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NewYork's Urban Affairs News Magazine May 1995 $3.

City Limits
Volume XX Number 5
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Depraved Indifference
he rats were such frequent visitors to her second floor apartment that
Doris Ruffin even gave one a name, Herman. The day Herman
jumped onto her bed while she was snoozing is the day she decided
to stop paying the rent. By that time, she adds, it had been years
since the building's front door had a lock; since drug dealers took control
of the entryway; since tenants could rely on the landlord to provide heat or
hot water, much less a functioning elevator for the elderly folks on the up-
per floors.
Two months ago, on March 8, a judge in Housing Court gave the land-
lords until March 20 to repair the holes in the walls and floors of Ruffin's
apartment. "No one came," she says. The next day, the building collapsed.
The collapse of 142 West 140th Street in Harlem has attracted a great
deal of attention from the press and politicians. As Ruffin told her tale to
members of the City Council at a hearing recently, questioners focused on
how city inspectors could have failed to notice the structural decay of the
building on repeated visits. That is an important issue, certainly. But only
one or two of the Councilmembers seemed the least bit concerned about the
most painful information conveyed by these former tenants: ' what it was
like to live in a dark, decrepit, rat-infested slum buUding for the five or
more years it had been in decline.
The centerpiece of this issue is dedicated to understanding the private
housing market in New York City's low income neighborhoods. As you
will learn from the articles beginning on page 10, it is a predatory business.
A great deal of money has been made by financiers and speculators work-
ing the housing market in Central Harlem and similar communities. Count-
less tenants have lived-and died-with the consequences. Read on to
learn how it is done.
The city is at a turning point in housing policy. Commissioner Deborah
Wright of the Department of Housing Preservation and Development is de-
vising a new plan for dealing with tax delinquent properties, most of them
in low income neighborhoods. If her only solutions are to loosen govern-
ment regulation of landlords, challenge rent stabilization laws and lobby
for Housing Court "reform" that favors owners, she will solve nothing. The
city must devise a policy that uses whatever leverage it has at its disposal-
tax foreclosure, code enforcement, court appointed administrators-to en-
sure that landlords and their mortgage holders maintain property in decent
condition. Only then should discussions focus on reducing the cost of
ownership, not through deregulation but, perhaps, with targeted tax abate-
ments and low interest rehabilitation loans that do not undermine afford-
ability for the tenants.
If landlords cannot manage their properties, the city should take them in
tax foreclosure or otherwise eliminate the mortgage debt held by private fi-
nanciers and then transfer ownership cheaply and quickly to tenants or a
community group. There is no reason the city has to hold onto tax fore-
closed property for decades at a time, as it does today. If City Hall devoted
adequate resources to tenant and community organizing. clarified its hous-
ing sales programs and maintained a high level of rehabilitation funding,
the process could move much more speedily.
In an article last month about the city's Neighborhood Entrepreneurs
Program, we incorrectly identified a bank whose charitable foundation has
provided a grant to the New York City Housing Partnership to work with
landlords and tenants. Its correct name is the Industrial Bank of Japan.
Cover illustration by David Chelsea
The Big Squeeze 10
Everybody's talkin' 'bout regulation, high taxation, litigation. Devas-
tation. But no one wants to face up to what's really controlling the
cost of private low income housing: the market. by Andrew White
Making Millions Out of Misery 14
The landlords of a collapsed building in Harlem are facing bankrupt-
cy, foreclosure and criminal charges. But for the fmancial operators
behind the scenes it's simply business as usual. Getting away clean,
making a killing. by Kim Nauer, Andrew White and Jesse Drucker
Code Enforcement Conundrum 19
In Housing Court, city attorneys routinely give landlords with rap
sheets as long as Pinnochio's nose the chance to make "good faith"
efforts at repairs, no money down. by Jill Kirschenbaum
A Woman's Work 22
Job training programs designed to meet the special needs of women
overcoming poverty are succeeding where previous efforts haven't-
moving them off welfare and into independence. by Seema Nayyar
Wise Man 6
At 50, Richie Perez is New York's grand old man of Puerto Rican
activism. by Stuart Miller
Harmonic Convergence 26
Long before the city started to rethink its development policy for
homeless people with AIDS, the creators of Flemister House were
piecing together a strategy of their own. by Stephen ArrendeU
Ransomed Justice
Where You Hang Your Hat
More Cuts to Kids
Incinerator Rebound
CRA Regs, Finally
Loan Fund Slashed
by Angelita Anderson
by Robin Michaelson
Clearinghonse 29
Letters 34
Professional Directory 38
lob Ads 37,38,39
More Cuts
to Kids
budget axed
Another funding stream feed-
ing an ever-dwindling pool of
city moneys for youth services in
New York is drying up, this one
for three programs that serve the
most vulnerable of New York's
homeless population.
Tagged by the city Child Wel-
fare Agency (CWA) as prevention
and" Juvenile Prostitution Diver-
sion" funds, the $920,000 pool of
money is slated to disappear
July 1. And while it represents
only a tiny fraction of the mas-
sive CWA budget, for the kids
who rely on the services and
support of Streetwork, the Het-
rick Martin Institute and The
Door, the impact of the cut will
be substantial
"We're really worried," says
Angela Amel, clinical director of
Streetwork, which offers counsel-
ing, outreach and a drop-in cen-
ter for homeless and runaway
youths in the limes Square area
of Manhattan. "It's going to be
devastating for the kids."
Streetwork, a project of the
Victim Services Agency, is losing
$390,000 of its annual operating
budget of $1 .2 million. As a re-
sult of the cut, Streetwork is
scrambling to find other funders
to make up the difference. But in
the meantime they are making
some hard choices about the ser-
vices they can offer.
"We are seeing sixty to ninety
kids a day at our drop-in center,"
says Amel, a significant number
of whom are engaged in prostitu-
tion, drug sales and other risky be-
havior associated with street life,
she says. Many are AWOL from
the foster care system, some have
mental health problems and all
are at risk of assault on the street.
Many, too, are HIV positive.
"These are kids who live on
the street, who are dirty, who are
completely marginalized," says
Francis Kunreuther, director of
the Hetrick Martin Institute.
Opened in 1987, Hetrick Martin
started out working primarily
with boys involved in prostitu-
tion at the piers on the West
Side, but has grown into a $2.6
million operation that now also
sees a lot of kids who gravitate
to the East Village. Many start
out panhandling but move into
prostitution when survival on
the street becomes threatened,
Kunreuther explains. "These are
not the poster children," she
says, "but they are the kids most
in need."
Like Streetwork, Hetrick Mar-
tin is perhaps the only link its
clients have to essential ser-
vices such as health care, food
and shelter. The organization is
losing its contract for $170,000.
CWA's prevention moneys
were first made available in
1984 by then-Mayor Ed Koch af-
ter a report was released expos-
ing the extent of juvenile prosti-
tution in New York City. Karen
Calhoun, spokesperson for
CWA, says that because of the
many cutbacks the agency has
endured in recent budget
rounds, "We've had to decide to
only provide our core mandate
of preventive services to chil-
dren under eighteen, those who
are at risk of imminent foster
care placement or have been
discharged and are at risk of go-
ing back to foster care."
But the needs of kids on the
street, many of whom are fleeing
abusive foster care placements,
has hardly diminished, says
Katey Assem, executive director
of The Door, a multiservJce cen-
ter that serves a wide range of
New York City youth. Its prostitu-
tion diversion and other preven-
tion services include counseling,
job training, apprenticeships and
placements as well as health
care and family planning. They
are losing $360,000 of an annual
budget of $7 million.
"Cuts to this program won't
break our budget," says Assem.
"But these young people, who
are otherwise prostituting them-
selves on West 12th Street and
42nd Street, here they had a di-
version, someth ing that gave
them the skills and the empow-
erment to get involved in posi-
tive activities. This puts them
right back on the street. Putting
more cops out there is not going
to solve this problem."
Jill Kirschenbaum
Incinerato.r Rebound
A few weeks ago, environmental justice
activists thought they might soon hammer
the last nails into the coffin of a fiscally bank-
rupt four-year-old medical waste incinerator
in the South Bronx. But then the nation's sec-
ond-largest waste disposal company stepped
into the picture.
Early last month, Browning-Ferris Indus-
tries won a bankruptcy court judge's approval
to purchase the Bronx-Lebanon incinerator in Port Morris for '
$4.5 million. If it goes ahead, the deal would be a coup for the
Texas-based company: originally, the incinerator was developed
at a cost of more than $15 million, much of it provided through
government subsidized city industrial development bonds.
The bankrupt owners of the incinerator, Metro New York
Health Waste Processing, have committed repeated emissions vi-
olations. Browning-Ferris promises to run the incinerator cleanly
and in full compliance with its state environmental permits.
But members of The South Bronx Clean Air Coalition say
that's not good enough. They want the plant shut down for
good, and they are organizing local residents to pressure Brown-
ing-Ferris not to go through with the purchase.
Unfortunately the bankruptcy court has opened this up to a
larger organization that knows how to manipulate situations a
lot more effectively, says Frances Sturim of the Riverdale Com-
mittee for Clean Air, which is working with the South Bronx
group. We don't want Browning-Ferris in the Bronx. We will
continue to put pressure on them and we hope they see the
light. Andrew White
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eRA Regs,
It's official. After two years of
intense negotiations with com-
munity activists and banks, gov-
ernment regulators have released
new rules governing the nation's
Community Reinvestment Act
(CRA). Their publication on April
19 in the Federal Register caps
two rounds of often heated con-
troversy over how much banks
should be required to invest in
disadvantaged communities.
"[Neighborhood groups)
weren't happy with some aspects
of it, but everything considered,
they thought these were regula-
tions they could live with. And the
industry response was pretty
much along the same lines, " says
Allen Fishbein, general counsel
for the Washington-based Center
for Community Change. "Now
we think they ought to be given
an opportunity to be tried."
But they may not be, thanks
to several legislative efforts to
gut the act now underway in the
Republican-controlled House
and Senate. The most serious of
the bill s now in committee
would exempt more than 95 per-
cent of the nation's banks from
activist CRA challenges. Senate
hearings begin in mid-May.
"That's the opening shot," Fish-
bein says.
Assuming CRA remains in-
tact, here are some highlights in
the new regulations:
Banks will now be evaluated
according to the adequacy of their
branch services, their community
investments and the amount of
lending they do in the neighbor-
hoods where their depositors live.
Lending is considered para-
mount: a bank cannot pass its
CRA examination without getting
a satisfactory lending rating.
Examiners will also use
comparative lending tests. They
will assess a bank's lending
record by comparing it with oth-
ers serving the same communi-
ty. The public will also be notified
of upcoming CRA evaluations, a
provision that could give local
groups more of an opportunity
to participate in the process
Banks will have to report
the number of business loans
they have made in a given cen-
sus tract. They will also have to
report how many business loans
they have made by income
group .
A controversial proposal re-
quiring that banks report the race
and gender of their small busi-
ness loan recipients was dropped
from the final rules. While
bankers wanted to steer clear of
the extra paperwork involved,
they also argued that collecting
such information could be viewed
as a violation of the Equal Credit
Opportunity Act, which outlaws
racial discrimination in lending.
To overcome this complaint, Fish-
bein says, regulators have pro-
posed a change to the ECOA rules
allowing banks to collect and
publish this data, if they wish.
Regulators are now seeking com-
ment on this proposal.
"If you assume the new regu-
lation does get adopted for the
race and gender reporting, there
will be many of the elements that
community groups wanted to
see in terms of more information
about small business lending ac-
tivity," he says. "Perhaps it's not
as systematically laid out as peo-
ple would like, but there will be
some important pieces of infor-
mation available."
The next step, assuming
Congress doesn't gut the law, is
to help regulators write a de-
tailed CRA evaluation manual
for their staff. Activists have
also been invited to help with
training and recruitment.
The new regulations still
leave a great deal up to the judg-
ment of individual bank examin-
ers, Fishbein says. "Now they'll
have more data, but they need to
Loan Fund Slashed
A cornerstone of President
Clinton's urban investment ini-
tiative is in trouble and likely to
lose much of its current funding
under the Republican-controlled
The much-touted community
development financial institution
(CDFI) loan fund had been allo-
cated $125 million for the current
year. Altogether, the four-year
program was slated to receive
$382 million for distribution
among the nation's tiny commu-
nity-based banks and credit
unions. However, the House, in
a recent funding rescission bill,
decided to withhold all but $1
million of this year's allocation.
Thanks to some last-minute
lobbying by grassroots forces,
the Senate restored $36 million
for the current year.
Now the two proposals are
scheduled for debate in confer-
ence committee. Word on the
street is that the House will al-
low the $36 million allocation
with, perhaps, some new
strings attached.
"The good news is that the
program is going to survive. The
bad news is that it was scaled so
far back: says Mark Pinsky, ex-
ecutive director of the National
Association of Community De-
velopment Funds.
Adding insult to injury, the
learn how to apply it in a way
that makes for a good rating sys-
tem," he adds. "That's what it's
really come down to, and we're
going to find out if they're up to
the job." Kim Nauer
Senate Banking Committee has
refused to consider the confir-
mation of Kirsten Moy, Presi-
dent Clinton's nominee to run
the loan fund. The appointment
has been sitting in the commit-
tee's in-basket since February,
Pinsky says.
He maintains that the only
long-term hope for this legisla-
tion is pressure from activists
and the communities who will
benefit from it. "This is a pretty
low-profile program when you
consider there's $60 billion ba-
ing cut from the federal budget:
he says. "But we're playing to
our strength-the only strength
we have at all-the 300-plus
grassroots member organiza-
tions we have around the Unit-
ed States. Kim Nauer
By Stuart Miller
Wise Man
As police brutality rates soar, Richie Perez is organizing activists
young and old for Puerto Rican rights.
any adults look back on
their youth and recall a
teacher who was a sin-
gular influence, a guid-
ing force during their formative
years. For Vicente "Panama" Alba,
who came of age in the Bronx dur-
ing the late 1960s, it was a high
school teacher named Richie Perez.
Following Perez's example, Alba
joined the Young Lords (a smaller
scale Latino version of the Black
Panthers) and embarked on a career
in community activism.
When Alba, now National Con-
gress for Puerto Rican Rights chap-
ter chairman for New York, took the
microphone at One Police Plaza on
March 30 and looked out on hun-
dreds of protesters marching against
police brutality, he was keenly
aware of Perez's impact, not just on
his own life, but on the entire Latino
with Perez for five years dur-
ing their Young Lords days.
"He's someone you want to
get to know," says Guzman.
"He has a sense of humor
that is sorely lacking in this
line of work."
"He has transcended time
and the political element in
a way very few have," agrees
Juan Figueroa, president of
the Puerto Rican Legal De-
fense and Education Fund
(PRLDEF). "He was effective
in 1975 and he is effective
in 1995."
Intent and Outspoken
Perez is not some spectral pres-
ence, an Obi Wan Kanobi of the
grassroots movement. After nearly 30
years of activism he remains on the
front lines. The National Congress'
national coordinator, Perez is the
man who handed Alba the micro-
phone. Now 50, he is both elder
statesman and dynamic leader.
After neart, 30 ,ears of activism, Richie Perez of the National
Congress for Puerto Rican Rights remains on the front lines.
Sitting in his sunny East
22nd Street office at the
Community Service Society,
where he runs the Depart-
ment for Political Develop-
ment, Perez, a short, solidly
built man with a salt-and-
pepper beard, exudes a pro-
fessorial air. He is intense
and outspoken, but his
thoughts are well organized,
and he occasionally refers to
notes on a yellow pad.
Raised in the South
Bronx, Perez was the first in
The demonstrators were protest-
ing what they considered to be too-le-
nient charges filed by the Bronx Dis-
trict Attorney against police officer
Francis Livoti in the December death
of Anthony Baez. The University
Heights incident occurred after Baez's
football struck Livoti's police car. The
officer allegedly used an illegal choke
hold, which Baez's three brothers wit-
nessed. Livoti has pleaded not guilty to
a charge of criminally negligent homi-
cide which could lead to a maximum
of four years in prison.
On one level, the demonstration
might be considered a failure, receiving
scant media attention for its demands
for a jury trial, an independent prose-
cutor and a federal investigation into
the rapid rise of brutality cases under
the watch of Mayor Rudolph Giuliani.
But Sonjia Gonzalez, 25, who helped
organize the rally, says that even
though the lack of coverage was frus-
trating, "Everybody felt really ener-
gized afterward. There was a special
There were also some tangible results:
the Congress recruited 400 participants
to fill the courtroom during Livoti's trial
in order to counter the anticipated po-
lice union presence.
The ability to make the most of a sit-
uation is just one reason observers
rank the tenacious Perez among the
Latino community's most prominent
grassroots activists. "He is truly the
most committed person I have met,"
says Newsday reporter Elaine Rivera,
who has interviewed Perez on every-
thing from police brutality to school
board elections.
His gift of leadership is rooted in an
infectious personality, adds NBC news-
caster Pablo Guzman, who roomed
his family to go to college. At
Lehman College, he cared more about
"hangin' out" than politics, he recalls.
It wasn't until he became a stenogra-
phy and civics teacher at James Mon-
roe High School in the late 1960s-he
opposed the Vietnam War, and inner-
city teachers were given draft defer-
ments-that he says he gradually be-
came "deeply politicized."
He chipped in with an English
teacher to buy copies of Down These
Mean Streets, Piri Thomas' seminal au-
tobiography about growing up in the
Puerto Rican ghetto, which soon be-
came a status symbol among students.
When Perez' colleague was nearly fired
for going outside the approved reading
list, "It became clear the bureaucracy
was about control and uniformity, not
about reaching the kids," he says. He
quickly realized the importance of or-
ganizing. "When you're dealing with a
tremendous institutional bureaucracy,
individuals cannot change things. Only
groups of people who coalesce can."
In 1969 the Young Lords were born
and Perez discovered a group of kin-
dred radical spirits. A year later he left
teaching to become a community orga-
nizer, a role he retained even after he
returned to teaching in 1972. "People
really rallied around him," Guzman re-
calls. "Students were devoted to the
guy." But the Lords had little guidance
from previous generations and were
soon tom apart by dogmatic battles and
power grabs.
Perez rebounded in the 1980s, start-
ing with a nationwide protest against
the Paul Newman film, Fort Apache,
The Bronx, that attempted to educate
the Latino communi-
ty about the long last-
ing impact of nega-
tive media images.
Perez, Alba, and Juan
Gonzalez (now a Dai-
ly News columnist)
were among those
who molded a loose
network of activists
into the National
Congress, hoping to
supply a grassroots
voice for their com-
munity's most vul-
nerable citizens.
goes to those who devote the time.
Political Growth
In 1983, Perez was hired by the
Community Service Society to run a
voter registration pilot project in Bush-
wick. In two years, the assembly dis-
trict's turnout jumped from 4,000 to
6,000. "We destabilized the status
quo," Perez says. The program served
as a model for other neighborhoods
and a symbol for Perez's own political
growth. He had grasped the impor-
tance of electoral power, seeing both
the obvious-votes bring quality-of-life
results like getting streets paved-and
the subtle-registration campaigns
help build a mailing list and a base for
other forms of struggle.
ing policies and forced the public televi-
sion station to make annual reports on
hiring to the FCC instead of once every
five years. In 1990, the Congress was
part of a coalition that successfully bat-
tled a City Council redistricting plan
that they charged discriminated against
Latinos. The group is also a key player in
the ongoing fight against a medical
waste incinerator in the South Bronx.
Today, racial and police violence
are the group's core interests. Crisis
teams reach out to families in the first
hours after a racial incident; others ad-
vise on challenging a bewildering bu-
reaucracy. The Congress even pub-
lished a newspaper-Justice Daily-
during one case, Perez says, providing
lawyers and observers "serious scruti-
ny" of the proceed-
Many of them had
a clear memory of the
bitter infighting that
wrecked the Young
Lords, so the Con-
gress sought to de-
velop along pragmat-
ic rather than ideo-
logical lines. Alba
Protestors head into the streets near City Hall following a March lOth demonstration against
police brutality.
To build support in
New York's Puerto
Rican community,
where the median age
is about 22, Perez says
the organization has
offered advice, con-
tacts and endorse-
ments to a large num-
ber of youth-spon-
sored community pro-
jects-including re-
cent efforts by gangs
such as Strictly Ghet-
to, Zulu Nation and
the Latin Kings to be-
come involved in po-
litical organizing. The
effort is appreciated.
"I don't know of an-
other organization in
New York that reach-
says their inclusive approach "recog-
nized you didn't have to be a revolu-
tionary to be a tenant organizer." They
also specified that half the leadership
positions were to be filled by women.
And after studying established organi-
zations, the Congress decided not to
seek any government or corporate
funding so they wouldn't have to wor-
ry about criticizing someone with con-
trol over their purse strings.
"It makes you fiercely independent,
but on the other hand you're totally
poor," Perez says. "It's slow going. The
political goals are not matched by an
economic infrastructure." On the bright
side, says Priscila Curet, the Congress
executive board's Philadelphia repre-
sentative, there are few internal clashes.
In an all-volunteer organization, power
The National Congress now has
about 4,000 members, including affili-
ated organizations, though Perez ac-
knowledges the core group is much
smaller. The leadership's radical past
attracts young members like Sonjia
Gonzalez and Pete Diaz, both of whom
were inspired by hearing Perez speak
about the Young Lords at school forums
and community meetings. "His long
struggle counts with us," says Diaz, 25.
The Congress has become a key play-
er in shaping Puerto Rican advocacy na-
tionwide, adds PRLDEF's Figueroa; over
the years, its staple issues have been
racial violence, language rights, environ-
mental justice and police brutality. As
part of a media discrimination campaign
several years ago, the Congress took
WNET to task for its poor minority bir-
es out to young peo-
ple like them," says Diaz. Two years
ago, the Congress even gave its bless-
ing to a new Young Lords group in East
Harlem, even as Perez warned partici-
pants it was likely to fail. "They fol-
lowed the paramilitary structure.
There was not enough democracy," he
says. "But they had to go through it
themselves. And we still work with
most of those kids."
Following a CUNY students' rally at
City Hall that disintegrated into rioting
and arrests, Perez strove to keep order
at the Police Plaza protest. Novices
were taught what to carry (tokens,
identification, no weapons), what to
wear and what to do if they were ar-
rested. Between the chants of "No jus-
tice, No peace!" and other impassioned
declarations, Perez repeatedly urged
protesters to follow the rules and main-
tain discipline. When they headed to-
ward City Hall, people lined up by
group: first came the families of brutal-
ity victims, followed by clergy, guests
such as former Black Panthers and
members of the Committee Against
Anti-Asian Violence, then youth groups
like El Puente. There was a surge of
emotion and an increase in volume as
the marching began, but no breakdown
in discipline, and no arrests.
Charismatic Leaders
Perez and the Congress do have critics
in the local Puerto Rican activist com-
munity. Observers both inside and out-
side the group believe the Congress has
failed to reach its potential, especially in
mobilizing more of the population.
Part of the problem is that too much
responsibility falls on the group's
charismatic leaders, says Eddie
Bautista, who was the Congress' New
York City chairperson in 1991 and 1992.
"Richie and Panama are keeping the or-
ganization alive. They are not being giv-
en enough support," he says. That has
led to a gap in which regular meetings
required by the Congress bylaws often
fall by the wayside. So in spite of a
"kick-ass mailing list," Bautista says it
is sometimes unclear who the group's
actual members are and whether they
are fulfilling their responsibilities.
"They need work plans. It's too ad
hoc, too reactive," he says, adding that
what Perez calls the natural ebb and
flow of activist participation could be
avoided with more proactive strategies.
Perez doesn't entirely disagree.
"Volunteer organizations are notori-
ously problematic, since you can't
make anybody do anything." Indeed,
the group recently dissolved its board
and plans to refine its structure at its
next convention.
Meanwhile, the group continues to
push itself into new territory. When
two gay members left for college, Perez
asked gay organizations to educate his
members on the issues. The Congress
has since lent support to battling ho-
mophobia in the Latino community
and the city. Perez pursued this despite
internal resistance from those who pre-
fer to focus on exclUSively Puerto Ri-
can issues because he believes survival
depends on evolution.
Evolution even includes going on-
line: BoricuaNet, a nationwide Internet
communication service for Puerto Ri-
can activists tied to San Francisco's
PeaceNet system, will "help us pro-
mote computer technology among
people, and we can have on-line
conferences overnight when something
happens," Perez says.
Still, of all the tricks in his bag, di-
rect action remains the most crucial.
"You don't get attention until you dis-
play your ability to throw a monkey
wrench into business-as-usual," he
says. With more than 40 Bronx police
officers under official investigation for
alleged brutality and other abuses,
Perez says the situation has "reached
the point of immorality" under the
Giuliani administration. He is prepar-
ing to challenge the Mayor with a civil
disobedience campaign.
While such a move may guarantee
more media coverage, conventional
wisdom says that the Mayor responds
poorly-and with stiffresolve-to such
confrontational tactics.
Nontheless, Perez thrives on "this
David and Goliath stuff." He has no in-
tention of backing down. And after a
quarter-century of uphill battles, he re-
mains an optimist. "As long as I ad-
vance the starting point for the next ef-
fort, then that's a victory." D
Stuart Miller is a Manhattan-based
freelance writer.
Applications Sought for Seventh
leadership New York Program
Leadership New York is a competitive fellowship program co-sponsored by the New York City Partnership and Coro. In
the nine-month program, during which participants are expected to remain employed full-time in their current profes-
sions, participants explore the critical issues confronting New York City.
These include housing policy, the city's educational, social service, health care and criminal justice systems, infrastruc-
ture, and the city's changing demographics and power structures.
Leadership New York welcomes applications, which must be accompanied by two letters of recommendation, from the
public, private and non-profit sectors. Candidates should have a demonstrated concern about New York City, a record of
professional achievement, and the potential to playa significant role in the city's future.
For further information and applications, please telephone the program's sponsors:
At Coro: Carol Hoffman, Manager, Leadership New Yorie, 12121 248-2935
At the New Yorie City Partnership: Eve Levy, Director of Leadership Development Programs, 12121493-7505
Application deadline: June 9, 1995

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na windowless midtown confer-
ence hall, dozens of civic-minded
denizens of the City Club sat over
lunch last month, listening to
experts discuss the high cost of
building and operating rental
housing. The panelists sitting
beneath the white blast of televi-
sion lights included the city's
housing commissioner, a major
developer, a representative of a
landlords' trade association and a
nonprofit housing advocate.
They talked about excessive
taxes. They talked about the high
costs of regulation and complicat-
ed building codes. They talked
about landlord/tenant court.
Clearly, the conventional
wisdom has it that New York's
housing problems are entirely the
result of the depredations of
regulatory socialism.
"We can't have housing in New
York without subsidies," said Dan
Margulies of the Community
Housing Improvement Program,
an owners' trade association.
"Why? Because the government
has its hands in the pocket of
every landlord in the city."
Not once during more than an
hour of discussion, however, did
anyone in the room mention the
single largest element that
controls the order of the universe
for private, low income housing:
The market.
Has debt
killed the
private inner-
city housing
s the articles in this City Umlts Special Report make indIs-
putably clear, there are some fundamental reasons why the
city's market for affordable housing is severely out of kilter.
Foremost among them: excessive debt financing, reckless
landlord speculation, irresponsible lending-and of course
urban poverty. We are currently riding out the aftershocks
of wild, late 1980s real estate speculation, not only in up-
scale districts but throughout the city's low income neigh-
It all began in the early part of the last decade when, after
20 years of devastating owner-abandonment and arson-for-
profit, government returned to neglected areas with low-in-
terest financing, replacing windows and boilers, eventually
even financing the rehabilitation of entire buildings. Within
five years, this public investment helped put a stop to the
long decline, recalls former city housing commissioner
Felice Michetti. But it also sparked private investment,
much of it extremely reckless, as speculators got caught up
in the highs of a co-op conversion frenzy they thought
would spread from gentrifying middle class areas.
"Private capital became available in a way that wasn't
responsible, that didn't recognize a building's value in its
operating costs and its bottom line," says Michetti. In other
words, people were buying apartment buildings on the
assumption that they could get rid of their poor tenants and
jack up the rent, convert to a co-op, or just ride the market
and sell again. "Buildings became over-mortgaged, leading
to economic abandonment," she continues. "Instead of
burning the building for insurance proceeds, owners
basically cashed out through over-mortgaging. Now what
you have is physical abandonment again, as a result of
economic abandonment."
Here are the results: Today, there are about 1,400 mid-size
and large apartment buildings at least three years behind on
their city taxes, almost five times as many as in 1990. Near-
ly all of them are in the city's lowest income neighborhoods,
according to research data produced by Vic Bach of the
Community Service Society, and they contain as many as
20,000 apartments. Meanwhile, mortgage foreclosure rates
have been soaring for half a decade. And late-1980s debt-fi-
nancing shenanigans that led to the federal government
takeover of small local banks-Ensign and Freedom Nation-
al among them-are only now being ironed out. Meanwhile,
the properties they financed are returning to the market of-
ten in far worse condition than they were when the cycle of
speculation and foreclosure began.
Through all of this, it is the tenants who have taken the
hardest hit. On March 21, part of a building collapsed on
West 140th Street in Central Harlem. While engineering ex-
perts say the immediate cause was water damage to a lime-
stone foundation, tenants say signs of instability were obvi-
ous for months and neither the owners nor the superinten-
dent paid attention. The tale behind that decline unfolds in
the article beginning on page 14. The owners had been in
and out of bankruptcy; they were five years behind on their
taxes and on a $10.3 million mortgage that included a dozen
other buildings. All were in deteriorating condition.
"The mistake would be if this were seen as some kind of
isolated incident," says Andy Scherer, coordinating attor-
ney with Legal Services of New York. "It can't be seen as a
building slipping through the cracks. The cracks are so big,
many buildings are destined to slip through."
"It takes this kind of thing to make the front page," adds
a housing activist who works for a large charity and asked
not to be quoted by name. "Yet no one admits this is going
on all the time. Kids are bitten by rats all the time, sewage
seeps into children's bedrooms all the time, people fall
through the floors all the time. It's a day-in and day-out con-
dition for many people in these neighborhoods. Yet that
never makes the cover of The New York Times."
he city is at a critical turning point in its housing policy. For 20
yean, up until late 1993, the city had a policy of taldng title, or
"vesting," any property whose owners had fallen at least
one to three years behind on their property taxes. That era
appears to be permanently over. The city currently owns
tax-foreclosed buildings containing about 42,000 apart-
ments. At the behest of the Giuliani administration, the
Arthur Andersen consulting firm recently completed a re-
port for HPD on the long-term cost of managing, rehabilitat-
ing and selling this property. Its primary finding, says HPD
Commissioner Deborah Wright, is that the long-term cost of
vesting more tax delinquent properties is far too high to jus-
tify (see sidebar, page 13).
"The question is, what should we do instead?" asks
For the small property owners making waves at public
meetings like the City Club luncheon, or at recent City
Council hearings on Housing Court, the solution would be
for government to entirely remove itself from the market.
Deregulate rents. Cut taxes. Reform the landlord/tenant
court. In other words, cut the cost of owning housing.
None of these proposals deal with the awesome burden
that reckless speculation has laid across the shoulders of the
city's neighborhoods, however. Advocates of affordable
housing say any solution has to take into account the poten-
tial for abusing the market and the lessons of disinvestment.
"If you are going to do the Reaganomics equivalent of
supporting speculation, believing that that is an adequate
substitute for real responsible economic activity, it's going to
be disastrous," says Brien O'Toole, former director of the
Northwest Bronx Community and Clergy Coalition, which
has organized tenants for more than 20 years.
Meanwhile, the number of buildings eligible for vesting
continues to rise. "It's more than doubled over the last two
years," says Bach. "These are buildings in a kind of limbo,
for which owners may no longer be doing even minimal
management.. .. The number of buildings technically still on
the private market but virtually unattended is growing by
leaps and bounds."
hat would a government policy look like if it took poor com-
munities and the brutal nature of the market into account?
Traditional bank financing is hard to come by in low in-
come neighborhoods. The alternative is to go to indepen-
dent mortgage financiers, who charge premium interest
rates-as much as five percentage points or more above pre-
vailing bank rates plus high broker's fees. While banks are
currently charging rates in the 8.7 percent range, these in-
dependent brokers get as high as 13 percent, according to
real estate professionals.
Meanwhile, rents must remain very low. "The tenants' in-
comes are fundamentally the problem," says Frank Braconi,
executive director of the Citizens Housing and Planning
Council. Just do the math: according to the Rent Guidelines
Board, the cost of maintaining and
operating the average apartment
building in the city comes to about
$382 per apartment, per month. This
does not include any debt payments
on a mortgage. If a tenant household
is going to pay only 30 percent of its
income in rent-a standard formula
used in the business-then they
must have an annual income of at
least $15,000.
More Apartment Buildings in Serious Tax Arrears
But the median household income
in Central Harlem is only $8,500. It's
even less in parts of the Bronx.
1990 1992 1994
More than
3 years
More than
1-1/4 years
Source: Community S8Mce Society
Housing Policy and Research
Yet these are the very neighbor-
hoods where mortgages are obtained
at higher interest rates from indepen-
dent brokers. Experts say there is no
way to regulate these financiers, who
hold mortgages on a high percentage
of private apartment buildings in low
income communities. As long as peo-
ple are willing to borrow money at ex-
orbitant rates, these firms can lend it.
All they need is a broker's license,
says O'Toole, and that requires only
that one be of "good character."
Ch.rt sh_s the number of buildings with five .... rtments or more that .re eligible to be taken into
tax foreclosure by the city. As the numbers rise rapidly, 1,384 of these buildings owe more th.n
three in back taxes-and no one knows what condition they .re in.
There are more rational and re-
sponsible ways of raising capital for housing, says Mike
Lappin of the Community Preservation Corporation (CPC),
which oversees a far more tightly regulated stream of gov-
ernment and bank financing for owners in these commu-
nities. For example, the city's Participation Loan Program
provides private owners with 30-year, low-interest mort-
gages combined with market-rate bank loans, all for acqui-
sition and rehabilitation of a property; the package is then
very closely overseen by CPC.
"When we go into a project, we want to do all of the
major renovations needed to give the building mechanical
integrity for the next thirty or forty years," says Lappin.
"That means replacing the plumbing, wiring, heating,
whatever. Then we structure the financing so the invest-
ment is feasible and the rents are affordable." In other
words, it is important to assess the long-term operating
expenses and get a clear sense of the income before fi -
nancing a building-something that frequently didn't
happen during the 1 980s when buyers had stars in their
eyes and financiers were looking for a quick deal. "To pre-
vent speculation, we will not permit sale of these build-
ings without our prior consent," adds Lappin. "If there is
additional debt on the building, we would make sure it
wouldn't be so much as debt to affect the proper operating
of the building."
Problem is, the city has only about $34 million a year to
put into this loan program. Braconi and other observers
say that amount is slowly dwindling along with the rest of
the city's budget. Even more critical, says Lappin, is the
need for rent subsidies to make many of these projects
work. A loan from CPC generally means rents are in-
creased. The larger the loan and the higher its interest rate,
the larger the rent increase.
And for the lowest income tenants, that can prove to
be no solution at all if there aren't serious long-term sub-
sidies, says Jay Small of the Association for Neighbor-
hood and Housing Development: "It means compromis-
ing tenant protections and getting someone new in who
can pay the rent."
overnment money to help poor people pay their rent is paltry.
The part of weHare benefits that goes to pay for housing is set
at $312 for a family of four. It's $278 for a family of three.
"It doesn't even cover the maintenance and operating
costs of the building, let alone debt service," says Marc
Jahr of LISC, which arranges financing for nonprofit hous-
ing development. "Let alone the tax bill. Let alone return.
That's the problem."
Welfare funding is under attack at City Hall, in Albany
and Washington. Federal Section 8 rent subsidies, which
provide low income tenants with vouchers covering part
of their rent on the private market, were cut by $2.4 bil-
lion in Congress last month. Next year, Washington ob-
servers say, Section 8 is very likely to take a crushing hit.
At the same time, Governor Pataki is pushing a provision
in his budget bill that would eliminate the so-called
"Jiggetts" rent supplement, a court-ordered program that
provides welfare recipients facing eviction with up to
$250 more in rent money each month. And Mayor Giu-
liani is seeking to phase out Home Relief, the welfare pro-
gram that provides a minimal income, including rent, to
indigent adults.
"They are moving so fast but they have no solution.
Just shut it down and then we'll worry about it," says
Doug Moritz, a founder of the Los Sures community or-
ganization in Brooklyn who is now an executive vice
president of the Washington Mortgage Financial Group in
Northern Virginia. "No one has come up with an alterna-
tive to public assistance for providing safe affordable
housing to low income people," he adds. "There is no
private sector alternative."
he crisis comes full circle, back to the Plaintive wail of landlord
organizations begging for lower taxes, less regulation, less
government. There are some changes along these lines
that affordable housing advocates support, such as private
sector demands that steeply-rising water and sewer
charges be rolled back. The city spends billions of dollars
a year maintaining its water and sewage treatment sys-
tems under federal guidelines, and the cost has been
passed on through water bills which are as much as six
times higher than they were just seven years ago.
Others say the city should overhaul the way it assesses
property values for tax purposes in low income neighbor-
hoods. "Base the assessment on the net income the build-
ing is generating, and you wouldn't owe taxes, or not
much," says Jim Buckley of the University Neighborhood
Housing Program in the Bronx. "Get people to open up
their books. Some buildings, they have absolutely no net
income. There should be a zero tax."
Michetti, the former housing commissioner, proposes a
program whereby small buildings in certain low income
districts wouldn't have to pay any tax at all, so long as
they maintained their apartments in decent condition. "If
you did it in a progressive way, you could at least tie it to
a standard of habitability in terms of maintenance." But
the current commissioner, Deborah Wright, says she wor-
ries that a no-tax policy in certain neighborhoods might
stigmatize the community.
There are potential problems with any tax cut plan,
however. When owners spend less on taxes, they are like-
ly to spend more on debt payments rather than funneling
that money into the cost of operating and maintaining a
building. "Often times the subsidies get capitalized into
the cost, either into more debt or a higher sales price,"
Lappin explains. "That's why it's a very complicated
problem as to how you actually structure it."
Nevertheless, Lappin says the idea is probably worth
the risk, as long as the right kind of controls are put in
place. Others disagree.
"I don't see it making sense," says a Bronx real estate
manager who stabilizes and sells foreclosed properties.
He argues that the tax relief plan would immediately in-
crease building values, leading owners to refinance their
properties with a larger mortgage, putting more cash in
their pockets while saddling the buildings with in-
creased debt.
"Small, independent buyers are like bad parents," he
adds. "You need a license to drive a car but you don't
need one to operate a building."
Ublk'S Cube is child's play compared to this puzzle. In a per-
feet world, as lOng as there is enough income for a landlord
to cover the cost of maintaining and operating a building,
the market should compensate for value and debt should-
n't be such a problem. It doesn't work that way in the real
world, at least it didn't in the 1980s. The tragic building
collapse on West 140th Street is only one legacy of that
unbridled market.
"The point is, there are no restrictions. Whatever
someone is willing to lend you, you can get," says Andy
Scherer. "People suffer from it every day."
There is one solution, and it's been around for many
years, adds Small of ANHD. "Maybe there is no profit for
owners in the private market in low income neighbor-
hoods. So don't throw good money after bad. Landlords
buy a building with their eyes open. They should know
what they are getting into. If they get in over their head,
they should get rid of it. Give it to a tenant group. Give it
to a nonprofit." That, he says, is what the city should be
making possible. But it's hard to imagine an idea more at
odds with the winds blowing from City Hall. 0
The end. of in rem foreclosure?
private consultant's report to the
city's Department of Housing
Preservation and Development sup-
ports permanently scrapping the city's
practice of taking title to buildings with
several years of tax arrears, according
to HPD Commissioner Deborah Wright.
The report also includes a number
of proposals that would set up new
means for supporting low income hous-
ing, she says. "Some are very contro-
versial, W she adds, including one that
would set a minimum rent on regulated
apartments. Another would ease the
tax burden on certain buildings.
The report, by the Arthur Andersen
consulting firm, concludes that it costs
the city an average of $2.2 million to
take a building into city ownerShip,
manage and rehabilitate it and then
sell it. This figure includes not only the
hard operating and construction ex-
pense, but also litigation costs, lost
taxes and water charges, even interest
on capital investment in the renova-
tion. Yet, the report adds, the average
building taken in such a foreclosure
action owes only $36,000 in city tax-
es. A moratorium on foreclosing on tax
delinquent properties has been in ef-
fect since before Mayor Giuliani came
into office.
Wright says instead of taking title to
properties, HPD would prefer to negoti-
ate work-out plans on individual build-
ings. "In the case of a building in mort-
gage foreclosure, we would sit with the
banks, the owners, everyone, and say
this is not viable. The hammer is we
will take the building unless everyone
around the table takes a haircut. The
bank would cut its interest, we would
cut the tax debt or drop litigation. W The
city would also help to arrange financ-
ing for repairs if the owner complied
with demands, Wright says.
Advocates say the plan sounds like a
thinly veiled effort to raise tenant rents
and gut lease protections. "I don't want
to see more buildings taken by the
city, W says Jay Small of the Association
for Neighborhood and Housing Develop-
ment. "But if you are going to restruc-
ture the debt and refinance [for repairs],
you are going to increase the rent roll
and the tenants are going to take the
hit. It's an outrage. W Andrew White
The money flows from
hand to hand, and
a building falls in Harlem.
gain a solid grasp of professional real estate investors' m0-
tives and methods, listen to how they refer to the buildings
they trade. They call the properties "sticks and bricks." And
when neophytes confuse a building's concrete foundations
and sturdy floors with a solid financial investment, the pros
call this a "sticks and bricks fixation."
That's because they have something more important on
their minds: cash, profit margins, return on investment. "It's
the cash flow that's coveted. Real estate is a mere means,"
writes Gaylon Greer, author of a popular text book pub-
lished by Dow Jones & Company.
In New York City, acknowledged to be one of the nation's
most cutthroat real estate markets, a thriving industry has
been built on the successive waves of newcomers who fail to
make accurate, realistic calculations about cash flow before
buying property. They allow themselves to be convinced
that, one way or another, the buildings they buy will be their
ticket to wealth.
Two months ago, the east wing of a large apartment build-
ing at 142 West 140th Street in Harlem collapsed, killing
three tenants and revealing in very stark terms how low in-
come people pay for the errors of ill-educated speculators.
Marcus Lehmann and Morris Wolfson, the principals be-

By Kim Nauer, Andrew White and Jesse Drucker
hind Mount Wilson Realty, the company that owns the
felled building and at least 11 others, owe millions of dol-
lars in debt on their overleveraged properties and are likely
to lose their buildings to foreclosure. They may also face
criminal charges stemming from the March 21 tragedy.
Much less evident, however, are the investors who make
profits-often big profits-from the business of slumlord-
ing. Alternately known as financiers, mortgagees or opera-
tors, this group makes loans that banks with strict credit
rules are unwilling or unable to make. They play the role of
negotiator and matchmaker, hooking up buyers, sellers and
people willing to invest capital for the high interest returns
that risky inner-city investments have sometimes garnered.
A City Limits investigation of the Harlem properties
Targeted Or.ganizing
n the Bronx, private financiers are
prime players in the commercial cred-
it market. That's why the Northwest
Bronx Community and Clergy Coalition
has almost completed a textbook-sized
manual for tenant organizing in debt-
burdened apartment buildings.
do a title search. There they look for
tell-tale signs of trouble:
much a building was sold for. The
mortgages will indicate how much has
been borrowed and, frequently, at what
interest rate. Here, tenants can deter-
mine if their landlord is on a tight
A key strategy of the group, which
has affiliates in 11 neighborhoods, has
been to look beyond the problem land-
lords-often recent immigrants who
naively sign steep loan agreements for
buildings with inadequate rental in-
comes-to the people who lent them
money. With luck, some well-placed
pressure on these well-heeled money
movers can relieve the worst of a build-
ing's problems, says the coalition's ex-
ecutive director, Mary Dailey.
When tenants approach the group
about problems in their buildings, the
first thing organizers do is take them
down to the Department of Finance to
First, Dailey says, tenants determine
if the loan for the building came from a
bank or a private mortgage lender. In re-
cent years, banks, which count on mak-
ing their money back over the long haul,
have tended to be more conservative
about whom they lend money to. For the
most part, loan officers want to ensure
that the monthly rental income of a
building will be enough to meet loan
payments and keep the building in good
shape. A conventional mortgage, for ex-
ample, will always have a clause allow-
ing the bank to foreclose if it is not
maintained. Private financiers, whose
goal is to maintain cash flow-not the
building-frequently scratch out or fail
to include this provision, Dailey says.
leash held by the people who lent him
money. Problem signals include low
down payments, high interest rates
and short-term loans with frequent
term extensions.
It is in the mortgage documents that
tenants will often see the genesis of
their landlord's financial problems. The
manual, due out later this year, out-
lines many of the multifarious and cre-
ative techniques financiers have used
in recent years to make money quickly.
It goes into detail on the many organiz-
ing strategies that tenants have used
over the years to challenge the folks
that hold the purse strings-and offers
valuable prescriptions for gaining the
upper hand. Kim Nauer
Next, she says, tenants are taught
to look at the money trail. By reviewing
the deeds, tenants can determine how
bought and sold by Mount Wilson over the last decade
shows that nearly all were originally purchased with capital
from the private, unregulated world of alternative financing.
Lehmann and Wolfson's financiers loaned them money-
lots of money, at very high interest rates-during the mid-to-
late 1980s, while the city's real estate market was hot and
the values of buildings in low income neighborhoods were
soaring. Impressively, but in what appears to be standard
fashion, these operators got out of the deal and took their
profits with them just moments before Mount Wilson began
to show signs of serious financial trouble.
All of this happened in a market boosted by what experts
say were wildly inflated property values made possible by
crafty financiers, reckless-often foolish-speculators, and
bankers who drove their own institutions into the ground,
only to be bailed out by America's taxpayers as part of the
Savings & Loan crisis. As a result, the federal Resolution
'Irust Corporation (RTC) ended up with hundreds of millions
of dollars worth of mortgages on inner-city properties-in-
cluding all of Mount Wilson's Harlem buildings.
Yet the financiers behind Lehmann and Wolfson made
money, and today they are still among the biggest players in
the business, plowing cash earned in New York's marginal
neighborhoods during the 1980s into investments in shop-
ping malls, parking lots and other properties around the
country. And the mortgages on Mount Wilson's buildings
have been sold by the federal government to a new set of fi-
nanciers at rock-bottom prices. According to business press
reports, these new investors expect that their multimillion-
dollar investment will yield a whopping 100 percent profit.
Jethro Chappelle, a 69-year-old resident at 75 St. Nicholas
Place, which is, for the time being, still owned by Mount
Wilson, knows that he and the other residents will never see
a penny of this windfall. Living on the fifth floor with a
wheelchair-bound son, Chappelle and other family mem-
bers have been lobbying for months to get the building'S el-
evator fixed. Chappelle adds that he and his family have
been calling building management for the last two years
about a three-foot hole in his bathroom ceiling. Rats, which
crawl on the rafters above, sometimes fall through onto the
floor below. Now Chappelle, like most tenants interviewed
for this article, just wishes he could move. "I'm sick and
tired of the whole damn thing," he says.
surYey of property data on five blocks surrounding the West
l40th Street building shows that during the last 10 years, only
a small minority of the private property mortgage deals in
the neighborhood have involved traditional bank financing.
It's a problem that afflicts most low income communities of
color, where high-interest alternative financing is often the
only game in town.
Unlike banks, which negotiate a mortgage to last several
decades, private financiers set up short-term deals, com-
monly called balloon mortgages, with high up-front interest
payments and early principal due dates. When the principal
comes due, the financiers have the flexibility and the op-
tion to renegotiate the deal. If, for example, the cost of mon-
ey has gone up, they can charge higher interest rates. If the
deal has begun to look shaky, they can find other investors
to buyout the mortgage loan.
On the surface, it appears that the financiers are taking a
high-risk gamble that the landlords they lend to will be able
to keep up with their mortgage payments. But real estate
watchers say the true professionals, the ones that last in this
business, know how to control their risk and get out of the
market before the inevitable downturns.
Mount Wilson's deals follow this pattern. Property
records show that Lehmann's and Wolfson's early forays
into the real estate business were largely privately financed,
with high-priced loans from two closely linked backstage
players well known to tenant activists in the South Bronx
and Harlem.
In the case of 142 West 140th Street, Mount Wilson
bought the six-story, 71-unit building for $525,000 from a
Yonkers businessman in January 1987. The partners put
down $100,000 in cash and signed a $425,000 mortgage note
at 15.5 percent interest with Howard Parnes, a partner in the
Scarsdale-based company, Houlihan-Parnes Realtors. At the
end of the year, Parnes attempted to sell the mortgage to Ma-
rine Midland Bank. The bank apparently balked and quick-
ly returned the mortgage to the financiers.
Parnes then sold the mortgage to Harvey Wolinetz, an-
other operator whose office shares the same Scarsdale ad-
dress. And Wolinetz turned
around and promptly loaned
the building owners-Lehmann
and Wolfson, a.k.a. Mount Wil-
son-another $175,000.
By this time, Lehmann and
Wolfson had to make mortgage
payments of $93,000 a year to
Wolinetz on this property
alone. Meanwhile, they had
purchased a dozen more build-
ings in the surrounding neigh-
borhood, mounting up debt at a
rapid pace.
They had owned the build-
ing barely a year when
Wolinetz, having collected tens
of thousands of dollars in pay-
ments and, in all likelihood,
broker's fees as well, cashed
out. Wolinetz sold the mort-
gages, and the risk, to Ensign
Savings Bank. And Lehmann
and Wolfson promptly bor- ~
rowed another $450,000 from ~
Ensign against the value of the c;,
building. ~
Because none of the players '"
in the deal returned calls from
City Limits, there is no way to know exactly what happened
to the money. A Bronx real estate operator familiar with the
process says the best analysis is simple: don't get obsessed
with the sticks and bricks, just follow the cash. Lehmann
and Wolfson put $100,000 down on the original purchase,
and after the Ensign deal they had $450,000 cash in hand.
Whether or not they reinvested any of that cash back into
the building through repair work is unclear. Lugarna
Thompson, who lived in the West 140th Street building for
54 years, say residents have had only minimal services for
the last five years.
What is known is that, within a few months of signing
the deal with Ensign Bank, Lehmann and Wolfson, under
the new name "Mount Wilson Stores," bought another
building on Flatbush Avenue near Park Slope, Brooklyn, for
$675,000. They may have been investing their Harlem earn-
ings in another part of town.
There are variations in the histories of Mount Wilson's
many Harlem properties. In some transactions, for example,
buildings were repeatedly flipped between Parnes affiliates
and a Brooklyn-based real estate company. But for each of
the Harlem buildings examined by City Limits, the epilogue
was the same: After a period of intense trading during the
height of the speculators' market, the mortgages were sold to
Ensign Bank. In February 1990, the bank cemented its rela-
tionship with Lehmann and Wolfson with a massive $10.5
million mortgage loan that wrapped together 13 buildings
worth a total of just $6.3 million, according to an RTC ap-
praisal one year later. The bank also loaned another $1.7
million to the pair.
Two months later, Mount Wilson stopped making their
mortgage payments to Ensign. And in September, the bank,
heavily invested in the city's collapsing real estate market,
was seized by federal regulators.
In 1990 and 1991, Lehmann and Wolfson were hit with
nearly two dozen lawsuits and liens, ranging from unpaid
oil bills to personal injury claims. Their corporation,
Mount Wilson, filed for bankruptcy protection in the fall
of 1991, owing RTC principal, interest and fees on $12.7
million in Ensign loans according to court documents.
The city was also seeking more than $800,000 in back tax-
es and other charges on their properties.
II s Lehmann and Wolfson's finances spun out of control, the lives
~ their tenants steadily wonened. Interviews with some 20 ten
ants, activists and lawyers involved with the buildings in-
dicate that the owners all but refused to do work there.
While tenants' fortunes differed depending on how well
organized they were, all reported that maintenance in the
early 1990s was done almost exclusively through the
Department of Housing Preservation and Development's
Emergency Repair Program.
With Lehmann and Wolfson protected by Chapter 11
bankruptcy proceedings, Mount Wilson's mortgages were
put up for RTC auction. They were quickly purchased,
along with Ensign's other bad debts, by an investment
group led by Lloyd Goldman, nephew of deceased New
York real estate king Sol Goldman, and investment banker
Michael Sonnenfeldt. According to Crain's New York Busi-
ness, the $45 million deal is expected to net them more
than 100 percent profit. Interestingly, Houlihan-Parnes bid
$55 million for the same failed loan package; the RTC, how-
ever, rejected Parnes' higher of-
has only taken charge of the properties in order to purchase
them. "I have always been negotiating to buy these build-
ings," he says.
fer, charging a conflict of inter-
est. RTC officials, however,
would not elaborate.
Today, Mount Wilson's build-
ings remain in limbo, riddled
with code violations, heat prob-
lems and desperately needed
repairs. In addition to the liabil-
ity associated with the collapse
on West 140th Street, Mount
Wilson owes the city $911,000
in back taxes, water and sewer
charges and emergency repair
bills for the building and its
other Harlem properties. The
company has also been cited for
more than 5,000 housing code
violations, nearly 1,000 consid-
ered hazardous.
Tenants report that they have
been fighting for repairs for
years, frequently hiring lawyers
to bring Lehmann and Wolfson
into Housing Court. The compa-
nies in charge of building man-
agement shifted repeatedly over
the years, finally resting in 1992
with Baruch Singer of Triangle
Management. In four Mount
Wilson buildings on West 108th
Street, tenants report that Singer
is making repairs, but they say
he is also following up with an
aggressive eviction policy and,
occasionally, steep rent increas-
es. Other buildings deeper in
Harlem crave even this atten-
tion. "They always say, 'We're
working on it," says Jacqueline
Goodman, a tenant in 406 West
129th Street, which, aside from
the collapsed building, could
qualify as Mount Wilson's
worst. Goodman says there's
shrouded as the world of private financing may seem, it's an
'ndustry as old, and as legitimate, as the free market system.
And mining bank-snubbed neighborhoods has long been con-
sidered a prime opportunity for up-and-coming operators.
"Redlined regions-the areas from which large lenders
will not entertain loan applications-are not necessarily
Into the Ground
June 1987
Mount Wilson Realty buys 142 West 140th Street for
5525,000, borrowing 5425,000 from Houlihan-Parnes.
January 1988
Houlihan-Parnes transfers 5425,000 mortgage to Harvey
Wolinetz, who lends Mount Wilson another 5175,000.
June 1988
Harvey Wolinetz transfers 5600,000 mortgage to Ensign
Bank. Ensign lends Mount Wilson another 5450,000.
February 1990
Ensign wraps the 51.05 million note into a 510.5 million
mortgage encompassing Mount Wilson's 13 Harlem
apartment buildings.
April 1990
Mount Wilson stops making payments on the 510.5
million mortgage.
September 1990
Ensign is seized by federal regulators.
September 1991
Mount Wilson files for bankruptcy protection.
December 1991
The Resolution Trust Corporation bundles Mount Wil-
son's mortgages with a package of distressed Ensign
loans valued at 5196 million. They are sold to an in-
vestor group for 545 million.
March 1995
The east wall of Mount Wilson's six-story building at
142 West 140th Street falls. Three people die.
poor prospects for lenders;
they just require you to weigh
more carefully the merits of
each individual parcel that a
borrower wants to pledge,"
writes Gaylon Greer in his text
for real estate pros. "Since you
will expect to make loans re-
peatedly in the same geo-
graphic area, you can afford to
spend some time and money
mastering the economic eccen-
tricities. The payoff goes on
and on."
In Harlem and the South
Bronx, Howard Parnes and a
coterie of closely-linked associ-
ates are well-known to tenant
activists and housing lawyers.
They report that he has long
had a reputation for allowing
buildings to deteriorate under
his watch.
In the late 1970s and early
1980s, he was a prime player
in the game of "flipping," buy-
ing a building at its legitimate
cost and quickly reselling it to
a burgeoning market of new
immigrants, uneducated on
New York City's housing prices
and strict rental laws. Fre-
quently, activists says, the new
owners couldn't keep up with
the steep mortgage payments
and Parnes would foreclose,
taking the building back to sell
to another unsuspecting buyer.
At the height of the real estate
speculation market in 1986,
The New York Times reported
that Parnes had a hand in fi-
nancing an estimated two-
thirds of the residential prop-
erty transactions in the Bronx.
been a hole in her son's bedroom for more than a year; the
gash in her living room ceiling went so long without repairs
that HPD was forced to fix it. This is the only maintenance
she can get, she says. "Any work that I have done here is
done by Housing."
Today, Houlihan-Parnes remains a high-profile broker
of properties throughout New York City and, indeed, na-
tionwide. Parnes' company has also branched out to
take advantage of one of the 1990s' most lucrative real
estate opportunities: the default mortgage market. Re-
ports in Liquidation Alert, an industry publication,
show the firm to be a substantial investor in the mort-
gage clean-up business.
Singer wouldn't be interviewed at length for this article.
He did, however, indicate that Mount Wilson's tenants
should get used to him. Contrary to press reports, he says he
hese players should not be ignored by tenants and organizers
seeking services from a negligent landlord. They will often
respond to some well-timed in-your-face pressure, says
Mary Dailey, executive director of the Northwest Bronx
Community and Clergy Coalition, which has been combat-
ing-and carefully researching-the predations of the spec-
ulative mortgage market for more than a decade.
"We perked up his ears," Dailey laughs. "Next thing you
know, the landlord is talking to us, saying, "You know, send-
ing Howard Parnes everything is not doing you any good.'"
"I don't know if Parnes ever gave this guy any time off on
his mortgage or not," she adds. "But they got the repairs
done in the building."
Advocates caution, however, that these are not perma-
nent fixes. If over-mortgaging is the problem, the only way
to get a building back into good economic and physical
health is to reduce the debt burden. To do that, the land-
lords must have access to government-backed, low-cost re-
habilitation funding and, more importantly, legitimate long-
term financing. Or the tenants themselves might swing a
deal to buy the property on the foreclosure market, a tech-
nique that the Community and Clergy Coalition has used to
create tenant cooperatives and community-owned housing.
Oftentimes, she says, mortgagees like Howard Parnes will
give a landlord some breathing room on his or her payments
in order to ensure that major repairs are made-if the ten-
ants are applying enough pressure in the right place, or if
lenders feel it's necessary to head off city enforcement ac-
tion and other legal headaches, she says.
Two years ago, the tenants at 2275 Morris Avenue, a 25-
unit Bronx walkup, were having no luck getting their land-
lord to deal with mounting code violations and drug dealers
who had taken over apartments in the building. When they
stepped up pressure by filing a case in Housing Court and
seeking intervention from the state's Division of Housing
and Community Renewal, they also made sure Parnes and
Barry Shapiro, the building'S two mortgagees, received
copies of every official document. For good measure, the
tenants even stopped by Shapiro's Bronx office for a long,
unscheduled chat.
For now, however, the tenants in Mount Wilson's
buildings can only continue to pressure for repair work-
and hope that Baruch Singer, if he does buy the build-
ings, is able to borrow money for the mortgage and main-
tenance without beginning the cycle anew. "It makes you
feel very uneasy," says Emma Moore, a tenant on West
l08th Street. "We don't want what happened on l40th
Street to happen here. We don't want to wake up and find
ourselves in the basement." 0
Interview With a Player
n New York City, one of the biggest
names in private financing is Houli-
han-Parnes Realtors. Principal Howard
Parnes has been a long-time player in
Harlem and the South Bronx. Of late,
however, the firm has moved into more
lucrative pastures: a nationwide busi-
ness of buying and selling bad bank
debt. The Scarsdale-based firm's
Michael O'Neill talked to City Limits
about the past and present. This is an
excerpt of the conversation.
Please explain how this new
market works.
we're buying [blocks of bank] debt.
We're not buying the properties
themselves. We work both ends of the
market, searching for product to buy
and then searching for people who
want to invest.
Q What becomes of this debt?
Often, we'll restructure the debt.
Say [the owner] had a million dollar
mortgage. We [buy it] and feel that he
could carry an $800,000 mortgage.
What we've found is that these owners,
a lot of times, are able to refinance
with a bank because the debt has been
reduced and is workable again. [In the
end,] we get $800,000 on a million
dollar loan that we might have paid
$500,000 for. The owner now has a
workable deal again, so he wins, and
we get a nice return on our money be-
cause it usually happens in a short pe-
riod of time.
What's happened to Parnes' inner-
city brokerage business?
we're not doing a lot now. It had
been somewhat of a market-
place ... The typical deal was, we might
have contracted to buy a building and
we might flip that contract [to a new
buyer]. In so doing, we provided financ-
ing for the buyer ....
Houlihan-Parnes also sold second
loans for buildings that already had
bank mortgages. That business has
also faded?
What's happened in recent years is,
if you're buying property for a mil-
lion dollars and you've got a $750,000
mortgage from X Saving Bank, they're
not going to allow someone else to put
a $100,000 second behind it.
In the eighties, it was more common
that there was secondary financing be-
hind the first mortgage, and I think
there's a misconception by the institu-
tions that it was a bad thing. Of course,
if you're overleveraged and you've got
too much debt service to pay, the build-
ing isn't going to be run correctly.
was there a market between the
flipping period and the period
you're in now?
The doldrums. There was a period
of time [in the late 1980s] that
there wasn't much to do. A lot of bro-
kers here were involved in the buying
and selling of properties and that's
where they made their commission, but
those were slow times [for them] be-
cause there weren't many sales. Val-
ues were down and things had a lot of
debt on them so they weren't really
So this niche that we have found
has been a godsend, not just for Houli-
han-Parnes' big investors, but for the
brokers. They can eat now ... They can
support their families.
I don't see it drying up ... 1 think it will
last for years, easily.
Talk about your quality-of-life issues.
Conditions at the nine-unit rooming
house in which Victor Marshall had
peacefully resided for 17 years started
to take a nasty turn when the building
was sold in December, 1992.
The electricity was cut off repeated-
ly and without notice. Mysterious
floods occurred, threatening to wash
Marshall and his fellow tenants out of
house and home. Often there was no
heat or hot water, the bathtub in the
communal bathroom on the second
floor was being used as a slop sink and
the ~ h o w e r on the third floor didn't
work, so there was no place to bathe.
An attorney for the owners, Vernon
Roberts and his daughter Cheryl, even
dispatched a letter notifying tenants
the building was going to be renovated
and they had to get out. Marshall and
James Cole, another long-time tenant
who lived there with his 4-year-old son
and was ill with AIDS, were deter-
mined to stay put.
So they took the landlords to Hous-
ing Court. It took nearly two years and
countless trips downtown to force the
them to finally make repairs at 63 West
119th Street.
Of course, if the Department of
Housing Preservation and Develop-
ment (HPD) had done what it was sup-
posed to be doing in the first place,
monitoring code violations and exact-
ing compliance from the landlords at
fault, none of that would have been
necessary, says Larry Wood, an orga-
nizer with the West Side SRO Law Pro-
ject who helped Marshall and Cole
with their case.
The way it is supposed to work, ten-
ants call in complaints to HPD and an in-
spector comes out to confirm the report.
The city has the
authority to ensure that
apartment buildings
are maintained, but
officials say they can't
afford to use it.
By Jill Kirschenbaum
rcemen onun rum
HPD then notifies the offending land-
lord. For the responsible owners who
make the repairs promptly, all's forgiven
and everyone goes to bed happy. But the
ones who push their luck and fail to cor-
rect the violations may get summoned to
Housing Court, where they can get hit
with rent abatements, substantial fines
for unrepaired violations, contempt
charges and even jail time.
But generally that's not what hap-
pens. Once in court, landlords routine-
ly make deals with the HPD attorneys
to get fines knocked down in return for
the chance to make "good faith" efforts
at repairs. Often, observers point out, it
takes them a year or two to get around
to it.
Good faith. That's what they call it
when you have to take a landlord to
Housing Court to force him to obey the
law and maintain his building. And that,
critics say, is what passes for code en-
forcement in New York City these days.
Just ask VICtor Marshal. His case went
through repeated defaults, delays and
adjournments, and even then the land-
lord didn't make the court-ordered re-
pairs. Eventually, Marshall and Cole
pushed the case all the way to the
criminal contempt stage, and that's
what finally prodded Roberts to action.
He also wound up paying a fine of
$2,700 in the form of a rent abatement
to Marshall and Cole. Later, a thor-
oughly exasperated Judge Peter Wendt
even sentenced the landlord to a cou-
ple of months of jail time in a related
case brought by HPD.
But most tenants aren't so fortunate.
Ninety percent of those in court, in fact,
have no representation or guidance in
pursuing regular code enforcement ac-
tions, let alone a contempt motion for
It is a circumstance made all the
worse by the city's willingness to
forego the collection of fines altogether
or to greatly reduce them, critics say, in
exchange for the landlord's promise to
make amends.
HPD attorneys claim they are given
little choice. With some 300,000 viola-
tions recorded every year, they say
they are forced to make deals and use
the mere threat of penalties in order to
avoid lengthy trials so they can resolve
the 50,000 violations they say they suc-
ceed in correcting each year.
"If we didn't cut a deal there wouldn't
be any code enforcement," says Harold
Shultz, deputy commissioner for
HPD's Office of Housing Preservation
in charge of the agency's attorneys and
inspectors. "In order to operate on a
volume basis, I have to make deals."
The problem with such a strategy,
according to a 1993 report by the Com-
munity Service Society (CSS), is that
"months can go by while the landlord
continues to neglect the building. The
landlord is usually given lengthy case
postponements in order to comply
with a minimum standard of building
maintenance. "
And it is hardly the way to strike
dread in a landlord's heart, says An-
gelita Anderson, executive director of
the City-Wide Task Force on Housing
Court. Without being forced to pay
meaningful penalties, "landlords are
not fearful of the court," she says.
Shultz concedes that his agency is not
collecting nearly the number of fines it
could be or should be, considering the
thousands of violations recorded each
year. But he lays the blame on a cum-
bersome enforcement procedure unlike
any used by similar agencies.
"If you fail to pay a parking ticket or
place a defense, you are assessed a
penalty and a judgment goes on the
books," says Shultz. The same is true
for the departments of sanitation,
health, fire, buildings, "virtually every
violation that's written in this city."
HPD, on the other hand, issues a docu-
ment called a "notice of a violation."
"But the violation itself is not a self-
executing document," Shultz explains.
"We give twenty-four hours, thirty days
or ninety days to correct the violation.
At that point, an attorney has to bring a
full plenary court action in Housing
Court ... to reduce the fine to a judgment.
"If you are dealing with thousands
and'thousands of violations, it is very
time-consuming and very labor inten-
sive," says Shultz, who suggests that
an administrative tribunal like those
used in other agencies would go a long
way toward remedying the problem of
collecting potentially millions of dol-
lars in fines.
While such a no-nonsense method
would surely be welcomed by city
workers in these fiscally strapped times,
it would require an adequate number of
HPD inspectors to respond to tenant
complaints in the first place, and then
to follow-up with reinspections once a
landlord claims to have righted the situ-
ation. But the truth is that the roster of
inspectors has been decimated, down
from 693 in 1971 to 253 today.
And even those numbers are deceiv-
ing, says Joseph Corso, president of the
Allied Building Inspectors Local 211,
the union that represents inspectors at
HPD and the Department of Buildings.
Allowing for supervisors, apprentices
and those assigned to specialty units
such as the Loft Board or the Housing
Court squad-which responds only to
court orders-there remains a nucleus
of some 125 inspectors to service 1.5
million households. Little wonder,
then, that the agency has only enough
staff to handle emergency and heat
complaints, Corso says. "There just
aren't enough people." Often, tenants'
only recourse is to sue their landlord,
which triggers an inspection. Other-
wise, Corso conservatively estimates
that 50,000 to 60,000 complaints go
unanswered each year.
Similarly, follow-up inspections are
the exception rather than the rule,
notes Anne Pasmanick, director of the
"There is no
way to enforce
penalties because
there is no
reinspection. "
Community Training and Resource
Center. And this, she says, has effec-
tively disemboweled the city's primary
code enforcement mechanism and cre-
ated an atmosphere that actually en-
courages landlords to manipulate the
system and avoid compliance. Current
policy allows a landlord served with a
violation notice to "self-certify" that he
has made the necessary repairs, Pas-
manick notes. "The city relies on the
landlord to do the work. But what is the
threat if they don't? There is no way to
enforce the penalties for false certifica-
tion because there is no reinspection."
The Department of Buildings-one
of the agencies whose administrative
tribunal Shultz says HPD should emu-
late-has a similar shortage of inspec-
tors and a similar self-certification pol-
icy. According to Corso, an internal au-
dit of 20 percent of the self-certifica-
tions showed that half of them were
false, including those involving iIIipor-
tant structural repairs.
Advocates and judges contend the sys-
tem could work a lot better if HPD
would make effective use of the provi-
sions and resources available to them.
For example, HPD could push for
contempt fines for landlords who fail to
address orders to correct violations,
says Sandy Russo, a housing attorney
with Legal Services of New York. "But
HPD does not routinely go for contempt.
And even when there is a civil con-
tempt judgment, they turn around and
literally cut a deal again. So what you
get is a nickel collected on every dollar,"
and shoddy enforcement to boot.
State Supreme Court Judge Lewis
Friedman, who formerly sat on the
Housing Court bench, believes he had a
system that made good use of his re-
"I had no problem putting people in
jail," he says, "and imposing substantial
fines for contempt. My attitude was, I
give you three tries and that's enough."
Jail time is rather Draconian, Fried-
man admits, and in fact, judges use it
sparingly, if at all. "But it is a way of
telling people you are very serious."
Still, Friedman's ability to go to such
lengths depended on HPD attorneys'
willingness to press a case to its limits.
Critics also charge that HPD's litiga-
tion bureau attorneys spend too much
time trying to go the distance on what
are known as "comprehensives"-cas-
es against the buildings with the high-
est number of violations on the agency
computer and which often carry fines
and penalties totaling $100,000 or
more. The problem, says Mike Skrak,
who researched the process while
working as an assistant to Senator
Franz Leichter, is that in most of these
buildings, "The landlord has either
died, fled the city, decided the build-
ing has gone to hell or otherwise pro-
tected himself from legal or financial
penalties six ways from Sunday.
"It's crazy," says Skrak, now a staff
aide in the office of Comptroller Alan
Hevesi. "HPD invests an enormous
amount of legal time-and they don't
have much time over there-putting to-
gether these comprehensives." But the
same building, he points out, is proba-
bly in receivership or bankruptcy or in
rem in another part of HPD.
"The law is the law. Housing Court
was set up to preserve the housing
stock. But there is complacency at every
level, and everybody is an apologist,"
Russo says. "Meanwhile, Giuliani is go-
ing after street peddlers to pay a side-
walk tax." 0
The Board of Directors of
Self Help Works Federal Credit Union
announces its new name
Beginning April 25, 1995
we will be
Federal Credit Union
40 Prince Street, New York, NY 10012
Voice: 212-941-1599* or 212-226-4119
Fax: 212-966-3407
Note our new telephone number
Providing assistance
to community development
projects in the New York
City metropolitan area.
Please contact Crossland regarding your financing needs.
Andrew D. Kelman, Vice President
Community Reinvestment Officer
211 Montague Street, Brooklyn, NY 11201
(718) 780-0448
Crossland is a subsidiary of Brooklyn Bancorp, Inc.
ebecca Sanchez was just getting her life in order
when her lung collapsed in June, 1994. After years
of substance abuse, she was finally enrolled not
only in drug rehab but in a job training program
for welfare participants when she was stricken with "spon-
taneous pneumothorax" and confined to 10 days of rest at
Beth Israel Hospital in Manhattan.
Her fears didn't go away when she learned she would re-
cover in good time, however. Sanchez, 30, was worried
about the possibility of being dropped from her training
course and having to start allover again. But Debra Palmieri
wasn't about to let that happen. Director of the YWC.A:s Re-
Entry Employment Program, Palmieri, along with staff
counselors and fellow students, visited Sanchez daily,
clutching flowers in one hand and the day's assignment in
the other. Says Palmieri, "There's something about every
woman who walks through the door that makes us feel that
we can't give up. We don't let go of any of them."
If only all training programs had Re-Entry's resolve-or
placement record. Nearly 90 percent of the 60 or so women
who walk through Re-Entry's doors each year find and re-
tain a job. Compare that to the overall 10 percent placement
rate for welfare recipients enrolled in the city's $6.2 million
job training program in 1993, or the 44 percent dropout rate,
both reported by New York City Comptroller Alan Hevesi
last February.
As the welfare debate rages on in every legislative corner
of America and middle class tolerance for welfare wears
thin, questions rarely asked are why training programs fail
and, more importantly, why they fail the largest single
group of recipients: women.
Some say it's gender discrimination; others contend it's be-
cause program planners take a short-term view. Fact is, a ma-
jority of current programs don't take basic issues into account,
such as balancing breadwinning with raising a family. And,
experts say, they don't recognize how incredibly difficult it is
for a single income household to escape the jaws of poverty.
As a result, women either drop out or are "ghettoized" in
low-wage, high-turnover jobs. "Skills training is one thing,"
says Merble Reagon, executive director of the Women's Cen-
ter for Education and Career Advancement in Manhattan.
"Most women also need job readiness training and a support
system to make the transition." Adds Irene Navero Hammel,
executive director of Queens Women's Network: "What
most programs don't do is exploration-helping women fig-
ure out what it is they want to do when they grow up."
Feminist hogwash? Consider the 1991 General Account-
ing Office study that found women received more classroom
training than men, but were less likely to be trained for jobs
with higher wages. Or the December 1994 GAO report that
concluded that the Job Opportunities and Basic Skills Train-
ing GOBS) program established seven years ago for women
on welfare isn't "well focused on employment" as the goal.
"We know more about welfare careers than work careers of
welfare women," says Tom Corbett, associate director of the
Institute for Research on Poverty at the University of Wis-
consin. By Corbett's estimation, 70 percent of entrants en-
rolled in a training program leave welfare for a few years,
but 70 percent of those who exit eventually return.
It's not that all programs are bad. Most have a "positive,
but generally modest impact," according to the December
GAO report. It's just that they're burdened with an almost
unattainable goal: finding ways for families to survive on
one meager income, says Sharon Rowser, deputy regional
manager for the Manpower Demonstration Research Corpo-
ration in San Francisco.
Catherine, 27 and a mother of one, has been "on and off
welfare" for the past eight years. The last time she went to a
city-sponsored Job Club-a training program required of
many employable welfare recipients-she says she was "al-
most conned into taking just any job," including a spot do-
ing part-time phone sales for $7 an hour. "That's $140 a
week," Catherine says. "They wanted me to give up my
$234 check every two weeks, $169 in food stamps and Med-
icaid for a part-time job with no benefits."
o get a job that provides an adequate income and
the kind of support structure that a single woman
needs to raise a family, training programs have to
be extraordinary, experts say. Most are limited in
their ability to provide integrated services, from day care to
social work assistance, program coordinators say. Consider
the way providers are funded. Typically they are assessed by
the number of participants they train quickly and move into
any job placement, rather than how many end up in long-
term employment. What's more, many participants face a
slew of hurdles like low skills and limited education, lack of
real work experience, drug addiction, depression or domes-
tic violence. "Most programs look for quick results that get
them a pat on the back," says Irv Ackelsberg, a legal services
lawyer in Philadelphia. "They set up a performance standard
that doesn't measure a lot: Are they employed after 90 days?
It doesn't tell whether it's changed anyone's life."
Some programs just don't have the resources-money or
staffing-for case management, so
the prevailing attitude becomes: if
you can't make the class, you're
dropped. Few counselors are
available to help students through
unexpected crises such as an evic-
tion, or, as in Sanchez's case, an
illness. The result: those who
need help the most fall through
the cracks.
What's needed, experts say, is
more flexibility in terms of when
people can begin or end a pro-
gram, and greater recognition that
even those who work may still live
in poverty and need help. If this is
understood, programs will be bet-
ter designed to make a significant
difference-and more successful
at moving women into a long-term
placement in the work force.
Social work is a key element of
any training program for low in-
come women, says Sherry Roberts,
the director of an entrepreneurial
training program at the Local De-
velopment Corporation of East New York. "We have a
woman coming in who has skills and wants to start her own
business. But she has a young teenage daughter who is un-
controllable. Some have daughters who become pregnant.
They have to stop and deal with those issues," Roberts says.
"That takes a lot of time. Others have housing problems, they
are facing eviction, their house is falling apart, school isn't
working out for their child. At least half of our participants
have some kind of problem like this."
Creativity and lots of legwork, says Roberts, is the solu-
tion. And there are a handful of job training programs in
New York City that have taken this lesson to heart and are
working. Part high school guidance counseling, part vo-
cational training, all are community-based organiza-
tions run by women for women. The shared philoso-
phy: more individualized training, greater emphasis on
higher-paying jobs and greater support services for re-
cipients with difficult problems like substance abuse
or domestic violence.
he Queens Women's Network and the
Women's Center for Education and Career
Advancement don't even touch what are
called "hard skills" or occupational train-
ing. Their focus: "soft skills," life skills that will en-
able women to reach self-sufficiency. The Queens
Women's Network reaches through the cracks of
the welfare and job training systems and pulls out
women that others may have missed. Where some
programs may turn away trainees with a history
of domestic violence, the Queens Women's Net-
work steps in. "We're zeroing in on the woman
herself," says Hammel. "We realize that women
are facing multiple barriers. What you have to
do first is give them control over their lives."
Trainees at Queens Women's Network are
steered into setting personal goals, problem
solving, stress management and, finally, a
possible career path. Counselors ask: "What
job skills do you have? What skills would
you want?" Hammel measures success not
by the number of women they've served,
but through the number of "positive out-
comes," such as how many move on to get
their GED or to another training program.
Of the 1,600 women served last year, at
least 21 percent were on welfare.
At the Women's Center for Education
and Career Advancement, counselors act
as coaches and partners who make referrals on
behalf of their participants. The center helps welfare recip-
ients as well as the recently divorced figure out how much
money they'll need to earn in order to match their needs. If
a woman's skills are not up to par, the center suggests word
processing, for example, or computer literacy training. After
making the training referral, the center continues to stay in
touch, providing support and, later, when the client is ready,
job referrals. "Training is not the whole solution," says
Reagon. "People don't just need better job training, they
need a support system that gets them off [welfare] forever."
What kind of support system? It could be as simple as
having someone to talk to or someone to offer encourage-
ment in the face of a crisis, like eviction or a lack of child
care. Consider Maggie. When she finally moved out of an
abusive relationship five years ago, "Welfare was the only
goal I had," she says. After a few months at a shelter, she en-
tered First Step, a program that offers both hard and soft
skills training, everything from teaching women how to bal-
ance a check-book to advice on the appropriate jewelry to
wear on a job interview. They also bring in guest speakers to
talk to students about starting over.
"They get you ready for an interview, but first they work
on your self-esteem," Maggie says. "They give you the con-
fidence first."
Two years
ago, Maggie received $316
a month and $324 in food stamps to
care for herself and her three boys. Today, she's a
community aide in a district attorney's office and earns
$22,000 a year.
The success of these programs is rooted in the attention
they pay their participants. If women entering YWCA's Re-
Entry don't have dress clothes for work, Palmieri outfits
them with donations from the community. If there's a prob-
lem with child care, counselors look for solutions.
These sound like simple steps. But training coordina-
tors say that people who have been battered by the daily
injustices of poverty usually don't have anyone to lend
them a helping hand, a pat on the back or reassurance that
"this too shall pass." Most poverty-stricken women, they
add, are too worried about getting through the day to
think long-term. Federal statistics bear this out: roughly
25 to 40 percent of AFDC recipients are handicapped by
problems that prevent them from holding a full-time job.
Nearly 22 percent of AFDC females enrolled in JOBS say
they have a health or emotional problem, according to the
U.S. Department of Health and Human Services. About 30
percent reported "too many family problems" as barriers
to JOBS participation.
It's not surprising, then, that programs must often deal
with psychological issues first if they are to be successful.
Trainers break through such barriers by recognizing and ad-
dressing such problems before moving on to skills training,
coordinators say.
"You have to look at the circumstances that force people
onto welfare, " says Hammel. "Their ability to find some
self-worth is often gone. They're demoralized. They don't
have a safety net. You have to be sensitive to that."
Sometimes it's just a matter of being treated with respect.
That's what seems to be winning over Hilde Stone, now en-
rolled in Women Helping Women, a program run by the
Bensonhurst Tenants' Council. "They treated clients like
children," Stone says of another program she attended.
"There, I felt a real lack of respect. Here, I'm treated as if I
know what's good for me."
What does Women Helping Women do differently? It em-
phasizes "self-development" and teaches basics like how to
go on interviews, write a resume and cover letter and arrange
for child care, with every effort made to avoid demeaning the
participants. "I have a higher regard for women than training
them to work forever for $5 an hour," says Sandy
Aboulafia. "What's wrong with
other programs is that they just
want women to work. They don't
help them look down the road fi
years. That's oppressive."
rogram coordinators face
an even bigger dilemma.
How do you predict the
needs of a rapidly chang-
ing labor market? Federal funds
can take almost two years to get
through the pipeline. By then, in-
dustries once identified for
growth could be shrinking. The
hospital industry, for example,
was rich with entry-level jobs a
few years ago. Today, hospitals
are facing budget cuts and lay-
offs, and consolidation is the in-
dustry'S means of survival.
One way of dealing with this is
to remain fl exible-and offer a
variety of approaches. Perhaps
the most comprehensive and am-
bitious program in New York to
date is the Women's Housing &
Economic Development Corporation (WHEDCO), a non-
profit founded four years ago to develop and operate hous-
ing and economic development programs for low income
women. WHEDCO and the Institute for Urban Family
Health plan to convert an abandoned hospital in Morrisania
into a center that will eventually include 131 affordable
apartments, a day care center, a health care facility and two
employment training programs alongside a new public ele-
mentary school.
The $24 million initiative, called Urban Horizons, will
act as a one-stop center that offers training in fields like
health care, day care and food preparation. "The structure
of Urban Horizons acknowledges the complex and inter-
disciplinary approaches," says Nancy Biberman, WHED-
CO's president. "Rather than bouncing people from pro-
gram to program, they can be serviced all at once."
Here, women will start off with a career assessment pro-
gram and figure out what they want to do, how to balance a
budget and develop an economic plan. They will then
move to a specific program that trains them to be medical
assistants, case workers, caterers and the like. Child care
will be provided in the same building. Personal trainers or
coaches will follow participants through each step.
There's no one-stop shopping for raising the funds to de-
velop and operate a project of this magnitude, however.
The $24 million assembled so far from state and private
funds ($6.3 million alone from the State Division of Hous-
ing and Community Renewal) covers the bricks and mortar;
construction is set to begin this summer. Biberman is now
in the process of securing funding for each component as
well as salaries for trainers and child care workers. The pro-
ject, she adds, is "like a patchwork quilt that you put to-
gether one piece at a time."
Sort of like piecing broken lives together again. Training
coordinators acknowledge there's no one quick fix that can
Debra Palmieri, director of
the YWCA's Re-Entry Employ-
ment Program, refuses to
~ e upon any
turn around a lifetime of problems. And even the programs
that work don't work for everyone. It 's just that they bring
people along at their own pace, accommodating varying
learning speeds. Notes Barbara Zerzan, a program manag-
er at Federation Employment and Guidance Services,
"Maybe if we gave people food, education and shelter
when they started life, we wouldn't have to worry about
them as adults." 0
Seema Nayyar is a researcher/reporter at Newsweek.
Laura Clark contributed additional reporting to this article.
Harmonic Convergence
How two organizations blazed trails in housing the city"s
homeless people with AIDS
hat is the formula
for putting together
a multimillion-dol-
lar residence and
day treatment program for home-
less people with AIDS? Equal
parts providence and persever-
ance, say the developers of
Flemister House, a 50-bed facili-
ty set to open later this month on
West 22nd Street in Manhattan.
"There were a lot of times
we could have said this is not
going to work, and we could
have walked away from it,"
says the Reverend Donald
Morlan, the project's deputy
director as well as the associ-
ate executive minister of
American Baptist Churches of
Metropolitan New York (ABC
Metro), a regional organization
of 181 American Baptist con-
gregations. But he and Flemis-
ter House executive director
Eric Galloway, both of whom
are veterans of the AIDS hous-
ing movement, say they knew
the need was too great to let a
little thing like discourage-
ment get in the way.
The Reyerend Donald Morlan (left) and Eric Galloway outside
By Stephen Arrendell
ACT UP. It helped that Settle-
ment Housing's board chair-
man, the Reverend Carl
Flemister, was also at the time
the executive minister of ABC
Metro; he became the pivotal
middle man as the two organi-
zations resolved to develop a
new supported housing pro-
ject rich in services for people
with AIDS.
Began as a Puzzle
It took more than resolve to
get the scheme off the ground,
recalls Galloway. "It began as a
puzzle, finding the funding
stream and the finances, and
the way in which the facility
ought to be properly owned and
operated," he says.
After drafting a formal pro-
posal for a housing and treat-
ment center, the two groups
divvied up the chores in the
o spring of 1992: ABC Metro be-
r came the sponsor and Settle-
~ ment Housing, functioning as
~ the development consultant,
~ submitted an application for
There is a critical shortage
of supported housing for the
the conYerted warehouses they haye deyeloped Into a home for 50
homeless men and women with AIDS.
low-interest capital financing to
the city's SRO Loan Program,
run by the Department of Hous-
city's swelling population of
people with AIDS, Morlan
points out. It is estimated that one-
third to one-half of the more than
70,000 people in New York City iden-
tified as having AIDS are either
homeless or are in serious jeopardy of
losing their homes. Yet aside from
temporary shelter in commercial ho-
tels, the city has fewer than 2,000
rooms in scattered apartments and
congregate residences where govern-
ment caseworkers and nonprofit
groups can place homeless people
with AIDS-and only a few of these
have supported health and social ser-
vices on site or nearby (see City Lim-
its, March 1995).
"We're at the epicenter of the epi-
demic. Something has to be done,"
says Morlan, who has spent the last
decade fighting for services for peo-
ple with AIDS. He served for six years
on the board of directors of the AIDS
Resource Center (ARC), one of the
first groups in the city to provide
housing for homeless people with
HIY. In the mid-1980s, the ARC board
planned and developed the city's first
permanent group home for people
with AIDS, Bailey-Holt House, a 44-
unit residence in Greenwich Village.
It's not surprising, then, that when
Morlan teamed up with Galloway in
1991, something of a harmonic con-
vergence took place. Galloway was
general counsel for the Settlement
Housing Fund, a nonprofit developer
that has created some 5,500 units of
affordable housing in New York dur-
ing the last two and a half decades,
and a board member of Housing
Works, the service provider for home-
less PWAs founded by members of
ing Preservation and Develop-
ment (HPD).
At the time, the city was still putting
most of its AIDS-related housing mon-
ey into scattered-site programs, in
which non profits lease apartments on
the private market and rent them to
clients. And the city Human Resources
Administration (HRA) was pumping
millions of dollars into temporary
housing for homeless people with AIDS
in substandard hotels. The forces be-
hind Flemister House understood that
New York needed a more permanent
housing solution and believed govern-
ment bureaucrats understood this, too.
"We anticipated housing policy,"
Galloway says. "We saw it moving to-
ward supportive housing for PWAs, so
that by the time our development team
had done its work and a site had been
picked, the funding had caught up with
the policy."
Indeed, the bulk of the money
needed for the project-$4.4 mil-
lion out of a total of $5.6 mil-
lion-eventually became avail-
able from the federal Housing
Opportunities for People With
residence and day treatment center for people
with AIDS.
medical , psychiatric and phar-
macological services. The HRA
subsidy will pay for manage-
ment and day-to-day operation
AIDS program (HOPWA), part of
the National Affordable Housing
Act of 1990. In fiscal 1992, New
York City received $11 million of
the federal HOPWA allocation,
and HPD then funneled money to
Flemister House in the form of a
forgivable 30-year mortgage. The
rest of the funding was raised
from a combination of city capital
funds, private contributions and
low income housing tax credits.
Locating a home for the project
wasn't easy. The first site the develop-
ers picked was a residence for homeless
and runaway teens run by Covenant
House on Eighth Avenue and 44th
Street. A scandal involving that organi-
zation's former director, Father Bruce
Ritter, had left Covenant House on
shaky financial ground, and the facility
was preparing to close.
Although the Flemister House pro-
ject had the backing of Community
Board 4, it hit an impasse as soon as the
Shubert Organization learned about it.
The site was beside the St. James The-
atre, one of the Shuberts' principal
Broadway venues, and the company's
executives let it be known they did not
want the residence opening up next
door. They offered a $25,000 donation,
and ABC Metro headed out of the the-
ater district to two former warehouses
on West 22nd Street on a mostly indus-
trial block between 10th and 11th Av-
At the time, the street was almost en-
tirely industrial, except for the DIA
Center for the Arts, which in 1987 had
converted a large four-story warehouse
building into an exhibition space, book-
store and coffee bar.
In the far reaches of West Chelsea,
neighborhood opposition to Flemister
House was muted by the developer's ef-
forts to reach out to local groups and
foster what Morlan calls a "very sup-
portive relationship." The local block
association formed a Flemister House
subcommittee which met monthly dur-
ing the planning stages. Renovation
and construction work began on Valen-
tine's Day, 1994, and was completed a
little more than a year later.
Act of Providence
Looking back, Morlan says the fact
Allowable Fees
Development Costs
Federal HOPWA funds, via
the city's SRO Loan Program
City capital funds
Tax credits, other funds
$ 472,750
$ 969,492
$ 250,000
that the project was bumped from the
Covenant House site to the warehouse
buildings, which could be gutted and
specially designed to meet the needs of
people with AIDS, was an act of provi-
dence. What started out as 28,425
square feet of open space in the two
buildings is now a 50-room residence
with private baths, congregate eating
facilities , space for day programs, of-
fices and health care facilities.
The AIDS epidemic has evolved in
recent years and medical needs are
continually shifting in a way that de-
mands flexibility. For example, the
original Flemister House plans didn't
call for a ventilation system to curb the
spread of tuberculosis. At the time,
neither did city financing guidelines.
As time went by, however, and tuber-
culosis rates among people with AIDS
skyrocketed, the developers convinced
city officials they needed an additional
$100,000 in HOPWA funds to install
and operate such a system.
Flemister House's annual operating
costs-$l million for the residence and
$2 million for day treatment programs-
will come from HRA and Medicaid.
There will be 24-hour staffing, and st.
Vincent's Hospital, a New York State-
designated AIDS center about a mile
away, will provide medical services.
"We realized from the beginning
that we couldn't go with just one fund-
ing source for the operation of the
building and the services," says Gal-
loway. "We anticipated an HRA sub-
sidy, and we didn't think that would be
enough, so we also planned for an on-
site day [treatment] program licensed
by the state Department of Health. It
will allow us to provide a higher level
of care on site."
The state license will enable Flemis-
ter House to receive Medicaid reim-
bursements, which will pay for social,
of the residence, including
salaries of staffers such as
porters and desk clerks, food ser-
vice, laundry workers and case
managers, and referrals to other
AIDS/HIV service providers.
Flemister House residents
will be referred there by the
city's Division of AIDS Services
(DAS) and the city shelter sys-
tem, with preference given to
people from the neighborhood.
Qualified applicants must be
registered with DAS, be SSI-eligible
and homeless. People with AIDS resid-
ing in local scattered-site programs
will have access to Flemister House.'s
day treatment services, including
evening meals, medical assistance and
case management.
Each of the four floors with living
quarters has a lounge and kitchen facil-
ities for residents. The roof features a
solarium, a meditation room, trellised
shade areas, plus space for gardening
and other recreational activities.
Morlan says the goal of the home is
simply "to treat people with dignity."
Meanwhile, real estate activity on
the block has picked up. The DIA Cen-
ter for the Arts now has plans to reha-
bilitate another six-story warehouse
building on the block to house its per-
manent collection. A third DIA build-
ing on the north side currently houses
the Arnulf Rainer Museum. Last fall,
Matthew Marks, an established uptown
art dealer, opened a new exhibition
space across the street. And at the west-
ern end of the block, on the far side of
West Street, the Chelsea piers will soon
undergo a multimillion-dollar transfor-
mation into a recreation complex.
What was once a sleepy industrial
area is now thriving. In fact, Morlan
figures the Flemister House backers
would be priced out of the site if they
tried to buy the buildings today.
"We think it's great," adds Melissa
.Goldstein, DIA's exhibition coordinator
and head of public information there.
With Flemister House providing a
round-the-clock presence on the block,
she says, "There'll be more people
coming in. We'll be exposing the art to
a greater population-a good popula-
tion-people that are interested in art."
Stephen Arrendell is a Manhattan-
based freelance writer.
~ ...
~ ,
The Chase Community Development
Corporation Finances Housing and
Economic Development Projects,
New Construction
Special Needs Housing
Homeless Shelters
Home Mortgages
Small Business Loans
Loan Consortia
For information, call the
Community-Based Development Unit
(212) 552-9737
We Look Forward to Your Call!
Tlte Cirv L i m i ~ s
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form to City Limits, 40 Prince Street, New York, NY, 10012. Allow
4-6 weeks for delivery.
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e 1993 Chemical Banking Corporation
Ransomed Justice By Angelita Anderson
he doors of Housing Court
may soon be closed to the ma-
jority of tenants in New York
City. Landlords and building
owners have been busy lobbying for a
mandatory pre-trial rent deposit law
that would require tenants to pay an
"admission fee" before appearing in
court to answer a landlord's claim for
back rent. Before tenants could defend
themselves, they would have to pay
the disputed amount of back rent as
well as all ongoing rent into a court-
assigned escrow account.
Appearing in the city's notoriously
chaotic Housing Court is already 'a
challenge for the thousands of people
faced with eviction proceedings each
year. For the lucky few who can afford
an attorney or receive free representa-
tion from Legal Aid or Legal Services,
the experience is less of an ordeal. But
about 90 percent of tenants in Hous-
ing Court must face this adversarialle-
gal maze alone. Each year, the City-
Wide Task Force on Housing Court's
information tables provide assistance
to more than 40,000 unrepresented re-
spondents. Armed with information
about their rights, some tenants are
able to attain some justice.
The mandatory rent deposit bills
now before the City Council and the
State Assembly would end all oppor-
tunity for tenants to gain a fair trial.
An eviction case would be decided
not on its merits, but on a tenant's
ability to pay the deposit.
Camouflaged Intent
Under current law, landlords must
prove that they are in fact entitled to
back rent during a court proceeding.
But if a landlord is demanding an ille-
gally high rent, tenants can ask the
court to determine the legal amount of
rent they should be paying. This often
reduces the amount of the landlord's
initial rent claim. In addition, a land-
lord's failure to provide adequate ser-
vices or properly maintain a building
is grounds for a rent abatement.
Landlords have camouflaged their
true intent-to vacate buildings-by
suggesting that the rent deposit law
would be good for both landlords and
tenants. The landlords would get a
payment guarantee, while the tenants,
they claim, would get a "savings pro-
gram" so that they could pay the land-
lord if they lose. Yet no one is calling
for such a savings plan for landlords
who have failed to address numerous
code violations or who owe tenants
money for rent paid above the legal
In spite of this inherent unfairness,
the real estate in-
dustry has crafted
several arguments
that have persuad-
ed some elected of-
ficials to support
the legislation.
Landlords contend
that "professional
tenants" are the
only ones who will
be harmed by this
law. "The dishon-
est will no longer
be able to manipu-
late the system to
avoid their debts
and responsibili-
ties," says Joseph
Strasburg, presi-
ready allows a judge to order a ten-
ant to deposit the disputed rent with
the court upon the second adjourn-
ment of the case, if there is no good
cause for the payment to be deferred
until the end of a trial. There is no
such provision requiring a landlord
to pay a bond if the tenant makes a
counterclaim of
code violations.
Neither is a land-
lord penalized un-
less he seeks ex-
cessive adjourn-
ments. An amend-
ment requiring
pretrial rent de-
posits would only
worsen an already
section of the
On March 31,
the Housing and
" Buildings Commit-
~ tee of the City
::< Council held a
dent of the Rent Angelita Andenon Is executive director of
Stabilization Asso- the City-Wide Task Force on Houling Court.
public hearing on
a resolution urging
the state to require
mandatory pretrial ciation, a landlord
trade group.
But in truth, all types of tenants
will be harmed by this law. The elder-
ly who have worked all their lives and
come upon hard times, the disabled
who are awaiting approval for Supple-
mental Security Income, the people
who have been trying to get their
landlord to repair cracks in the foun-
dation before a building collapses, the
new immigrants who have been pay-
ing $1,000 for a $500 apartment-all
will be harmed by this law. It will af-
fect the most vulnerable of tenants.
And it will be felt by everyone in this
city as we watch homelessness rise
and buildings crumble.
As State Assembly Member Richard
Gottfried noted recently, "There will
be more evictions and homelessness
as tenants are summoned to Housing
Court, are unable to make the pay-
ment and are then dispossessed."
No Good Cause
What landlords also fail to men-
tion is that the Real Property Actions
and Proceedings Law (RPAPL) al-
rent deposits. Ad-
vocates, attorneys and concerned cit-
izens worked to educate the mem-
bers of the committee, and as a re-
sult, a majority declared they would
oppose the resolution. At this time,
we do not know whether the resolu-
tion will be revised and scheduled
for further debate.
In Albany, three pieces of legisla-
tion have been introduced in the As-
sembly that would require mandato-
ry pretrial rent deposits. Discussion
of the proposed laws, and of any oth-
er rent deposit legislation, will take
place in the legislature'S housing and
judiciary committees.
On May 16, Tenant Lobby Day,
tenants and their advocates will
meet with legislators in Albany to
explain the likely impact of this
legislation and the need to preserve
and improve tenant protections.
For more information, call the Met-
ropolitan Council on Housing at
(212) 693-0550 on Mondays,
Wednesdays and Fridays from 1:30
to 5:30 p.m. 0
Where You Hang Your Hat
By Robin Michaelson
Living Downtown: The History of Resi-
dential Hotels in the United States, by
Paul Groth, University of California
Press, Berkeley, 423 pages, $35.00
hard cover.
What do Cyril Magnin, Jane Wagner
and Felix Ayson have in common? The
wealthy clothing-store owner, success-
ful Broadway playwright and Filipino
field worker all have made hotels their
homes. For more than 25 years, Magnin
lived in a suite at San Francisco's Mark
Hopkins Hotel. Wagner lived at the
YWCA for three years when she first
moved to New York City. And Ayson
lived in inexpensive San Francisco ho-
tels on and off for 50 years when he
couldn't find work in the fields.
That hotels have been the perma-
nent addresses of such a range of
guests may come as a surprise to some.
Yet residential hotels, from upscale
palaces to respectable rooming houses
to cheap flops, have long been part of
the American housing landscape.
However, not until Paul Groth's Living
Downtown has the history of American
residential hotels been told, a story the
author maintains has been misunder-
stood by the public-and often inten-
tionally obscured by policy makers
and planners.
Human Geography
An associate professor of architec-
tural history at the University of Cali-
fornia at Berkeley, Groth blends social
and cultural history with architectural
detail and human geography to de-
scribe residential hotels and the lives
of their residents from the late 1800s to
the present. The first half of Living
Downtown deals primarily with the
early years, from the 1890s to the
1920s, when hotel living was at its
peak. Groth reconstructs life in four
types of hotels, categorized by income
and social status, and vividly illus-
trates who lived where and what life
was like, complete with commentary
about the design of buildings and ofin-
dividual rooms. Well-chosen pho-
tographs and details of building plans
complement the text, adding up to a
portrayal of hotels as an essential hous-
ing resource.
But who now thinks of hotels that
way? In the second half of the book,
Groth focuses on how residential ho-
tels have come to be perceived and
how these perceptions continue to
shape our beliefs. He explains why
planners and policy makers ignored
residential hotels after 1920, noting
that the official attitude toward hotel
housing dovetailed with the morality
of Prohibitionists: like alcohol, hotel
life was considered a public nuisance.
The nature of residential hotels, par-
ticularly inexpensive rooming and
lodging houses, ran counter to the
emerging American ideal of the single
family home, Groth observes. He theo-
rizes that those who lived in hotels-
for the most part single workers of both
sexes-threatened middle-and upper-
class sensibilities with their indepen-
dent and property-free way of life. The
single stenographer or sales clerk, even
the "problem" relative, lived in room-
ing houses. Ditch diggers, construction
workers and those described by Groth
as "essential outcasts"-tramps and
bums-frequented the cheap lodging
houses. Many of these tenants were im-
portant to downtown industries as
workers, but their other downtown ac-
tivities, such as eating and socializing,
ran counter to a new professional con-
ception of the center city.
"The cultural and social opposi-
tion of rooming houses and cheap
lodging houses to middle and upper
class norms did the most to bring of-
ficial condemnation on hotel hous-
ing," he maintains.
Even through the 1960s, real estate
reports, real property surveys and even
the U.S. Census did not include resi-
dential hotels or consider why they
were there. "This was neither oversight
nor negligence, but active repudia-
tion," Groth argues.
Sixty years of this sort of public pol-
icy led to the depletion of the stock of
residential hotels, he notes. Building
and health codes, moral reforms and
zoning regulations all were enacted as
first steps to discourage hotel develop-
ment. Today we are dealing with the
consequences of the demolition of tens
of thousands of residential hotel rooms
under the auspices of government-
sponsored urban renewal. Although
federal policies finally mandated in
1970 that displaced hotel dwellers be
recognized as city residents and helped
to find new housing, it was too late to
save the hotels themselves. Groth notes
that 99 percent of the remaining inex-
pensive hotel rooms are in crumbling
structures that are at least 70 years old.
Present Crisis
Groth's examination of the past
helps us understand the present crisis
in single room occupancy (SRO) hous-
ing, an important and large subset of
moderately priced residential hotels.
He points to the link between SRO de-
molition and homelessness, a connec-
tion many have noted in New York
City. Indeed, according to government
statistics, this city lost more than
150,000 units of SRO housing between
1960 and 1990. Groth, however, fails to
discuss the market forces and outright
greed that motivated midtown real es-
tate owners to vacate and demolish
countless hotels, or the government tax
abatements that encouraged the devel-
opment of office towers on sites where
these hotels once stood.
Today's housing activists are now
promoting SROs as a housing option,
particularly for formerly homeless in-
dividuals and the working poor. Groth
points out that in San Francisco, four
or five hotel rooms can be rehabilitated
for the price of one new HUD-subsi-
dized studio apartment. Yet, as hous-
ing activists try to reinvent hotel living,
they still battle the stereotypes "inher-
ited from generations of misunder-
standing," he writes.
Today an estimated one to two mil-
lion people live in residential hotels, a
greater number than those in public
housing, Groth writes. He admits that
he was once a critic of hotel living, but
changed his mind after examining who
lived there and why. He now believes
in the "positive potential" of hotelliv-
ing in properly managed and main-
tained buildings. "They deserve a
place in the range of American hous-
ing," he writes.
And he persuades the reader, too,
making visible what had been invisi-
ble, exposing the past of residential ho-
tels, some parts better than others. At
the least, readers will recognize that
residential hotels have been called
home by millions of Americans, homes
that for the most part are missing and
much needed today. 0
Robin Michaelson is a Manhattan-
based freelance writer.
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I thoroughly enjoyed Robin Ep-
stein's well-researched and well-writ-
ten article, "Lighting a Beacon," in the
March 1995 issue. It was a very infor-
mative piece for me and I think cap-
tured much about the Industrial Areas
Foundation from what I know of their
organizing. Good work!
We have taken a subscription to City
Limits for the Fund and hope to follow
some New York developments through
the publication.
Ken Rolling
Associate Director
Woods Fund of Chicago
I am writing on behalf of ReSource
NE, Inc. and its affiliated companies,
including Allied Sanitation, Star Recy-
cling, BQE Services and Lehigh Cart-
ing, to express our deep concern and
dissatisfaction with an article in the
January 1995 issue of City Limits by
John Gilmore, "Business as Usual."
The article was filled with factual er-
ror, and its many inaccuracies and dis-
tortions resulted in the worst use of
guilt by insinuation and association I
have observed in some time.
This set of problems resulted from
the author's misguided attempt to
make one company-Allied Sanita-
tion-his example to prove whatever
point he desired. His insinuations of
wrong-doing in our seeking and being
awarded city contracts, including
those made through unsupported and
irrelevant statements about the local
carting industry, did a great disservice
to our company. They demeaned our
reputation and could diminish the
city's confidence in our providing it
with high quality, reliable, professional
services to meet its many needs. The
article approached defamation in all of
the ways discussed below.
Also central to our concern about
this unfounded attack on our company
is that we are not aware of any effort by
your reporter (or editors) to contact our
company to ascertain key information,
discuss the facts related to our con-
tracts with the city, or respond to any
of the allegations made in the article.
The article is filled with misinforma-
tion, beginning with the author's inven-
tion of a business entity called "the L&G
group." In fact, Allied and Star (and BQE
Services) are operating divisions of Re-
Source NE, Inc. of Brooklyn, the largest
waste management and materials recov-
ery company in the New York metropol-
itan region. Although L&G Realty is
owned by several of the principals of Re-
Source, L&G is an entirely separate com-
pany engaged only in the ownership and
management of property.
Therefore, it is not true that "accord-
ing to city records, the L&G Group [sic)
has more than $30 million in outstand-
ing or recently completed contracts
and purchase orders with the City of
New York." This and every other state-
ment in the article about "the L&G
group" are, therefore, false.
To our knowledge, we have not
"won millions of dollars of contracts in
less competitive ways" than offering
the lowest price, and Star Recycling
has not been awarded "at least nine
contracts from the departments of En-
vironmental Protection and the Sanita-
tion for everything from hauling
sewage sludge to recycling metal and
glass, even though lower bids were of-
fered for each contract." And the au-
thor provides no basis for his scur-
rilous assertion that our companies
"have had the good fortune to receive
millions of dollars in city contracts
without competing against a single bid
from other local carting firms."
!lBankersliust Company
Community Development Group
A resource for the non-profit
development community

Gary Hattem, Managing Director
Amy Brusiloff, Vice President
280 Park Avenue, 19West
New York, New York 10017
Tel: 212 .. 454 .. 3677 Fax: 212 .. 454 .. 2380
In the case of our company's Depart-
ment of Sanitation (DOS) recycling-
processing contracts, Star is a back-up
contractor for bottles and cans, and
BQE has the same status for wastepa-
per. BQE was, in fact, the nominal low-
bidder for bottle and can processing,
and receives approximately one-third
of the city's daily collection. In the five
months prior to the award of the bot-
tle-and-can contracts, effective last
March, both Star and BQE were award-
ed "emergency contracts"-at different
facilities and with different prices-
based on the same public bid process
that eventually led to award of the five-
year contracts.
The author makes much of these
emergency awards-but only by refer-
ring to criticisms of alleged misuse of
emergency contract procedures by other
agencies in other situations. Yet, by
clever innuendo, he makes our con-
tracts appear sinister when they are not.
Gilmore continues on this misguided
course by treating the issue of procure-
ment contracts with a value of less than
$10,000 in a similar way. First, he
quotes an anonymous "inspector" say-
ing that agencies use small purchase or-
ders to evade competitive bid proce-
dures and tells a story about a corrupt
corrections official caught taking bags of
cash. In passing, he notes that purchase
orders are used justifiably, thousands of
times a year. Then he presents Star's re-
ceipt of purchase orders from DOS in a
critical light. No one is quoted---ven
anonymously-arguing that Star's were
not among the thousands of "justifi-
able" awards, as they certainly were.
Gilmore also takes up the matter of
Allied receiving Department of Housing
and Preservation contracts after submit-
ting the sole bid, even though the agency
tried to encourage competition. Again,
the author approaches defamation.
The people he quotes were speaking
generally, certainly not about Allied
contracts. Moreover, they were not
speaking in concert. By stringing
quotes together, the author creates the
slanderous and false illusion that our
company is part of a nefarious cartel
that engages in illegal practices. We
vigorously object.
In any case where few companies
compete, we agree that the city should
review its bid specifications and process-
es to encourage more competition. In
some cases, we have directly encouraged
such efforts, and then have offered bids
that resulted in savings to the city.
Yes, our company does make politi-
cal contributions, as do individuals af-
filiated with our company. No, we do
not believe these contributions are ei-
ther inappropriate or necessarily "gen-
erous" when compared with like-size
companies in the city, and over the
time period in which your reporter ag-
gregated this information. Your reporter
failed to make any connection-factu-
al, direct or otherwise between such
contributions and contract award
processes, yet again used insinuation to
suggest otherwise. It cannot be credibly
argued that modest contributions affect
the decisions of several city agencies.
As the region's largest and most so-
phisticated solid waste management
and recycling-related services compa-
ny, it should not be a story that we are
aggressive in bidding competitively for

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the full range of services required by
agencies of the nation's largest city.
clude a changing group of corporate
entities engaged in a range of contrac-
tual activities with the City of New
York over a span of eight years. All the
firms discussed are controlled by the
same group of principal partners con-
sisting primarily of members of the Lo-
mangino and Gusmano families. This
data was verified by the records of the
city's Financial Information System
Kendall Christiansen
Director, Government & Public Affairs
ReSource NE, Inc.
John Gilmore responds: As was dis-
cussed in the article, the group of com-
panies identified as the L&G group in-
(!)rooldynCDetroOlmes ~ ~ B M T is a vital source of independent
journalism exposing the truth about
governmental corruption, greed and re-
pression in Brooklyn. "
-Mike Zielinski, journalist, activist
First anniversary issue in stores now, featur-
ing a look into the state's exploitation of
cheap labor under the workfare program,
neighborhood resistance to fair housing
laws in Brooklyn and a discussion with au-
'---______ -.J thor David Lamb on Black/Latino relations.
Send $2 for a sample copy or $7 for a one-year
subscription (4 issues) to: Brooklyn Metro Times, Dept. CL,
PO Box 310281, Brooklyn, NY 11231-0281, 718-390-7136.
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and Vendex maintained by the Depart-
ment of Finance and the Mayor's Office
of Contracts.
Firms doing business with the city
must complete a detailed and lengthy
questionnaire known as a Vendex. The
Vendex questionnaire requires appli-
cants to identify the principals of a
firm and any subsidiary or parent com-
panies. The relationship between the
companies of the L&G group is derived
directly from Vendex information.
As I asserted in the article, the L&G
group of companies have won many
city contracts in which they were the
lowest out of a number of qualified
bids. But there are a number of con-
tracts where that was not the case.
In regard to the Allied Sanitation
contracts with the Department of Hous-
ing Preservation and Development, I
quoted HPD Assistant Commissioner of
Maintenance Joy Fairtile, who claimed
that none of the several hundred cart-
ing firms in New York other than Allied
submitted bids for 11 separate HPD
contracts worth more than $2 million.
According to publicly available
records, the L&G-related companies
were awarded the following contracts in
which they were not the low bidder:
#9239783 ($5,742,464) , #9231171
($1,612,000), and #9229638 ($45,000) ,
all from the Department of Environmen-
tal Protection. Similarly, the Depart-
ment of Sanitation awarded the follow-
ing contracts that were not the lowest
bids: #9553888 ($1,819,114), #9016379
($1,856,000), #9013874 ($2,226,413)'
and #9114919 ($4,200,000). In addition,
contract #9448882 ($650,000) for recy-
cling metal and glass was awarded on
an emergency basis by DOS. It is still
unclear to us how metal and glass recy-
cling services could not be reasonably
anticipated and put out for competitive
bids in the conventional manner.
Even though in your letter you have
not challenged the accuracy of the facts
concerning the political contributions
made by the L&G group of companies
and affiliated individuals, you suggest
the sums given, more that $30,000, are
"modest" and a "conventional activity." I
think you just made my argument for me.
Nevertheless, the donations to polit-
ical candidates made by the group of
firms discussed in the article are a mat-
ter of public record. The amount, date
and source of each donation is on file
with the Campaign Finance Board and
was verified in a report prepared by the
staff of that agency.
No assertions or claims of any kind
were made about the quality of service
delivered by the companies discussed
in the articles. No claims or sugges-
tions were made of any kind that the
group of companies discussed in the
article had engaged in any type of ille-
gal activity. Indeed, the direct opposite
was clearly stated more than once.
Finally, several calls made to Allied
Sanitation and L&G Realty the week
before publication were not returned.
Send your letters to:
The Editor, City Limits
40 Prince St., NYC 10012
or bye-mail to:
HN4360 @
Rfth Avenue Committee, a Brooklyn-based
community development group, seeks Director
of Economic Development to increase eco-
nomic opportunity for residents. Launch and
manage initiative including job creation and
training, commercial revitalization, and entre-
preneurial training. Experience in business
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to work well in small, diverse office environ-
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preferred. Salary: commensurate with experi-
ence. Send cover letter, resume, and salary re-
quirements to DED Search, FAC, 19914th St.,
Brooklyn, NY 11215.
able Housing Network/NJ & LlSC seek experi-
enced consultants for HUD-funded project to
provide technical services to nonprofit hous-
ing/community development corporations in
New Jersey. Consultants must have substan-
tial experience working with CDCs & special ex-
pertise in either nonprofit organization man-
agement or affordable housing develop-
ment/financial packaging. Please send qualifi-
cations/requirements to Martha Lamar, Af-
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ton, NJ, 08607.
EXECUTIVE DIRECTOR. Community-based Envi-
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vidual to oversee lead poisoning
prevention/abatement initiative. Experience in
nonprofit development and youth/environ-
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BA/BS required. $35++ commensurate with
experience. Send resumes and three refer-
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Steven Potolsky, President
111 Great Neck Road, Great Neck, New York 11021 Phone (516) 482-5765 Fax (516) 482-5837
I ", I ~ \ " , I
a proiect of the lawyers Alliance for New York, a nonprofit Qrgonizotion
Real Estate, Corporate and Tax Legal Representation to Organizations
Tax Syndications Mutual Housing Associations
Homeless Housing Economic Development
HDFC's Not-for-profit corporations
Community Development Credit Unions and loan Funds
99 Hudson Street, 14th Fir., NYC, 10013 (212) 219-1800
William .Jacobs
Certitied Jlllhlil .\u llllllt.lIlt
Over 25 y ..... experience apecielizing in nonprofit housing
HDFCs, Neighborhood Preservetion Corporations
Certified Annuel Audits. Compilation end Review Services,
Menegement Advisory Services, Tex Consultation end Preperetion
CIIII TeNIa..- For A Free ConauItafIoa
77 Queker RiCige Road, Suite 215
New Rochelle, N.Y. 10804
914-633-5095 Fex 914-633-5097
J-51 Tax Abatement/Exemption. 421A and 421B
Applications. 501 (c) (3) Federal Tax Exemptions. All forms
of government -assisted housing including USC/Enterprise,
Section 202, State Turnkey, and NYC Partnership Homes
(718) 585-3187
Attorneys at Law
New York, N.Y.
(212) 682-8981
Hardware Sales: Software Sales:
IBM Compatible Computers Data Base
Super VGA Monitors Accounting
Okidata Laser Printers UtilitieslNetwork
Okidata Dot Matrix Printers Word Processing
Services: NetworklHardwareiSoftware Installation,
Training, Custom Software, Hand Holding
Clients Include: ANHD, MHANY, NHS, UHAB
Morris Kornbluth 718-857-9157
LandAir Management
ProfeSSional Resources to Meet Your Prolect Needs
Cost Estimating
Construction Management
Owners Representative
In/ IIlnll tllll)rlll.IIIOlIl'h I'ot "til '::1':: N"" -II \II 01 I 1\ '::1':: "j- 1':;'l'j
- - ~ - - - - - - - - - - - - - ~ ~ , ; : : - - , - - ~ ~ -
Attorney at Law
Meeting the challenges of affordable housing for 20 years.
Providing legal services in the areas of General Real Estate,
Business, Trust & Estates, and Elder Law.
217 Broadway, Suite 610
New York, NY 10007
(212) 5130981
Concentrating in Real Estate & Non-Profit Law
Title and loan closings 0 All city housing programs
Mutual housing associations 0 Cooperative conversions
Advice to low income co-op boards of directors
100 Remsen Street, Brooklyn, NY 11201, (718) 624-6850
COMMUNITY AFFAIRS. The Federal Reserve Bank of New York is seek-
ing experienced professionals for two positions in our Community Af-
fairs office. COMMUNITY AFFAIRS REPRESENTATIVE. Bachelor's degree
(preferably in economics, finance, urban planning or community de-
velopment) , and demonstrated knowledge of community develop-
ment with at least one year of related work experience. Responsibil-
ities include: conducting research and developing projects; conduct-
ing interviews to identify community/economic programs, as well as
issues and developments in the field; and maintaining an automat-
ed database of community programs. SENIOR COMMUNITY AFFAIRS
REPRESENTATIVE. Master's degree (in community development, eco-
nomiCS, finance, urban planning or related field) or 2-3 years of re-
lated work experience; demonstrated knowledge of the Community
Reinvestment Act (CRA) and related issues; understanding of the
community/economic development process and development fi -
nance; and demonstrated research ability. Primary responsibilities
include: conducting research and developing projects; responding to
inquiries related to the implementation of the CRA and Home Mort-
gage Disclosure Act; managing relationships with and disseminating
information to financial institutions and others regarding community
credit needs; designing and coordinating meetings/conferences con-
cerning current reinvestment developments; providing technical as-
sistance to examiners in preparing for CRA exams; and writing arti-
cles, newsletters and educational brochures. Both positions require
strong analytical ability and excellent oral and written communica-
tions/presentations skills, good PC skills and the ability to travel 15-
20 percent of the time. We offer a competitive salary commensurate
with experience and a full range of employee benefits. For consider-
ation, please send a current resume with salary requirements to:
Placement Services Staff, Attn: JT, Federal Reserve Bank of New
York, 59 Maiden Lane, 39th Floor, New York, NY 10038-4502.
Replies will be made only to applicants under consideration. Equal
Opportunity/Affirmative Action Employer.
More job ads on page 37
PROGRAM.1JPERA1 MANAGER. Habitat for Humanity has opening to
join 4-person management team. Position manages: hectic office, many
volunteers, quarterly newsletter, family partners, accounting, database
& computer system. Experience with nonprofit community programs,
highly organized, self-starter & excellent interpersonal skills; have an
ability to motivate, enthusiastic about producing professional & techni-
cal results while working in a heterogeneous environment encompass-
ing human-<:entered values of a "people-to-people" ministry. Bilingual
ability, fund development, construction knowledge, and writing skills a
plus. Salary based on experience. Fax resume and references to: E.D. ,
HFHNYC, (212) 691-4935 or mail to 7 W. 11th Street, NYC 10011.
SENIOR DEVELOPMENT ASSOCIATE. Hope Community, an East Harlem-
based neighborhood preservation corporation, seeks a dynamic indi-
vidual with a proven track record in affordable housing development.
Supervised by the Director of Development, this position calls for indi-
vidualized attention to 4-6 housing production projects throughout their
development life-cycle. Applicants must have experience in finance, pro-
ject administration and construction monitoring. Ability to speak Span-
ish a plus. Salary: Up to $40,000, excellent fringe benefits. Please in-
clude: Cover letter, resume, and three references. Mail by May 19 to:
David Gillcrist. Hope Community Inc. , 174 East 104th Street, NYC
10029. An equal opportunity employer.
bank recs and G/L input. Requirements: An AAS in accounting, mini-
mum two years work experience, Lotus 123-4. MAS90 plus. Non-prof-
it experience helpful. Salary negotiable. Please send cover letter/re-
sume to: AbysSinian Development Corporation, 131C West 138th
Street, NYC 10030.
ter for Communit}' and Environmental Development (PICCED) seeks an
experienced Community Economic Development (CEO) Planner to pro-
vide comprehensive neighborhood planning assistance, as well as pro-
ject-sPecific technical assistance (including residential and nonresiden-
tial project financial underwriting) to nonprofit community-based devel-
opment organizations in NYC and vicinity. Position requires research and
analysis of regional economies to ascertain appropriate strategies to
capture jobs and business opportunities for disadvantaged communi-
ties, and development and delivery of training programs designed to en-
hance the capacity of community-based organizations to undertake CEO
activities. Applicants must have an M.S. in planning or related field and
5 years experience (or equivalent combination of education and experi-
ence) in hands-<>n low-income community development and planning of
specific local enterprise promotion and employment projects. Facility
with planning and development computer applications required. Knowl-
edge of CEO practices and programs both locally and nationally a plus.
Spanish speaking a plus. Salary to $35,000 plus benefits for this grant
funded position. Review of resumes begins immediately. Please send to:
Department UP, 379 DeKaib Ave. , 2nd floor, Brooklyn, NY 11205. An
AA/EOE. Women and minorities are strongly encouraged to apply.
HOUSING DEVELOPMENT SPECIALIST. Nonprofit community-based organi-
zation seeks individual to manage housing development from concept
origination through oversight of building management. Includes financial
feasibility analysis, preparation of funding applications, coordination of
development team, and tenant training. Spanish-speaking a plus.
Salary $30,000 to $35,000, DOE. Minorities and women are encour-
aged to apply. Send resume and writing sample to: HDS Search, NMIC,
76 Wadsworth Ave. , NYC 10033.
We have been providing low-cost insurance programs and
and other NONPROFIT organizations for over 75 years.
We Offer:
"Tailored Payment Plans"
146 West 29th Street, 12th Floor, New York, NY 10001
(212) 279-8300 FAX 714-2161 Ask for: Bala Ramanathan
For years, developers, small business owners,
couples and families just starting out have
relied on the Chase Community Development
Corporation to finance their dreams for a
better life.
Through our special programs, Chase makes
new homes affordable for first-time home
buyers, helps old neighborhoods get a new
lease on life, and supports minority and
women-owned businesses.
Chase will work hard to make your dream
come true. Call us during business hours at
1 995 The Chase Manhattan Bank. N.A. Member FDIC. ~ Equal Housing Lender. Equal Opportunity Lender.