city limits magazine, may 1979 issue

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

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CITY LIMITSCOMMUNITY HOUSING NEWS

MAY 1979 VOL. 4 NO.4MARRIAGE, SECTION 8 STYLEBEWARE: HPDMAYWANTTO UDAAP YOUR BLOCK

by Bernard Cohen and Susan BaldwinNew York City has asked the state Legislature for new authority tonegotiate sales of tax-foreclosed properties to private owners and to offerthe buyers a tax exemption as an added incentive for development.The proposed legislation, which opponents say is too loosely written andhas the potential to displace low income tenants, is one part of a coordinated effort by the city to limit its rapidly growing role as landlord byreturning as many properties as possible to private hands. It dovetails with anew law that permits higher rents in city-owned buildings sold to privateowners.With some 37,000 occupied

apartments currently undercity ownership and projectionsof 83,000 by 1981, the Kochadministration has taken thefirm stand that the city cannotafford to be the long-termlandlord for all these buildings.Negotiated sales, resumption of auctions and privatemanagement leading to purchases are three of the ways inwhich the city intends to dispose of properties to for-profitreal estate firms and individuals.

The legislation would em-power the city to designate Police evict tenants moments be/ore scuffle."urban development action areas" within which the city could negotiate thesale of its property for specific projects. The land-use designation would besubject to community board approval under ULURP (Urban Land UseReview Procedure) and the sale would require approval by the Board ofEstimate. A tax exemption of up to 20 years for new construction orrehabilitation costing at least 100 per cent of the assessed value of thestructure would be authorized. However, the city could not sell to anyonewho had lost property through tax default in the previous two years.

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by Howard B. BurchmanThe Section 8 Substantial Rehabilitation Program has hardly aromantic ring to it, but it is providing the dowry for a growing

number of interesting marriages ofconvenience.This component of the Section 8program stimulates private industryto restore housing for occupancy bylow and moderate income families.Significant incentives are providedin the form of tax shelters and guaranteed rents in excess of $500 for aone-bedroom apartment.The New York Area Office ofHUD is receiving national attentionfor its attempts to reduce the costsof Section 8 development. It has seta $42,000 per unit ceiling on totaldevelopment costs for rehabilitation. Multiplying this amount timesthe 6,700 units available to the city'means that $280,475,000 will shortlymake its way to New York neighborhoods.This is likely to be the peak ofSection 8 rehab in this city. Section8 national funding levels have beensteadily decreasing. And one of themost popular features to privatedevelopers is under threat. Tax syndication proceeds under Section 167(k) of the Internal Revenue Coderun frequently as high as 30 per centof the total project mortgage. Legislative provisions allowing for thesedeductions are due to expire in 1982,and sentiment is growing in manyWashington circles to rule them out.In the past, the role of community

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Sales Policy continuedNegotiated sales would include occupied buildings,vacant buildings to be rehabilitated and vacant land fornew construction. In some cases the city plans to advertise specific property to be sold according to a development plan. More often, the city will respond toinquiries from private interests. "There are not going tobe that many projects, by projects I mean big planning

type things, at least initially, until we get used to it,"said Deputy Housing Commissioner Marvin Markus. "Ithink the bulk of them are going to be individuallynegotiated. Our feeling is that this land is marginal andif anybody's willing to do anything we ought. to take ashot at it."

The bill says little about criteria for designating urbandevelopment action areas and projects, other than thatthe property must be city-owned and in blighted surroundings. Action areas can be as large as many squareblocks or as small as one or two buildings. The propertymust be appraised within six months prior to sale, butthe role of the appraisal in setting the price is undefined.The two issues of greatest concern to tenant andcommunity organization advocates are the lack ofexplicit controls over the negotiating process (the

normal rules of competition and best offer don't apply)and the potential impact on low-income tenants of cityowned buildings that are sold. This bill creates a relatively simple disposition tool. A companion law, Intro594A, permits rents to be raised freely by the city and toremain at the higher level when the building is sold.How high will rents go? Will the buildings be fixed?Will the city use its consolidation power to empty abuilding it wants to sell? Should there be guaranteedsubsidies such as exist for other programs? Will there bewidespread displacement of tenants unable to afford thehigher rents?

Markus acknowledged that "we are very loose withthis thing," but insisted that to tie the bill down withguarantees and restrictions would make it impossible tohave a workable sales program.Asked about fears that in negotiating with privateinterests, HP D will gauge the rents at whatever levelpotential buyers say they need, Markus said, "It's ascenario you can draw, a scenario opponents of 594drew, but it's not a scenario that Nat Leventhal orMarvin Markus chooses to draw. It comes back to thetwo words I uttered before, which is 'trust us.' ' 'Markus said he doubted that the two laws will cause adisplacement problem. "W e are concerned with viablecommunities with people living there. And if people areliving some place we're not going to go out of our wayto get rid of them."

He said the interim lease and community management programs give tenants a first option to retaincontrol of their buildings and noted that HPD is tryingto simplify and reduce the cost of creating low income

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cooperatives. Moreover, HPD intends for now torestrict the sale of occupied buildings to private ownerswho have shown competence while managing propertyunder a new city program." I f tenants want to manage and can manage thebuildings, we do it. But to say to us on the other endthat we may not raise the rents somewhat to induceprivate enterprise after the tenants have not expressed

an interest and an owner has come in and says, 'I wantto do it,' to tell us to keep the building and own thebuilding . . .The mayor has made that point quite clear,which is we're not interested in being long-termowners. "Assistant Commissioner Manuel Mirabal said consolidation (the movement of tenants into what areconsidered better buildings) will not be a tool to cleartenants out of buildings the city wants to sell. "That isnot our problem, that's a development problem,"Mirabal said, adding that the criteria for consolidationare rate of occupancy of a building, amount of repairsnecessary, and condition of the adjacent housing.Asked why UDAAP was necessary when the cityalready has authority to sell property under the urbanrenewal laws, Markus said, "W e could have designatedit urban renewal, The statutes are basically identical.But urban renewal has years of tradition attached to itand we felt a more upbeat phrase would be useful." Inaddition, with UDAAP, "you don't need an elaborateplan. You can just designate an area."The companion decontrol bill passed the City Council24 to 16 on April 10, but only after about 100 organizersand tenants chanted "594, We Won't Pay the Rent NoMore" and other slogans, holding up the Councildebate for about 30 minutes until police cleared thechambers. One tenant activist, Tom Gogan, was arrested following a scuffle in which he said he was knockeddown. Other tenants said they were treated roughly bythe police as well.The de-control law, which Mayor Koch has signed,will result in much higher rents for tenants in city-ownedbuildings that are re-sold to private owners. During thedebate, Councilman Leon Katz (D-Brooklyn), said,"The reason why these people chant 'No repairs, norent,' is because there is nothing in this bill to compelthe city to make repairs ."Calling for a no vote on 594A, he said rent increaseson city-owned properties may be 100 to 150 per centmore, or an apartment could go from $80 to $200 . . .these rent increases are substantial, they go under stabilization and require no repairs by the owner. "Asked about Katz's comment, Markus said the cityhad no guidelines yet on what the rent increases willamount to.A Katz amendment that called for putting back 22 \12per cent of the assessed value of a building within twoyears after purchase before an owner could raise rents


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was defeated.Another opponent of 594A, Councilwoman RuthMessinger (D-Manhattan), criticized HP D for failing toprovide data regarding the number of tenants in cityowned buildings who are protected by subsidies andsaid, "We have been asked to make changes outside ofexisting protections for tenants with no clear benefit tothe housing and substantial risk to tenants."She offered an amendment, also defeated, that wouldhave required buildings to be brought up to housingmaintenance code before sale.Deputy Commissioner Charles Raymond admittedhaving problems with the bill, "but hopefully we candeal with it responsibly . .. I am very concerned aboutwhether people will be able to pay the new rents . . . I

think we must look into a new use of Section 8subsidy. "He said the intent of the bill was "not to knockpeople out of buildings." Rather, it was meant to

support the city's alternative management programs.Meanwhile, Robert Sugerman, a tenant lawyer,predicted that 594A would be used as a vehicle to justifywidespread eviction of tenants in city-owned buildings.

"I see this as a way to clear buildings of the deadweight and make them more attractive to the prospective buyer," he said, adding that many tenants in thesebuildings may not be paying rent because they arereceiving no services."Once they get the old tenants out," he asserted,

"then they can restructure the rents upward. Thenmaybe they will make repairs. But then there may nolonger be low an d moderate income tenants in thebuilding." 0

MARKUS. MOORE LEAVEPOSITIONS AT HPDDeputy Commissioner Marvin Markus, an HPD

veteran, has submitted his resignation, and SandraMoore, a newcomer to the agency, is expected to bereplaced soon.

Appointed to the post of deputy commissioner ofpolicy and government liaison last May, Markus hasserved previously as assistant commissioner of government liaison and was HPD's main lobbyist in Albany.After five-and-a-half years of service at HPD, Markuswill join the Wall Street firm of Bear, Stearns & Co., asa municipal bonds underwriter.

Moore, an architect who joined the agency in September as director of the community managementprogram, will leave that post in the near future.According to HP D insiders, "Sandy is very good butnot cast in the role" of director in the community management program. They say that the agency is lookingfor someone who can "deal with the community groupsan d is a tough administrator."

Moore came to HP D from Boston. 0

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To the Editor:I read with interest the article on thefederal Urban Development ActionGrant program in the March, 1979,issue of City Limits.I would like to clarify a few pointsmade in the article. First, it is not theCity Council President's Office whichprocesses UDAG applications, as the article implies.The Council President's Office is pleased to providegeneral UDAG program information to potentialproject sponsors, bu t typically we refer sponsors withspecific projects to the City's Office of EconomicDevelopment, which has the capacity to provide detaailedtechnical assistance.

In addition, as Chair of the City's UDAG Subcommittee, the Council president plays a role in establishingliaison with HUD on general UDAG policy and programissues and in "reaching out" to potential UDAG projectsponsors in the City. As part of this function, I lastweek co-sponsored a day-long series of forums bringingHUD officials together with City financial institutions,real estate developers, neighborhood groups, locallyelected officials and others in an effort to disseminateinformation about UDAG and to generate furtherinterest in developing UDAG projects.I also noted with interest Mr. Ronald Shiffman'sreported observation that the City tends to focus on"big, polished" projects. Actually, HUD's observationregarding size is somewhat the reverse. HU D officialsadvise that very few cities have won more numerousUDAG approvals than New York (Le. five). However,many cities have won more total UDAG dollars-evenwith fewer projects-because New York's approvedprojects to date tend to be relatively small .

Carol BellamyApril 18, 1979 President, City Council

_CITY LIMITS'City Limits is published monthly except June / July and August/ Sep

tember by the Association of Neighborhood Housing Developers,Pratt Institute Center for Community and Environmental Development and the Urban Homesteading Assistance Board . Subscriptionrates: $20 per year; $6 a year for community-based organizations andindividuals. All correspondence should be addressed to CITYLIMITS, 115 East 23rd St., New York , N.Y. 10010. (212) 674-7610Application to mail at second-class postage rates is pending at NewYork, New York 10001.Editor . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. Bernard CohenAssistant Editor . . . . . . . . . . . . . . . .................. Susan BaldwinDesign and Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Louis FulgoniCopyright 1979. Al l rights reserved. No portion or portions of thisjournal may be reprinted without the express written permission of thepublishers.This issue was funded by New York Community Trust.


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SAVINGS BANK DENIF:I) BRANCHIn the first major test of new federal anti-redlininglegislation, an application by the Greater New YorkSavings Bank to open a new branch, which was challenged by a Brooklyn community organization, hasbeen turned down in Washington.On April 23, the Federal Deposit Insurance Corp.

refused GNYSB's request to open a branch in Manhattan, stating the bank had failed to provide an adequate number of mortgage loans in the Brooklyn neighborhoods it is supposed to be serving.The FDIC's ruling had been eagerly awaited by bothanti-redlining organizations and the banking industryfor the first clue as to how sharp the teeth of the newlaw, called the Community Reinvestment Act, wouldbe." I t is a vindication of what we have been saying

about this bank for years," said Herbert Steiner, chairman of AID (South Brooklyn Against Investment Discrimination), the Park Slope community organizationthat filed the challenge. " I t is a big victory not only forus, a small neighborhood group that fought and beat ahuge financial institution, but also for any kind of consumer organization. I t shows what an organized andaroused neighborhood can do." AID has been tryingmore than two years to get the bank to give more loans.When CRA was passed by Congress in 1977, it washailed as a "landmark," a major tool for increasing theavailability of mortgages and other types of loans inolder neighborhoods that have suffered over the yearsfrom a drastic shortage of needed credit, the conditionknown as redlining. Until the FDIC decision, however,the value of the new law remained only theoretical.

CRA requires the four federal agencies that regulatebanking to take into account a lending institution'srecord in meeting the credit needs of its community,including low and moderate income neighborhoods,before granting charters and deposit insurance orapproving new branches, mergers or acquisitions.The premise of the law is that financial institutionshave an affirmative obligation to the community inwhich they are chartered. I t states that regulators can"encourage" banks to improve their loan policies but iscarefully vague about defining credit needs andadequacy of lending.

GNYSB, whose main office is in Park Slope, is thestate's 14th largest savings bank, with $1.7 billion inassets and $1.5 million in deposits. I t has 16 branches,nine of them in Brooklyn.In challenging GNYSB's application to open a branchon Manhattan's affluent East Side, AID charged thatonly 6.5 per cent of the bank's real estate loans weremade in Brooklyn, although 80 per cent of its depositscame from Brooklyn.Steiner said the vast majority of the bank's $1.1billion real estate portfolio is made up of federallyinsured mortgages for mostly out-of-state properties .

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He said conventional mortgages accounted for $64million and that the bank originated only 96 mortgagesworth $3,2 million in 1976 and 155 mortgages worth $4million in 1977.Although the FDIC ruling did not supply very manyfigureS' to use as guideposts for the future measures ofwhat constitutes an adequate lending record, anti-redl i ~ i n g analysts saw several positive signs. The FDIC ruling did note that GNYSB had comeclose to its goal of $25 million for new mortgages inNew York City for 1978. The implication is that the goalwas too low. The FDIC could have found fault with GNYSB'slending record, but still given the bank "conditionalapproval" to open the branch. Instead, it rejected theapplication.

The decision may spur banks to voluntarily altertheir lending habits and increase the flow of credit toneighborhoods. It will most certainly provide encouragement to community organizations that are trying tomonitor their local banks.

"This decision was what was needed," said AllenFishbein, an attorney with the Neighborhood Revitalization Project of the Center for Community Change inWashington. " I t takes a lot of resources, time andenergy to challenge a bank, and people have to feel thereis a chance of a payoff at the end." AID's challenge,filed more than a year ago, was an 80-page brief thatrequired "a vast amount of research," according toSteiner.Jerome Maron, president of GNYSB, declined tocomment on the FDIC ruling. Although the bank isstate-chartered, its deposits are federally insured, whichis why the FDIC had regulatory jurisdiction. The otherthree agencies with similar authori ty for other banks arethe Federal Home Loan Bank Board, the Federal ReserveBoard, and the Comptroller of the Currency.The savings and loan industry is mounting acampaign to weaken the ability of community groups tomonitor the lending records of banks. The Home Mortgage Disclosure Act, which requires banks to providedetailed data on the volume and locations of their loans,expires in June, 1980.The U.S. League of Savings and Loan Associations,has included in its 1979 legislation program the goal ofconvincing Congress to let the law expire. I t also seeks areview of CRA, which does not carry an expirationdate, in 1981.According to Fishbein, there are at least 11 CRA challenges pending among the four regulatory agencies,seven of them in New York City.AID is one of a number of community groups thathave joined in an active Coalition Against Redlining inNew York City. For additional information aboutCAR, call Roger Hayes, 533-5650. 0


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BUDGET SETS $167 MILLION FOR HPDby Bernard Cohen

The proposed budget for the fifth year of the Community Development program targets $167 million forHPD, a funding level that shows general confidence inthe alternative management programs but puts a largedent in what the agency requested to repair In Rembuildings.New York City will be receiving $241 million in CDV, which begins September 1. HPD, which relies on thefederal funds for nearly its entire operations, requested$212 million or 88 per cent of the total budget.

The total allocation for In Rem housing is $78.7 million, an actual increase of $21 million and considerablyshy of the $100 million that HP D officials have longmaintined they needed."It's a surprisingly small increase after all the talk byWagner and Koch about the $100 million," said BrianSullivan of the Pratt Center for Community and

Environmental Development. He said the officials haveused the urgency of the In Rem problem as a "shield"against other legitimate CD proposals.The CD budget, which was released by Mayor Kochon April 26, must still be passed by the City Council andthe Board of Estimate before being submitted to HUDfor final approval.The most discordant note in the HP D budget is the

amount allocated for repairs of city-owned buildings.The agency requested $38.5 million and received $13.6million. Despite the appearance of a sizable discrepancy,HPD officials asserted there would be no loss of basicmaintenance. "It means we will not be able to do theextra work we had hoped to do," spokeswoman MarthaGershun said. The budget change means a cut from$1,700 in repairs per unit to about $1,000 per unit.Deputy Commissioner Charles Raymond said the$38.5 million request was based more on educated guesswork than on a "scientific" projection, that the numberof new foreclosures in Brooklyn will probably be abouthalf the volume of earlier estimates, that there is additional money for repairs in the beefed-up consolidationprogram and that, if worse came to worse, money couldprobably be shifted from other programs.Despite his optimism that HPD's ability to provideheat, hot water and other basic services in its buildingswill not be impaired, Raymond admitted, "I'm notterribly pleased" about the overall amount budgeted forIn Rem housing. "It doesn't sound like enough to me."Two other trouble spots could be the Tenant InterimLease program, for which $2.5 million was asked and $1million allocated, and the 7-A seed money program, cutfrom $1 million to $500,000. "I am unhappy with thosefigures," Asst. Commissioner Philip St. Georges said."It was probably inevitable because interim lease issupposed to be a low-cost, no-cost program. But we are

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going to need money to make system repairs."The proposed amounts budgeted for the major HPDfunctions were: rehabilitation, $26.5 million (amountrequested); neighborhood preservation program, $2.4million (amount requested); code enforcement, $22 million, ($17.5 million requested); community improvements, $6.9 million ($8.5 million requested); unsafebuilding program, $19.1 million (amount requested); inrem property management, $52 million ($78.8 millionrequested); in rem alternative management, $26.7 million, ($33.9 million requested); administration. $11.5million (amount requested); Open Housing Center,$230,000, (amount requested) .All of the rehabilitation programs received theamounts requested. Handyman contracts were cut from$11.2 million requested to $8.7 million, while superintendent contracts rose slightly from $6.4 million to $6.7million.Although most of the alternative management programs were trimmed, St. Georges said several of the newones were just getting started on CD III and IV funds.Coming on the heels of the budget was a report prepared by the Office of Management and Budget onHPD's and other city agencies' CD spending recordthrough Feb. 28, 1979. Although City Limits obtainedthe document too late to analyze it very closely beforegoing to press, officials said HPD had vastly improvedits ability to obligate and spend the money. An interimanalysis last December showed that of $248 millionreceived by HP D since the program began in 1975, only$149 million had been obligated and only $102 millionactually spent.The OMB report did pick out some obvious blemishesin HPD's CD IV spending up to February (the CD yearends in August.) Of the $41.1 million set aside formanagement and repair of In Rem properties for theyear, only $8.4 million had been actually spent. HPDofficials attributed the low figure to two factors: thecity's sluggish machinery for paying its bills and anunaccountable time lag of up to three or four months inreceiving invoices from customers.

Of the $15.1 million budgeted for seal-up and demolition of unsafe buildings, only $1.3 million had beenspent, although $10.9 million had been obligated. Thereport listed figures for the number of seal-up anddemolition contracts that had been bid and registered,but the lines showing work "completed" were blank.The report criticized the slow admittance of buildingsinto the community management program and the slowstart of the rehabilitation component, said the volumeof work orders to repair city-owned buildings wasthreatening to overload the system and cited a lO-monthprocessing time for Article 8A loans. 0


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QUEENS 'GOLD COAST GLITTER FADESby Susan Baldwin

Years ago it was known as the black Gold Coast. I twas stable. Some families had lived in their neatlymanicured homes for 30 or 40 years. I t epitomized theAmerican Dream-everyone should work hard to own ahome tha t would be a refuge in retirement.Today the small communities-South Jamaica,Hollis, St. Albans, and Baisley Park-that constitutethis portion of southeast Queens are facing the problems of abandonment and decay that have already beenfought and lost in old stable communities in the Bronx,Brooklyn, and Manhattan.

"When I came out here in 1942, this was a beautifulneighborhood," said Rev. Samuel J. Lloyd, the head ofthe Urban Renewal Committee of South Jamaica. " I twas about 60 per cent white then, and 40 per cent black.But now as the neighborhood has changed-there areonly a handful of whites now-so has the delivery ofservices-namely, we get almost no services. Our streetsare in terrible disrepair, we have trouble getting thegarbage picked up, and the streets are constantlyflooded because of the lack of sewers, not to mentionthe poor public transportation."But, Rev. Lloyd and other community leaders areworried about their neighborhood for reasons otherthan poor delivery of services and inadequate transportation. They are concerned that the ever increasingnumber of vacant, boarded-up homes which owners lostthrough mortgage foreclosures will soar to the pointthat southeast Queens may become another Brownsvilleor South Bronx.

" I t just breaks my heart to go block to block and seeall these vacant homes cropping up," said AdrienneRogers, head of the Queens Operation Open Cityprogram."I know that most of these homes were FHA mortgages, and yet each month when I check to see if they'reon the list [FHA], I'm lucky to see two," she continued.

"Why are these homes in limbo, why did people losethem in the first place .. . and then why do they show upsometime later with a sold sign on the door? . . Veryfew of those houses were put back on the market forsale so that the community could have a chance topurchase them."Under the FHA program, a homeowner signs a fullyinsured mortgage agreement for 30 years at ten per centinterest. Arrangements can be made, however, to reducethe length of the mortgage payment period.

Citywide, HUD sells 100 to 150 FHA-toreclosedhomes each month. According to available statisticsprovided by both community groups and HUD, about100 FHA properties in southeast Queens are now beingtaken each month in foreclosure proceedings. There isgrowing concern that this rate is mounting to the level

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that resulted in a major FHA scandal during the early1970's.At the height of the scandal, homes were beingappraised at over inflated values and serious structuralviolations were corrected by cosmetic repairs. Frequently, brokers would sell to dummy corporations thatwould walk away from the property or to unwittingbuyers ignorant of the real cost of home ownership. Ineither case, the seller cashed in on the insurance andHUD was stuck with the mortgages.According to a HUD official, a 1973 investigation bythe U.S. Attorney's Office in New York led to theimprisonment of the regional director of FHA; a vicepresident at Dun and Bradstreet, his firm held responsible for making inaccurate credit reports on the defective homes; and several brokers.

At that time, the accumulated number of mortgageforeclosures that were listed was about 3,000 citywide,according to HUD figures. Today, the listed number is2,000, primarily in Brooklyn and Queens.No one has any easy answers to this problem insoutheast Queens that threatens to blight a stable neighborhood that offers the promise of home ownership atprices that low and moderate income families canafford.Inflation, unemployment, marital problems, old ageand fixed income have all been blamed for the highvacancy rate.Another cause prevalent in southeast Queens is thathome buyers do not start out with the income necessaryto meet their mortgage payments and maintain theirproperty, and even in some cases, to meet the downpayment without borrowing it."I think the problem began a long time ago and is stillgoing on," Rogers asserted. "Several years ago whendroves of people were coming out to look around,brokers would stand by the Hillside Avenue subway exitand tell these people, 'Come into my offic-e . I have a realgood deal for you.' I t was like they were sellingcabbages.' ,According to Rogers and Lois Phillips, director of theBaisley Park Neighborhood Community Council,people who do not have enough capital to purchase ahome have been told that they can buy a $30,000 to$45,000 home for as little as $200 or $300 down.

"When these people are encouraged to buy a $35,000or $40,000 house, they find out that the monthlymortgage of about $400 is too high, and it is too highfor them," Phillips said. "They also don't anticipatepaying $300 out of their own pocket every two monthsfor fuel and high rates to Con Ed . . . and then there arethe home improvement scoundrels. Pretty soon thisadds up to a second mortgage. "


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HUD officials acknowledge that a serious home ownercrisis exists in southeast Queens and have committedthemselves to helping in its solution.Shirley Bradley, coordinator of HUD's counselingagencies program in the New York area office, hasdeveloped a special training program for neighborhoodrepresentatives to learn about various aspects ofhousing with an eye to counseling prospective buyersbefore they are reached by brokers.This year eight New York City neighborhood groupswill receive small grants to run this program. Anaverage grant is $18,693. The maximum to any group is$50.QOO.

Boarded-up home offers threat to neighbors."The neighborhood counselors will learn to showfamilies on limited incomes whether they can afford totake on home ownership," Bradley said, "and maybeeven suggest to these first-time owners that they maywant to live in the house for awhile before they buy it."

At the present time, HUD does have anti-foreclosureprovisions for home owners who have financial problems and are behind in their payments. They can payless each month for a longer time (forbearance agreement) or , if they are hopelessly behind, they can turn theproperty title back to HUD (deed in lieu of foreclosure),leaving them the option to rent. Under this arrangementthe former owner, now renter, also has first priority tobuy the house back from HUD if the house is put on thesales market and his financial picture has improvedenough to meet HUD FHA requirements.HUD's counseling program has not in its first 18months reached enough people to claim much success."S o many times when I finally see a client forcounseling," said Rogers, "I have to wonder why FHAapproved the mortgage in the first place. These peoplecoming to me just didn't fall into hard times overnight.They never had the money and were tricked into the dealby the broker who told them you don't need any money

to buy a house."One case in point is a young couple who came toRogers's office who had not made any mortgage

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payments in 18 months. They owe HUD $5,292.Bradley pointed to another case in which the clientasked for a hearing to discuss his present indebtedness,hoping that HUD would set up a hardship paymentarrangement for him. His "hardship," she explained,comes from the fact that he has used the $3,000 owedHUD to buy a 6O-unit apartment house with two otherwould-be landlords.A recent visitor to the area spoke with several realestate brokers about the prospect of purchasing a homeand was told that a $1,900 down payment was all thatwas needed to buy a $48,000 house and that an additional $3,300 would cover the closing fees.

"Nobody can buy a house like that for $5,000 andkeep it, and they know it," Rogers charged. "This iswhy home prices are getting so inflated here, why peoplelose their homes, and why someone out there gets fat.Why is HUD always so good to the mortgage companiesand the real estate brokers who are living off ourbacks?"

Stories like these leave many observers dubious aboutthe possibility for success in changing the tide of abandonment in southeast Queens.But another view was expressed by a real estate salesman who has had a great deal of experience in sellingFHA-foreclosed homes."I don't think it's right to deny people the right toown a home just because they don't have the downpayment," salesman John Oliphant argued. "I haveseen the opposite side of abandonment. I f these peopleare motivated to make money, they will work hard sothat when they are ready to sell, 1 will sit down withthem as the broker, and they will sit down as the sellerand will get $10,000, $15,000, $20,000 in equity. DoesHUD or anyone else want to deny those people thatequity?And Rev. Lloyd remembers the late 1960's and early1970's when droves of people fled from burned-outBrownsville and the South Bronx seeking refuge and anew life in southeast Queens."Brownsville is a ghost town now. You have towonder if that is a prediction of the future here," heconcluded. "I certainly hope not. We want to save ourhomes anyway we can." D

HA MANAGEMENTPLAN POSTPONEDThe Board of Estimate April 26 postponed action ona two-year pilot project for the Housing Authority tomanage 13 city-owned properties on Manhattan'sUpper West Side. The board questioned the cost.Un,der the program, the authority would manage andrehabilitate 268 units of partially occupied In Remhousing on West 134th and 135th Streets and alongAmsterdam Avenue near its own public housing-Manhattanville Houses.


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Photographs by John Selden

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John Selden bought hi s first camer a in 1975 after wishing for yearsthat he had a way to document therugged changes that turned KellyStreet and many other South Bronxneighborhoods he knew Into survivalzones.

Selden. a 25-year-old medicaltechnician. spends hi s spare time wanderIng around familiar blocks. using hiscamera to catch the sorrow of brokendown. wasted buildings. th e endurance of th e old people who have hungon and the energy of th e children.who. like Selden. are growing upthere.

His photographs. six of which areshown here. are a record Selden usesto keep certain memories alive. a wayto contrast the future to the past.

Ho w will the place look In 10 years?"It's hard to say. There are to o manyhungry people In th e South Bronx.The whole thing wa s planned to go."

After dropping ou t of DeWitt Cllnto n High School ("nothing wa s happening in school"), Selden returnedto finish up at th e Bronx SatelliteAcademy. a non-traditional setting .He works at th e Bronx Dialysis Cente r with patients who have seriouskidney problems and is also taking acourse to get a federal broadcastlicense .

Selden Is married an d lives In Co opClty.


10/16

TENANTS SUE TO BLOCK RENT HIKESby Michael McKee

Fifteen tenant organizations have sued the New YorkCity Rent Guidelines Board to overturn higher rentincrease guidelines, plus a separate fuel "surcharge" forapproximately 300,000 tenants.The higher guidelines-4.5, 6.5 and 8.5 percent forone, two and three-year lease renewals-were adoptedat a public meeting April 4 when the RGB amended itsGuidelines Order No. 10, originally promulgated lastJune but subsequently overturned by court order on thebasis of violations by the RGB of the state's OpenMeetings Law. The original order provided for guidelines of 3.5, 5.5 and 7.5 percent. The new Order No.lO-a affects leases which were or will be renewedbetween July 1, 1978 and June 30, 1979; the tenant maychoose the term of the lease and the landlord is allowedto increase the rent accordingly.

The RGB met again on April 10 and adopted OrderlO-b, or "add-on," for increased fuel costs which haveoccurred since November, 1978. This surcharge, retroactive to March 1, 1979, has the effect of allowing totalrent increases of 7, 8.5 and 9 per cent for one, two andthree-year leases signed in 1978-79. The surcharge doesnot affect the base rent, but rather expires with thelease.For leases signed prior to these orders, landlords maylegally collect the higher guideline and surcharge only ifthe lease contains a rider allowing a rent adjustment.For reasons which have yet to be disclosed fully, theMarch 14 meeting was postponed twice, first to March

21, and then to April 4. On March 28, Mayor EdwardKoch announced that he was replacing two long-termpublic members because their Nassau County residencemade them ineligible to serve on the RGB. The two newmembers, Scott Mollen and Carolyn Odell, both votedfor the higher guidelines as well as for the fuel add-on.Close to 200 tenants attended the April 4 meeting,held at the Police Plaza auditorium in lower Manhattan.The proceedings were confused and hard to follow,made more difficult by frequent boos and catcalls fromthe audience. Prior to the meeting RSA chairmanSheldon Katz was overheard telling his colleagues, "Themore confused we can keep them today, the better it will

be for us." RSA counsel Arthur Richenthal andWilliam Rowen, Southern Region chairperson of theNew York State Tenant and Neighborhood Coalition,summarized the viewpoints of their respective camps.The deliberations which followed were dominated byowner members Ralph Morhard and William Brennen,

and "tenant" member Sid Davidoff, a Lindsayadministration functionary appointed in 1977 by MayorAbraham Beame. There was no discussion of the analytical studies submitted by both sides. Horse-trading

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quickly became the order of the day.Morhard proposed increases of 5, 7.5 and 11 percent;Brennen seconded; this motion failed 7-2, with only theowners in favor.Davidoff then proposed 4.5,6.5 and 8.5. His motionwas promptly seconded by Morhard. Asked by Odell toexplain his rationale for the one percent increase overOrder 10, Davidoff replied: "I thought two percent was

too much. I think the present is too little, and thereforethe in-between is one. "RGB chairperson Frances Levenson asked for a vote.Five hands, the minimum necessary to carry a motion,shot up: Davidoff, Morhard, Brennen, Mollen andOdell. Levenson, public members Gladys Jones andMsgr. Harry Byrne, and tenant member BarbaraChocky voted no. I t was all over within seconds. And itall sounded rehearsed. In the audience, Richenthalremarked to Katz: At least it pays our expenses."

The fuel surcharge was adopted the following week atan even more chaotic meeting. The vote was 6 to 2(Chocky and Morhard) with one abstention (Jones).

In effect, the owners got the 7 percent they demandedfor one-year leases when Richenthal berated the RGBon March 7. The only cost factor which was discussedon both April 4 and April 10 was fuel; the board votedtwice to compensate owners for this one expense item,ignoring other, larger components (such as real estatetaxes) of operating and maintenance costs whichremained stable or even decreased.Rowen, who had overseen the preparation of thetenant analyses to the RGB, declared his belief that theboard had disregarded the data before it: "There hasbeen no demonstration of the need for an increase. Theymight as well pull two figures out of a hat and let SidDavidoff split the difference. "A preliminary hearing on the tenants' lawsuit toinvalidate Orders lO-a and 10-b was held April 30. Arequest for a stay of these orders was denied, and thecase was adjourned until May 14. The RSA asked to beallowed to intervene, a move which was opposed by thetenants.

On April 23 the RGB met again to consider a fuelsurcharge for Order No.8, which affects leases signedbetween July, 1976 and June,1977. This time, the votewas 6-2 against a surcharge. On April 27 the board metto adopt guidelines of 6.5 percent, effective May 1, for24,500 stabilized apartments in residential hotels androoming houses. At this meeting the members voted toreopen Order No.9, governing leases signed betweenJuly, 1977 and June, 1978, for a possible fuel surchargeand set June 12 as the date for a vote. 0


11/16

Section 8 continuedhousing organizations in Section 8 rehabilitation andprior federally assisted housing programs has beennegligible. Private developers backed by investors builtthe housing and reaped the financial rewards . More andmore, community involvement and cooperation havecome to be seen as necessary to the success of a Section 8project. Several neighborhood organizations have usedthis leverage to negotiate partnership arrangements withdevelopers, winning significant benefits for themselves,local residents and the general community.Developers have two things in mind when they agreeto such a partnership. They want an ally to spare themfrom the ordeal of community opposition that couldblock their Section 8 project and waste the sumsrequired to put together a package and obtain site control. Secondly, developers recognize the need forcommunity assistance in managing the housing.

It seems unlikely that any Section 8 project will beproduced in the city without the involvement at somelevel of a community housing organization. Groupsmust bear in mind though that what they get as jointsponsors will come at the expense of the developer, anddevelopers are not predisposed to generosity.The way Section 8 is structured, the vast bulk ofprofits to the private developer comes in the first fiveyears of the project. Far sighted developers will takesteps at the time of development to build up the capability of a community organization to take over projectseventually.Community groups do not necessarily have to go intopartnership with developers. At least one New Yorkcommunity housing organization has been able to go italone. Groups should be warned, however, that HUD isvery cautious in its choice of developers and gives strongpreference to those with previous federal housing development experience.Community groups can be involved in Section 8 rehabin four separate areas : site selection, design and tenantselection; proceeds from the tax shelter syndication;project management responsibilities; and jobs and subcontracts to the community.Site Selection, Design and Tenant Selection. Community groups probably have a good sense of wherethey would like to see Section 8 developed and the kinds

of units that are needed in their neighborhood. Theyshould condition their agreement to work with a developer on their ability to influence these matters. Frequently, developers will be actively looking to community group involvement in tenant selection. Fundingshould come out of the project mortgage.Tax Shelter Syndication Proceeds. Most agreementsbetween developers and community groups provide thecommunity with some share of the tax shelter proceeds.These are the juiciest bit of a Section 8 project, and community groups should expect hard negotiations to get

11

what they want.Syndication is very complicated. In essence it involvesthe sale of the ownership interest in the project to hightax bracket individuals who are thereby able to claim thetax deductions associated with the project's depreciation, taxes and interest. Section 167(k) allows most ofthe value of the rehabilitation improvements to be depreciated over five years . By investing in the tax shelter,individuals are able to pay substantially less in theirincome taxes. The active participation of a communitygroup and the assurance that the project will be acceptedin the community are often considered to aid in the saleof the tax syndication.The total sum paid by the investors is referred to asthe gross proceeds. This sum is automatically reducedby the costs of syndication, i.e., that paid to lawyers,accountants, and brokers who arrange the sale to investors. Syndication costs frequently run as high as 25per cent of the gross proceeds. The remaining proceeds,called net proceeds, are further reduced by a number ofexpenses incurred by the developer in creating theproject, i.e., the' risk capital.' Typical deductions fromnet proceeds include excess acquisition costs for the site,the case advanced by the developer to close the projectmortgage, the builder's fee, and any overruns incurred.The remaining sum, the net net proceeds, is the amountto be split between the community and the developer.The percentage that a community group can expect toreceive of the net net proceeds will range somewherebetween 20 and 50 per cent. For a 200-unit project withan $8 million development cost, a community groupmight expect to realize roughly $300,000. The share willdepend on the extent of the community group's involvement in the project, how influential it was in getting thecommitment from HUD, and whether the neighborhood is an Neighborhood Strategy Area. I f the community group needs the funds quicker than over the fiveyear period, it may have to pay for this by getting asmaller portion of the proceeds.Project Management. Depending on the managementexperience of the community group, it can eitherbecome the managing agent for the project or havemembers of its staff hired by the managing agent toassist in managing the project. HUD will require themanaging agent to have a fairly impressive management track record. Groups with community management, 7 A or similar experience could definitely qualify.Jobs and Sub-contracts to the Community. This isperhaps the fuzziest of all negotiating areas. Most developers and sub-contractors seem unwilling to agree tospecified percentages of jobs for community residentsand opt instead for "best efforts" pledges. The community organization should monitor the efforts of thedeveloper to hire community residents. At least onegroup was able to reach an agreement with the developerto fund an affirmative action job developer out of theproject mortgage. continued ...


12/16

GREEN HOPE LOAN CLOSESTh e city's first Direct Loan was closed on May I, one

year to the day after the crew of Building for Women atGreen Hope began demolition on 328 East 120th St . inpreparation for the sweat equity rehabilitation.

Th e gut rehabilitation is expected to cost $120,000 forthe four-unit building. The work should be completedwithin three or four months.

Maureen Roach, coordinator of the project, said thecrew finished the demolition work in mid-summer and,"since then we have patiently spent a year watching thebuilding deteriorate as joints in the basement rotted andthe parapet wall on the roof crumbled."

Participating in the signing of some 58 d o c u m e n t ~ were representatives from Green Hope, Chemical Bankand HPD.During the next few months, the women will beworking along with the general contractor. Under theterms of the Direct Loan, they will do the finishing workthemselves. They will also live in the building atmonthly rents of $130 to $150 for a one-bedroom apartment. 0

Th e advent of the Section 8 Neighborhood StrategyArea program offers community groups an even stronger bargaining position. In that program, more than 5,000units have been set aside fo r 10 New York City neighborhoods: Bedford Stuyvesant, Sunset Park, Flatbush,Hamilton Heights, Washington Heights, ManhattanValley, Crown Heights, Kingsbridge-Bedford Park, FarRockaway and Gateway to Harlem.

In the regular Section 8 program, a private developercan always threaten a community organization makingsignificant demands that he will go to another neighborhood. Because the NSA units are tied to particularneighborhoods, developers must strike a deal with thelocal group.Several community groups in New York City havebeen able to establish extremely positive working relationships with private developers. SEBCO, in theSouth Bronx, has completed 201 units of Section 8rehab through a joint venture with a private developer.SEBCO relies almost exclusively on tax shelter proceedsto fund its operation . Lo s Sures, in the Williamsburgsection of Brooklyn, is currently rehabilitating 201 unitsof Section 8, also in a joint venture partnership with adeveloper. Los Sures's Section 8 complements its community management, sweat equity and other management an d rehab programs.

Th e fact that projects are required by law to wincommunity board approval gives groups a strong bargaining position. I f groups find that developers are no tnegotiating fairly, they might be advised to shop aroundfor another developer.

Section 8 is not without its downside, an d manycommunity organizations are justifiably opposed to

12

AdvertisementU-HAB is seeking a person with experience in tenant

organizing, building management and/or accountingan d bookkeeping to assist tenant organizations participating in HPD's Tenant Interim Lease Program.College degree or appropriate experience necessary.Must be able to work independently, have ability toteach and train and devote time to evening work . Fulltime position . Please send resume to:

Urban Homesteading Assistance (U-HAB), Inc.1047 Amsterdam AvenueNew York, New York 10025ANHD's CET A VI contract, which was to expire at

the end of March, has been extended by the Board ofEstimate until the end of September .

Peoples Housing Network is planning another Schoolfor Organizers, to be held during May and June in theBronx. For information, call PHN: 2121533- 5650.

having it around. One possible danger is the so-called"vacuum cleaner" effect. Section 8 provides participating families with a very high level of services, rehaband amenities; much more than is provided, for example,in community management and sweat equity projects.Ironically, because the rents paid by Section 8 familiesare based on their income, families living in Section 8units may be paying less than tenants in other community based projects. This might cause a drain on community management, tenant interim lease buildings oreven stable landlord owned buildings. Tenants may besiphoned off, endangering the surrounding buildings.

Another danger may be more subtle but perhaps justas serious. Some cartoonists have noted that by somemysterious process, pets an d their owners have a tendency to develop a resemblance.. Th e same tendencyseems to occur between contractors an d contractees.Over time,organizations start to resemble those that givethem money. This is no t to say that community groupsparticipating in Section 8 will become little Starretts.

However, community groups that are used to gettingby with little or no money for overhead or administrative expenses will through participation in Section 8 getmoney an d exposure to the high overhead world. Thedanger lies in becoming dependent on this incomestream an d the loss of freedom in making decisions forthe community that could result from that dependence.Community groups can gain through partnership withdevelopers in Section 8 projects; they can lose if theybecome more like private developers than communityhousing organizations. 0

Howard Burchman consults on neighborhood-basedhousing and community development projects.


13/16

THE FAILURE OF PRIVATE OWNERSHIPby Tony Schuman

It is no secret to New York's tenants that our housingis falling down around us. Abandonment, arson, lack ofservices, high rents, few vacancies-all these are facts oflife for low and modera te income families.The statistics are staggering. Of 1.9 million rentalunits, the city estimates that 15 per cent require replilcement and 47 per cent need rehabilitation. More than sixfamilies out of ten are inadequately housed. For theprivilege of living in these deteriorating apartments,tenants are obliged to pay an every increasing portion oftheir income in rent. More than half of New York'srenter households use up over 25 per cent of theirincome, and nearly half pay more than 30 per cent.A complex mosaic of factors is offered to explain thissituation: rising fuel and labor costs, greedy landlords,rent control, redlining by banks, racism, etc. This piecemeal approach to understanding the problem has led toscattershot efforts to improve housing conditions: antiredlining efforts, fair housing laws, rent subsidies, etc.But except for modes improvements in health and sanitary codes, New York's working families are as poorlyhoused today as they were ninety years ago when JacobRiis documented the horrifying conditions in the LowerEast Side slums.

The principal reason for this is that virtually allefforts have been aimed at making the private marketsystem work for housing. Mortgage insuranceprograms, subsidy programs like Section 8 and taxshelter write-offs for depreciation have all been devisedto prop up investor confidence in the housing market. Itis time to acknowledge that the private market simplydoes not work for low and moderate income rentalhousing in the New York area. The crisis is a structuralpart of the free market economy.

Fifty years ago, the Tenement House Committee ofthe Charitable Organizations Society, a housing reformgroup, warned of wages not rising in proportion toliving costs. The magnitude of this gap is still sizable.From 1960 to 1975, median rents in New York rose 57per cent, c o m p a n ~ d with only a 17 per cent increase inmedian income. From 1975 to 1978, rents rose 23 percent, wages seven per cent. When one adds the problemsof unemployment and inflation, the results are evidentin the ravaged neighborhoods of the South Bronx, EastNew York and similar communities.

In the face of the demonstrated failure of the privatemarket economy to provide for peoples' housing needs,there is only one source with the financial means, theauthority and the mandate to insure decent housing for

Tony Schuman is an architect who teaches at the NewJersey School of Architecture in Newark. He is amember of Homefront and co-coordinator of the NewYork Area Planner's Network.13

everyone-the government. The City of New York,already the reluctant landlord of more than 37,000occupied apartments, is in a perfect position to takeacourageous and far-sighted step by acknowledging thereality of the situation and accepting responsibility forthe housing it now owns.Public statements from Mayor Koch and Housing,Preservation and Development Commissioner NathanLeventhal, echoed by the City Planning Commissionand the New York Times, reveal a dogmatic insistencethat, all experience to the contrary, the private marketstill holds the answer to our housing needs. Thus we areassured that the city is making every effor t to restore thebuildings to the tax rolls by returning them to theprivate sector (including not-for-profit private ownership) with rents raised so that the buildings can be selfsufficient taxpaying properties. New legislative andpolicy initiatives are in support of these goals: negotiatedsales to private owners, removal of rental controls onproperties upon resale and contracting with privatemanagement concerns to maintain In Rem propertieswith eventual sale of the buildings to these privatecompanies.

The "alternative management" programs whichtransfer operation and eventual ownership of In Rembuildings to tenant and community groups are valued bythe city primarily because they have a better rent collection record (90 per cent) than the city's own efforts(40 per cent), and because they transfer responsibilityfor restructuring rents to the tenants themselves.While some tenant groups have welcomed thisapparent "control" over their housing, very fewbuildings appear to have the necessary financial andstructural conditions for making these programs workin the long run.I f "tenant control" is to have better results forhousing than "community control" of schools did foreducation, we must recognize that adequate financialresources are essential. We need a permanent publicsubsidy to cover operating and repair costs when tenantincomes are inadequate. Public responsibility for

housing without real elements of tenant/communitycontrol will leave us prey to the same bureaucraticproblems that have characterized government-runhousing in the past. Most aspects of housing management can best be dealt with at the building level. Wheretenants and community groups are willing and able,complete self-management is desirable.As long as structural weakness in our private marketeconomy leaves hundreds of thousands of city tenantsunable to provide themselves and their families withdecent housing at rents they can afford, we must insiston public responsibility for housing in the form ofpermanent public subsidy. 0


14/16

$lM WEATHERIZATION PLAN:INACTION REMAINS HALLMARK

by Len RodbergLast month City Limits reported that New York Citywas letting more than $1 million in housing weatherization funds sit idle, while it tried to get its fiscal house in

order. Since then, the Community Development Agencyhas announced its weatherization program. Nevertheless, inaction continues to be the hallmark of the city'seffort to help low-income residents cu t their fuel bills.

Under the federally-funded weatherization program,materials such as insulation, weatherstripping, andreplacement windows are provided, along with a limitedamount of funds for supervisory labor and transportation. Until last year, the weatherization services wereprovided by Operation Open City, working undercontract to the Community Development Agency.Drawing on labor supplied under the CETA program,Open City operated a city-wide program out of officeslocated in each borough. (In some cases, homeownerswere provided with weatherization materials which theyinstalled themselves, on a do-it-yourself basis.)Recognizing, in at least a limited way, the real energycrisis facing low-income residents as fuel costs skyrocket, the Congress has, over the last several years,approved a rapid increase in the weatherization program. New York City'S allocation of weatherizationfunds has risen from $420,000 in fiscal year 1977 to $6.9million in fiscal year 1979 funds, according to a recently-announced State plan for use of these funds. (Thefederal money is all funneled through the states, whichdecide how to spread it among the counties and municipalities.) However, New York City has not even begunspending the 1977 allocation for weatherizing homes .Having seen this growth on the horizon, and facedwith internal organization and fiscal problems, CDAdecided last fall upon a reorientation of its program.Though CDA officials have been unwilling to releasedetails of their plan, we have learned that it envisionedconverting Operation Open City into the "quartermaster" for the program, providing materials andtraining to other organizations who would perform theactual weatherization services. Under CDA's plan, mostof this work would be done by selected "delegateagencies" in each borough . Until now, these agencieshave been providing various social services undercontract with CDA. Apparently, they have not beenwilling to pick up the weatherization mantle, and CDAhas still not announced this delegate agency plan, oreven which organizations it is seeking for this role.

CDA has indicated a willingness to involve neighborhood housing groups in the program, but it has shown aclear lack of enthusiasm toward their participation,emphasizing that these groups have to go-it-alone.

14

These groups came together last fall to form an AdHo c Neighborhood Weatherization Task Force, tofacilitate their weatherization efforts. CDA representatives met once, in January, with the Task Force, butthey displayed a 'noticeable coolness toward Task Forceefforts to help in shaping the program.When CDA finally announced its program on March29, it was labeled, in wordy bureaucratese, the Weatherization and Energy Conservation Self-Help VolunteerLabor Materials Allocation Program. "Self-help"groups were invited to apply to the program, demonstrating that they have the necessary "volunteer" labor,a prior history of involvement in the housing field, anda Board of Directors representative of the poor.In spite of CDA's stand-offish attitude, at least fiveneighborhood housing groups immediately applied forthe program. By early May, CDA had yet to act on anyof these applications. No money or materials have yetflowed to any group. Time is crucial here.

The Ad Hoc Neighborhood Weatherization TaskForce, which is working for neighborhood-basedweatherization activities in New York City, may bereached c/o Len Rodberg, 515 W. 110 St., New York,NY 10025 (212) 662-2463. 0SAVE ON INSURANCE

Preliminary studies show that by forming a liabilityinsurance consortium tenants and neighborhood groupscan save an average of one-third of their existingpremium costs, and often much more.

After months o(research by Wendy Faxon and AndyReicher of UHAB, a consortium of this kind is ready togo.The broker for the consortium will be Marsh andMcLennan, Inc. one of New York's largest insurancebrokers. ANHD will handle administration, includingthe application process, billing and claim procedures.Liability insurance is required by most HPD-administered, alternative management programs (TenantInterim Lease, 7 A and Community Management, forexample) and is highly recommended for any tenant

group or agency taking over management or ownershipof a building.

To find out how much your building may save inI iability premiums, call Gay Bunn at ANHD (674-7610).As soon as we get an idea of how many buildings willparticipate, ANHD will begin negotiating witi:l fundingsources and banks to fund the lowest rate at whichbuildings can borrow money to cover the mandatory

"up front" premium payment. 0 Anne Hartwell


15/16

HARLEM SOLAR PROJECTA solar heating and hot water system that uses airinstead of water as the heat-transfer medium will bemounted soon on two adjacent brownstones in Harlem.Chip Tabor, and architect for the Energy Task Force(ETF) and designer of the project, describes it as "one

of the first urban applications of a commercial activesolar air-heating system in the northeast."The solar system will provide approximately 420/0 ofthe heat and hot water needs of 417 and 419 West 146thSt. and will be paid for by a $27,000 grant under HUD'scycle 4A program. Both of these four-story buildings,which will house four families in duplex apartments, arescheduled to be renovated by United Harlem Growthusing a federal low-interest loan.The primary purpose of the solar project is to providespace heating for the two buildings, although enough ofthe energy gathered by the solar collectors will bediverted to heat about 25% of the water in winter and

nearly 100% of the water during summer.Although the main goal of solar heating is to cutenergy costs, this project is not intended to be costefficient. "Right now," says Tabor, "our economicsystem is not geared to solar energy and it is still lessexpensive to buy oil." Tabor was reluctant to estimatethe payback period although he did note that the firstyear's savings on fuel would be about $500.Eventually, ETF hopes to learn enough from thisproject so it can manufacture it's own solar air-heatedcollectors.The system works in two ways. First, hot air can besent directly from the collectors to individual roomsthrough air ducts. I f the air from the collectors isnot hot enough to heat the rooms, it is routed through afurnace in the basement.Second, heat can be drawn from a rock storage bin inthe basement. This bin, made up of 38,000 pounds oftiny granite pebbles, could heat comfortably bothbuildings for thirty hours when the outside temperatureis at zero degrees.

If no heat or hot water is needed, the system continues to store heat in the rock storage bin until it isneeded."The decision to use air-heated collectors as opposedto water-heated panels involves a fair amount of subjectivity," says Richard Crane, a mechanical engineerwho is also a technical consultant for the National SolarHeating and Cooling Information Center in Rockville,Maryland.There are advantages and disadvantages to both. " Ifa liquid system leaks, you know it," Crane said.Because it is more difficult to detect leaks using airheated collectors, the system may be running at subefficiency without anyone knowing it. But then, an airsystem can still operate if repairs are needed while a

15

water system has to be shut down and drained. The airsystem also never needs anti-freeze to prevent pipesfrom breaking.The only obstacle standing in the way of this projectis final approval of two HUD 312 mortgage loanstotalling $92,000, according to Dave Robinson, president of United Harlem Growth, the community organization which will handle the actual construction.

Robinson says he has received assurances that themoney will be available in the upcoming weeks.Already, United Harlem Growth has demolished theinterior building frame and has begun beam replacement and roofing using their own capital, according toRobinson.United Harlem Growth, which has been in existencefor five years, has completed five projects under the 312program, says Robinson. 0 Selwyn EiberLOW INCOME CO-OPS

City and state officials are exploring ways of removingan impediment to the development of low-incomehousing cooperatives in city-owned buildings-the highcost of filing plans with the State Attorney General'soffice.The city has a new policy that permits tenants in lowand moderate income neighborhoods to incorporateand buy the city-owned building in which they live for$250 per unit. However, an offering plan that disclosesfinancial information and building condition data mustbe filed with the attorney general's office before acooperative can be approved. Such plans require professional services, and the costs can run into the thousands of dollars."The system works well when there is money in thecooperative to hire a lawyer and an engineer," said DickRifkin, deputy counsel to State Attorney GeneralRobert Abrams. "But it's expensive for low incomepeople. We agree that this might prevent the city fromturning buildings into co-ops."Among the changes contemplated are more standardization of forms to cut down on legal costs and possibleacceptance of building surveys done by the city ratherthan expensive engineer studies. 0

Mayor Koch: "If we cannot restructure the whole busi-ness and get out of the rent business and we're still leftnext year with these large numbers of properties, we'regoing to vastly reduce our commitment to providingservices to these buildings. No other city does. Whatthey do is simply tell tenants, 'You don't like it, getanother apartment. ' "New York Daily News, April 29


16/16

$6.9 MILLION OKAYED FOR PRESERVATIONThe State Legislature has voted a $2 million increasefor the Neighborhood Preservation Companies Program, and the next application cycle is expected to be inlate spring or early summer.The program, which provides operating funds tocommunity organizations around the state, now carries

an annual budget of $6.9 million. It's original fundingwas $500,000 two years ago.Sharon Lauer of the State Division of Housing and

Community Renewal, which administers the program,said DHCR was hoping to announce the next round inMay after which communi ty groups would have 30 to 45days to apply.There are 118 organizations in the NeighborhoodPreservation Companies program, receiving an averageof $40,000 each, she said.Lauer said that of the $6.9 million, only about $1 .5million to $2 million would be avaihible for new groups .The balance would be to re-fund groups already in the

program.The State Assembly has passed a bill to create a newOffice of Urban Revitalization directly under Gov.Carey. Asked about possible plans to transfer theNeighborhood Preservation Companies program fromDHCR to the proposed new office, Lauer said that therewere none at the moment. She said that because theprogram focuses on housing and because of the disruptive effect of a transfer, it will remain in DHCR undercurrent thinking.

City Limits115 East 23rd StreetNew York, N.Y. 10010

IN THIS ISSUESection 8 MarriageUDAAP Sales PlanSavings Bank Denied BranchCD V Budget ReleasedHUD Foreclosures in Queens

DHCR has awarded contracts totaling $480,000 to 11organizations in the sta te to provide technical assistanceto neighborhood groups in the program. Final approvalof the contracts is subject to release of the funds by theState Budget Office.Notification of contract recipients has been confused.At least one decision appears to have been changed,switching a contract away from a group that had beentold informally of approval. Other groups said contractsigning timetables had been shifted. DHCR has notannounced the contract winners, but City Limits hasobtained the following list from the agency: PublicExecutive Project, State University of New York atAlbany; TAP, Troy; Settlement Housing Fund, UrbanHomesteading Assistance Board, Pratt Center for Community and Environmental Development, New YorkState Legislative Inst itute at Baruch College, New York-State Alliance to Save Energy and Ables Schwartz andAssociates , all of New York City; 78 Restoration andFire Survival Center, Buffalo; Project Reach, Wayland.o

The 8th annual conference of National People'sAction is set for Sunday and Monday, June 17-18 at theShoreham Americana Hotel in Washington, D.C. Theconference will deal with insurance and mortgageredlining, HUD programs, public housing, subsidizedhousing, crime, utilities .

NON-PROFIT ORG.U. S. POSTAGEPaidNew York, N.Y.Permit No . 3372

city limits magazine, may 1979 issue

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