the rents somewhat to induce
private enterprise after the tenants have not expressed
an interest and an owner has come in and says, 'I want
to do it,' to tell us to keep the building and own the
building .. . The mayor has made that point quite clear,
which is we're not interested in being long-term
owners. "
Assistant Commissioner Manuel Mirabal said con-
solidation (the movement of tenants into what are
considered better buildings) will not be a tool to clear
tenants out of buildings the city wants to sell. "That is
not our problem, that's a development problem,"
Mirabal said, adding that the criteria for consolidation
are rate of occupancy of a building, amount of repairs
necessary, and condition of the adjacent housing.
Asked why UDAAP was necessary when the city
already has authority to sell property under the urban
renewal laws, Markus said, "We could have designated
it urban renewal, The statutes are basically identical.
But urban renewal has years of tradition attached to it
and we felt a more upbeat phrase would be useful." In
addition, with UDAAP, "you don't need an elaborate
plan. You can just designate an area."
The companion decontrol bill passed the City Council
24 to 16 on April 10, but only after about 100 organizers
and tenants chanted "594, We Won't Pay the Rent No
More" and other slogans, holding up the Council
debate for about 30 minutes until police cleared the
chambers. One tenant activist, Tom Gogan, was arres-
ted following a scuffle in which he said he was knocked
down. Other tenants said they were treated roughly by
the police as well.
The de-control law, which Mayor Koch has signed,
will result in much higher rents for tenants in city-owned
buildings that are re-sold to private owners. During the
debate, Councilman Leon Katz (D-Brooklyn), said,
"The reason why these people chant 'No repairs, no
rent,' is because there is nothing in this bill to compel
the city to make repairs ."
Calling for a no vote on 594A, he said rent increases
on city-owned properties may be 100 to 150 per cent
more, or an apartment could go from $80 to $200 . ..
these rent increases are substantial, they go under stabil-
ization and require no repairs by the owner. "
Asked about Katz's comment, Markus said the city
had no guidelines yet on what the rent increases will
amount to.
A Katz amendment that called for putting back 22 \12
per cent of the assessed value of a building within two
years after purchase before an owner could raise rents
was defeated.
Another opponent of 594A, Councilwoman Ruth
Messinger (D-Manhattan), criticized HPD for failing to
provide data regarding the number of tenants in city-
owned buildings who are protected by subsidies and
said, "We have been asked to make changes outside of
existing protections for tenants with no clear benefit to
the housing and substantial risk to tenants."
She offered an amendment, also defeated, that would
have required buildings to be brought up to housing
maintenance code before sale.
Deputy Commissioner Charles Raymond admitted
having problems with the bill, "but hopefully we can
deal with it responsibly . .. I am very concerned about
whether people will be able to pay the new rents ... I
think we must look into a new use of Section 8
subsidy. "
He said the intent of the bill was "not to knock
people out of buildings." Rather, it was meant to
support the city's alternative management programs.
Meanwhile, Robert Sugerman, a tenant lawyer,
predicted that 594A would be used as a vehicle to justify
widespread eviction of tenants in city-owned buildings.
"I see this as a way to clear buildings of the dead
weight and make them more attractive to the prospec-
tive buyer," he said, adding that many tenants in these
buildings may not be paying rent because they are
receiving no services.
"Once they get the old tenants out," he asserted,
"then they can restructure the rents upward. Then
maybe they will make repairs. But then there may no
longer be low and moderate income tenants in the
building." 0
MARKUS. MOORE LEAVE
POSITIONS AT HPD
Deputy Commissioner Marvin Markus, an HPD
veteran, has submitted his resignation, and Sandra
Moore, a newcomer to the agency, is expected to be
replaced soon.
Appointed to the post of deputy commissioner of
policy and government liaison last May, Markus has
served previously as assistant commissioner of govern-
ment liaison and was HPD's main lobbyist in Albany.
After five-and-a-half years of service at HPD, Markus
will join the Wall Street firm of Bear, Stearns & Co., as
a municipal bonds underwriter.
Moore, an architect who joined the agency in Sep-
tember as director of the community management
program, will leave that post in the near future.
According to HPD insiders, "Sandy is very good but
not cast in the role" of director in the community man-
agement program. They say that the agency is looking
for someone who can "deal with the community groups
and is a tough administrator."
Moore came to HPD from Boston. 0
3
To the Editor:
I read with interest the article on the
federal Urban Development Action
Grant program in the March, 1979,
issue of City Limits.
I would like to clarify a few points
made in the article. First, it is not the
City Council President's Office which
processes UDAG applications, as the article implies.
The Council President's Office is pleased to provide
general UDAG program information to potential
project sponsors, but typically we refer sponsors with
specific projects to the City's Office of Economic
Development, which has the capacity to provide detaailed
technical assistance.
In addition, as Chair of the City's UDAG Subcom-
mittee, the Council president plays a role in establishing
liaison with HUD on general UDAG policy and program
issues and in "reaching out" to potential UDAG project
sponsors in the City. As part of this function, I last
week co-sponsored a day-long series of forums bringing
HUD officials together with City financial institutions,
real estate developers, neighborhood groups, locally
elected officials and others in an effort to disseminate
information about UDAG and to generate further
interest in developing UDAG projects.
I also noted with interest Mr. Ronald Shiffman's
reported observation that the City tends to focus on
"big, polished" projects. Actually, HUD's observation
regarding size is somewhat the reverse. HUD officials
advise that very few cities have won more numerous
UDAG approvals than New York (Le. five). However,
many cities have won more total UDAG dollars-even
with fewer projects-because New York's approved
projects to date tend to be relatively small .
Carol Bellamy
April 18, 1979 President, City Council
_CITY 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
Application to mail at second-class postage rates is pending at New
York, New York 10001.
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 New York Community Trust.
SAVINGS BANK DENIF:I) BRANCH
In the first major test of new federal anti-redlining
legislation, an application by the Greater New York
Savings Bank to open a new branch, which was chal-
lenged by a Brooklyn community organization, has
been turned down in Washington.
On April 23, the Federal Deposit Insurance Corp.
refused GNYSB's request to open a branch in Man-
hattan, stating the bank had failed to provide an ade-
quate number of mortgage loans in the Brooklyn neigh-
borhoods it is supposed to be serving.
The FDIC's ruling had been eagerly awaited by both
anti-redlining organizations and the banking industry
for the first clue as to how sharp the teeth of the new
law, called the Community Reinvestment Act, would
be.
"It is a vindication of what we have been saying
about this bank for years," said Herbert Steiner, chair-
man of AID (South Brooklyn Against Investment Dis-
crimination), the Park Slope community organization
that filed the challenge. "It is a big victory not only for
us, a small neighborhood group that fought and beat a
huge financial institution, but also for any kind of con-
sumer organization. It shows what an organized and
aroused neighborhood can do." AID has been trying
more than two years to get the bank to give more loans.
When CRA was passed by Congress in 1977, it was
hailed as a "landmark," a major tool for increasing the
availability of mortgages and other types of loans in
older neighborhoods that have suffered over the years
from a drastic shortage of needed credit, the condition
known as redlining. Until the FDIC decision, however,
the value of the new law remained only theoretical.
CRA requires the four federal agencies that regulate
banking to take into account a lending institution's
record in meeting the credit needs of its community,
including low and moderate income neighborhoods,
before granting charters and deposit insurance or
approving new branches, mergers or acquisitions.
The premise of the law is that financial institutions
have an affirmative obligation to the community in
which they are chartered. It states that regulators can
"encourage" banks to improve their loan policies but is
carefully vague about defining credit needs and
adequacy of lending.
GNYSB, whose main office is in Park Slope, is the
state's 14th largest savings bank, with $1.7 billion in
assets and $1.5 million in deposits. It has 16 branches,
nine of them in Brooklyn.
In challenging GNYSB's application to open a branch
on Manhattan's affluent East Side, AID charged that
only 6.5 per cent of the bank's real estate loans were
made in Brooklyn, although 80 per cent of its deposits
came from Brooklyn.
Steiner said the vast majority of the bank's $1.1
billion real estate portfolio is made up of federally
insured mortgages for mostly out-of-state properties.
4
He said conventional mortgages accounted for $64
million and that the bank originated only 96 mortgages
worth $3,2 million in 1976 and 155 mortgages worth $4
million in 1977.
Although the FDIC ruling did not supply very many
figureS' to use as guideposts for the future measures of
what constitutes an adequate lending record, anti-red-
l i ~ i n g analysts saw several positive signs.
The FDIC ruling did note that GNYSB had come
close to its goal of $25 million for new mortgages in
New York City for 1978. The implication is that the goal
was too low.
The FDIC could have found fault with GNYSB's
lending record, but still given the bank "conditional
approval" to open the branch. Instead, it rejected the
application.
The decision may spur banks to voluntarily alter
their lending habits and increase the flow of credit to
neighborhoods. It will most certainly provide encourage-
ment to community organizations that are trying to
monitor their local banks.
"This decision was what was needed," said Allen
Fishbein, an attorney with the Neighborhood Revitaliza-
tion Project of the Center for Community Change in
Washington. "It takes a lot of resources, time and
energy to challenge a bank, and people have to feel there
is a chance of a payoff at the end." AID's challenge,
filed more than a year ago, was an 80-page brief that
required "a vast amount of research," according to
Steiner.
Jerome Maron, president of GNYSB, declined to
comment on the FDIC ruling. Although the bank is
state-chartered, its deposits are federally insured, which
is why the FDIC had regulatory jurisdiction. The other
three agencies with similar authority for other banks are
the Federal Home Loan Bank Board, the Federal Reserve
Board, and the Comptroller of the Currency.
The savings and loan industry is mounting a
campaign to weaken the ability of community groups to
monitor the lending records of banks. The Home Mort-
gage Disclosure Act, which requires banks to provide
detailed data on the volume and locations of their loans,
expires in June, 1980.
The U.S. League of Savings and Loan Associations,
has included in its 1979 legislation program the goal of
convincing Congress to let the law expire. It also seeks a
review of CRA, which does not carry an expiration
date, in 1981.
According to Fishbein, there are at least 11 CRA chal-
lenges pending among the four regulatory agencies,
seven of them in New York City.
AID is one of a number of community groups that
have joined in an active Coalition Against Redlining in
New York City. For additional information about
CAR, call Roger Hayes, 533-5650. 0
.
,
BUDGET SETS $167 MILLION FOR HPD
by Bernard Cohen
The proposed budget for the fifth year of the Com-
munity Development program targets $167 million for
HPD, a funding level that shows general confidence in
the alternative management programs but puts a large
dent in what the agency requested to repair In Rem
buildings.
New York City will be receiving $241 million in CD
V, which begins September 1. HPD, which relies on the
federal funds for nearly its entire operations, requested
$212 million or 88 per cent of the total budget.
The total allocation for In Rem housing is $78.7 mil-
lion, an actual increase of $21 million and considerably
shy of the $100 million that HPD officials have long
maintined they needed.
"It's a surprisingly small increase after all the talk by
Wagner and Koch about the $100 million," said Brian
Sullivan of the Pratt Center for Community and
Environmental Development. He said the officials have
used the urgency of the In Rem problem as a "shield"
against other legitimate CD proposals.
The CD budget, which was released by Mayor Koch
on April 26, must still be passed by the City Council and
the Board of Estimate before being submitted to HUD
for final approval.
The most discordant note in the HPD budget is the
amount allocated for repairs of city-owned buildings.
The agency requested $38.5 million and received $13.6
million. Despite the appearance of a sizable discrepancy,
HPD officials asserted there would be no loss of basic
maintenance. "It means we will not be able to do the
extra work we had hoped to do," spokeswoman Martha
Gershun said. The budget change means a cut from
$1,700 in repairs per unit to about $1,000 per unit.
Deputy Commissioner Charles Raymond said the
$38.5 million request was based more on educated guess-
work than on a "scientific" projection, that the number
of new foreclosures in Brooklyn will probably be about
half the volume of earlier estimates, that there is addi-
tional money for repairs in the beefed-up consolidation
program and that, if worse came to worse, money could
probably be shifted from other programs.
Despite his optimism that HPD's ability to provide
heat, hot water and other basic services in its buildings
will not be impaired, Raymond admitted, "I'm not
terribly pleased" about the overall amount budgeted for
In Rem housing. "It doesn't sound like enough to me."
Two other trouble spots could be the Tenant Interim
Lease program, for which $2.5 million was asked and $1
million allocated, and the 7-A seed money program, cut
from $1 million to $500,000. "I am unhappy with those
figures," Asst. Commissioner Philip St. Georges said.
"It was probably inevitable because interim lease is
supposed to be a low-cost, no-cost program. But we are
5
going to need money to make system repairs."
The proposed amounts budgeted for the major HPD
functions were: rehabilitation, $26.5 million (amount
requested); neighborhood preservation program, $2.4
million (amount requested); code enforcement, $22 mil-
lion, ($17.5 million requested); community improve-
ments, $6.9 million ($8.5 million requested); unsafe
building program, $19.1 million (amount requested); in
rem property management, $52 million ($78.8 million
requested); in rem alternative management, $26.7 mil-
lion, ($33.9 million requested); administration. $11.5
million (amount requested); Open Housing Center,
$230,000, (amount requested) .
All of the rehabilitation programs received the
amounts requested. Handyman contracts were cut from
$11.2 million requested to $8.7 million, while superin-
tendent contracts rose slightly from $6.4 million to $6.7
million.
Although most of the alternative management pro-
grams were trimmed, St. Georges said several of the new
ones were just getting started on CD III and IV funds.
Coming on the heels of the budget was a report pre-
pared by the Office of Management and Budget on
HPD's and other city agencies' CD spending record
through Feb. 28, 1979. Although City Limits obtained
the document too late to analyze it very closely before
going to press, officials said HPD had vastly improved
its ability to obligate and spend the money. An interim
analysis last December showed that of $248 million
received by HPD since the program began in 1975, only
$149 million had been obligated and only $102 million
actually spent.
The OMB report did pick out some obvious blemishes
in HPD's CD IV spending up to February (the CD year
ends in August.) Of the $41.1 million set aside for
management and repair of In Rem properties for the
year, only $8.4 million had been actually spent. HPD
officials attributed the low figure to two factors: the
city's sluggish machinery for paying its bills and an
unaccountable time lag of up to three or four months in
receiving invoices from customers.
Of the $15.1 million budgeted for seal-up and demo-
lition of unsafe buildings, only $1.3 million had been
spent, although $10.9 million had been obligated. The
report listed figures for the number of seal-up and
demolition contracts that had been bid and registered,
but the lines showing work "completed" were blank.
The report criticized the slow admittance of buildings
into the community management program and the slow
start of the rehabilitation component, said the volume
of work orders to repair city-owned buildings was
threatening to overload the system and cited a lO-month
processing time for Article 8A loans. 0
-----------
QUEENS 'GOLD COAST GLITTER FADES
by Susan Baldwin
Years ago it was known as the black Gold Coast. It
was stable. Some families had lived in their neatly
manicured homes for 30 or 40 years. It epitomized the
American Dream-everyone should work hard to own a
home that would be a refuge in retirement.
Today the small communities-South Jamaica,
Hollis, St. Albans, and Baisley Park-that constitute
this portion of southeast Queens are facing the prob-
lems of abandonment and decay that have already been
fought and lost in old stable communities in the Bronx,
Brooklyn, and Manhattan.
"When I came out here in 1942, this was a beautiful
neighborhood," said Rev. Samuel J. Lloyd, the head of
the Urban Renewal Committee of South Jamaica. "It
was about 60 per cent white then, and 40 per cent black.
But now as the neighborhood has changed-there are
only a handful of whites now-so has the delivery of
services-namely, we get almost no services. Our streets
are in terrible disrepair, we have trouble getting the
garbage picked up, and the streets are constantly
flooded because of the lack of sewers, not to mention
the poor public transportation."
But, Rev. Lloyd and other community leaders are
worried about their neighborhood for reasons other
than poor delivery of services and inadequate trans-
portation. They are concerned that the ever increasing
number of vacant, boarded-up homes which owners lost
through mortgage foreclosures will soar to the point
that southeast Queens may become another Brownsville
or South Bronx.
"It just breaks my heart to go block to block and see
all these vacant homes cropping up," said Adrienne
Rogers, head of the Queens Operation Open City
program.
"I know that most of these homes were FHA mort-
gages, and yet each month when I check to see if they're
on the list [FHA], I'm lucky to see two," she continued.
"Why are these homes in limbo, why did people lose
them in the first place .. . and then why do they show up
sometime later with a sold sign on the door? .. Very
few of those houses were put back on the market for
sale so that the community could have a chance to
purchase them."
Under the FHA program, a homeowner signs a fully
insured mortgage agreement for 30 years at ten per cent
interest. Arrangements can be made, however, to reduce
the length of the mortgage payment period.
Citywide, HUD sells 100 to 150 FHA-toreclosed
homes each month. According to available statistics
provided by both community groups and HUD, about
100 FHA properties in southeast Queens are now being
taken each month in foreclosure proceedings. There is
growing concern that this rate is mounting to the level
6
that resulted in a major FHA scandal during the early
1970's.
At the height of the scandal, homes were being
appraised at over inflated values and serious structural
violations were corrected by cosmetic repairs. Frequent-
ly, brokers would sell to dummy corporations that
would walk away from the property or to unwitting
buyers ignorant of the real cost of home ownership. In
either case, the seller cashed in on the insurance and
HUD was stuck with the mortgages.
According to a HUD official, a 1973 investigation by
the U.S. Attorney's Office in New York led to the
imprisonment of the regional director of FHA; a vice
president at Dun and Bradstreet, his firm held respon-
sible for making inaccurate credit reports on the defec-
tive homes; and several brokers.
At that time, the accumulated number of mortgage
foreclosures that were listed was about 3,000 citywide,
according to HUD figures. Today, the listed number is
2,000, primarily in Brooklyn and Queens.
No one has any easy answers to this problem in
southeast Queens that threatens to blight a stable neigh-
borhood that offers the promise of home ownership at
prices that low and moderate income families can
afford.
Inflation, unemployment, marital problems, old age
and fixed income have all been blamed for the high
vacancy rate.
Another cause prevalent in southeast Queens is that
home buyers do not start out with the income necessary
to meet their mortgage payments and maintain their
property, and even in some cases, to meet the down
payment without borrowing it.
"I think the problem began a long time ago and is still
going on," Rogers asserted. "Several years ago when
droves of people were coming out to look around,
brokers would stand by the Hillside Avenue subway exit
and tell these people, 'Come into my offic-e. I have a real
good deal for you.' It was like they were selling
cabbages.' ,
According to Rogers and Lois Phillips, director of the
Baisley Park Neighborhood Community Council,
people who do not have enough capital to purchase a
home have been told that they can buy a $30,000 to
$45,000 home for as little as $200 or $300 down.
"When these people are encouraged to buy a $35,000
or $40,000 house, they find out that the monthly
mortgage of about $400 is too high, and it is too high
for them," Phillips said. "They also don't anticipate
paying $300 out of their own pocket every two months
for fuel and high rates to Con Ed . . . and then there are
the home improvement scoundrels. Pretty soon this
adds up to a second mortgage. "
HUD officials acknowledge that a serious home owner
crisis exists in southeast Queens and have committed
themselves to helping in its solution.
Shirley Bradley, coordinator of HUD's counseling
agencies program in the New York area office, has
developed a special training program for neighborhood
representatives to learn about various aspects of
housing with an eye to counseling prospective buyers
before they are reached by brokers.
This year eight New York City neighborhood groups
will receive small grants to run this program. An
average grant is $18,693. The maximum to any group is
$50.QOO.
Boarded-up home offers threat to neighbors.
"The neighborhood counselors will learn to show
families on limited incomes whether they can afford to
take on home ownership," Bradley said, "and maybe
even suggest to these first-time owners that they may
want to live in the house for awhile before they buy it."
At the present time, HUD does have anti-foreclosure
provisions for home owners who have financial prob-
lems and are behind in their payments. They can pay
less each month for a longer time (forbearance agree-
ment) or, if they are hopelessly behind, they can turn the
property title back to HUD (deed in lieu of foreclosure),
leaving them the option to rent. Under this arrangement
the former owner, now renter, also has first priority to
buy the house back from HUD if the house is put on the
sales market and his financial picture has improved
enough to meet HUD FHA requirements.
HUD's counseling program has not in its first 18
months reached enough people to claim much success.
"So many times when I finally see a client for
counseling," said Rogers, "I have to wonder why FHA
approved the mortgage in the first place. These people
coming to me just didn't fall into hard times overnight.
They never had the money and were tricked into the deal
by the broker who told them you don't need any money
to buy a house."
One case in point is a young couple who came to
Rogers's office who had not made any mortgage
7
payments in 18 months. They owe HUD $5,292.
Bradley pointed to another case in which the client
asked for a hearing to discuss his present indebtedness,
hoping that HUD would set up a hardship payment
arrangement for him. His "hardship," she explained,
comes from the fact that he has used the $3,000 owed
HUD to buy a 6O-unit apartment house with two other
would-be landlords.
A recent visitor to the area spoke with several real
estate brokers about the prospect of purchasing a home
and was told that a $1,900 down payment was all that
was needed to buy a $48,000 house and that an addi-
tional $3,300 would cover the closing fees.
"Nobody can buy a house like that for $5,000 and
keep it, and they know it," Rogers charged. "This is
why home prices are getting so inflated here, why people
lose their homes, and why someone out there gets fat.
Why is HUD always so good to the mortgage companies
and the real estate brokers who are living off our
backs?"
Stories like these leave many observers dubious about
the possibility for success in changing the tide of aban-
donment in southeast Queens.
But another view was expressed by a real estate sales-
man who has had a great deal of experience in selling
FHA-foreclosed homes.
"I don't think it's right to deny people the right to
own a home just because they don't have the down
payment," salesman John Oliphant argued. "I have
seen the opposite side of abandonment. If these people
are motivated to make money, they will work hard so
that when they are ready to sell, 1 will sit down with
them as the broker, and they will sit down as the seller
and will get $10,000, $15,000, $20,000 in equity. Does
HUD or anyone else want to deny those people that
equity?
And Rev. Lloyd remembers the late 1960's and early
1970's when droves of people fled from burned-out
Brownsville and the South Bronx seeking refuge and a
new life in southeast Queens.
"Brownsville is a ghost town now. You have to
wonder if that is a prediction of the future here," he
concluded. "I certainly hope not. We want to save our
homes anyway we can." D
HA MANAGEMENT
PLAN POSTPONED
The Board of Estimate April 26 postponed action on
a two-year pilot project for the Housing Authority to
manage 13 city-owned properties on Manhattan's
Upper West Side. The board questioned the cost.
Un,der the program, the authority would manage and
rehabilitate 268 units of partially occupied In Rem
housing on West 134th and 135th Streets and along
Amsterdam Avenue near its own public housing-Man-
hattanville Houses.
Photographs by John Selden
8
9
John Selden bought his first cam-
era in 1975 after wishing for years
that he had a way to document the
rugged changes that turned Kelly
Street and many other South Bronx
neighborhoods he knew Into survival
zones.
Selden. a 25-year-old medicaltech-
nician. spends his spare time wander-
Ing around familiar blocks. using his
camera to catch the sorrow of broken-
down. wasted buildings. the endur-
ance of the old people who have hung
on and the energy of the children.
who. like Selden. are growing up
there.
His photographs. six of which are
shown here. are a record Selden uses
to keep certain memories alive. a way
to contrast the future to the past.
How will the place look In 10 years?
"It's hard to say. There are too many
hungry people In the South Bronx.
The whole thing was planned to go."
After dropping out of DeWitt Clln-
ton High School ("nothing was hap-
pening in school"), Selden returned
to finish up at the Bronx Satellite
Academy. a non-traditional setting.
He works at the Bronx Dialysis Cen-
ter with patients who have serious
kidney problems and is also taking a
course to get a federal broadcast
license.
Selden Is married and lives In Co-
opClty.
TENANTS SUE TO BLOCK RENT HIKES
by Michael McKee
Fifteen tenant organizations have sued the New York
City Rent Guidelines Board to overturn higher rent
increase guidelines, plus a separate fuel "surcharge" for
approximately 300,000 tenants.
The higher guidelines-4.5, 6.5 and 8.5 percent for
one, two and three-year lease renewals-were adopted
at a public meeting April 4 when the RGB amended its
Guidelines Order No. 10, originally promulgated last
June but subsequently overturned by court order on the
basis of violations by the RGB of the state's Open
Meetings Law. The original order provided for guide-
lines of 3.5, 5.5 and 7.5 percent. The new Order No.
lO-a affects leases which were or will be renewed
between July 1, 1978 and June 30, 1979; the tenant may
choose the term of the lease and the landlord is allowed
to increase the rent accordingly.
The RGB met again on April 10 and adopted Order
lO-b, or "add-on," for increased fuel costs which have
occurred since November, 1978. This surcharge, retro-
active to March 1, 1979, has the effect of allowing total
rent increases of 7, 8.5 and 9 per cent for one, two and
three-year leases signed in 1978-79. The surcharge does
not affect the base rent, but rather expires with the
lease.
For leases signed prior to these orders, landlords may
legally collect the higher guideline and surcharge only if
the lease contains a rider allowing a rent adjustment.
For reasons which have yet to be disclosed fully, the
March 14 meeting was postponed twice, first to March
21, and then to April 4. On March 28, Mayor Edward
Koch announced that he was replacing two long-term
public members because their Nassau County residence
made them ineligible to serve on the RGB. The two new
members, Scott Mollen and Carolyn Odell, both voted
for the higher guidelines as well as for the fuel add-on.
Close to 200 tenants attended the April 4 meeting,
held at the Police Plaza auditorium in lower Manhattan.
The proceedings were confused and hard to follow,
made more difficult by frequent boos and catcalls from
the audience. Prior to the meeting RSA chairman
Sheldon Katz was overheard telling his colleagues, "The
more confused we can keep them today, the better it will
be for us." RSA counsel Arthur Richenthal and
William Rowen, Southern Region chairperson of the
New York State Tenant and Neighborhood Coalition,
summarized the viewpoints of their respective camps.
The deliberations which followed were dominated by
owner members Ralph Morhard and William Brennen,
and "tenant" member Sid Davidoff, a Lindsay
administration functionary appointed in 1977 by Mayor
Abraham Beame. There was no discussion of the anal-
ytical studies submitted by both sides. Horse-trading
10
quickly became the order of the day.
Morhard proposed increases of 5, 7.5 and 11 percent;
Brennen seconded; this motion failed 7-2, with only the
owners in favor.
Davidoff then proposed 4.5,6.5 and 8.5. His motion
was promptly seconded by Morhard. Asked by Odell to
explain his rationale for the one percent increase over
Order 10, Davidoff replied: "I thought two percent was
too much. I think the present is too little, and therefore
the in-between is one. "
RGB chairperson Frances Levenson asked for a vote.
Five hands, the minimum necessary to carry a motion,
shot up: Davidoff, Morhard, Brennen, Mollen and
Odell. Levenson, public members Gladys Jones and
Msgr. Harry Byrne, and tenant member Barbara
Chocky voted no. It was all over within seconds. And it
all sounded rehearsed. In the audience, Richenthal
remarked to Katz: At least it pays our expenses."
The fuel surcharge was adopted the following week at
an even more chaotic meeting. The vote was 6 to 2
(Chocky and Morhard) with one abstention (Jones).
In effect, the owners got the 7 percent they demanded
for one-year leases when Richenthal berated the RGB
on March 7. The only cost factor which was discussed
on both April 4 and April 10 was fuel; the board voted
twice to compensate owners for this one expense item,
ignoring other, larger components (such as real estate
taxes) of operating and maintenance costs which
remained stable or even decreased.
Rowen, who had overseen the preparation of the
tenant analyses to the RGB, declared his belief that the
board had disregarded the data before it: "There has
been no demonstration of the need for an increase. They
might as well pull two figures out of a hat and let Sid
Davidoff split the difference. "
A preliminary hearing on the tenants' lawsuit to
invalidate Orders lO-a and 10-b was held April 30. A
request for a stay of these orders was denied, and the
case was adjourned until May 14. The RSA asked to be
allowed to intervene, a move which was opposed by the
tenants.
On April 23 the RGB met again to consider a fuel
surcharge for Order No.8, which affects leases signed
between July, 1976 and June,1977. This time, the vote
was 6-2 against a surcharge. On April 27 the board met
to adopt guidelines of 6.5 percent, effective May 1, for
24,500 stabilized apartments in residential hotels and
rooming houses. At this meeting the members voted to
reopen Order No.9, governing leases signed between
July, 1977 and June, 1978, for a possible fuel surcharge
and set June 12 as the date for a vote. 0
Section 8 continued
housing organizations in Section 8 rehabilitation and
prior federally assisted housing programs has been
negligible. Private developers backed by investors built
the housing and reaped the financial rewards. More and
more, community involvement and cooperation have
come to be seen as necessary to the success of a Section 8
project. Several neighborhood organizations have used
this leverage to negotiate partnership arrangements with
developers, winning significant benefits for themselves,
local residents and the general community.
Developers have two things in mind when they agree
to such a partnership. They want an ally to spare them
from the ordeal of community opposition that could
block their Section 8 project and waste the sums
required to put together a package and obtain site con-
trol. Secondly, developers recognize the need for
community assistance in managing the housing.
It seems unlikely that any Section 8 project will be
produced in the city without the involvement at some
level of a community housing organization. Groups
must bear in mind though that what they get as joint
sponsors will come at the expense of the developer, and
developers are not predisposed to generosity.
The way Section 8 is structured, the vast bulk of
profits to the private developer comes in the first five
years of the project. Far sighted developers will take
steps at the time of development to build up the capa-
bility of a community organization to take over projects
eventually.
Community groups do not necessarily have to go into
partnership with developers. At least one New York
community housing organization has been able to go it
alone. Groups should be warned, however, that HUD is
very cautious in its choice of developers and gives strong
preference to those with previous federal housing devel-
opment experience.
Community groups can be involved in Section 8 rehab
in four separate areas: site selection, design and tenant
selection; proceeds from the tax shelter syndication;
project management responsibilities; and jobs and sub-
contracts to the community.
Site Selection, Design and Tenant Selection. Com-
munity groups probably have a good sense of where
they would like to see Section 8 developed and the kinds
of units that are needed in their neighborhood. They
should condition their agreement to work with a devel-
oper on their ability to influence these matters. Fre-
quently, developers will be actively looking to commu-
nity group involvement in tenant selection. Funding
should come out of the project mortgage.
Tax Shelter Syndication Proceeds. Most agreements
between developers and community groups provide the
community with some share of the tax shelter proceeds.
These are the juiciest bit of a Section 8 project, and com-
munity groups should expect hard negotiations to get
11
what they want.
Syndication is very complicated. In essence it involves
the sale of the ownership interest in the project to high
tax bracket individuals who are thereby able to claim the
tax deductions associated with the project's deprecia-
tion, taxes and interest. Section 167(k) allows most of
the value of the rehabilitation improvements to be de-
preciated over five years . By investing in the tax shelter,
individuals are able to pay substantially less in their
income taxes. The active participation of a community
group and the assurance that the project will be accepted
in the community are often considered to aid in the sale
of the tax syndication.
The total sum paid by the investors is referred to as
the gross proceeds. This sum is automatically reduced
by the costs of syndication, i.e., that paid to lawyers,
accountants, and brokers who arrange the sale to in-
vestors. Syndication costs frequently run as high as 25
per cent of the gross proceeds. The remaining proceeds,
called net proceeds, are further reduced by a number of
expenses incurred by the developer in creating the
project, i.e., the' risk capital.' Typical deductions from
net proceeds include excess acquisition costs for the site,
the case advanced by the developer to close the project
mortgage, the builder's fee, and any overruns incurred.
The remaining sum, the net net proceeds, is the amount
to be split between the community and the developer.
The percentage that a community group can expect to
receive of the net net proceeds will range somewhere
between 20 and 50 per cent. For a 200-unit project with
an $8 million development cost, a community group
might expect to realize roughly $300,000. The share will
depend on the extent of the community group's involve-
ment in the project, how influential it was in getting the
commitment from HUD, and whether the neighbor-
hood is an Neighborhood Strategy Area. If the com-
munity group needs the funds quicker than over the five
year period, it may have to pay for this by getting a
smaller portion of the proceeds.
Project Management. Depending on the management
experience of the community group, it can either
become the managing agent for the project or have
members of its staff hired by the managing agent to
assist in managing the project. HUD will require the
managing agent to have a fairly impressive manage-
ment track record. Groups with community manage-
ment, 7 A or similar experience could definitely qualify.
Jobs and Sub-contracts to the Community. This is
perhaps the fuzziest of all negotiating areas. Most devel-
opers and sub-contractors seem unwilling to agree to
specified percentages of jobs for community residents
and opt instead for "best efforts" pledges. The com-
munity organization should monitor the efforts of the
developer to hire community residents. At least one
group was able to reach an agreement with the developer
to fund an affirmative action job developer out of the
project mortgage. continued ...
GREEN HOPE LOAN CLOSES
The city's first Direct Loan was closed on May I, one
year to the day after the crew of Building for Women at
Green Hope began demolition on 328 East 120th St. in
preparation for the sweat equity rehabilitation.
The gut rehabilitation is expected to cost $120,000 for
the four-unit building. The work should be completed
within three or four months.
Maureen Roach, coordinator of the project, said the
crew finished the demolition work in mid-summer and,
"since then we have patiently spent a year watching the
building deteriorate as joints in the basement rotted and
the parapet wall on the roof crumbled."
Participating in the signing of some 58
were representatives from Green Hope, Chemical Bank
and HPD.
During the next few months, the women will be
working along with the general contractor. Under the
terms of the Direct Loan, they will do the finishing work
themselves. They will also live in the building at
monthly rents of $130 to $150 for a one-bedroom apart
ment. 0
The advent of the Section 8 Neighborhood Strategy
Area program offers community groups an even strong-
er bargaining position. In that program, more than 5,000
units have been set aside for 10 New York City neigh-
borhoods: Bedford Stuyvesant, Sunset Park, Flatbush,
Hamilton Heights, Washington Heights, Manhattan
Valley, Crown Heights, Kingsbridge-Bedford Park, Far
Rockaway and Gateway to Harlem.
In the regular Section 8 program, a private developer
can always threaten a community organization making
significant demands that he will go to another neighbor-
hood. Because the NSA units are tied to particular
neighborhoods, developers must strike a deal with the
local group.
Several community groups in New York City have
been able to establish extremely positive working re-
lationships with private developers. SEBCO, in the
South Bronx, has completed 201 units of Section 8
rehab through a joint venture with a private developer.
SEBCO relies almost exclusively on tax shelter proceeds
to fund its operation. Los Sures, in the Williamsburg
section of Brooklyn, is currently rehabilitating 201 units
of Section 8, also in a joint venture partnership with a
developer. Los Sures's Section 8 complements its com-
munity management, sweat equity and other manage-
ment and rehab programs.
The fact that projects are required by law to win
community board approval gives groups a strong bar-
gaining position. If groups find that developers are not
negotiating fairly, they might be advised to shop around
for another developer.
Section 8 is not without its downside, and many
community organizations are justifiably opposed to
12
Advertisement
U-HAB is seeking a person with experience in tenant
organizing, building management and/or accounting
and bookkeeping to assist tenant organizations partici-
pating in HPD's Tenant Interim Lease Program.
College degree or appropriate experience necessary.
Must be able to work independently, have ability to
teach and train and devote time to evening work . Full
time position. Please send resume to:
Urban Homesteading Assistance (U-HAB), Inc.
1047 Amsterdam Avenue
New York, New York 10025
ANHD's CET A VI contract, which was to expire at
the end of March, has been extended by the Board of
Estimate until the end of September.
Peoples Housing Network is planning another School
for Organizers, to be held during May and June in the
Bronx. For information, call PHN: 2121533- 5650.
having it around. One possible danger is the so-called
"vacuum cleaner" effect. Section 8 provides partici-
pating families with a very high level of services, rehab
and amenities; much more than is provided, for example,
in community management and sweat equity projects.
Ironically, because the rents paid by Section 8 families
are based on their income, families living in Section 8
units may be paying less than tenants in other commun-
ity based projects. This might cause a drain on com-
munity management, tenant interim lease buildings or
even stable landlord owned buildings. Tenants may be
siphoned off, endangering the surrounding buildings.
Another danger may be more subtle but perhaps just
as serious. Some cartoonists have noted that by some
mysterious process, pets and their owners have a ten-
dency to develop a resemblance.. The same tendency
seems to occur between contractors and contractees.
Over time,organizations start to resemble those that give
them money. This is not to say that community groups
participating in Section 8 will become little Starretts.
However, community groups that are used to getting
by with little or no money for overhead or administra-
tive expenses will through participation in Section 8 get
money and exposure to the high overhead world. The
danger lies in becoming dependent on this income
stream and the loss of freedom in making decisions for
the community that could result from that dependence.
Community groups can gain through partnership with
developers in Section 8 projects; they can lose if they
become more like private developers than community
housing organizations. 0
Howard Burchman consults on neighborhood-based
housing and community development projects.
THE FAILURE OF PRIVATE OWNERSHIP
by Tony Schuman
It is no secret to New York's tenants that our housing
is falling down around us. Abandonment, arson, lack of
services, high rents, few vacancies-all these are facts of
life for low and moderate income families.
The statistics are staggering. Of 1.9 million rental
units, the city estimates that 15 per cent require replilce-
ment and 47 per cent need rehabilitation. More than six
families out of ten are inadequately housed. For the
privilege of living in these deteriorating apartments,
tenants are obliged to pay an every increasing portion of
their income in rent. More than half of New York's
renter households use up over 25 per cent of their
income, and nearly half pay more than 30 per cent.
A complex mosaic of factors is offered to explain this
situation: rising fuel and labor costs, greedy landlords,
rent control, redlining by banks, racism, etc. This piece-
meal approach to understanding the problem has led to
scattershot efforts to improve housing conditions: anti-
redlining efforts, fair housing laws, rent subsidies, etc.
But except for modes improvements in health and sani-
tary codes, New York's working families are as poorly
housed today as they were ninety years ago when Jacob
Riis documented the horrifying conditions in the Lower
East Side slums.
The principal reason for this is that virtually all
efforts have been aimed at making the private market
system work for housing. Mortgage insurance
programs, subsidy programs like Section 8 and tax
shelter write-offs for depreciation have all been devised
to prop up investor confidence in the housing market. It
is time to acknowledge that the private market simply
does not work for low and moderate income rental
housing in the New York area. The crisis is a structural
part of the free market economy.
Fifty years ago, the Tenement House Committee of
the Charitable Organizations Society, a housing reform
group, warned of wages not rising in proportion to
living costs. The magnitude of this gap is still sizable.
From 1960 to 1975, median rents in New York rose 57
per cent, with only a 17 per cent increase in
median income. From 1975 to 1978, rents rose 23 per
cent, wages seven per cent. When one adds the problems
of unemployment and inflation, the results are evident
in the ravaged neighborhoods of the South Bronx, East
New York and similar communities.
In the face of the demonstrated failure of the private
market economy to provide for peoples' housing needs,
there is only one source with the financial means, the
authority and the mandate to insure decent housing for
Tony Schuman is an architect who teaches at the New
Jersey School of Architecture in Newark. He is a
member of Homefront and co-coordinator of the New
York Area Planner's Network.
13
everyone-the government. The City of New York,
already the reluctant landlord of more than 37,000
occupied apartments, is in a perfect position to takea
courageous and far-sighted step by acknowledging the
reality of the situation and accepting responsibility for
the housing it now owns.
Public statements from Mayor Koch and Housing,
Preservation and Development Commissioner Nathan
Leventhal, echoed by the City Planning Commission
and the New York Times, reveal a dogmatic insistence
that, all experience to the contrary, the private market
still holds the answer to our housing needs. Thus we are
assured that the city is making every effort to restore the
buildings to the tax rolls by returning them to the
private sector (including not-for-profit private owner-
ship) with rents raised so that the buildings can be self-
sufficient taxpaying properties. New legislative and
policy initiatives are in support of these goals: negotiated
sales to private owners, removal of rental controls on
properties upon resale and contracting with private
management concerns to maintain In Rem properties
with eventual sale of the buildings to these private
companies.
The "alternative management" programs which
transfer operation and eventual ownership of In Rem
buildings to tenant and community groups are valued by
the city primarily because they have a better rent col-
lection record (90 per cent) than the city's own efforts
(40 per cent), and because they transfer responsibility
for restructuring rents to the tenants themselves.
While some tenant groups have welcomed this
apparent "control" over their housing, very few
buildings appear to have the necessary financial and
structural conditions for making these programs work
in the long run.
If "tenant control" is to have better results for
housing than "community control" of schools did for
education, we must recognize that adequate financial
resources are essential. We need a permanent public
subsidy to cover operating and repair costs when tenant
incomes are inadequate. Public responsibility for
housing without real elements of tenant/community
control will leave us prey to the same bureaucratic
problems that have characterized government-run
housing in the past. Most aspects of housing manage-
ment can best be dealt with at the building level. Where
tenants and community groups are willing and able,
complete self-management is desirable.
As long as structural weakness in our private market
economy leaves hundreds of thousands of city tenants
unable to provide themselves and their families with
decent housing at rents they can afford, we must insist
on public responsibility for housing in the form of
permanent public subsidy. 0
$lM WEATHERIZATION PLAN:
INACTION REMAINS HALLMARK
by Len Rodberg
Last month City Limits reported that New York City
was letting more than $1 million in housing weatheriza-
tion funds sit idle, while it tried to get its fiscal house in
order. Since then, the Community Development Agency
has announced its weatherization program. Neverthe-
less, inaction continues to be the hallmark of the city's
effort to help low-income residents cut their fuel bills.
Under the federally-funded weatherization program,
materials such as insulation, weatherstripping, and
replacement windows are provided, along with a limited
amount of funds for supervisory labor and transporta-
tion. Until last year, the weatherization services were
provided by Operation Open City, working under
contract to the Community Development Agency.
Drawing on labor supplied under the CET A program,
Open City operated a city-wide program out of offices
located in each borough. (In some cases, homeowners
were provided with weatherization materials which they
installed themselves, on a do-it-yourself basis.)
Recognizing, in at least a limited way, the real energy
crisis facing low-income residents as fuel costs sky-
rocket, the Congress has, over the last several years,
approved a rapid increase in the weatherization pro-
gram. New York City'S allocation of weatherization
funds has risen from $420,000 in fiscal year 1977 to $6.9
million in fiscal year 1979 funds, according to a recent-
ly-announced State plan for use of these funds. (The
federal money is all funneled through the states, which
decide how to spread it among the counties and muni-
cipalities.) However, New York City has not even begun
spending the 1977 allocation for weatherizing homes.
Having seen this growth on the horizon, and faced
with internal organization and fiscal problems, CDA
decided last fall upon a reorientation of its program.
Though CDA officials have been unwilling to release
details of their plan, we have learned that it envisioned
converting Operation Open City into the "quarter-
master" for the program, providing materials and
training to other organizations who would perform the
actual weatherization services. Under CDA's plan, most
of this work would be done by selected "delegate
agencies" in each borough. Until now, these agencies
have been providing various social services under
contract with CDA. Apparently, they have not been
willing to pick up the weatherization mantle, and CDA
has still not announced this delegate agency plan, or
even which organizations it is seeking for this role.
CDA has indicated a willingness to involve neighbor-
hood housing groups in the program, but it has shown a
clear lack of enthusiasm toward their participation,
emphasizing that these groups have to go-it-alone.
14
These groups came together last fall to form an Ad
Hoc Neighborhood Weatherization Task Force, to
facilitate their weatherization efforts. CDA representa-
tives met once, in January, with the Task Force, but
they displayed a' noticeable coolness toward Task Force
efforts to help in shaping the program.
When CDA finally announced its program on March
29, it was labeled, in wordy bureaucratese, the Weather-
ization and Energy Conservation Self-Help Volunteer
Labor Materials Allocation Program. "Self-help"
groups were invited to apply to the program, demon-
strating that they have the necessary "volunteer" labor,
a prior history of involvement in the housing field, and
a Board of Directors representative of the poor.
In spite of CDA's stand-offish attitude, at least five
neighborhood housing groups immediately applied for
the program. By early May, CDA had yet to act on any
of these applications. No money or materials have yet
flowed to any group. Time is crucial here.
The Ad Hoc Neighborhood Weatherization Task
Force, which is working for neighborhood-based
weatherization activities in New York City, may be
reached c/o Len Rodberg, 515 W. 110 St., New York,
NY 10025 (212) 662-2463. 0
SAVE ON INSURANCE
Preliminary studies show that by forming a liability
insurance consortium tenants and neighborhood groups
can save an average of one-third of their existing
premium costs, and often much more.
After months o(research by Wendy Faxon and Andy
Reicher of UHAB, a consortium of this kind is ready to
go.
The broker for the consortium will be Marsh and
McLennan, Inc. one of New York's largest insurance
brokers. ANHD will handle administration, including
the application process, billing and claim procedures.
Liability insurance is required by most HPD-admin-
istered, alternative management programs (Tenant
Interim Lease, 7 A and Community Management, for
example) and is highly recommended for any tenant
group or agency taking over management or ownership
of a building.
To find out how much your building may save in
I iability premiums, call Gay Bunn at ANHD (674-7610).
As soon as we get an idea of how many buildings will
participate, ANHD will begin negotiating witi:l funding
sources and banks to fund the lowest rate at which
buildings can borrow money to cover the mandatory
"up front" premium payment. 0
Anne Hartwell
HARLEM SOLAR PROJECT
A solar heating and hot water system that uses air
instead of water as the heat-transfer medium will be
mounted soon on two adjacent brownstones in Harlem.
Chip Tabor, and architect for the Energy Task Force
(ETF) and designer of the project, describes it as "one
of the first urban applications of a commercial active
solar air-heating system in the northeast."
The solar system will provide approximately 420/0 of
the heat and hot water needs of 417 and 419 West 146th
St. and will be paid for by a $27,000 grant under HUD's
cycle 4A program. Both of these four-story buildings,
which will house four families in duplex apartments, are
scheduled to be renovated by United Harlem Growth
using a federal low-interest loan.
The primary purpose of the solar project is to provide
space heating for the two buildings, although enough of
the energy gathered by the solar collectors will be
diverted to heat about 25% of the water in winter and
nearly 100% of the water during summer.
Although the main goal of solar heating is to cut
energy costs, this project is not intended to be cost-
efficient. "Right now," says Tabor, "our economic
system is not geared to solar energy and it is still less
expensive to buy oil." Tabor was reluctant to estimate
the payback period although he did note that the first
year's savings on fuel would be about $500.
Eventually, ETF hopes to learn enough from this
project so it can manufacture it's own solar air-heated
collectors.
The system works in two ways. First, hot air can be
sent directly from the collectors to individual rooms
through air ducts. If the air from the collectors is
not hot enough to heat the rooms, it is routed through a
furnace in the basement.
Second, heat can be drawn from a rock storage bin in
the basement. This bin, made up of 38,000 pounds of
tiny granite pebbles, could heat comfortably both
buildings for thirty hours when the outside temperature
is at zero degrees.
If no heat or hot water is needed, the system contin-
ues to store heat in the rock storage bin until it is
needed.
"The decision to use air-heated collectors as opposed
to water-heated panels involves a fair amount of sub-
jectivity," says Richard Crane, a mechanical engineer
who is also a technical consultant for the National Solar
Heating and Cooling Information Center in Rockville,
Maryland.
There are advantages and disadvantages to both. "If
a liquid system leaks, you know it," Crane said.
Because it is more difficult to detect leaks using air-
heated collectors, the system may be running at sub-
efficiency without anyone knowing it. But then, an air
system can still operate if repairs are needed while a
15
water system has to be shut down and drained. The air
system also never needs anti-freeze to prevent pipes
from breaking.
The only obstacle standing in the way of this project
is final approval of two HUD 312 mortgage loans
totalling $92,000, according to Dave Robinson, presi-
dent of United Harlem Growth, the community organ-
ization which will handle the actual construction.
Robinson says he has received assurances that the
money will be available in the upcoming weeks.
Already, United Harlem Growth has demolished the
interior building frame and has begun beam replace-
ment and roofing using their own capital, according to
Robinson.
United Harlem Growth, which has been in existence
for five years, has completed five projects under the 312
program, says Robinson. 0 Selwyn Eiber
LOW INCOME CO-OPS
City and state officials are exploring ways of removing
an impediment to the development of low-income
housing cooperatives in city-owned buildings-the high
cost of filing plans with the State Attorney General's
office.
The city has a new policy that permits tenants in low
and moderate income neighborhoods to incorporate
and buy the city-owned building in which they live for
$250 per unit. However, an offering plan that discloses
financial information and building condition data must
be filed with the attorney general's office before a
cooperative can be approved. Such plans require pro-
fessional services, and the costs can run into the thou-
sands of dollars.
"The system works well when there is money in the
cooperative to hire a lawyer and an engineer," said Dick
Rifkin, deputy counsel to State Attorney General
Robert Abrams. "But it's expensive for low income
people. We agree that this might prevent the city from
turning buildings into co-ops."
Among the changes contemplated are more standard-
ization of forms to cut down on legal costs and possible
acceptance of building surveys done by the city rather
than expensive engineer studies. 0
Mayor Koch: "If we cannot restructure the whole busi-
ness and get out of the rent business and we're still left
next year with these large numbers of properties, we're
going to vastly reduce our commitment to providing
services to these buildings. No other city does. What
they do is simply tell tenants, 'You don't like it, get
another apartment. ' "
New York Daily News, April 29
$6.9 MILLION OKAYED FOR PRESERVATION
The State Legislature has voted a $2 million increase
for the Neighborhood Preservation Companies Pro-
gram, and the next application cycle is expected to be in
late spring or early summer.
The program, which provides operating funds to
community organizations around the state, now carries
an annual budget of $6.9 million. It's original funding
was $500,000 two years ago.
Sharon Lauer of the State Division of Housing and
Community Renewal, which administers the program,
said DHCR was hoping to announce the next round in
May after which community groups would have 30 to 45
days to apply.
There are 118 organizations in the Neighborhood
Preservation Companies program, receiving an average
of $40,000 each, she said.
Lauer said that of the $6.9 million, only about $1 .5
million to $2 million would be avaihible for new groups .
The balance would be to re-fund groups already in the
program.
The State Assembly has passed a bill to create a new
Office of Urban Revitalization directly under Gov.
Carey. Asked about possible plans to transfer the
Neighborhood Preservation Companies program from
DHCR to the proposed new office, Lauer said that there
were none at the moment. She said that because the
program focuses on housing and because of the disrup-
tive effect of a transfer, it will remain in DHCR under
current thinking.
City Limits
115 East 23rd Street
New York, N.Y. 10010
IN THIS ISSUE
Section 8 Marriage
UDAAP Sales Plan
Savings Bank Denied Branch
CD V Budget Released
HUD Foreclosures in Queens
DHCR has awarded contracts totaling $480,000 to 11
organizations in the state to provide technical assistance
to neighborhood groups in the program. Final approval
of the contracts is subject to release of the funds by the
State Budget Office.
Notification of contract recipients has been confused.
At least one decision appears to have been changed,
switching a contract away from a group that had been
told informally of approval. Other groups said contract
signing timetables had been shifted. DHCR has not
announced the contract winners, but City Limits has
obtained the following list from the agency: Public
Executive Project, State University of New York at
Albany; TAP, Troy; Settlement Housing Fund, Urban
Homesteading Assistance Board, Pratt Center for Com-
munity and Environmental Development, New York
State Legislative Institute at Baruch College, New York
-State Alliance to Save Energy and Ables Schwartz and
Associates, all of New York City; 78 Restoration and
Fire Survival Center, Buffalo; Project Reach, Wayland.
o
The 8th annual conference of National People's
Action is set for Sunday and Monday, June 17-18 at the
Shoreham Americana Hotel in Washington, D.C. The
conference will deal with insurance and mortgage
redlining, HUD programs, public housing, subsidized
housing, crime, utilities.
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