Sie sind auf Seite 1von 20
CITY LIMITS
CITY LIMITS

COMMUNITY HOUSING NEWS

CITY LIMITS COMMUNITY HOUSING NEWS MARCH 1979 HPD EVICTION UNIT: VOL. 4 NO.3 ·RENT NOW, REPAIRS

MARCH 1979

HPD EVICTION UNIT:

VOL. 4 NO.3

·RENT NOW, REPAIRS LATER

O.K. - WE GOT A \PB ••• t-tOTHE.R
O.K. - WE GOT A
\PB ••• t-tOTHE.R

by Susan Baldwin

An operation with the sanitized name Tenant Legal Affairs Unit has been functioning in almost total secrecy since last December. It is devoted exclusively to evicting tenants for nonpayment of rent from city-owned pro- perties. Although some 762 three-day notices have been pro- cessed against residents of city tax-foreclosed build- ings, only ten evictions have been carried out since December, according to city figures. Martha Gershun, of the Department of Housing Pre- servation and Development's public affairs office, said the city has received $40,585 in rent arrears since Janu- ary as a result of agreements and judgments in response to the three-day notices.

"Eviction is not what we're looking for," she said, adding that HPD is primarily interested in improving its level of rent collection. At best, rent collection in city- managed dwellings, she explained, is 40 to 45 per cent in the warmer weather. In the dead of winter the collection was much lower because of the lack of heat and hot water. By contrast, collection- in the community management buildings has been about 80 per cent and in tenant-run interim lease buildings, as high as 95 per cent. Asked where the three-day notices are being sent, Gershun said, "Everywhere. All over the city." According to her report, the notices are directed at

tenants in the "better" buildings that have been receiv- ing adequate or basic services and repairs. "We deter- mine to evict on a building-to-building basis," she said, noting that In Rem managers assigned to the Legal Affairs Unit keep up-to-date records of tenants who do not pay rent and report these figures to the unit for evic- tion proceedings. The Legal Affairs Unit has five female attorneys assigned to it. Head of the office is Rita Dattola, for- merly of the Division of Alternative Management Programs (DAMP) under the direction of Assistant Commissioner Philip St. Georges. But Dattola's refusal to return calls to City Limits to submit to an interview are symptomatic of how HPD views this new unit-nervously. Gershun, who returned Dattola's calls, would only say that she was speaking for the unit because Dattola is "shy" and "just getting used to the new job responsibil- ities. " In noting that the eviction unit works with both the general counsel and the office of property management, Gershun indicated that it is a unit that has no allotted placement on HPD's organizational chart. In fact, its accountability within HPD and its various programs remain mysterious and vague. In a departmental memorandum to Mayor Edward I. Koch dated January 12, Commissioner Nathan Levan- thal admitted that the city "has built an astronomical level of rent arrears and with the doubling of the In Rem workload this year, the level of arrears is accelerating." He also mentioned HPD's plans to bring larger numbers of eviction cases. As of October 1, 1978, the HPD rent arrears, Leven- thal pointed out, amounted to $15.9 million and in Jan· uary, the amount had increased to $21.6 million. In his communication to the mayor, Leventhal said the eviction unit had been created to "carry out your [Koch's] express mandate that the city take a far more vigorous posture in seeking to collect rent arrears and evict tenants who fail to pay their rent." At the writing of the memorandum, Leventhal anticipated that the eviction unit would eventually have an active caseload of between 300 and 500 tenants per month. When the city first took over its estimated 10,200 pro- perties with some 37,000 occupied units from the Divi- sion of Real Property on September 1, it did not antici- pate the enforcement of a hard line eviction policy. Instead, it realized that it would have ever increasing problems with simply managing the properties and delivering basic services. Now, however, critics of the city's new eviction policy believe that the city will try to terminate more and more tenants as the weather gets warmer. "We certainly plan to monitor this eviction policy very closely," remarked Mark Goldowitz, of ~he Bronx Legal Services, who said he still could get no clear idea of what the city's "better" buildings are and what con-

~~ ----~--------

stitute adequate services. Peter Wendt and Charles Brennan, of Mobilization for Youth (MFY) on Manhattan's Lower East Side, said they had not heard complaints of increased evictions of tenants, to date, but confirmed that they would be look- ing out for this new development. Several B~ooklyn legal aid units had the same response. In fact, in its quest to find tenants threatened with eviction, City Limits was only able to find one definite case-that of the tenants of 53 Stanton Street, who have sought political support from the White House to the local councilwoman, Miriam Friedlander (D-Man.), in their fight for delivery of services to their building. The city recently issued three-day notices against nine of the 16 residential and commercial tenants in the building. Prior to the deterioration of services under the city's management, the building had 27 residential and three commercial tenants. Fifty-three Stanton Street was taken In Rem last May for failure to pay taxes. After a meeting March 14 with HPD property management and eviction officials in Councilwoman Friedlander's office, the three-day actions against the tenants were suspended, pending delivery of major . repairs and a complete inspection of the building. The building, according to one tenant spokesman, Arthur Male, needs major repairs to the roof, the plumbing, and to the windows. The city attempted to interest the tenants in the inter- im lease program, but the tenants' association has refused to consider this program until major, expensive repairs are made to the building. According to Male, repairs to the building could reach $50,000 to $100,000 for basic work. Under its consolidation program, HPD has reserved some $1,500 per unit for repairs to make apartments habitable. In the case of 53 Stanton Street, $1,500 would not be enough to fix up these apartments, the tenant leader asserted. In a letter from Mayor Koch to Male, the tenants' association was told that "a handyman had been as- si~ned exclusively to your building." The letter from Koch came on the heels of the March 14 meeting in Councilwoman Friedlander's office. Male said the tenants have let up on political pressure to give the city a chance to fix up the building, but they have no intention of paying rent until major repairs are completed. "One thing is sure," Male concluded. "We will not cave in to the threat of eviction if services are not deli- vered. This case certainly could heat up in the near future." In the meantime, the HPD eviction unit shows every sign of continuing to operate in secrecy, but with the city's plan to "beef up" the consolidation unit and close down buidings that are under-populated and expensive to run, it could be that this unit will have to assume a less shadowy pose and come out of the closet. 0

2

SALES POLICY ADOPTED

The tenants at 1714 Palmetto Street in Queens may be homeowners before the end of April, which would make their building the first to be sold under New York City's new sales program to non-profit tenant and community organizations. The Board of Estimate approved the sales policy on March 22. It sets a price of $250-per-unit for buildings in low income (CD-eligible) areas and requires HPD approval of any subsequent resale of the building for three years. The buildings being sold will for the most part be coming out of one of the city's treatment programs- community management, tenant leasing or sweat equity. The buyers will be low and moderate income community and tenant groups that will form non-profit corporations to purchase the buildings. The policy of selling buildings to non-profit organiza- tions is only a part of a much larger developing plan to "dispose of a significant number" of city-owned pro- perties to private owners. A bill to expand the city's ability to negotiate such sales has been introduced in the State Legislature, according to the HPD Commissioner Nathan Leventhal. New York City is now the landlord for some 37,000 occupied apartments or eight per cent of all residential property in the city. The volume will soon increase dra- matically when the foreclosure of Brooklyn properties takes place. It is estimated that the city will need more than $100 million in federal (Community Development) funds next year to manage and maintain all the build- ings it will own by then. Whether the federal Depart- ment of Housing and Urban Development, which ap- proved $41 million this year on an "emergency" basis, will allow such a huge expenditure is not yet known, although Leventhal maintains he is optimistic. At the same time, the city is pushing hard on a number of fronts to reduce its stock by returning properties to private ownership. While there seems to be general endorsement of the $250-per-apartment price tag set of HPD, a number of community organizations objected that the initial sales policy contained no restrictions on subsequent resale of the building. The groups feared that after buying a building from the city, some tenant or community or- ganizations might be tempted to sell their buildings to a developer or speculator for a handsome profit, return- ing the property to the cycle of abuse familiar to many low income neighborhoods. They also protested that HPD had devised the policy without practically any consultation with community groups and tenants. On the other hand, many HPD officials and tenant groups said owners should have the freedom to sell for a good price if they wanted to. HPD officials insisted that $250 was not a subsidized price and therefore resale

3

restrictions were not appropriate. They added that there was not likely to be much of a speculative market in most neighborhoods with large numbers of city-owned buildings. As a result of the objections, HPD inserted a line in the resolution requiring approval by the city agency for any resale during the first three years. "This is to guard against buildings being sold to speculators or similarly disposed of," said Assistant Commissioner Philip St. Georges, who personally had favored an unrestricted sales polciy. St. Georges maintains that the city is capable of pro- cessing 100 buildings through sale in 1979 and 200 buildings next year if there is a like number of commun- ity and tenant organizations ready to buy. st. Georges said it will be HPD policy to inspect all buildings prior to sale and to make whatever repairs are necessary to insure that major systems will work for at least five years. Asked if that meant the city would guarantee the systems for five years, St. Georges said no. He said the sold buildings would be eligible for tax abatement for renovations paid for by the new owners. 0

HISTORIC BANK PACT

The Dime Savings Bank of Williamsburg in Brooklyn has signed an agreement that community residents regard as a crowning success to their long campaign to stimulate more mortgage and home im provement loans in their neighborhoods. The agreement signed on March 5 pledges the bank to provide at least $1 million in loans over the next year on relatively low downpayment terms. Buildings for which loans are sought will be evaluated individually rather than on a basis of their general location. Moreover, the Dime of Williamsburg committed itself to enforcing the "good repair clause" of its mortgages to encourage landlords to correct substandard conditions in their buildings. The bank can offer a debt moratorium on mortgage payments until repairs are made; refinance the mortgage or offer a mini-loan; foreclose if necessary on an owner who fails to make necessary improvements. It also promised to advertise the availability of mortgage and home improvement loans, inform neigh- borhood non-profit organizations of properties that are in foreclosure, take into account past ownership histories to discourage speculation and participate in a community-wide program to provide grants or loans to tenant associations during the winter. The affirmative action agreement was signed by Joseph F. Ujazdowski, president of the Dime of Williamsburg, and Marie Leanza, chairwoman of the GreenpointiWilliamsburg Committee Against Redlining after months of meetings. 0

'.

RGB IS SET TO RULE AGAIN ON RENT INCREASE CEILINGS

by Michael McKee

A good deal of commotion has surrounded the New York City Rent Guidelines Board in recent months as it began the process of reconsidering, under court order, the rent increase guidelines it promulgated last year for rent stabilized apartments. The RGB was sued last summer by the Rent Stabiliza- tion Association, the owner organization which ad- ministers the "self-regulating" rent stabilization system. The RSA claimed that the guidelines were too low. Supreme Court Justice Martin Stecher did not address this issue, but agreed with the RSA and tenant representatives who had intervened in the lawsuit that the RGB had violated the state's Open Meeting Law by holding meetings which were unannounced and not open to attendance by the public. On September 25, 1978 Stecher issued an order requiring the RGB to reconsider Guidelines Order No. 10; he also ordered the board to allow the public to submit comments on the guidelines, reversing the board's past practice. By mid-February the RGB had received analyses by the RSA and an ad hoc coalition of tenant organiza- tions, as well as over 600 letters, all but 29 of them from tenants. At a packed public meeting of the board on March 7 representatives of both sides made oral presen- tations on the guidelines. A decision on a revised Order No. 10 will be made at a second RGB meeting on April

4.

The annual guidelines, effective from July 1 to June 30, set rates landlords may charge tenants when their leases expire, as well as rates for new rentals. Under the city's rent stabilization law, augmented by the state's Emergency Tenant Protection Act of 1974, landlords must offer tenants a renewal lease, and tenants must pay the current guidelines increase upon signing. Order No. 10 set maximums of 3.5 per cent for a one- year lease, 5.5 for two years and 7.5 for three. An additional 5 per cent vacancy increase is allowed for new rentals, although in practice landlords ignore this limita- tion. These were the lowest guidelines in the board's nine- year history. However, they were far higher than ever before in relationship to owners' actual operating cost increases, up only 0.5 per cent over the previous year according to the annual "Price Index of Operating Costs" conducted for the RGB by the U.S. Bureau of Labor Statistics.

Michael McKee

is coordinator of Peoples Housing

Network, the statewide communications and training network.

In years past the allowable increase for a one-year lease has generally been one percentage point above the BLS index. Tenant leaders were startled that the one- year guideline was three percentage points above the price index. In its analysis of Order No. 10 the ad hoc tenant coalition defended the BLS index as "the only objective data available" to the RGB, and criticized the "qualitative factors"considered by the board (cash flow, the cost of money and "the value of different types of investment as compared to investment in stabilized multiple dwellings") as "capricious and unwarranted." Attacking the BLS index as "abnormally low," the RSA last fall conducted a survey of its members, asking them to provide data on their expenditures for the calendar years 1976 and 1977. The survey mailed to owners was accompanied by a letter from new RSA president Frank Kristof which identified the purpose of the survey as intending to prove that the 1978-1979 guidelines were too low. While the BLS index has been generally accepted for a decade as a source of objective data on cost increases for operating stabilized housing, the RSA claimed that expenditures, not prices, should be the basis for deter- mining the guidelines. Under the law, owners who feel they are not adequately compensated by the guidelines can apply for special "hardship" increases which, if granted, are imposed on top of the guidelines. A miniscule number of owners apply each year. These issues were argued and discussed before the RGB at its March 7 meeting, punctuated by raucous behavior from the audience of several hundred tenants and landlords. Representing the tenant viewpoint were Bill Rowen, Southern Region chairman of the New York State Tenant and Neighborhood Coalition, and Dr. Phillip Weitzman, research director of the Working Group for Community Development Reform in Wash- ington, D. C.

Rowen and Weitzman had prepared the tenant sub- missions to the RGB. One of these was a critique of the RSA expenditure survey, which they described as biased (owners with low cost increases had strong incentives not to supply data, as the purpose of the survey was clear); unrepresentative (tilted toward larger buildings); and consisting of "undefined and unaudited" data (owners were given no definitions or instructions on how to complete the survey-for example, no distinc- tion was made between ordinary repairs and capital improvements). Furthermore, the RSA survey used calendar year data, whereas the BLS index measured cost increases from April 1977 to April 1978. This is

4

especially significant because there had been a sharp decrease in the cost of heating oil during the first four months of 1978, the major reason for the small rise in the BLS index. A fatal flaw in the RSA survey, according the Rowen and Weitzman, is an absence of a sample design and methodology, standard procedure for such a study, necessary as an indication of the statistical reliability of the data. This criticism was also made by Herbert Bienstock, regional commissioner of the U.S. Bureau of Labor Statistics, who on February 20 wrote the ROB:

"The absence of a section describing the sample design and methodology used to develop the expenditure data precludes any detailed evaluation of the RSA report. Absence of this information may have some additional relevance here, since questions of self interest might be raised." Representing the owners at the March 7 hearing was RSA counsel Arthur Richenthal. He predicted increas- ing owner non-compliance with the rent stabilization law unless the guidelines were raised, and dismissed the tenant criticisms of the RSA survey as "hyper- technical." Kristof was present but did not testify, fueling speculation that he was unwilling to stand too strongly behind his expenditure survey in light of the attacks on it. Richenthal also asked the ROB for an additional "pass-along" increase to compensate owners for sharp fuel cost increases during the November 1978 to February 1979 period. The ROB voted unanimously to consider this matter. However, the RSA subsequently withdrew this request, raising uncertainty as to whether the ROB will consider it at the April 4 meeting. Normally these cost increases would be reflected in the April 1978-April 1979 BLS index, and would result in higher guidelines for 1979-1980, which the ROB is expected to announce in late June. An unexpected and somewhat unsettling element was added to the issue on March 28 when Mayor Koch appointed two new public members to the Rent Ouide- lines Board who had not participated in the earlier deliberations. Carolyn Odell, for 16 years a housing specialist with the Community Service Society and currently deputy director of the Temporary State Commission on Rental Housing, and Scott Mollen, an attorney, were named to replace two board members whose residence on Long Island precluded their continued service. Both tenant and owner representatives expressed concern that the new members would not have sufficient time to review submitted material prior to the ROB's April 4 meeting. Rowen likened the situation to "changing juries in the middle of a trial." 0

5

COUNCIL RENEWS RENT SYSTEM

the middle of a trial." 0 5 COUNCIL RENEWS RENT SYSTEM Lee Sterling The City Council

Lee Sterling

The City Council voted overwhelmingly to renew rent control and rent stabilization for the next three years. Thirty-six members of the 44-member body went on record in favor of the legislation. Only one Council- member, Leon Katz (D-Bkln.), abstained. The vote came after two days of public testimony and questioning during which a substantial number of rent control opponents appeared before the Council's Hous- ing and Buildings Committee to complain about the ills of this legislation. Had the legislation not passed, both rent control and rent stabilization would have expired March 31. In his presentation in support of rent control and rent stabilization, HPD Commissioner Nathan Leventhal said there are 2,724,000 housing units in the City of New

York; 1,988,712 or 73 per cent are renter units of which only 58,682 or 2.95 per cent were found by the U.S. Census Bureau to be vacant and available for rent. This 2.95 per cent rental vacancy is well below the statutory limit of five per cent set by the Council for the contin- uation of rent control. He also pointed out that only 2.76 per cent of apart- ments renting for between $125 and $149 a month were found to be vacant, and only 8,000 apartments renting for $300 were available, representing a 3.12 per cent vacancy rate. Commenting on rent control, one opponent, Lee Sterling, of the American Property Rights Association, Inc., said, "People who are against property rights are

for dictatorship

control is destroying the city. The MBR [Maximum Base Rent] system is a phoney. It does not permit land-

lords to maintain property and pay taxes." A number of community and tenant groups as well as elected officials testified in favor of both bills. 0

Most Councilmen admit that rent

COUNCIL EYES RENT IN CITY'S UNITS

by Susan Baldwin

A very weak and possibly compromising resolution that permits the city to raise rents on its vast number of tax-foreclosed properties without guarahteeing delivery of basic services was held over at the City Council March 27. Even though the measure constituted an amended bill, it was permitted to go to the Council less than 24 hours after it was passed in committee as an emergency act. Such a bill requires a two-thirds vote for passage. The amended bill, known as 594A, passed the Coun- cil's Committee on Housing and Buildings by a vote of five to one after two days of testimony during which it received a great deal of criticism. Intro.594 had asked that any occupied rent controlled unit (hat had been taken in a tax-foreclosure proceeding and had subsequently been sold by the city would be decontrolled and go into the city's rent stabilization system. This would mean that the city or anyone who bought the property could set the amount of rent with- out restriction. Although the amended bill contains language that can, at best, be described as confused, it does guarantee some limited advances for tenants: namely, landlords cannot allow their buildings to go In Rem and then redeem them with the idea of de-controlling the rents; rents cannot go above the Maximum Base Rent (MBR), the rent ceiling that will be set for these city-owned apartments and rent control will be preserved. Critics of 594 and the amended 594A claim that there still are no guarantees that rents will not be raised far above the level justified by the quality of maintenance provided by the city. The city, on the other hand, contends that it needs the new legislation to promote sales of its thousands of In Rem properties back to the private sector. Calling the new legislation and its implications a " canard," Councilman Leon Katz (0-Bkln.) said, "I have generally supported the Administration, but with

this bill I find myself almost in a state of shock

bill is probably one of the most ridiculous pieces of

legislation

going to fall down. It's a shame." Katz was the sole vote against 594A during the committee roll call. Earlier at the committee hearing, Katz, presented an amendment that would have forced the city to make a substantial commitment-22 per cent of the assessed valuation-to its properties before it could restructure rents and sell property. His amendmend was defeated. At the first hearing on Intro. 594 March 23, Commis- sioner Nathan Leventhal, of the Department of Housing Preservation and Development, testified in favor of the legislation, stressing that "it is critical that buildings be returned to non-city ownership in an economically self- sufficient way. "

This

If it ever passes, a great deal of housing is

"It is not our desire to impose a hardship on tenants," he added. "At the same time, it is our desire to achieve self-sufficiency so the buildings do not come back into

city ownership." Questioned by Katz about the city's making an invest- ment in its properties, Leventhal said that HPD would "very strongly object' 'to having to put 22 per cent (of the assessed valuation) into a building before sale. During the same hearing, William Rowen, southern region chairman of the New York State Tenants and Neighborhood Coalition, said of the bill, "Essentially,

this is an 'In Rem decontrol' bill which would serve

much more directly the interests of private landlords and speculators who would be interested indeed in acquiring city-owned properties whose rents have been

'restructured.' " He also said that if this bill were approved, the "city's poorest and least mobile citizens, in the large part the elderly and handicapped" would be the most penalized. Both Katz and Councilwoman Ruth Messinger (O- Man.) have been very critical of the city's reliance on using federal Community Development (CD) funds to repair and maintain its In Rem properties. Leventhal and HPD officials' lobbying for Intro. 594

and

594A have said that if the legislation were passed,

the

city would have a much better chance of receiving

CD

funds to run its tax-foreclosed properties because,

under this legislation, they hope to be able to sell the property back to the private sector-a move that is supported by the federal government. During the committee debate on 594A, Messinger stated that it was inappropriate for city officials to rely on CD funds to maintain the In Rem housing as a way

for the city to duck its responsibility for handling this

property. "I think you should go a little bit easy on CD fund- ing," she said to Marvin Markus, HPD's representative who helped draft 594A. "We're tired of hearing about CD. What you're really doing is asking not to codify [any requirements] for repairs, and yet you want to restructure rent." Messinger also said that any rent restructuring should involve correction of major violations on buildings. When she asked Leventhal to support this amendment,

he refused. Several Councilmembers claimed that they were uneasy voting for 594A but stressed that they were supporting the bill to show "good faith" in the Admin- istration. Councilman Stanley Michels (D-Man.) explained his vote in favor of the bill this way. "I voted for it because I wanted to be sure that there

I wanted to save rent control, I also wanted to believe in

was a cap on rent cor

and I think this bilI does

6

the commissioner [Leventhal]. He spoke to us before the vote, and said our support was very important." Alan H. Wiener, area director of HUD, also lent his support to the legislation in a letter directed to Leventhal that was read at the Council. Referring to HPD's plans to dispose of the In Rem properties, he said, "HPD's policy guidelines for the sales of In Rem buildings to non-profit entities in CD eligible areas is one such step. Another step that should be given serious consideration is an adjustment in the present workings of the rent regulatory system as it applies to In Rem buildings." The main problem with 594A is justifying the pay- ment of more rent for little or no services. Critics have said repeatedly that they support rent restructuring in buildings enrolled in the city's treatment programs (e.g. community management, interim lease) because they are receiving services. The city claims it must raise rents because the In rem program is exorbitantly expensive. And tenants claim that they must receive services if they are to pay rent. 594 A will be heard April 10. 0

SOLAR MECHANICS

HUD has extended until April 26 the deadline for applying for solar energy grants under the fifth and final cycle of the federal demonstration program, which so far has equipped 11,500 residential dwelling units with solar systems. Round Five, which contains more than $2 million, stresses for the first time solar installations in multiple dwellings housing low and moderate income families. Projects by neighborhood housing organizations that combine rehabilitation with energy efficiency are eligible. There will be two stages to Round 5. The first will be a competition for design. HUD expects about 25 awards of $5,000 each to help organizations design a solar system to be used when multi-family buildings are rehabilitated. Those with winning designs will receive up to $50,000 to construct and install their systems.

A second category will be energy conserving solar

systems in new single-family homes.

In New York City, a program that will train 15 people

to install and maintain solar energy systems is about to be launched. Called SUEDE (Solar Utilization, Economic Development and Employment), the program will result in the installation of 12 solar energy systems, half in single-family homes and half in multiple dwellings for a total of about 65 units. The $400,000 plan, which was prepared by the Energy Task Force, combines funds from the Department of Energy and the Community Services Administration to pay for the solar equipment with funds from the

Department of Labor (CETA) to pay salaries. The Board of Estimate has to approve the CETA funds for

7

SUEDE. The goals of the program, according to ETF, are to provide training that will lead to jobs in the solar or related fields and to reinforce the need to apply the most appropriate energy technology in low income neighborhoods.

The ETF plan also addresses a couple of troubling issues, mainly the absence of a strong solar energy market at the present time due to the high cost of solar equipment for low income people and the relatively small level of government subsidies available. "Federal solar dollars are somewhat in question as there does not appear to be any guarantee of HUD demonstration dollars in 1980," ETF said in its propos- al. One alternative suggested by ETF is Community Development Block Grant funds, although New York City has never allocated CD funds for solar energy. "It

is [hoped]

that both solar installations and solar

employment will develop near enough in the future to provide ongoing commercial expansion of the industry and at the same time employment for low income trainees." Most of the 12 energy systems to be installed will include rooftop solar collectors, purchased from Standard Solar Collectors, a minority-owned company in Brooklyn, and will range in cost from $1,200 for single- family homes to $36,525 for the largest mUltiple dwell- ings. Two of the systems will be passive solar wall heaters, panes of fiberglass bolted to outside walls that collect and radiate heat. No sites for the solar systems have been set as yet. ETF said it is having difficulty finding single-family buildings that both meet the federal low-income guide- lines and are in good enough condition to justify the investment of the solar equipment. ETF, which provides educational information and technical assistance to community organizations on alternative energy issues, has been out of funds since January but expects to return to full-scale operation with the start of SUEDE.

Energy, Retrofit

On a related topic, a five-story tenant-owned and managed building at 219 East Fourth St. in Manhat- tan is saving energy thanks to a series of improvements, including thermal shutters, new wall insulation, valves to control the flow of hot water and installation of a second entry door. The cost was about $8,500, paid for by a CSA grant, and the"payback period is expected to be five to eight years, according to Chip Tabor of ETF. He said ETF would like to perform what he calls the "Occupied Building Energy Retrofit" on four other buildings. ETF also offers an energy auditing service in which, for a very small fee, a specialist will assess the thermal efficiency of a building, recommend ways of cutting down heat loss and estimate costs. ETF's chief energy auditor is Larry Levan. ETF's number is 675- 1920. 0

CETA JOBS RESTORED

HPD, which proposed last November that the CETA

VI program of the Association of Neighborhood

Housing Developers be slashed from 335 jobs to 80 jobs, has agreed to restore a large number of the slots. In several negotiating sessions held since a demonstra-

tion by about 200 people at HPD on Jan. 29, the housing agency has yielded to the following:

-A doubling (to 160) of the number of jobs for groups in the disputed ANHD package. -The inclusion in the ANHD umbrella of several organi- zations not recommended for any jobs under HPD's initial proposal. - The right for ANHD to decide about allocations of

job slots among the 38 housing organizations under its

CETA umbrella.

HPD, in turn, obtained ANHD's agreement to take administrative responsibility for a couple of subcontrac- tors not in its original proposal, bringing the total number of jobs in the contract to 194. Although the current CETA contract expired at the

end of March, ANHD has received approval to extend it

until the end of May and will be seeking Board of Estimate approval to roll it 'over under Sept. 26, when the new contract would begin. ANHD has also been fighting for an increase beyond

the nearly 5,000 CETA slots currently available to the non-profit sector on the assumption that New York City

will n6t be able to meet the low average income ($8,690

per year) required by the federal government for CETA public service employment. New York City is not even close to the recommendation by the Department of Labor that a "substantial" proportion (generally inter- preted as one-third) of CETA VI jobs be allocated to non-profits.

At a March 8 meeting of the citywide CETA VI

coalition, a spokesperson for ANHD asked the coalition

for cooperation in pressing this demand; volunteers

from Colony-South Brooklyn Houses and the College for Human Services offered to work with ANHD on developing strategies. The coalition's transition committee has been meeting regularly with Department of Employment staff to develop mechanisms to assure that current CETA VI

employes will be able to transfer into projects under the

new contracts.

Representatives from CETA organizations in the ANHD umbrella met with staff aides to the borough presidents of Manhattan, Brooklyn and the Bronx in the hope of getting assistance for the effort to win more jobs for the non-profit sector. In each case, ANHD people were told the borough presidents agreed with the ANHD position, but none expressed a willingness to take the lead in setting up meetings with city officials.

Susan Gould

8

ANHD NAMES BETTY TERRELL AS ITS. EXECUTIVE DIRECTOR

The appointment of Betty Terrell as executive director of the Association of Neighborhood Housing Devel- opers has been announced by ANHD President Margaret McNeill. Terrell, director of the Moris Heights Neighborhood Improvement Association in the Bronx in 1977-78, has more than 10 years of experience working with tenants who have housing problems. She has designed a model for a community corporation to own and manage build- ings under control of the tenants. Her housing career began when she organized her own apartment building. Later she worked as a volun- teer with the Metropolitan Council on Housing and MHNIA before becoming its director. Terrell, who is 36, attended the Monroe Business Institute, Bronx Community College and Hunter College.

MILLIONS UNSPENT FOR CD

Nearly half of the $343 million in federal Community Development funds allocated to New York City from 1975-78 has not been spent, according to a City Council report that was sharply critical of the city's management of the program. Mayor Koch, acknowledging the criticism, agreed to a request in the report that the city's CD application be submitted for approval to the Council as well as to the Board of Estimate. "When I took office in January, 1978, I too, found the program poorly sup<:rvised, lacking coherence and badly managed and took steps to improve its adminis- tration," Koch said in a statement. D

NEIGHBORHOODS ON THE AIR

"New York Considered, " a weekly radio program on WNYC-AM and WNYC-FM, takes a listen at life in New York City's diverse neighborhoods.

The format includes news, features and a documen- tary-style exploration of a local community. Recent programs have focused on Roosevelt Island, the Banana Kelly Community Improvement Association in the South Bronx and Woodside on the Move in Queens. "New York Considered" is aired every Tuesday (4:30 p.m. on WNYC-AM and 6:30 p.m. on WNYC-FM) and re-broadcast at the same time on Fridays.

Peter

Freiberg. For information call Peter Freiberg at 566-4577 or 758-7939 or write to WNYC, 2500 Municipal Building, New York, N.Y. 10007. D

It

is

produced

by

Marty

Goldensohn

and

HPD APPOINTMENTS

Charles Reiss, former director of housing at the City Planning Commission, is the new assistant commission- er for community development at HPD. His appoint- ment is effective April 9. Reiss replaces Barry Light, who, after ten years with the city at HPD and CPC, is going to work for the State Urban Development Corporation. Asked to explain his reasons for leaving HPD, Light said, "I thought it was time for a change. I have been with the city a long time. I wanted to try something dif- ferent. " Light described his employment plans at UDC as "intriguing," but said that he could not comment further on his new job as he is not sure what his duties will be. For the past eight months Reiss has served as director of housing at CPC and, prior to that, he was director of the Staten Island office of City Planning where he was in charge of waterfront and water quality studies. From 1968 to 1971 he served with the mayor's office as execu- tjve director of the Urban Design Council. "I am looking forward to my new job," Reiss said, stressing that he hoped to run his department as "effi- ciently as Barry did. " In his new job Reiss expects to push for more con- struction of one- and two-family homes in low and moderate jncome neighborhoods. He also said that his office would be revitalizing the old Section 235 pro- gram in an effort to stimulate low cost mortgages and provide for home ownership on vacant city-owned urban renewal sites around the city. This program, he explained, allows for low-interest four-and-a-half per cent mortgages. Philip Johnson, director of project planning and development at HPD, has been assuming the assistant commissioner duties on a temporary basis while inter- views for Light's replacement were going on. In other HPD business, the departure of long-term Deputy Commissioner Peter Joseph in the Office of Development has been widely rumored but not con- firmed. Reached by City Limits, Joseph acknowledged the talk of his imminent departure in housing circles but refused further comment. D

NEIGHBORHOOD PRESERVATION

Additional funding for the state's Neighborhood Pre- servation Companies program has been the subject of negotiations as the state legislature and the governor moved toward adoption of an executive budget for the fiscal year, beginning April 1. Gov. Hugh Carey had requested $4,925,OOO-the same amount appropriated last year.

9

The New York State Tenant and Neighborhood Co- alition has been lobbying to increase this appropriation to at least the $7,925,000 requested by the State Division of Housing and Community Renewal. NYSTNC main- tains that Carey's request will result in no new groups being funded and a freeze in the grant amount currently made to 118 neighborhood organizations funded under the program. As City Limits went to press, legislative leaders seemed to be heading toward agreement to increase the appropriation to $6,925,000 either in the executive budget or the supplemental budget to be adopted later in the session. D

SCHOOL FOR ORGANIZERS

Peoples Housing Network has begun another series of training sessions for people interested in learning about community organizing. The to-week program, which began March 27, covers community and tenant organizing, sweat equity home- steading, rent control, fund-raising insurance redlining, the state legislature and community reinvestment. The classes are $3 each or $25 for the entire course. PHN also offers specialized on-site training sessions for organizations that wish to have their staff trained. For further information call Roger Hayes or Michael McKee at 533-5650.

CD CONFERENCE PLANNED

The New York City Housing and Community Development Coalition will hold its fifth annual CD Conference May 3 from 9 a.m. to 4:30 p.m. at the Harlem State Office Building: Contact Brian Sullivan or Pat Swan at Pratt Center, 622 - 5026.

_CITY LIMITS.

published monthly by the Association of Neighborhood Housing Developers Inc., Pratt Center for Community and Environmental Dev~lopment, and the Urban Homesteading Assistance Board.

Editorial Office: 115 East 23rd Slreet, New York, New York 10010 (212) 674-7610

Editor Assistant Editor Design and Layout

•.••. ••

.•

• .••

• . Bernard Cohen Susan Baldwin Louis Fulgoni

Copyright 1979. All rights reserved. No portion or portions of tills jourlUll may be reprinted without the express written permission of the publishers.

This issue was funded by grants from Citibank, Bankers Trust Co. and Riverside Church. City Limits wishes to express special appreciation to the Consumer-Farmer Foundation for its encourage- ment and support.

HUD PROPOSES WAYS TO BLOCK EARLY·SALE OF SECTION 8'S

by Bernard Cohen

Despite some doubts about how real the problem is, HUD is taking steps to prevent owners of subsidized low-income (Section 8) housing developments from cashing in on low-cost borrowing and tax benefits, then quickly selling their properties and displacing poor ten- ants. Two steps under serious consideration by HUD would prohibit an owner from pre-paying a federally insured mortgage to get out from under federal supervi- sion and would bind the owner to the full 20 to 4O-year term of the Section 8 contract, doing away with the cur- rent practice of allowing owners to renew or opt out of the contract every five years. The latter proposal is being incorporated in a revision of the Section 8 regula- tions that will soon be proposed by HUD. The purpose of the proposed changes is to prevent the loss of low income housing units; although interviews with a dozen federal, state and New York City housing officials turned up widespread doubt that early conver- sion of Section 8 projects to unsubsidized housing will be a problem in the forseeable future, particularly here.

"The factual circumstances do not exist as far as I can see in the City of New York," said Roger Simons, act- ing executive director of the New York City Housing Development Corp., which is financing 3,000 to 4,000 units of Section 8 housing. "I'm not going to say it can't happen, but I think it is highly unlikely," said Deputy Commissioner Peter Joseph of the city's Department of Housing Preservation and Development. Nevertheless, since the housing subsidy program is barely five.years old, and since no contracts would have come up for renewal as yet, officials acknowledged that it was too soon to pass judgement. Some say they could conceive of scenarios in which there might be market conditions in areas of growth that would be conducive to conversion of projects in the future. 'Section 8 is a rent assistance program in which the federal government.pays the difference between 15 or 25 per cent of a low-income family's adjusted income and an established rent for the apartment. It was created in

1974.

Although HUD says it has been aware of it for some time, the sale issue lacked visibility until January when the General Accounting Office published a letter to Sen. William Proxmire, chairman of the Committee on Banking, Housing and Urban Affairs, stating that it had detected a serious problem with the Section 8 pro- gram. "This problem could immensely reduce the effec- tiveness .and increase the costs of housing assistance by

10

allowing private investors who own and operate Section 8 housing to sell their projects or convert them to con- dominiums in as little as five years. This would likely result in the displacement of low and moderate income tenants and is in marked contrast to the much longer service which.can be expected from a program such as conventional public housing which should serve subsi- dized tenants for at least 40 years at much lower costs." Predicting that the cost to the public of premature sales could run into the hundreds of millions of dollars, the GAO letter blamed the five-year renewable contracts combined with the rapid build-up of tax shelter benefits that provide an economic incentive to unload the pro- perty after 10 years. It estimated that after recapture and capital gains taxes are paid, investors could expect yearly rates of return of about 28 per cent and 32 per cent on multi-family properties sold after five or 10 years respectively. HUD officials said privately that the GAO letter was "alarmist" and that GAO's analysis was based on hypothetical conditions that were so favorable that they lacked credibility. "I think many on staff here feel the GAO financial analysis does not reflect the real situa- tion of owners," one said. Joseph Burstein, counselor to HUD Secretary Patricia Harris, said, "I know of no such case where this has ever happened. The question has been raised theoreti- cally by the GAO and we are taking care of it; but it has never happened to my knowledge." Another HUD staff 'member, who asked not to be identified, said the five-year intervals had been written into the contracts for the benefit of HUD. "It was not to allow them [owners] to escape. It was to allow us to look at the project." He predicted that developers will be delighted to get a stronger lock on a 20-year Section 8 contract. One of the confusing elements of the problem is that ther.e is a variety of methods for financing buildings that will have the Section 8 subsidy. Among them are con- ventional bank loans; HUD/FHA mortgage insurance; below market rate interest loans from state and city finance agencies, which sell bonds; Section 202 loans to build housing for the elderly poor; Farmers Home Ad- ministration loans for housing in non-metropolitan areas. The newest financing mechanism involves sale of tax-exempt bonds by a Public Housing Agency. The first modification that HUD is proposing, prohi- biting early refinancing, would apply to Section 8 pro- jects with HUD-insured mortgages, said to cover about 90 per cent of the rent assistance program. As of now,

there is nothing to stop an owner from paying off the HUD-insured mortgage and finding another means of financing, such as a conventional bank loan. "If anyone got into our program and got the advantages of our insurance and Section 8, I think they have the obligation to stay with us, but legally they have the right not to stay with us," said Alexander Naclerio, director of housing for the New York area office of HUD. The second modification, requiring adherence to the Section 8 contract for at least 20 years, would apply to all developments. In New York City, there are a number of existing factors weighing against premature sales. Any Section 8 developments financed with bonds sold by the State Housing Finance Agency or the New York City Community Development Corporation, are gov- erned by state law, which prohibits refinancing for at least 20 years and requires approval of the supervising agency (HFA or CDC) for any sale. In addition, the law provides for substantial recapture of tax benefits from a housing company that is dissolved early on. Stringent rent laws protect tenants from summary evictions. Beyond the legal protections are the weak market conditions of most New York City neighborhoods where Section 8 is being built, according to many local housing officials. Saying it was difficult to imagine the buildings surviving on their own, they asked what devel- oper would buy without the subsidy attached and what tenant who did not need the assistance would move in. By definition, "the structure needs Section 8, and with- out it it is not feasible," said Naclerio. "It isn't very relevant to New York," said Linda Field, who assembles Section 8 loan packages for developers. While agreeing with that view, Stanley Berman, a tax lawyer who represents major housing developers, said the GAO criticism nevertheless was valid. He said Sec- tion 8 projects are going up in suburbs and in so-called transitional urban neighborhoods that could appreciate in value sufficiently in five or ten years to make conver- sion through refinancing, outright sale or filling vacan- cies with unsubsidizea tenants an attractive proposition. Joseph said developer contacts of his also foresaw such possibilities. "If in fact the purpose of the subsidy is to assist low income people then HUD is remiss in not re- quiring a minimum of 20 years with no prepayment," said Berman. He noted that other federal housing pro- grams, including the 236 mortgage insurance program, included such a condition. Ronald Shiffman, director of the Center for Com- munity and Environmental Development at Pratt Insti- tute, said the Clinton neighborhood on Manhattan's West Side was an example of an area that could develop sufficiently in the near future to make conversion of a Section 8 project a possibility. The GAO report said the potential. problem was un- covered in the midst of a study of the strengths and weaknesses of the different ways of financing housing

that has the Section 8 rent assistance. "We stumbled on this as a side trip," said William Gainer of GAO'·s Program Analysis Division. Gainer said he saw nothing wrong with offering lucra- tive incentives to build low-income housing "as long as there are sufficient controls to assure that the housing serves needy tenants for 20 years." D

ANTI·REDLINING RULES

The state Banking Board recently adopted by a vote of nine to one regulations to combat wholesale redlining of communities by banks. The board's action came three months after state legislators met with Governor Carey and received a commitment from him to secure these regulations. Modeled after federal guidelines under the Community Reinvestment Act of 1977, the regulations require banks seeking to merge, expand, or open new branches to show how they meet the credit needs of the communities they serve. This information is to be on file for public scrutiny. 0

MUSLIMS CLOSE LOAN

After a number of months of delay, the city's first sweat equity participation loan was closed and 14 Muslim families are living in spacious low rent homes in West Harlem. The two rehabilitated buildings, 55 St. Nicholas Avenue and 132 West 113th Street, were renovated by the Sunni (Orthodox) Muslim community whose Mosque is located in a renovated brownstone at 257 West 113th Street. Funds for the rehabilitation came from HPD's Participation Loan program supplemented by a Ceta Title I rehab contract. The cost of rehabilitating each unit was about $22,000 for a monthly rental of about $50-a-room. Chemical Bank provided the construction mortgage. The New York Bank for Savings is handling the permanent 25- year mortgage. In th~ participation loan, the city puts up a portion of the mortgage money needed for the rehabilitation at one per cent interest and the private lender puts up the rest at the market rate. Commenting on the closing, Theodore Ferguson of Chemical Bank, said, "We're out of it now. We're happy that the people are living on the property. The workmanship is superior." The Muslims expect to rent the commercial space as a herbal tea room and health food market within the next few months. D

11

CETA VII LOOKS TO PRIVATE SECTOR

by Gini Sherry

On October 27, 1978, when President Carter signed the Comprehensive Employment and Training Act (CETA) Amendments of 1978 into law, a new CETA era was quietly ushered in. Embodied in Title VII, a new section of CETA, is a two-year demonstration program, the Private Sector Initiative Program. Title VII represents a potentially significant new thrust in national CETA policy. It is, specifically aimed a increasing the participation of the private sector in em- ployment training programs in order to increase the level of permanent unsubsidized job placement for "economically disadvantaged" persons. How this goal will be accomplished is suggested by the federal Depart- ment of Labor's proposed regulations for the Title VII program, which call for the creation of a "local partner- ship" between private sector business and industry and each CETA prime sponsor (that is, the government unit requesting CETA funds; in New York's case, the City of New York). The partnership is to be spearheaded in each city by a Private Industry Council (PIC), an organization which must be formed or designated by each prime sponsor

interested

and other prime sponsors to establish PICs, the Depart-

ment of Labor is providing $25,000 planning grants to 450 prime sponsors nationwide.

in receiving CETA VII funds . To assist cities

Broad Responsibilities

PICs will be the center of Title VII activities in each prime sponsor area, and the proposed regulations indi- cate they will have broad power and responsibility for policymaking, research and analysis, program development, and funding and administration of grants, contracts and programs. Members of the PIC board are to be appointed by the prime sponsor; majority position on the board is reserved for private sector business and industry representatives. The regula- tions further suggest, but do not mandate, that at least half of these representatives be from businesses and industries employing less than 501 employees. Other required membership on the PIC board i\lcludes repre- sentatives of organized labor, community-based organi- zations and educational agencies or institutions, although no specific representation formulas are pre- scribed.

It appears that the program is intentionally designed to allow prime sponsors and PICs an enormous degree

Gini Sherry is on the staff of the Pratt Institute Center for Community and Environmental Development. She is working on neighborhood economic development issues and strategies.

of flexibility in their approaches to training and

securing permanent private sector jobs for the

unemployed and underemployed recipients of CETA

VII

services. In fact, an explicitly stated goal of Title

VII

is a reduction in the number of CETA-subsidized

private and public sector jobs, a goal echoed in the Administration's fiscal year 1980 budget. The Carter budget proposes a $729 million slash in CETA, including a reduction in the number of public service (Title VI) jobs from 625,000 as of September 1979 to 467,000 as of September 1980. At the same time, the budget includes a $400 million appropriation request for Title VII to be used during the current fiscal year. Clues to the direction and design of CETA VII programs permeate the proposed regulations. A major emphasis is placed on identifying and plugging the labor demand needs of the private sector-discovering where permanent job opportunities are available and training

people to fill these jobs. Techniques for accomplishing

this

include entering into on-the-job training contracts

with

private businesses and industries for partial trainee

wage reimbursement; development and administration of other training programs; and entering into contrac-

tual agreements with private firms, neighborhood-based

organizations and educational institutions to achieve the increased job opportunity goal.

Local Economic Development

Precisely because the scope of Title VII is broad and rather open-ended, it is critical that the specific goals

and objectives of a prime sponsor's approach to the

program be carefully reviewed and analyzed, particular- ly from the viewpoint of how funds can best be utilized

to support local economic development activities. Since

the aim of Title VII is to increase permanent job

opportunities in the private sector, it seems clear that funds should be directed, as much as possible, to those

businesses and industries with potential for expansion and growth. In addition, criteria should be developed so

that preference is given to private sector firms that are

labor intensive, locally owned and managed, and generate a demand for additional locally produced

goods and services, thereby further expanding the local ecomonic base. In New York, this approach would suggest that the PIC work closely with citywide and neighborhood- based nonprofit organizations involved in the design

and planning of economic development strategies and

programs to identify existing and new enterprise job op-

portunities most appropriate for Title VII support. Keeping in mind that the emphasis of Title VII is to train people for permanent jobs in private sector

12

businesses and industries, the program could be used to assist the following kinds of efforts:

• Supporting the retention or expansion of locally-

based firms capable of providing training and long-term jobs for neighborhood residents presently lacking skills

needed by these firms.

• Providing special assistance to the small business

sector of New York's economy; authoritative studies indicate that almost all new private sector jobs are

generated by the small business sector of the economy,

and that about 80 per cent of these jobs are created by

firms with 250 or less employees and a full 50 per cent

by firms with 50 employees or less; by targeting CETA

VII

assistance to small businesses with growth potential,

aid

could be given to that section of the private sector

which tends to be locally owned and managed. • Supporting innovative efforts of neighborhood organizations to develop locally-based businesses under worker cooperative ownership or joint worker-

community ownership.

Nothing In Writing

New York City's Title VII planning and polic),making process is yet to be disclosed. The Department of Employment's office of Policy and Program Develop- ment, charged with oversight of the program, has no written material available as of yet concerning the expected design and operation of CETA VII. Likewise, the city's Private Industry Council is unable to supply interested organizations with a written programmatic agenda outlining the anticipated focus and range of ac- tivities expected to occur under Title VII. Community groups-especially those involved or interested in ad- dressing economic development needs in their neighbor- hoods-should become familiar with CETA VII issues and opportunities, in order to be able to effectively respond to the city's Title VII Plan. The Plan, according to the proposed regulations, must be made available to all interested parties for review and comment prior to submission to the Department of Labor. 0

HOMESTEADING MOVES TO BROOKLYN

The month of June may turn out to be an important milestone for the HUD multi-family urban homestead- ing demonstration program in New York City. If all goes according to schedule, the first of eight buildings being rehabilitated under Phase I of the sweat equity program, 1178 Washington Avenue in the South Bronx, will be completed. At the same time, the first

who will do the rehabilitation and then move into the buildings as co-operators. They will buy the buildings for $500 and will pay monthly carrying charges of $45 to $50 per room. Although HUD has committed $2.2 million in low- interest (3 per cent) loans for the second phase, Los Sures and OHBTA have been confronted with a city-

loans for the 13 buildings under Phase II will be closed, officially launching the second stage. The federal demonstration project, which began in the South Bronx and the Lower East Side and has been expanded to two Brooklyn neighborhoods, marks the first time that HUD has provided mortgage financing for multi-family low income urban homesteading. For Phase I the sponsors were Adopt-a-Building on the Lower East Side and People's Development Corp. in

wide cutback in CETA job training (Title lIB) funds with which to pay homesteaders during the rehabilita- tion. As a result, for many of the jobs they have had to substitute another CETA program (Title VI) which is not nearly as suited for housing rehabilitation. Lydio Rivera of the Urban Homesteading Assistance Board, which is providing technical assistance to the hoinesteading organizations, said HPD had committed $400,000 to help cover the loss of training funds

the

South Bronx. Although the program has moved

necessitated by using Title VI.

slower than anticipated for a number of reasons, at least

Rivera also said a strong effort will be made to

two

of the eight buildings are scheduled to be finished

improve on the disappointing past record of finding

by early summer. Three more buildings are still in the

jobs for homesteaders at the end of their training. "If

early stages of rehabilitation. Three others await loan closings. The demonstration has now been expanded to Brook-

we want to continue to use CETA, all housing groups need to concentrate on the problem of placement rates," he said, adding that the goal of a 60 per cent

lyn,

where Los Sures in South Williamsburg plans to

successful placement rate had been set for placing

rehabilitate nine buildings with 50 units and the Ocean-

trainees in the demonstration into unsubsidized jobs.

hill

Brownsville Tenants Association will rehabilitate

HPD has approved the preliminary drawings for the

four

buildings with 50 units also.

13 buildings in Phase 2. The next step vyill be submission

Each of the groups intends to hire about 65 workers

of detailed working drawings. 0

13

TOTTERING DEMOLITIONPROGRAM SHORED UP AFTER NEAR COLLAPSE

by Bernard Cohen

SHORED UP AFTER NEAR COLLAPSE by Bernard Cohen 345 East 99th St. in Manhattan set for

345 East 99th St. in Manhattan set for demolition.

HPD resumed registering buildings for demolition in March after a four-month pause to reorganize the pro- gram in the wake of a report that tore down nearly every aspect of the city's system for removing unsafe build- ings. In a one-week stretch, HPD signed contracts totalling $1.1 million with nine demolition companies to take down 104 buildings. It is an almost insignificant num- ber, compared with the estimated 12,000 unsafe build- ings that are standing around in various parts of the city. But it is a beginning, according to Deputy Commis- sioner Robert Davis, of HPD's effort to correct its own flawed management of the program and to make sure that private demolition companies begin to take their contracts more seriously. "Guys were sitting on contracts for months, years," Davis told City Limits recently. "The time is over for stockpiling contracts and getting around to the build- ings when it is convenient. We have been severely criti- cized by the planning boards for not satisfying the pace of demolition and seal-ups. It has had an impact on all of us."

HPD's response has been to remove demolition from the Office of Code Enforcement, headed by Assistant Commissioner Frank Dell'Aira, who has been seen by planning boards and neighborhood organizations as an obstacle to the program, and place it directly under Davis. The director of demolition is Frank Juliano. His assistant is Larry Yermack, who helped compile the re- lentlessly critical report on the demolition program for the city's Office of Management and Budget. That report confirmed complaints by neighborhood groups dating back to 1974 that HPD's handling of the program was a disaster. It cited vague lines of authority and responsibility; lack of trained and properly utilized staff; an inefficient clerical system, faulty paperwork and missing files; lack of an information system to de- termine the number of buildings at various stages in the program; long delays in processing payments; no clear policy on unsafe buildings placed on "hold;" inefficient clustering of buildings in contracts; buildings not released for demolition in a consistent manner; general lack of enforcement of contract provisions; unsystematic inspection procedures leading to waste of too much

14

time; failure to recover costs of demolishing privately owned buildings. While criticizing the practice by private demolition companies of stockpiling buildings to improve their work flow, the report said the haphazard way HPD re- leased buildings for demolition and grouped them in contracts also discourage efficiency. In cases where a building was put on "hold" in the middle of the pre-demolition process-for example, if a community organization raised objections to demolish- ing the structure-the "status can be in limbo for years," the report said. In 1977, the city signed 614 contracts to demolish 1,609 buildings at an average cost of $6,700 per building and a total cost of $10.8 million. More recently, produc- tivity sank to 150 buildings per month. "No matter what we did, that number did not change," Davis said. Davis said both HPD and the contractors were to blame for the dismal performance of the demolition program. He added that. there were a great many factors that could prevent completion of a contract, including a sin- gle building dangling on "hold" or delays in replacing torn-up sidewalks or erecting fences around the demoli- tion sites. Nevertheless, he stressed that with the resumption of demolition contracts, HPD intends to monitor compan- ies very closely to make sure buildings come down promptly (he hesitated to specify what promptly meant, but said 30 days, 60 days and 90 days at various times) and would deny future business to firms that don't live up to their current contracts. HPD does business with approximately 55 small and medium-sized demolition companies in the New York City area, although about 80 per cent of the work goes to about half of them.

CM CONTRACTS APPROVED

Two six-month Community Management contracts that were laid over at the February 8 meeting of the Board of Estimate were approved at the March 22 meeting. They are the United Block Association, $179,164 and the Urban Renewal Committee of South Jamaica,

$110,377.

A third contract of $201,331 to Neighborhood Com- munity Renewal Corporation, which had been post- poned with the other two, was not heard. 0

1978 REHAB FIGURES

Some 7,800 city-aided housing starts in rehabilitation programs make up almost half of the total housing starts for 1978, according to a report from Mayor Edward I. Koch.

15

A major recommendation of the OMB report was the HPD should work with much larger, more sophisticated companies outside New York City and greatly increase the size of contracts. Davis said he has had discussions with about 12 such companies but that no decisions had been made. However, another source said the city was preparing a contract with one company to knock down 500 buildings. "That's not the final answer to the number of unsafe buildings," Davis said, adding that HPD would be developing other options, which he declined to specify. One idea that has been floating around the agency is to import the U.S. Army Corps of Engineers and the U.S. National Guard to do some of the work. Asked if HPD was again contemplating using dyna- mite to demolish buildings, an idea the agency dropped more than a year ago after it triggered an explosion of community protest, Yermack said, "We are not looking at it right now." He added that most city buildings can be razed by conventional means at no greater cost, and local opposition remains a strong deterrent. The size of the 70-member demolition unit has not been increased. Davis said he wants to see how the reor- ganization and effort to implement the report's recom- mendations affects productivity before he thinks about enlarging the staff. Despite Davis's assurance of "an increased focus on demolition coming out of HPD," good intentions have not yet been translated into reality. The agency was still unable to answer a question about how many contracts involving what number of buildings were currently open. "We won't have a fix on that until our analysis is in place," Davis said. 0

Commenting on the rehabilitation figure which repre- sents a total of more than $175 million in construction funds, both public and private, Koch said, "The starts in rehabilitation are particularly significant because they mean not only improvements in many cases for tenants in occupancy, but they are also a major weapon in the fight against building abandonment because owners who re-invest in their property will not walk away from it. " The figures under the various city rehabilitation pro- grams are as follows: Section 8-3,600 units worth about $150 million in construction investment; Article VIlla "Mini Loan"-2,200 units representing $3.3 million in construction work; Participation loans-465 upgraded apartments and committed funds for an additional 1,300, combining $3.6 million in CD funds with $3.3 million in private financing; and the REMIC mortgage insurance program-l,400 units for $4.2 million in loans. 0

CITY, REP. GREEN ASK FEDS TO FUND S100M CD PLAN FOR CITY-HELD UNITS

by Susan Baldwin

New York City was put on notice by Washington last August. It was to develop a self-sufficiency plan by February 28 to run its tax-foreclosed (In Rem) housing or condemn itself to a no-man's-land housing disaster. The city has developed the plan for dealing with its ever increasing number of problem dwellings. And it has gained an advocate in Congressman S. William Green (R-Man.), the former director of HUD's N.Y. regional office, who supports the city in its effort to secure $100 million from the federal Community Development Block Grant fund to maintain its deterior- ated In Rem housing stock. "I certainly think the city should be given the op- portunity to try to maintain its property and try to stay on top of it," Rep. Green told City Limits recently, noting that he plans to recommend to the House Banking, Finance, and Urban Affairs committee that HUD give the city $100 million for the CD V year to run its tax foreclosed properties. Green is a member of the Housing and Community Development Subcommittee of the House banking committee. "But the real question here, aside from the support money," he was quick to add, "is whether the city's various alternative programs can develop the capacity to take on this large number of properties. This could develop into a large political football with devastating effects on the city's future." In a report to the House subcommittee submitted at the end of February, Green referred to his meeting in January with HUD Assistant Secretary Robert C. Embry, Jr., during which Embry questioned the continued use of CDBG funds to operate the city's In Rem program. Embry noted that HUD had permitted an emergency allocation of $41.1 million for CD IV and that "clarifying legislation might be in order." Subsequent to the meeting, Green received a letter from the HUD assistant secretary dated January 29 in which he stated that continued use of CDBG funds would not be allowed for the InRem program. Green held a fact-finding session on the city's In Rem dilemma February 12 where community housing groups and city experts testified in support of continued use of CDBG funds to maintain city-owned property. Joining him at the forum were Representatives Theodore Weiss (D-Man.) and Jonathan Bingham (D-Bx.) who also endorse the continued use of this funding to save the city's housing stock. "In my report I have pointed out that both interior and exterior maintenance of the buildings is allowable under the statute," Green explained, noting that a series of public services covered by Sections 104 and 105 of the

Housing and Community Development Act of 1974 permit these funds to be used for In Rem purposes. According to Green, the city's major responsibility is to target how it will use the money for the properties. New York is expected to receive a total of $241 million in its CD V fundings, of which $100 million, if approved, will go to the In Rem program and about $22 million will be used for alternative management programs. In the city's self-sufficiency plan submitted on the February 28 deadline to HUD's New York area office, Housing Preservation and Development Commissioner Nathan Leventhal pointed out that the city projects some 83,000 occupied units in city ownership by CD VII (the third year of the In Rem program) and that these properties must be "treated simply and returned to private ownership" as soon as possible. According to Leventhal's statistics, the city has approximately 37,000 occupied units at the present time. Noting that HPD has "rejected a large scale return to the traditional kind of public auctions which in the past served as the principal means of disposing of city-owned property," Leventhal outlined the following three main options for disposing of the city's vast holdings: "(I) restricted auction sales; (2) net leasing properties for a one-year period while an owner secures private financing and demonstrates good management and tax- paying ability; and (3) providing a series of financial incentives, including rent restructuring and reassess- ment of appraised values to enable auction buyers to upgrade and successfully maintain such properties." Opponents of the city's auction sales policy were successful in mid-November in calling on the Board of Estimate to impose a four-month moratorium on the auction sales of the city's residential properties. The first renewal of such sales are planned for late in May. In addition to outlining these three basic options for handling In Rem property, HPD's plan also calls for the disposal of a "significant number of properties directly to public and private developers who would utilize existing substantial and moderate rehabilitation programs to acquire and rehabilitate city-owned property." Programs available to developers, the report pointed out, include Section 8 substantial rehabilitation, rehabilitation by the New York City Housing Authority, Sweat Equity rehabilitation, REMIC mortgage insur- ance, and Section 312 loans. By CD VII, according to Leventhal, HPD hopes to dispose of more units of In Rem housing through alter- native management programs and public auction sales

16

than will enter city ownership each year. The commis-

sioner's predictions also suggest that by CD VII, the city

will need "some $280 million annually to fully fund all

costs of the In Rem management and treatment programs," with $200 million of this amount being non-

city funded.

In addition to requesting changes in state and local legislation that would permit the city to restructure rents, HPD, in its report, has also said that it will rely more heavily on its recently adopted consolidation and improved demolition and seal-up programs to carry out its proposed self-sufficiency program.

By CD VII, the report projects, the city's request for

CD funds will grow to $200,600,000 unless some other

funding source can be found, and the tax levy cost to the city of maintaining the properties will rise to

$52,300,000. At the same time the city expects to provide city funding for all the fuel and utility costs,

two ineligible CD expenditures. The city also hopes to

receive about $27,910,000 by CD VII in rent revenues from alternative management buildings. HUD Area Director Alan W ie ner could not be reached for comment on the city's plan, but Ginger Macomber of the Community Planning and Development Division at the area office said, "I must study it in greater detail, but from a first reading I think they [HPD] tried hard to furnish us with the statistics that we asked for."

Officials at HPD and HUD will be meeting with each other on a regular basis over the next few months to develop the fmal application for the In Rem program, which must be submitted to Washington by the end

of June. The CD V funding year begins September 1,

1979.

In the meantime, Congressman Green will continue to lobby in Washington for approval of the $100 million to manage and repair the In Rem property. At one point earlier this year, it had been hoped that the federal government might have an additional $100 million to run these properties so that the city would not have to devote $100 million of its CD-total of $241 million to this program. "Money is tight in Washington, and there just isn't that much extra to go around," Green said. "The city will be lucky to target this $100 million for the program. "And in order to do this right, I am hoping that HUD will provide the city with the technical assistance it needs so that an innovative anti-abandonment housing program will be developed," Green continued. "I think we're in for some tough decisions down the road, and it remains to be seen whether HPD can manage its In Rem properties or not." Noting that some 113 cities across the nation have housing abandonment problems, Green has called on HUD in Washington to "do more to assist local govern- ments to turn the tide of housing abandonment and property tax delinquencies." "In spite of the severity and scope of housing aban- donment," he added, "HUD-as I learned from Assistant Secretary Embry's January 29 letter-has 'not provided any special kind of assistance to cities regarding housing abandonment, nor do we [HUD] keep data on the amount of block grants for - that purpose.' This approach must change," Green concluded. 0

BOARD TO STUDY MUNICIPAL POWER

The City Council has named a nine-member review board to study why New Yorkers pay such high utility rates and to explore the feasibility of replacing Consoli- dated Edison and Long Island Lighting Co. with a pub- licly owned utility. The Public Utility Review Board is composed of three utility representatives, three consumer representatives and three public representatives selected by the City Council's rules, privileges and elections committee. The board, which is unsalaried, is to reports its findings by June 30,1980. Only one of the nine choices, Rev. Morton Van Allen, drew any controversy. Councilman Stanley Michels, D- L-Manhattan, charged that Van Allen, a consumer representative, lacked the necessary qualifications. Michels said he favored Robert Lekachman, an economics professor at Lehman College, or Rose Kry- cak, an activist with senior citizen and energy issues.

The following are the members of the review board with background as provided by the resumes they sub- mitted. Public Utility Representatives Edward Livingston-Acting vice president for public affairs, Consolidated Edison. Jerome Katzin-Managing director of Lehman Bro- thers Kuhn Loeb Corp., investment bankers; former government attorney, Securities and Exchange Com- mission. William Kirrane-International vice president of Transport Workers Union; president of TWU locall0} AFL-CIO; chief union negotiator with Brooklyn Union Gas Co. Consumer Representatives Martin Seham-Partner, law firm of Surrey Karasik Morse and Seham, general counsel for the Owners Committee on Electric Rates Inc., representing the

17

continued on page 19

ACTION GRANTS PASS BY NEEDY AREAS

Within the next few weeks, the city will be announc- ing the awarding of several pending Urban Develop- ment Action Grants (UDAG), but applications from low and moderate income neighborhoods around the city where such a grant would have a major impact will be conspicuously absent. "It really is a shame that the city has not provided more assistance to these communities so that they would learn what the UDAG program is all about and have a chance to compete for these monies in Washington," said Ronald Shiffman, director of the Pratt Center for Community and Environmental Development, the organization that provides substantial help to low and moderate income neighborhoods in their applications each year for Community Development (CD)-eligible activities. Shiffman's major criticism of the city's implementa- tion of the UDAG program is its "inability or unwilling- ness" to help these communities develop viable econo- mic development or commercial revitalization plans.

A total of $400 million a year for three years is avail- able under this program created by the Housing and Community Development Act of 1977. Of this total amount, $300 million a year will be available for larger cities, while 25 per cent of the program funding must go to cities with populations of 55,000 of less.

"UDAG funds are to provide support for projects that are intended to aid in the revitalization of the city's economic base or in the reclamation of neighborhoods.

The intent of the program is to lever~ge private dollars

for development

who 'processes UDAG applications upon their submis- sion to City Council President Carol Bellamy's office. "The definition of what constitutes an eligible activity for UDAG funding is quite broad," she added. "Basic- ally all development activities, exclusive of planning costs, allowed under the CD program are eligible." Among allowable activities, she said, are property ac- quisition, construction and reconstruction of public and neighborhood facilities, rehabilitation and demolition, and economic development activities directed toward alleviation of physical and economic distress. Project applications are accepted by HUD during the

first month of each quarter (January, April, July, and October). And, if an organization submits an applica- tion in January, for example, it should expect to hear from HUD by April.

and revitalization:' said Joan Malin,

According to Shiffman, there are no strict criteria that must be followed to enter the national competition for the funds.

"But," he said, "the city has done terribly in getting UDAG's-only $3.5 million last year-because it only goes with big, polished plans." In Shiffman's estima-

18

tion the city should and could have gotten anywhere from $35 to $40 million last year if it had submitted smaller, more modest, neighborhood-oriented plans. Two areas that have expressed interest in the UDAG program are Manhattan Valley on Manhattan's Upper West Side and Flatbush in Brooklyn. "At this point I don't even know if we will go after a UDAG," said Nancy Foxworth of the Manhattan Val- ley Coalition, whose group is trying to develop a plan for a neighborhood sports center and skateboard facil- ity and a youth hostel and restaurant in an underutilized school and an abandoned nursing home. According to Foxworthy, the coalition is having a fair amount of difficulty getting CD IV money "pried loose" to hire an architect to develop the plan. In Brooklyn, the Flatbush Development Corp. is working on a revitalization plan for community use of the Loew's- East Kings, an abandoned movie theatre. The UDAG proposal, Joyce Coward of the Flatbush organization said, will be developed carefully and sensi- tively so as not to interfere with the economic viability of the existing commercial strip in the neighborhood. She noted that the community in another Brooklyn neighborhood-Red Hook-is opposing the conversion under UDAG of an abandoned factory formerly owned by Goya because it will hurt other existing neighborhood business by causing an increase in storefront abandonment. Other "big, polished" UDAG plans include the proposed $172-million Portman Hotel for the Times Square area; a $3-million fund to match loans from con- ventional sources to provide 90 per cent of the financing for cogeneration-type diesel plants to generate electri· city and recover waste heat; renovation of a vacant department store in Jamaica, Queens, for use by Alex- ander's; and the development of the South Street Sea- port area as a retail and museum complex. "Our hope in the future is to involve the city's low and moderate income neighborhoods in the UDAG pro- gram," Malin concluded. "But one of the major prob- lerns faced in these poor, impacted neighborhoods is getting the commitment of private money. " She stressed the difficulty of involving the banks and private devel- opers in these neighborhood proposals. According to her figures, for every dollar involv(!ment of public money, the community must guarantee 'three private dollars. The city's Development Funds Steering Committee is headed by Deputy Mayor Peter Solomon. Other com- mittee members include Council President Bellamy, Who chairs the UDAG subcommitt~, City Planning Chairman Robert Wagner, Jr., Director of the Office of Management and budget James Brigham, and Commis- sioner of the Department of Employment (now Human Resources Administrator ) Stanley Brezenoff. 0

Utility Board continued

majority of industrial and commercial utility consumers in New York City. Rev. Morton Van Allen-Executive director, Urban Crisis Task Force, a multi-service agency in the areas of crime prevention, consumer services, youth counseling, senior citizen services, housing employment, education and job training; pastor of the Downtown Baptist Church. Rev. Robert Emerick-Pastor, Grace United Metho- dist Church; member Manhattan Community Board 7; president of New York City POWER (People Outraged With Electricity Rates), a coalition of 30 church, labor, tenant, civic and consumer groups organized around energy issues. Public Representatives Charles Hughes-President of the 18,OOO-member Local 372 of the American Federation of State, County and Municipal Employees, AFL-CIO; chairman of the political action and legislation committee of District Council 37 AFSCME.

Donald Moore-President, New York Chamber of

and

Library

Brooklyn Academy of Music.

Commerce

Industry;

trustee,

and

Brooklyn

Botanical

Brooklyn

Gardens;

Public

director,

Amalia V. Betanzos-President, Wildcat Service Corp.; former commissioner, New York City Housing Authority; former commissioner of youth services; former deputy administrator/commissioner Depart- ment of Relocation. Under its mandate from the City Council, the review board is to study "those factors which have contributed to the excessive costs chargeable to the New York City consumer and those mechanisms, including the potential of a creation of a publicly owned utility, which with ameliorate this situation. " Approximately 25 persons asked to be considered for the board. 0

Advertisement

City

Limits

is

seeking

to

fill

the

following

The Crown Heights Development Council is seeking to fill the following position:

position:

BUSINESS MANAGER-Major responsiblities include fundraising, building circulation, develop- ing advertiSing, processing subscriptions, wor1<ing on publicity and other day to day business matters. Qualifications: creativity, persistence and a genu- ine interest in the challenge of strengthening City Limits. (Salary $13,000.) Send resume to Bernard Cohen, Editor, City Limits, 115 East 23rd Street, New York, N.Y. 10010 or call 674-7610.

EXECUTIVE DIRECTOR-Overall supervision of a newly-formed community organization which will concentrate on tenant organizing, strengthen- ing block aSSOCiations, and working with local merchants. Qualifications-must have experience in community organizing, administra- tion, and project planning. Salary: $15,000 per year. Please send resume to: Father Robert Trabold, St. Ignatius Roman Catholic ChurCh, 1101 Carroll Street, Brooklyn, N.Y. 11225.

Catholic ChurCh, 1101 Carroll Street, Brooklyn, N.Y. 11225. To: The Editors, CITY LIMITS, Association of Neighborhood

To:

The Editors, CITY LIMITS, Association of Neighborhood Housing Developers, Inc. 115 East 23rd Street, New York, New York 10010

Please enter my subscription for one year (10 Issues) to CITY LIMITS.

o

Private businesses, foundations, banks, government agencies and officials, city-

wide groups - $20.00

o

Individuals and community-based organizations - $6.00

Enclosed Is my check for $

Name:

Address:

, payable to ANHD / CITY LIMITS.

19

City Limits

115 East 23rd Street

IN THIS ISSUE

Eviction Unit

SectionS

Demolition

CETAVII

Intro.594

New York, N.Y. 10010

Have You Sent Us Your Subscription?