City Limits Magazine, January 1979 Issue

8/3/2019 City Limits Magazine, January 1979 Issue

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CITY LIMITSCOMMUNITY HOUSING NEWSJANUARY 1979 VOL. 4 NO.1BIG GAPS ARE REPORTEDIN DATA ON CITY HOUSINGCITY PAVES BUSY ROAD.TO REALTY REDEMPTION

by Susan BaldwinAfter a close look, it is hard to understand why people are still Jiving inthe building at 647-49 East 11th Street. But an equally close look at thecity's lax tax foreclosure policy makes it easy to understand how its absenteelandlord, notorious for generations on Manhattan's Lower East Side, holds

on to what is left of his crumbling empire there.At 647 East 11 th Street, most of Irving Dankner 's tenants are, like Dank

ner, just holding on . While he holds on to the rent that they continue topay, they hold on to apart- Yments bereft of vital services.Dankner, a landlord with a

Owners Still Collect RentIn Some City Buildingsby Bernard Cohen

New York City cannot keep trackof the staggering number of properties it has acquired through tax foreclosure, according to housingofficials who say that their recordsare often inaccurate, largely incomplete and, in some cases, may havebeen tampered with.

Glaring problems have beenturned up through the painstakingprocess of cross-checking, updatingand coordinating data on more than10,000 city-owned properties. Many


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Department of Housing Preservation and Development."This has been going on for years. No one was systematically looking at it."Interviews with many housing officials and independent research by City Limits have revealed the followingfindings.-Some landlords have continued to collect rents fromtenants long after losing their buildings to the citythrough tax foreclosure. One example is a pair of buildings at 112 and 114 West 134th Street in Manhattan .(See page 3).

-Rent bills are sent by the city to thousands of nonexistent tenants. Out of more than 30,000 rent bills sentout by HPD in one month, 5,700 were returned. Acheck of 4,000 of those showed that 1,500 had beenaddressed to tenants no longer living at the listed location. Some 25 totally vacant buildings were being billed,one survey showed. Other occupied buildings continuedto be billed after the former owner had redeemed theproperty.

-Conversely, an unknown number of tenants living incity-owned buildings are not being billed, although officials say the figure is probably fairly small. The city saysit owns 5,600 occupied buildings and bills 30,000tenants.-Residential properties that the city did not know iteven owned are constantly showing up-often when tenants call up to complain about lack of services. OneHPD fieid office has compiled a list of 50 buildings~ h i c h it believes are owned by the city but for which ithas no records. "Did a boxload of records get lost?"wondered an HPD official. "It smells to high heaven.Maybe a whole carton of stuff did get misdirected.Needless to say, we don't have the information we'resupposed to have."

Cited as an example was the total lack of coordinationbetween management and billing lists for city-ownedproperties. As a result, managers were in the dark aboutthe rent status of the tenants in their buildings.Changes by DRP in some lot numbers (the city identifies properties by lot numbers, not addresses) led toconfusion as to which properties were being foreclosedfor tax arrears. In some cases, DRP reportedly listedwrong lot numbers entirely and sent rent bills to the secondary addresses of corner buildings.

City Limits interviewed a number of DRP staff whodenied that their records were in such bad condition andsaid the HPD criticism was a continuation of a longtime campaign to discredit the agency."W e had no federal money and we never had enoughhelp," one DRP employee said. "They have $39 millionmore than we had. I f we had one-quarter of that tooperate with here we'd have been in gravy."HPD has undermined us to such an extent. They say

our managers are poor, our records are poor, and wehave to sit back and take all this. It's strictly politics.We had one of the best departments going. For theamount of buildings we had and the amount of moneyto manage them, I thought we were doing pretty good. "The current number of city-owned properties hastripled since last April and is expected to jump to 12,500by next April and to 18,000 by April, 1980. Onemeasure of the complexity of keeping track of them isthat there are four ways to identify every piece of property depending on the system being used.

HPD says it is trying to create an information systemthat will be both comprehensive, so that multiple lists nolonger have to be consulted, and manageable so that itcan be continuously updated. That way, if a tenantmoves out, or the building goes into non-profit management or any of a dozen other changes occur, the city will


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557 East 169th StreetAn occupied I8-unit apartment building in the Bronxwas listed on city records as a vacant lot, enabling theformer owner to collect rents for more than two yearsafter the property was taken by the city for non-pay

ment of real estate taxes, according to well placedsources.The case has been turned over to the Inspector General's office at HPD to determine if the alleged misidentification of the building was due to error or corruption,the sources said.The city discovered that it owned the building, 557East I69th Street, in early December after the ownersfinally gave it up, cut of f the fuel and told the complaining tenants that the city was their landlord. The buildinghad actually belonged to the city since October 27, 1976.Anna Forte, the superintendent and a resident of thebuilding for 27 years, said that while the news came as

112 and 114 West 134th StreetFor seven months after New York City acquired twoHarlem buildings through tax foreclosure, the formerowner continued to provide some services and collectrent from the tenants, apparently unbeknownst to the

city.On December 22, one day after City Limits askedHPD about the discrepancy, the tenants were visited bytwo city property managers and told their buildingswere In Rem (city-owned) and that they should nowstar t paying their rent to the Department of Finance.The properties, 112 and 114 West 134th St., wereamong 13 buildings owned by a Harlem real estate firm,Deejay Apartments Inc., that were taken over by thecity on May 25, 1978, for non-payment of real estatetaxes. An estimated $30,000 was owed on the two buildings alone.The tenants in the other 11 Deejay buildings were


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Redemptions continuedlord may fall behind in paying his taxes before the citymay begin proceedings to foreclose on his property.This policy precipitated a flood not of tax paymentsbut of unwanted property coming into city ownershipwithin the past year. At the same time, tenant groupshave demanded a halt to the city's traditional way ofdisposing of such property-the auction, on groundsthat the auction perpetuates slumlords and produceslittle revenue and less taxes.As a result, the city has begun looking for ways tomake it easier for landlords to recover the property thatthe city has taken over. The City Council started with atemporary revision of the Administrative Code lastSeptember! Landlords are hoping it will finish the jobwith Intro. 492, a City Countil bill slated for a hearingat City Hall Jan. 24 at 10 a.m.Initially scheduled for its first hearing in December,Intro. 492 was rescheduled by Chairman Leon Katz ofthe Council's Government Operations Committee aftermore than 135 community representatives packed theCouncil's chambers Dec. 11 to denounce this easyredemption arrangement.When Dankner entered into an agreement in June,1977, since modified in his favor under the current"temporary" law, to pay his back taxes to the city, hehad not paid taxes since October. 1970.Under the current redemption law, agreements likethe one Dankner signed do not require landlords tocorrect major violations on their buildings. And theypay little or no money up front to set up agreementswith the Commissioner of Finance permitting them totake twice as long to payoff their tax arrears as it tookfor the taxes to pile up. Meanwhile, they can do businessas usual.

Dankner asserted. "But," he went on," if the city tookthe money that it gives to the welfare constituent andsent a credit to the landlord, we'd all be better off. Iwould pay my back taxes."

Intro. 492, would stretch out still further the schedules for Dankner's repayment. I t would require of himan even smaller down payment (the longer the arrears,the smaller the percentage of down payment), and itwould give him up to two years after the city took titleto his building to apply for an agreement to recover it.Under present law, the Board of Estimate must approveany recovery undertaken more than four monthsfollowing title-vesting in the city.

On Jan. 24, opponents of the easy redemptionpractices built into Intro. 492 will be asking Councilmembers to reject these easy measures and to attachsome strong amendments to the bill."Among a number of reforms, we have recommended that there should be a way to foreclose quickly

on a landlord if he does not keep up with an installmentagreement," said Sandy Bayer, a member of the TaskForce on City-Owned Property and an aide to Councilwoman Ruth Messinger (D-Man.). "A s it stands now,when a landlord signs an installment agreement with thecommissioner of finance, he is removed from the activeIn Rem list, and then he is free to milk the building foranother year until the next [In Rem] action."The Task Force is suggesting amendments to Intro.492 that call on a landlord to sign an agreement tocorrect major violations on his building and that orderhis property to remain on the In Rem list until he has


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~ L A N D L O R D ' SHUFFLES BACK TAXESAS CITYMISDEALS TO TENANTS

by Susan BaldwinTenants of the five-story walk-up tenement in theClinton district of Manhattan's West Side had just

about licked the leaky pipes and errant landlords, even aroof that poured rain on halls and apartments below, intwo years of struggle toward legal self-management.But the new year brought bad news to 408 West 48thStreet and to some 35 tenants who call its 20 apartmentshome. The city, which last May took the building awayfrom the second of two successive landlords whowouldn't pay their taxes, and in September signed aninterim lease with the tenants for them to run the building, in January seems bent on returning the building toits last owner on the installment plan for the taxes owed.He is a man whose claim to the property, the tenantscharge, is counterfeit.The city's corporation counsel, Allen Schwartz, however, has rejected the tenants' request that he ruleformer owner Robert Pinker ton ineligible to recover theproperty, since he applied to do so last September,tenants assert, only on behalf of new would-be ownersto whom he had sold his interest in it.Pinkerton admitted to tenants and to City Limits thathe is a front for other interests. "I don't own thatbuilding," he said recently. "I redeemed it but had soldit to another party, a broker named Richard Marks. Isold it to Marks and .the group interested in buying it inJune or July for a dollar and an agreement that I'm outof the building and not responsible for it."

Officials at the city's Department of Housing Preser

then we find Pinkerton back in the picture."Maeker's comments reflect the feelings of othertenants and HP D officials who were excited by theprospect of tenants managing their own building underthis new city program.Prior to the legal decision, the tenants rejected theoffer of Alvin Wilson, an agent of the real estate

company that bought out Pinkerton's interest, to sellthem the building for $3,500. The low and moderateincome tenants, who pay an average of $95 per monthfor their small three- and four-room apartments,couldn't afford to buy, anyway.

"They may have felt that they would wear us down,drive us out, and take control of this building," saidLesley Reynolds about the GDLR Realty Corp. "It'slike the Alamo," the young tenant spokeswoman said."I know everyone is going to stay here and fight to thebitter end . . . We like our building, we have invested in itby making certain necessary repairs, and we don'tintend to give up now. ""I offered to sell them the building against my betterjudgment," Wilson countered. "I have expended a lotof money and time, and what has happened is that thetenants have applied a lot of pressure, they have threatened to picket my house, and their attorney has tried toscare me. . continued on page 9


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RENT HIKE REVIEW SETThe Rent Guidelines Board, which is under courtorder to reconsider lower rent increases it adopted for

about 300,000 New York City rent-stabilized apartments, has set February 2 as the deadline for submittinginformation by the public.Until the board reaches a new decision, the rentincrease ceilings of 3Y2 per cent for a one-year renewal,5Y2 per cent for a two-year renewal and 7 Y2 per cent fora three-year renewal remain in effect as of July 1, 1978.The ceilings for new tenants moving into previouslystabilized apartments were set at 8 Y2 per cent for a oneyear lease, 1OY2 per cent for two years and 12 Y2 per centfor three years under the new rules.The board was ordered to reconsider the rent increasemaximums by State Supreme Court Justice Martin B.Stecher acting on a lawsuit filed by the real estateindustry. Stecher said three of the four meetings held bythe board to determine the increase guidelines had beenclosed to the public in violation of state law.The Rent Stabilization Association, the self-regulatedreal estate industry organization which brought thelawsuit, is reportedly gathering data about the cost ofrunning buildings that it hopes will convince the boardto reverse its earlier finding and raise the ceilings.Written material to support the reduced maximumssuch as documentation of overcharges or inability topay higher rent must be submitted to the Rent Guidelines Board at its office at 100 Gold Street, Room 9047,by Feb. 2. All information will be available for publicinspection at the board's office.The board will hold a public meeting to decide theissue on March 7 at 10:30 a.m . at One Police Plaza inManhattan.

SENIOR EXEMPTIONSSenior citizens living in rent controlled apartmentsand holding rent increase exemptions must renew their

exemptions in order to maintain their benefits in 1979.HPD said it mailed out renewal notices in December.The forms should be filled out and returned to the City,after which tenants will be sent an order certifying thecontinuance of their exemption.Some 57,000 senior citizens have the rent increaseexemption. To qualify, tenants must be at least 62 yearsold, live in rent controlled housing, have an annualhousehold income of $6,500 or less after taxes and payat least one-third of their income for rent.While they may not also be receiving public assistance, they can qualify if they are getting SupplementalSecurity Income.Senior citizens who want to apply for an exemptioncan obtain an application at district rent offices, thecentral Rent Control office at 110 Church Street or atsenior citizens centers. 0

CITY REVISES J 51A recent change in the J 51 program permits ownersto apply quarterly for tax abatements. The next periodfor filing an application with HPD is February-March,1979.The J 51 law allows owners who wish to rehabilitatetheir multiple dwellings to receive a tax abatement of 90per cent of the reasonable const ruction costs.In the past, applications for the abatement could be


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HPD WEIGHS NEW SALES POLICYHP D is in the process of drafting a more rational anduniform policy for selling New York City-owned prop

erty to non-profit buyers, hoping to end the unsystematic "case by case" method that resulted in longdelays and few sales in the past.Although the policy had not yet jelled by earlyJanuary, HPD sources told City Limits that the latestrecommendation called for a flat selling price ofbetween $230 and $300 per unit for all city-ownedproperty. The exact figure, reportedly a compromisebetween$I00-a-unit pressed by some HPD officials and$500-a-unit supported by others, could not be learned.The proposed policy was being re-submitted to HPDCommissioner Nathan Leventhal as City Limits wasgoing to press, and aides stressed that further modification was possible.The housing agency has been under considerablepressure to develop a sales policy. The City Comptroller's office released an audit in late October thatcriticized HPD's failure to transfer city-owned buildingsin the Community Management program to tenant orcommunity group ownership (outtake). "Since theinception of the program, no building has gone throughouttake," which the audit described as a "primarygoal" of Community Management.An early HPD draft of the sales policy acknowledgedthat the city's existing sales method hadbeen"established on an ad hoc basis, program byprogram and sometimes building by building." Notingthat it took months and sometimes years to reach anagreed price, the document said, "establishment of theterms of sale was an administrative nightmare and amajor hurdle for participants in every case."

Going further,the draft cited the failure of the auctionprocess to generate income for the city and suggestedthat these buildings should not be seen only for theircash revenue potential."The goal of generating income for the city from thesale of properties in these areas should be, at best, asecondary consideration," the document said. "Theamount realizable from the sales in these neighborhoodsis not large, no matter what policy is adopted."

"The city stands to gain much greater revenues in thelong run if the sale is to be to a group which iscommitted to maintaining the building, thereby insuringthe continued payment of property taxes."This view is in sharp contrast to the public stance of


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STATE IS SITTINGON $20 MILLIONTO ASSIST MITCHELL-LAMA HOUSINGSince April of last year, residents of Mitchell-Lamahousing have campaigned, demonstrated, and waitedwatchfully for the liberation of $20 million in thecurrent state budget to apply to their day-to-day efforts

to keep the program available for moderate-incomepeople.Now, under the leadership of the Mitchell-LamaCouncil, which represents 69 cooperative deYelopmentswith 47,000 units in New York City, they are steppingup the pressure by calling for a moratorium on pendingincreases in rents or co-op carrying charges.

"This $20 million is a cash asset in the state treasurywhich we demand be released by quick legislative enactment of an acceptable formula to reduce or eliminate. . . increases by some Mitchell-Lamaswhich are underthe gun," the Council said in mailgrams to state andNew York City officials.There ar e some 420 housing developmentswith 164,000 units built under the 23-year-old Mitchell

Lama program in New York State.The $20 million was heralded by Governor Hugh L.Carey in his 1978 Local Assistance budget (L. 1978, Ch.53). But expenditures were held up pending Jl billspelling out an allocation formula.The struggle to maintain Mitchell-Lama as moderateincome housing goes back to the early 1970s. It was

punctuated by a 1974 Carey campaign commitment to a$30 million annual program of state loans to keepMitchell-Lama mortgage interest payments at I per centduring the life of the first mortgage. "I believe in this

engineering survey of structural defects-a first steptoward state funding of necessary repairs. ,That money,too, remained frozen for lack of an authorizing bill.(Significantly, $9 million to keep increases inMitchell-Lamas built under the State Urban Development Corporation to an average of 5 Vz per cent a yearwas contained in a separate broadly-worded section ofthe 1978-79 budget. That funding affects 110 UDCdevelopments with 30,755 units.)Faced with inaction from the governor's office to getthe $20 million flowing, concerned legislators in bothAssembly and Senate formed a Mitchell-Lama coalition. A number of them sought a meeting withGovernor Carey, but no audience was gran ted .Finally, aides to the governor leaked details of animpending bill to the New York Times. A day later, onMay 19, a demonstration called by the MitchellLama Council in front of Carey's Manhattan officetriggered a meeting between Council officers andGovernor Carey.

The draft bill, which had been modeled on a report byRichard Ravitch, a contractor and former chairpersonof the UDC, was sharply opposed by the Council.Murray Raphael, Council president, said it constituted aformula for the abandonment of governmentalcommitment to moderate income housing. While itwould have kept rent or carrying charges at no morethan one-quarter of the income of current residents withless than $17,200 adjusted annual income, it would nothave automatically protected new residents. Residents


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Mitchell-Lama continuedincreases on a cost-of-living concept, the Council stillhad 19 major objections, and it died without furtheraction.The latest chapter of Mitchell-Lama is again beingwritten at Co-op City. Relying on a provision of theirstrike settlement, the board of directors has been withholding mortgage payments to the State HousingFinance Agency, which issued bonds to finance thedevelopment, and using the money to finance neededstructural repairs. By December I, 1978, HFA haddrawn a total of $4.3 million against reserves to makeup this deficit at Co-op City. The legislature has untilMarch 31 this year to replenish the reserve and maintainthe state "moral obligation" which underlies the creditworthiness of the HFA bonds.Ironically, of course, Co-op City's pro rata share isalready sitting in the state's general fund-along withshares for all other Mitchell-Lamas which need it-justwaiting to be liberated. 0408 West 48th Street continued"I told them they could have the building for $3,500,which is not an exorbitant amount for a wholebuilding," Wilson went on. "The city should not havegranted the lease, and it should not have ignored thepriority of redemption when it was dealing with

tenants," he charged."I can understand that the tenants are dismayed, butthey should understand the rights of redemption," headded, noting that he agreed with the tenants "inprinciple, but not in tactics ."Pinkerton's role in the 48th Street fight particularlygalls the tenants. He is a former tenant who moved intothe building in May, 1977, while the tenants were onrent strike against the previous runaway landlord. He

erty and agreed to pay all outstanding debts. He claimsto have paid one such debt of $1,200 for fuel, yet thetenants' association has proof that it paid the bill.In fact, the tenants paid much more in their two-year

stewardship-thousands of dollars for plumbingrepairs, a new roof, and even $1,000 in back taxes,which they paid last summer in an effort to forestall cityownership.Although the tenants claim that Pinkerton's onlyplausible investment to date is the one dollar he paid forthe building, Pinkerton complained recently, "Thatbuilding, it was such a losing proposition. It ruined mefinancially. Every time I walked down the hall it cost me$200, $100, or $50. There was no end."Quite frankly," Pinkerton concluded, "all thesetenants want is a free building where they don't have topay rent."In the brief prepared by their attorney, Robert M.Hayes, in opposition to Pinkerton's redemption application, the tenants argued before the corporationcounsel that the application was filed "on behalf ofpersons ineligible under the law to r e c o ~ e r thebuilding. "Under the city's administrative code, a person eligibleto recover property in tax arrears is someone "who hadan interest in property as either owner, mortgage, lieneror encumbrancer at the time of the city's acquisition.""But," the tenants argued, "the application filed byPinkerton to recover the building was filed on behalf ofthe speculators, none of whom had any interest in thebuilding when the city foreclosed on it. Pinkertonalready has conceded his inability to pay the city themoney due it-indeed Pinkerton has not even paid the$100 filing fee himself. All Pinkerton's applicationrepresents is a sham whereby Pinkerton acts as a frontfor the speculators so that these speculators can gain a


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LAW MAKING REDLINING 'ILLEGAL'NOT ENOUGH TO CURB DISINVESTMENT

by Michael McKee

As the members of the New York State Legislatureheaded out of Albany in the early morning hours ofDecember 8, one thing was certain: the bill they had justpassed and which within hours would be signed into lawby Governor Hugh Carey would raise the cost of shelterfor homebuyers and other consumers. Passed during anall-night special legislative session, the new law increasesmaximum interest rates on home mortgages from 8 V2 to9Yz percent, with additional increases certain in the nearfuture.

In a sample case prepared by legislative aides, ahomebuyer taking out a $40,000 30-year mortgage willpay the bank $337 per month, compared with $307 atthe old usury rate - or a total of $121,320 over the life

toothless new law bu t in promises by Carey of administrative actions to be taken by the Banking Department. In order to persuade former Speaker of theAssembly Stanley Steingut to pass the bill, Careypledged that the State Banking Board would adopt regulations modeled on the federal Community Reinvestment Act of 1977. These CRA regulations, if adopted,will require Banking Superintendent Muriel Siebert andthe Banking Board to assess a state-chartered bank'srecord of servicing the credit needs of communitieswhere it presently maintains branches before allowing itto open a new branch, close an old branch or mergeassets with another banking organization. Groups suchas the New York City Coalition Against Redlining hadbeen pressuring Siebert for overa year to adopt such apolicy - which Siebert had maintained she lackedstatutory authority to do - because they saw the CRAprovisions as a real threat to the banks. If it could beproved that a bank had redlined an inner city neighborhood, its application to open a more lucrative (depositwise) suburban branch could be stopped, at least untilthe bank agreed to provide more mortgage money to itsolder service area.

I f the CRA language is adopted, enforcement will stillbe in the hands of Siebert, her department, and theBanking Board, composed of Siebert, six bankers andsix members of the "public." Anti-redlining groups are


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means that usury rates will be set not by the State Legislature as in the past, but by Siebert.The new law empowers Siebert to hold a hearing on awould-be borrower's charge of redlining by a lendinginstitution. I f it is determined that a "prudent" loanwas denied because of geographic discrimination, thebank can be fined. The aggrieved mortgage-seeker willnot get the mortgage from the guilty bank, but ratherwill be rewarded with a "mortgage guarantee"from thequasi-'public State of New York Mortgage Agency. The.mortgage-seeker can then take the guarantee and shoparound for financing from another source.Siebert has used the new law as a wedge to extract acommitment from Carey for additional staff, complaining in public that she lacked the resources necessary toenforce the ban on red lining.Passage of the December 8 bill ended a year-longimpasse between the Democratic-controlled StateAssembly and the Republican-controlled State Senate.Speaker Steingut, under strong pressure from severaldozen New York City Assemblymembers concernedabout redlining (as well as an active greenlining organization, Bank on Brooklyn-East Flatbush, in his owndistrict), had refused throughout the 1978 regular legislative session to allow the Assembly to vote on a usuryrate increase bill unless it included strong sanctionsagainst redlining. His counterpart in the Senate, Majority Leader Warren Anderson of Binghamton, had refused to pass anti-redlining legislation, insisting that itnot be tied to the usury rate increase but considered"separately"-meaning never.

Democratic Assemblymembers from upstate cities,re.sponding to the cutting off of practically all mortgageloans by the banks, began pressuring Steingut to drophis redlining demands and pass the increase-only billwhich had already cleared the Senate. Caught between

enough to warrant it; information was leaked to thepress as it became advantageous; representatives of thebanks (but not consumers) were brought in when thedeal had been cut; and then the leaders set about sellingthe agreement they had reached to their rank-and-filemembers. By December 5 features of the bill had beenhammered out. Anderson agreed to language outlawinggeographic discrimination, and the Democrats tradedaway stronger enforcement provisions. But the realsticking point was Steingut's insistence on including astate CRA provision, anathema to Anderson.Carey resolved this impasse by promising Steingutthat his Superintendent would do administratively whatcould not be done legislatively: the Banking Boardwould adopt CRA regulations. In writing Carey wascautious: his December 7 "Dear Stanley" letter toSteingut stated that "b y using her best efforts" Siebertwas "confident of convincing the Board to adopt such aregulation." In private meetings the AssemblyDemocrats extracted an absolute commitment fromCarey and his staff. Because eight oLl3 votes are required to adopt regulations, the six bankers can vetoanything if they vote as a bloc; Carey promised thatSiebert would deliver two of the banker votes. To satisfyAssembly skeptics, he further promised that should theboard decline to adopt the CRA language, Siebertwould refuse to refer branch or merger applicationsfrom offending banks to the board, thus effectivelykilling them.As City Limits went to press, it was not clear whetherthe Banking Board will vote on the CRA regulations atits February 6 or March 6 meeting. Gary Brody of theState Banking Department predicted that the languagewill be adopted.The anti-redlining sections of the new law expireDecember 15, 1980, but not the floating interest rate


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HUD SECTION 8 NSA'SSLATED FOR TEN AREASNew York City housing officials are working under atight deadline to submit revised applications by the end

of January to HUD's area office for 5,000 units ofSection 8 rehabilitated housing in ten of the city's olderneighborhoods.The housing, a special set-aside of Section 8 substantial rehabilitation funds, is being offered to cities acrossthe country under the Neighborhood Strategy Area(NSA) program, an innovative demonstration effort byHUD to give local governments control 'over the distribution of federal subsidies, following locally approvedand conceived development strategies.This grant will bring over $40 million annually to thecity for five years, the duration of the program.HUD offered a total of 40,000 units in its nationalcompetition, a 100 per cent increase over its initialfigure of 20,000 for fiscal 1978.Neighborhoods in four boroughs will receive NSAgrants to provide housing units as follows: Bronx -

Kingsbridge, 300; Brooklyn - Sunset Park, 500; BedfordStuyvesant, 500; Flatbush, 275; Crown Heights, 750;Manhattan - Hamilton Heights, 625; WashingtonHeights, 500; Manhattan Valley, 500; Gateway toHarlem, 750; and Queens - Far Rockaway, 300.According to Alan Weiner, director of HUD's areaoffice, the ten applications will be submitted to HUDin Washington sometime early in the spring."We received many more units of housing than we

ever expected," said Marvin Wilkinson, director ofdevelopment for Manhattan at the Department ofHousing Preservation and Development [HPD]. Lastsummer city housing officials and the federal

PLANNING UNIT IS SETTO INCREASE CD NSA's

The City Planning Commission is expected toincrease the number of target areas for federalCommunity Development spending from five to aboutten after community groups protested that the originalplan of "one per borough" would deprive many needyneighborhoods of funds.The designation of target areas, the latest battleground in the five-year-old program, is a critical issuebecause of a shift in emphasis toward more concentration and better coordination of CD funds. More thana month after public hearings on the issue, the planningcommission was reported ready to double the numberbut still vascillating about where the additional areaswill be.Neighborhood representatives had said that whilethey supported the more planned approach to community revitalization, limiting it to only five areas of the citymeant surrendering to the concept of triage or "plannedshrinkage. "

In testimony before the CPC in late November andearly December, they said the city's plan ignored thefederal mandate to set spending priorities only afterassessing the needs of all neighborhoods; tilted policy infavor of more stable neighborhoods at the expense ofmore blighted areas and pitted one neighborhoodagainst another.They attacked the city's notion of having a modest"pilot" program in a "few carefully selected neighborhoods" as foot-dragging. "Nothing could be moredestructive to overall health of the city than the artificialdeprivation of the majority of eligible neighborhoods. . . while a few "pilot" neighborhoods are singled out


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In proposing the "pilot approach," CPC cited the"finite amount of money" available and said the smallnumber of NSA's would give a larger impact to thespending.

Alex.Garvin, head of community development at theCity Planning Department, said another reason forstarting with only five NSA's was uncertainty aboutwhether city agencies could deliver the kinds of concentrated and coordinated services the program calls for."W e are not interested in producing paper plans orprojects that are not do-able," Garvin said. 0

WHAT IS LOW INCOME?Using a new formula, New York City has determined

that 843 census tracts, or 38.1 per cent, are low andmoderate income and therefore qualify for federalCommunity Development Block Grant funds.The complicated formula, developed in Decemberafter many months of negotiations between the city and

HUD, is designed to reflect population changes thathave occurred since 1969 when data for the last censuswas collected.Large numbers of middle income families havemoved out of New York City during this period at thesame time that concentrations of low and moderateincome people have shifted within the city.

In addition to taking into account populationchanges, the new methodology also attempts to measurethe increasing number of poor "unrelated individuals"who are not included in family income statistics.The city has been under pressure from HUD to comeup with a new measurement after community organizations charged that the existing formula permitted thf

still take place outside the designated census tracts if theprojects primarily benefit low and moderate incomepopulations.Under the new guidelines, a census tract is considered

to be low and moderate income if it meets one or moreof the following criteria:1. Any tract in which the median family incomebased on 1970 census data was less than 80 per cent ofthe median family income for the New York SMSA.($8,385)2. Any tract in which the proportion of persons onpublic assistance as of 1977 is 15.7 per cent or greater.3. Any tract in which (a) at least 40 per cent of the

families had an income less than $8,385 in 1970 and (b)the proportion of persons on public assistance doubledbetween 1969 and 1977 and (c) the increase in theproportion of persons on public assistance between 1970and 1977, when added to the porportion of families inthe tract with an income below $8,385 in 1970 was 50per cent or greater.4. Any tract in which (a) the proportion of unrelatedindividuals was greater than the national average (9.2per cent) and (b) the median income for unrelatedindividuals is less than the median income for unrelatedindividuals in the New YorkSMSA ($3,218) and (c) thenumber of persons in families with income below $8,385plus the number of unrelated individuals divided by thetotal population is 50 per cent or greater. 0408 West 48th Street continued

Support for the embattled tenants has also come fromlocal elected officials. Assemblyman Richard Gottfried(D-L, Man.) wrote to Corporation Counsel Schwartzthat, "The administrative code provision involved appears to be intended to give an opportunity to a stable


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_CITY LIMITS'published monthly by the Ass.ociation of Neighborhood HousingDevelopers Inc., Peoples Housing Network, Pratt Center for Com-munity and Environmental Developmeilt, and the Urban Home-steading Assistance Board.Editorial Office: 115 East 23rd Street, New York, New York 10010(212) 674-7610Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bernard CohenAssistant Editor . . . . . . . . . . . . . . . . . . . . . . . . . .Susan BaldwinDesign and Layout . . . . . . . . . . . . . . . . . . . . . . Louis FulgoniCopyright 1979. Al l rights reserved. No portion or portions of thisjournalmay be reprinted without the express written permission of thepublishers.This issue was funded by grants from: Fund for the Cityof New York; Morgan Guaranty Trust Co.; GreaterNew York Savings Bank.SHIP PROGRAM RENEWED

After many months of uncertainty, HP D has decidedto fund a second phase of the Small Home ImprovementProgram in the East New York section of Brooklyn,Assistant Commissioner Jeffrey Heinz says.

In the second round, which will involve the rehabilitation of about 28 buildings, the East New YorkDevelopment Corp. will serve as the developer. ENYDCwas limited to marketing the 26 buildings that wererehabilitated under the first phase.Heinz also said he would like to see more moneygoing into sweat equity, noting that "there is a tremendous degree of interest" in the new Direct Loanprogram that provides 30 year mortgages at one per centinterest. He said he has more than 20 "serious, sincere

will gain many more that might have been conventionally financed when the rate was 8Y2 per c ~ ~ t . .

He predicted that up to 10 new PartlclpatlOn Loanswould be closed by the end of January. 0

LOW INTEREST LOANSA low-interest loan program created by the Fund forthe City of New York is helping many non-profit organizations avoid the cash flow squeeze that often comesbetween the award of a government contract and theactual receipt of funds.Although government contracts provide reliable

sources of long-term support, cumbersome processingprocedures often delay receipt of the money. As aresult, valuable programs are disrupted and in somecases the very survival of otherwise strong organizations is threatened.

Through its three-year-old cash flow loan program,FCNY has made 164 loans totalling $1.2 million to nonprofit housing, arts, youth, day care and other socialservice organizations caught in this financial bind.FCNY will lend up to $10,000 at 1Y2 per cent interestto organizations that have a contract commitment butare stalled by a funding delay. The interest is deductedin advance. However, half of it is returneq to theborrower if the loan is repaid within two months.

To qualify, an organization must submit a descriptionof its program and the terms of its impending contract;an explanation of why a loan is required, how much isneeded and how the funds will be used; and a definiterepayment date. Copies of the contract, non-profitstatus of the organization, board of directors and mostrecent financial report must also be submitted.FCNY makes the loans out of a $275,000 revolvingfund and the money is generally available within a week


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557 continued

estate taxes.He said he first learned that 557 East 169th St. wascity-owned in January, 1978, when the lawyer for a prospective buyer who was prepared to pay $7,000 for thebuilding informed him that it had been foreclosed onfor non-payment of taxes.Levites said he subsequently notified Finance Administrator Har ry S. Tishelman that 557 was city-owned. Inresponse, he said, he received a telephone call from theDivision of Real Property telling him that the building

was not owned by the city.So Levites continued to manage the building andcollect the rents until December when he walked awayfrom the property. "How can anybody take over abuilding without notifying anybody?" he asked. " I f thecity took over the property shouldn't they have postedit?"

City housing sources were skeptical that the ownerand manager of a building could have gone for morethan a year without knowing that it was city-owned.They said the owner was liable for the rent for the fullperiod since the city claimed the building .DRP was responsible for the building from October27, 1976, until last September 1 when all residential cityowned property was transferred to HPD. A DRPspokesman referred a City Limits inquiry about how thebuilding could have been overlooked for more than two

years to HPD, although one DRP official said, "This israre, very rare. I'm surprised it went on this long, whichis extraordinary. "HPD sources said that while DRP's central files listed

112-114 continued

that the city would probably not attempt to recover themoney since the owner had been providing someservices.The two buildings illustrate the city's general problemof tracking down all of the property it now owns. Morespecifically, the case is an example of the lack of coordination among various information sources-a problemthat HPD says it is trying to correct. In this case, thetwo buildings were on a billing list but not on anotherlist of city-owned properties from which managers areassigned.Billing files provide a clue that might have tippedHP D off to the problem. The files showed that whileboth buildings were being billed by the city, no rent wasreceived from any of the 16 tenants at 112 West 134thSt. in November.Deejay purchased the properties in 1959 and 1960,taking out a $112,000 mortgage with the then EmpireCity Savings Bank. According to city records, the properties were headed into tax foreclosure when the owners made a standard agreement in August, 1977, toredeem the buildings by making an immediate paymentof 15 per cent of the back property taxes. A year earlier,according to an official of Empire, the bank permittedDeejay to buy back the mortgage at a discount ratherthan take a total loss from a default.Unable to keep up with the tax payments subsequentto the August, 1977 agreement, the owners lost all 13buildings when the city took title last May.

"All the buildings we lost were good buildings wherepeople were getting services," said Allen Halpern, a


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CITY'S IN REM PROGRAMMAY BE AWAYWARD BUS

by Susan Baldwin"A big bus, with windows broken and tires missing,"

is the way a New York City housing official recentlydescribed the city's beleaguered program to manage itstax-foreclosed (In Rem) properties. Sources in and outof government now predict that the money to fuel theprogram through the cold winter months may soon runout, with tenants as captive passengers on a journey tonowhere.According to Charles J. Poidomani, assistantcommissioner of In Rem Property Management at theDepartment of Housing Preservation and Development(HPD), expensive contractors' repairs to boilers andother essential systems - repairs that the city's ownwork crews are generally not equipped to make - mayexhaust, by March, the portion of the $41.1 millionemergency federal Community Development fundingthat was scheduled to cover maintenance of the city'sknown 10,222 residential properties until next fall.

Since HPD took over the properties on Sept. 1, it hasbeen spending heavily - about $2 million a month - torepair boilers and heating systems and restore adequateplumbing in the largely dilapidated housing it has acquired. " I f we continue to spend moneiY at this rate,"said Poidomani, "we will definitely run' out by Marchand will have to get a transfusion from some othersource."But even though the money has already been com

The budget p r ~ b l e m s in Manhattan and the Bronx,critics of the In Rem program charge, have caused adelay until March of taking title to properties inBrooklyn that was originally set for early last October.Estimates of the number of parcels there in tax arrearsrun as high as 11 ,000."I hear March 15 as the date for the Brooklynvestings," Deputy Commisioner Charles Raymond toldCity Limits. "But I can't really be sure that that is thedate. It changes all the time."Asked for his assessment, Poidomani said,:"in allhonesty, we have done the best possible. We have delivered three million gallons of oil. We have respondedto boilers that are broken. And we understand that thishas been a learning process for us . . . It is very hard to

deliver service and sustain it."" I f I were a cartoonist I would draw this [the In Remprogram] as a big bus, with windows broken and tiresmissing . . . And we'd be pushing from behind . . . AndRaymond would be pulling from the f ront. . . We wouldalso be repairing windows at the same time. And wewould make it," said Poidomani. " I f we are allowed tokeep this program for four or five years, we would liketo make it desirable to move into city-owned property."The present budget problems are in the foreground ofa potentially more severe future funding crisis.Although HUD approved the $41.1 million CD grant, it


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intendents; 260 handymen, including dispatchers andclerical help; and 315 real estate managers.Poidomani is trying to keep the real estate managers'workload at between 225 to 250 units in a maximum of25 buildings each, as he feels it is important for eachmanager to make weekly visits to his buildings. Nevertheless, some managers have been assigned many moreunits; one in the Bronx was working with 1198 units.

On another front, a special team working under Assistant Commissioner Manuel Mirabal, who is in chargeof HPD's relocation efforts, has targeted 50 heavilyvandalized buildings taken in the most recent- In Remaction in the Bronx and is in the process of relocatingthe 150 remaining tenants into better apar tments in cityowned properties.

"W e have a very good handle on where those [better]apartments are in the Bronx," Mirabal asserted, notingthat the "lines of communication" for consolidating relocation efforts between his office and the real estatemanagers are "straightening out."A similar crew is beginning work in the East Harlemoffice and plans to begin consolidation efforts on theLower East Side are being drafted.Under HPD's official consolidation policy tenantsare supposed to be relocated in better-maintainedbuildings in their neighborhoods, but tenant organizerson the Lower East Side are finding that their dislocatedfamilies are being assigned apartments in East Harlemand the South Bronx.In fact, some community groups are not impressed bythe city's maintenance operat ion, saying that service hasdeclined since HPD took over the buildings."We were a lot further ahead on Sept. 1 with the cityin making headway on identifying buildings and gettingservices," complained George Ortega of Adopt-a

early in January.According to Ortega, Gotham Maintenance Corp.,the private company that was awarded the major contract with the city in October, "doesn't want to come

into this neighborhood and does not go around tofollow up on our complaints."Responding to this charge, Poidomani said, " I f they[Gotham] don't do the job, we have the right to askthem to terminate the workmen who are not performing. . .We have the right in our contract to provide adequate supervision of the work teams, but we don't havethat capability right now. We're trying to build that intoour operation."

"The maintenance costs in our buildings are sometimes two or three times more than the rent roll,"Ortega concluded. "But if we can't get intensive servicein the few buildings that are left down here, we won'thave any housing left. So much for the city'sprograms." 0

HP D is presently operating six area In Rem Officesunder its new decentralized program. They are asfollows:MANHAITAN: East Harlem - East 126th Street andLexington Ave. Contact: Earle Murray, Leo Cooper.Tel: 534-2807; 534-2783.

Lower Manhattan - 70 East 4th St. Contact: GusPaterno Tel: 477-9550; 477-9560.Clinton (Satellite Office) - 552 West 53rd Street.Contact : Isadora Burke. Tel: 265-2560.THE BRONX: Bronxchester - East 149th Street and

St. Anne's Avenue. Contact: John Autorino and DavidRabinowitz. Tel: 665-8488.BROOKLYN: Atlantic Terminal- 187 South OxfordStreet. Contact: Nerius Jackson. Tel: 636-1208.


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TENANTS DISPUTE HUD COSTLIMITSby Lisa Kaplan and Frances Goldin

The tenants came ou t of their houses in Pueblo Nuevoand Cooper Square on Manhattan's Lower East Sidelast Dec. 14 and boarded buses waiting in the gray dawnof a Thursday morning to take them to Washington,D.C.Sixty-two in all, they were bound for a meeting withofficials of the Department of Housing and UrbanDevelopment (HUD) and determined to get the greenlight to build the housing for Pueblo Nuevo and CooperSquare that they had planned for many years.Pueblo Nuevo needed large apartments to accommodate the families who live in the area of Houston andRidge Streets where its project would be built. CooperSquare had been struggling 19 years for innovative newhousing and was now ready to move ahead with its plan .But recently both groups had been told by the New YorkArea HUD office to scrap their plans and, because ofarbitrary cost limitations, to prepare new plans for"conventional" construction, which to the communitiesmeant unadorned boxes. The tenants' trip to Washington was one to answer to HUD's demand, one skirmishin the long fight.

Pueblo Nuevo's fight spanned eight years and threeimportant milestones: recogintion of the plan by NewYork City as an official urban renewal project; allocation of money for the city to buy the land; and commitment of the necessary subsidies to build the housing.In September, 1977, the Pueblo Nuevo project of 98units received a $57,OOO-per-unit commitment ofSection 8 funds from HUD, later conditionally revised

A delegation of community residents met with localofficials of HUD and were assured that Pueblo Nuevo'sproject would not have to meet HUD's most stringentcost limitation because of the evident need to house verylarge families, apartments for whom cost more to buildthan smaller units.A few weeks later, however, HUD reversed itself andset a rigid cost limit of $55,000 per unit. HUD nowproposed that the only way for Pueblo Nuevo to bringits project in under the cost limits was to give up apartments for large families, replace some of the solid wellbuilt walls with flimsy piasterboard and drop manyother design features.The needs of the people had to give way, in HUD'sview, to the need to produce the greatest number ofapartments at the lowest possible cost, and to the political need to run up an impressive statistical tally.Angry tenants of Pueblo Nuevo and Cooper Squaredecided to take their problem directly to the source inWashington. With the help of Rep. S. William Green(R-Man.), a meeting was set up with Larry Simons, theHUD man in charge of all federal housing constructionprograms.

The conference room in HUD's Washington officesfilled with Lower East Side residents of all ages andraces who displayed an intensity of feeling thatappeared to unnerve Simons. He offered vague proposals for three story construction in Manhattan,where, he said, "there is pleanty of open space." Heoffered the two groups more units if they would revisetheir plans and build cheaper housing .The tenants became infuriated by Simon's lack of


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(212) 499-4741 JOHN D. PARKERPartner

D. & L. Plumbing Co. andD. Parker and Sons, Inc.(A JOINT VENTURE)

116 St. Marks AvenueBrooklyn, N. Y. 11217 MORRIS LESNIKPartner

A MINORITY JOINT VENTURE COMPANYEngaged in general contracting, plumbing and heating - Has excellenttrack record - Maintains $500,000 bonding - Currently working forUHAB in Manhattan Valley - Community groups contact the above.

Have You Sent UsYour Subscription?To: The Editors, CITYLlMITS, Association of Neighborhood Housing Developers, Inc.115 East 23rd Street, New York, New York 10010Please enter my subscription for on e year (10 Issues) to CITY LIMITS.o Private businesses, foundations, banks, government agencies an d officials, city

wide groups - $20 .00


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City Limits115 East 23rd Street New York, N.Y. 10010

IN THIS ISSUE To o Many Buildings Redemptions 408 West 48th Street CD, Section 8 NSA's Redlining Mitchell-Lama

Documents

City Limits Magazine, January 1979 Issue