CITY LIMITS

COMMUNITY HOUSING NEWS
MARCH 1979 VOL. 4 NO.3
HPD EVICTION UNIT:
·RENT NOW, REPAIRS LATER
O.K. - WE GOT A
\PB ••• t-tOTHE.R
by Susan Baldwin
An operation with the sanitized name Tenant Legal
Affairs Unit has been functioning in almost total secrecy
since last December. It is devoted exclusively to evicting
tenants for nonpayment of rent from city-owned pro-
perties.
Although some 762 three-day notices have been pro-
cessed against residents of city tax-foreclosed build-
ings, only ten evictions have been carried out since
December, according to city figures.
Martha Gershun, of the Department of Housing Pre-
servation and Development's public affairs office, said
the city has received $40,585 in rent arrears since Janu-
ary as a result of agreements and judgments in response
to the three-day notices.
"Eviction is not what we're looking for," she said,
adding that HPD is primarily interested in improving its
level of rent collection. At best, rent collection in city-
managed dwellings, she explained, is 40 to 45 per cent in
the warmer weather. In the dead of winter the collection
was much lower because of the lack of heat and hot
water.
By contrast, collection- in the community
management buildings has been about 80 per cent and
in tenant-run interim lease buildings, as high as 95 per
cent.
Asked where the three-day notices are being sent,
Gershun said, "Everywhere. All over the city."
According to her report, the notices are directed at

tenants in the "better" buildings that have been receiv-
ing adequate or basic services and repairs. "We deter-
mine to evict on a building-to-building basis," she said,
noting that In Rem managers assigned to the Legal
Affairs Unit keep up-to-date records of tenants who do
not pay rent and report these figures to the unit for evic-
tion proceedings.
The Legal Affairs Unit has five female attorneys
assigned to it. Head of the office is Rita Dattola, for-
merly of the Division of Alternative Management
Programs (DAMP) under the direction of Assistant
Commissioner Philip St. Georges.
But Dattola's refusal to return calls to City Limits to
submit to an interview are symptomatic of how HPD
views this new unit-nervously.
Gershun, who returned Dattola's calls, would only
say that she was speaking for the unit because Dattola is
"shy" and "just getting used to the new job responsibil-
ities. "
In noting that the eviction unit works with both the
general counsel and the office of property management,
Gershun indicated that it is a unit that has no allotted
placement on HPD's organizational chart. In fact, its
accountability within HPD and its various programs
remain mysterious and vague.
In a departmental memorandum to Mayor Edward I.
Koch dated January 12, Commissioner Nathan Levan-
thal admitted that the city "has built an astronomical
level of rent arrears and with the doubling of the In Rem
workload this year, the level of arrears is accelerating."
He also mentioned HPD's plans to bring larger numbers
of eviction cases.
As of October 1, 1978, the HPD rent arrears, Leven-
thal pointed out, amounted to $15.9 million and in Jan·
uary, the amount had increased to $21.6 million.
In his communication to the mayor, Leventhal said
the eviction unit had been created to "carry out your
[Koch's] express mandate that the city take a far more
vigorous posture in seeking to collect rent arrears and
evict tenants who fail to pay their rent." At the writing
of the memorandum, Leventhal anticipated that the
eviction unit would eventually have an active caseload
of between 300 and 500 tenants per month.
When the city first took over its estimated 10,200 pro-
perties with some 37,000 occupied units from the Divi-
sion of Real Property on September 1, it did not antici-
pate the enforcement of a hard line eviction policy.
Instead, it realized that it would have ever increasing
problems with simply managing the properties and
delivering basic services.
Now, however, critics of the city's new eviction policy
believe that the city will try to terminate more and more
tenants as the weather gets warmer.
"We certainly plan to monitor this eviction policy
very closely," remarked Mark Goldowitz, of Bronx
Legal Services, who said he still could get no clear idea
of what the city's "better" buildings are and what con-
2
stitute adequate services.
Peter Wendt and Charles Brennan, of Mobilization
for Youth (MFY) on Manhattan's Lower East Side, said
they had not heard complaints of increased evictions of
tenants, to date, but confirmed that they would be look-
ing out for this new development. Several
legal aid units had the same response.
In fact, in its quest to find tenants threatened with
eviction, City Limits was only able to find one definite
case-that of the tenants of 53 Stanton Street, who have
sought political support from the White House to the
local councilwoman, Miriam Friedlander (D-Man.), in
their fight for delivery of services to their building.
The city recently issued three-day notices against nine
of the 16 residential and commercial tenants in the
building. Prior to the deterioration of services under the
city's management, the building had 27 residential and
three commercial tenants. Fifty-three Stanton Street
was taken In Rem last May for failure to pay taxes.
After a meeting March 14 with HPD property
management and eviction officials in Councilwoman
Friedlander's office, the three-day actions against the
tenants were suspended, pending delivery of major
. repairs and a complete inspection of the building.
The building, according to one tenant spokesman,
Arthur Male, needs major repairs to the roof, the
plumbing, and to the windows.
The city attempted to interest the tenants in the inter-
im lease program, but the tenants' association has
refused to consider this program until major, expensive
repairs are made to the building.
According to Male, repairs to the building could
reach $50,000 to $100,000 for basic work. Under its
consolidation program, HPD has reserved some $1,500
per unit for repairs to make apartments habitable. In
the case of 53 Stanton Street, $1,500 would not be
enough to fix up these apartments, the tenant leader
asserted.
In a letter from Mayor Koch to Male, the tenants'
association was told that "a handyman had been as-
exclusively to your building." The letter from
Koch came on the heels of the March 14 meeting in
Councilwoman Friedlander's office.
Male said the tenants have let up on political pressure
to give the city a chance to fix up the building, but they
have no intention of paying rent until major repairs are
completed.
"One thing is sure," Male concluded. "We will not
cave in to the threat of eviction if services are not deli-
vered. This case certainly could heat up in the near
future."
In the meantime, the HPD eviction unit shows every
sign of continuing to operate in secrecy, but with the
city's plan to "beef up" the consolidation unit and close
down buidings that are under-populated and expensive
to run, it could be that this unit will have to assume a
less shadowy pose and come out of the closet. 0
SALES POLICY ADOPTED
The tenants at 1714 Palmetto Street in Queens may be
homeowners before the end of April, which would make
their building the first to be sold under New York City's
new sales program to non-profit tenant and community
organizations.
The Board of Estimate approved the sales policy on
March 22. It sets a price of $250-per-unit for buildings
in low income (CD-eligible) areas and requires HPD
approval of any subsequent resale of the building for
three years.
The buildings being sold will for the most part be
coming out of one of the city's treatment programs-
community management, tenant leasing or sweat
equity. The buyers will be low and moderate income
community and tenant groups that will form non-profit
corporations to purchase the buildings.
The policy of selling buildings to non-profit organiza-
tions is only a part of a much larger developing plan to
"dispose of a significant number" of city-owned pro-
perties to private owners. A bill to expand the city's
ability to negotiate such sales has been introduced in the
State Legislature, according to the HPD Commissioner
Nathan Leventhal.
New York City is now the landlord for some 37,000
occupied apartments or eight per cent of all residential
property in the city. The volume will soon increase dra-
matically when the foreclosure of Brooklyn properties
takes place. It is estimated that the city will need more
than $100 million in federal (Community Development)
funds next year to manage and maintain all the build-
ings it will own by then. Whether the federal Depart-
ment of Housing and Urban Development, which ap-
proved $41 million this year on an "emergency" basis,
will allow such a huge expenditure is not yet known,
although Leventhal maintains he is optimistic. At the
same time, the city is pushing hard on a number of fronts
to reduce its stock by returning properties to private
ownership.
While there seems to be general endorsement of the
$250-per-apartment price tag set of HPD, a number of
community organizations objected that the initial sales
policy contained no restrictions on subsequent resale of
the building. The groups feared that after buying a
building from the city, some tenant or community or-
ganizations might be tempted to sell their buildings to a
developer or speculator for a handsome profit, return-
ing the property to the cycle of abuse familiar to many
low income neighborhoods. They also protested that
HPD had devised the policy without practically any
consultation with community groups and tenants.
On the other hand, many HPD officials and tenant
groups said owners should have the freedom to sell for a
good price if they wanted to. HPD officials insisted that
$250 was not a subsidized price and therefore resale
3
restrictions were not appropriate. They added that there
was not likely to be much of a speculative market in
most neighborhoods with large numbers of city-owned
buildings.
As a result of the objections, HPD inserted a line in the
resolution requiring approval by the city agency for any
resale during the first three years. "This is to guard
against buildings being sold to speculators or similarly
disposed of," said Assistant Commissioner Philip St.
Georges, who personally had favored an unrestricted
sales polciy.
St. Georges maintains that the city is capable of pro-
cessing 100 buildings through sale in 1979 and 200
buildings next year if there is a like number of commun-
ity and tenant organizations ready to buy.
st. Georges said it will be HPD policy to inspect all
buildings prior to sale and to make whatever repairs are
necessary to insure that major systems will work for at
least five years. Asked if that meant the city would
guarantee the systems for five years, St. Georges said no.
He said the sold buildings would be eligible for tax
abatement for renovations paid for by the new owners. 0
HISTORIC BANK PACT
The Dime Savings Bank of Williamsburg in Brooklyn
has signed an agreement that community residents
regard as a crowning success to their long campaign to
stimulate more mortgage and home im provement loans
in their neighborhoods.
The agreement signed on March 5 pledges the bank to
provide at least $1 million in loans over the next year on
relatively low downpayment terms. Buildings for which
loans are sought will be evaluated individually rather
than on a basis of their general location.
Moreover, the Dime of Williamsburg committed
itself to enforcing the "good repair clause" of its
mortgages to encourage landlords to correct substandard
conditions in their buildings. The bank can offer a debt
moratorium on mortgage payments until repairs are
made; refinance the mortgage or offer a mini-loan;
foreclose if necessary on an owner who fails to make
necessary improvements.
It also promised to advertise the availability of
mortgage and home improvement loans, inform neigh-
borhood non-profit organizations of properties that are
in foreclosure, take into account past ownership histories
to discourage speculation and participate in a
community-wide program to provide grants or loans to
tenant associations during the winter.
The affirmative action agreement was signed by
Joseph F. Ujazdowski, president of the Dime of
Williamsburg, and Marie Leanza, chairwoman of the
GreenpointiWilliamsburg Committee Against Redlining
after months of meetings. 0
'.
RGB IS SET TO RULE AGAIN
ON RENT INCREASE CEILINGS
by Michael McKee
A good deal of commotion has surrounded the New
York City Rent Guidelines Board in recent months as it
began the process of reconsidering, under court order,
the rent increase guidelines it promulgated last year for
rent stabilized apartments.
The RGB was sued last summer by the Rent Stabiliza-
tion Association, the owner organization which ad-
ministers the "self-regulating" rent stabilization
system. The RSA claimed that the guidelines were too
low. Supreme Court Justice Martin Stecher did not
address this issue, but agreed with the RSA and tenant
representatives who had intervened in the lawsuit that
the RGB had violated the state's Open Meeting Law by
holding meetings which were unannounced and not
open to attendance by the public. On September 25,
1978 Stecher issued an order requiring the RGB to
reconsider Guidelines Order No. 10; he also ordered the
board to allow the public to submit comments on the
guidelines, reversing the board's past practice.
By mid-February the RGB had received analyses by
the RSA and an ad hoc coalition of tenant organiza-
tions, as well as over 600 letters, all but 29 of them from
tenants. At a packed public meeting of the board on
March 7 representatives of both sides made oral presen-
tations on the guidelines. A decision on a revised Order
No. 10 will be made at a second RGB meeting on April
4.
The annual guidelines, effective from July 1 to June
30, set rates landlords may charge tenants when their
leases expire, as well as rates for new rentals. Under the
city's rent stabilization law, augmented by the state's
Emergency Tenant Protection Act of 1974, landlords
must offer tenants a renewal lease, and tenants must pay
the current guidelines increase upon signing.
Order No. 10 set maximums of 3.5 per cent for a one-
year lease, 5.5 for two years and 7.5 for three. An
additional 5 per cent vacancy increase is allowed for new
rentals, although in practice landlords ignore this limita-
tion.
These were the lowest guidelines in the board's nine-
year history. However, they were far higher than ever
before in relationship to owners' actual operating cost
increases, up only 0.5 per cent over the previous year
according to the annual "Price Index of Operating
Costs" conducted for the RGB by the U.S. Bureau of
Labor Statistics.
Michael McKee is coordinator of Peoples Housing
Network, the statewide communications and training
network.
4
In years past the allowable increase for a one-year
lease has generally been one percentage point above the
BLS index. Tenant leaders were startled that the one-
year guideline was three percentage points above the
price index. In its analysis of Order No. 10 the ad hoc
tenant coalition defended the BLS index as "the only
objective data available" to the RGB, and criticized the
"qualitative factors"considered by the board (cash flow,
the cost of money and "the value of different types of
investment as compared to investment in stabilized
multiple dwellings") as "capricious and unwarranted."
Attacking the BLS index as "abnormally low," the
RSA last fall conducted a survey of its members, asking
them to provide data on their expenditures for the
calendar years 1976 and 1977. The survey mailed to
owners was accompanied by a letter from new RSA
president Frank Kristof which identified the purpose of
the survey as intending to prove that the 1978-1979
guidelines were too low.
While the BLS index has been generally accepted for a
decade as a source of objective data on cost increases
for operating stabilized housing, the RSA claimed that
expenditures, not prices, should be the basis for deter-
mining the guidelines. Under the law, owners who feel
they are not adequately compensated by the guidelines
can apply for special "hardship" increases which, if
granted, are imposed on top of the guidelines. A
miniscule number of owners apply each year.
These issues were argued and discussed before the
RGB at its March 7 meeting, punctuated by raucous
behavior from the audience of several hundred tenants
and landlords. Representing the tenant viewpoint were
Bill Rowen, Southern Region chairman of the New York
State Tenant and Neighborhood Coalition, and Dr.
Phillip Weitzman, research director of the Working
Group for Community Development Reform in Wash-
ington, D. C.
Rowen and Weitzman had prepared the tenant sub-
missions to the RGB. One of these was a critique of the
RSA expenditure survey, which they described as biased
(owners with low cost increases had strong incentives
not to supply data, as the purpose of the survey was
clear); unrepresentative (tilted toward larger buildings);
and consisting of "undefined and unaudited" data
(owners were given no definitions or instructions on
how to complete the survey-for example, no distinc-
tion was made between ordinary repairs and capital
improvements). Furthermore, the RSA survey used
calendar year data, whereas the BLS index measured
cost increases from April 1977 to April 1978. This is
especially significant because there had been a sharp
decrease in the cost of heating oil during the first four
months of 1978, the major reason for the small rise in
the BLS index.
A fatal flaw in the RSA survey, according the Rowen
and Weitzman, is an absence of a sample design and
methodology, standard procedure for such a study,
necessary as an indication of the statistical reliability of
the data. This criticism was also made by Herbert
Bienstock, regional commissioner of the U.S. Bureau of
Labor Statistics, who on February 20 wrote the ROB:
"The absence of a section describing the sample design
and methodology used to develop the expenditure data
precludes any detailed evaluation of the RSA report.
Absence of this information may have some additional
relevance here, since questions of self interest might be
raised."
Representing the owners at the March 7 hearing was
RSA counsel Arthur Richenthal. He predicted increas-
ing owner non-compliance with the rent stabilization
law unless the guidelines were raised, and dismissed the
tenant criticisms of the RSA survey as "hyper-
technical." Kristof was present but did not testify,
fueling speculation that he was unwilling to stand too
strongly behind his expenditure survey in light of the
attacks on it.
Richenthal also asked the ROB for an additional
"pass-along" increase to compensate owners for sharp
fuel cost increases during the November 1978 to
February 1979 period. The ROB voted unanimously to
consider this matter. However, the RSA subsequently
withdrew this request, raising uncertainty as to whether
the ROB will consider it at the April 4 meeting.
Normally these cost increases would be reflected in the
April 1978-April 1979 BLS index, and would result in
higher guidelines for 1979-1980, which the ROB is
expected to announce in late June.
An unexpected and somewhat unsettling element was
added to the issue on March 28 when Mayor Koch
appointed two new public members to the Rent Ouide-
lines Board who had not participated in the earlier
deliberations. Carolyn Odell, for 16 years a housing
specialist with the Community Service Society and
currently deputy director of the Temporary State
Commission on Rental Housing, and Scott Mollen, an
attorney, were named to replace two board members
whose residence on Long Island precluded their
continued service.
Both tenant and owner representatives expressed
concern that the new members would not have sufficient
time to review submitted material prior to the ROB's
April 4 meeting. Rowen likened the situation to
"changing juries in the middle of a trial." 0
5
COUNCIL RENEWS RENT SYSTEM
Lee Sterling
The City Council voted overwhelmingly to renew rent
control and rent stabilization for the next three years.
Thirty-six members of the 44-member body went on
record in favor of the legislation. Only one Council-
member, Leon Katz (D-Bkln.), abstained.
The vote came after two days of public testimony and
questioning during which a substantial number of rent
control opponents appeared before the Council's Hous-
ing and Buildings Committee to complain about the ills
of this legislation.
Had the legislation not passed, both rent control and
rent stabilization would have expired March 31.
In his presentation in support of rent control and rent
stabilization, HPD Commissioner Nathan Leventhal
said there are 2,724,000 housing units in the City of New
York; 1,988,712 or 73 per cent are renter units of which
only 58,682 or 2.95 per cent were found by the U.S.
Census Bureau to be vacant and available for rent. This
2.95 per cent rental vacancy is well below the statutory
limit of five per cent set by the Council for the contin-
uation of rent control.
He also pointed out that only 2.76 per cent of apart-
ments renting for between $125 and $149 a month were
found to be vacant, and only 8,000 apartments renting
for $300 were available, representing a 3.12 per cent
vacancy rate.
Commenting on rent control, one opponent, Lee
Sterling, of the American Property Rights Association,
Inc., said, "People who are against property rights are
for dictatorship . .. Most Councilmen admit that rent
control is destroying the city. The MBR [Maximum
Base Rent] system is a phoney. It does not permit land-
lords to maintain property and pay taxes."
A number of community and tenant groups as well as
elected officials testified in favor of both bills. 0
COUNCIL EYES RENT IN CITY'S UNITS
by Susan Baldwin
A very weak and possibly compromising resolution
that permits the city to raise rents on its vast number of
tax-foreclosed properties without guarahteeing delivery
of basic services was held over at the City Council
March 27.
Even though the measure constituted an amended
bill, it was permitted to go to the Council less than 24
hours after it was passed in committee as an emergency
act. Such a bill requires a two-thirds vote for passage.
The amended bill, known as 594A, passed the Coun-
cil's Committee on Housing and Buildings by a vote of
five to one after two days of testimony during which it
received a great deal of criticism.
Intro.594 had asked that any occupied rent controlled
unit (hat had been taken in a tax-foreclosure proceeding
and had subsequently been sold by the city would be
decontrolled and go into the city's rent stabilization
system. This would mean that the city or anyone who
bought the property could set the amount of rent with-
out restriction.
Although the amended bill contains language that
can, at best, be described as confused, it does guarantee
some limited advances for tenants: namely, landlords
cannot allow their buildings to go In Rem and then
redeem them with the idea of de-controlling the rents;
rents cannot go above the Maximum Base Rent (MBR),
the rent ceiling that will be set for these city-owned
apartments and rent control will be preserved.
Critics of 594 and the amended 594A claim that there
still are no guarantees that rents will not be raised far
above the level justified by the quality of maintenance
provided by the city.
The city, on the other hand, contends that it needs the
new legislation to promote sales of its thousands of In
Rem properties back to the private sector.
Calling the new legislation and its implications a
" canard," Councilman Leon Katz (0-Bkln.) said, "I
have generally supported the Administration, but with
this bill I find myself almost in a state of shock ... This
bill is probably one of the most ridiculous pieces of
legislation ... If it ever passes, a great deal of housing is
going to fall down. It's a shame." Katz was the sole vote
against 594A during the committee roll call.
Earlier at the committee hearing, Katz, presented an
amendment that would have forced the city to make a
substantial commitment-22 per cent of the assessed
valuation-to its properties before it could restructure
rents and sell property. His amendmend was defeated.
At the first hearing on Intro. 594 March 23, Commis-
sioner Nathan Leventhal, of the Department of Housing
Preservation and Development, testified in favor of the
legislation, stressing that "it is critical that buildings be
returned to non-city ownership in an economically self-
sufficient way. "
"It is not our desire to impose a hardship on tenants,"
he added. "At the same time, it is our desire to achieve
self-sufficiency so the buildings do not come back into
city ownership."
Questioned by Katz about the city's making an invest-
ment in its properties, Leventhal said that HPD would
"very strongly object' 'to having to put 22 per cent (of the
assessed valuation) into a building before sale.
6
During the same hearing, William Rowen, southern
region chairman of the New York State Tenants and
Neighborhood Coalition, said of the bill, "Essentially,
this is an 'In Rem decontrol' bill which would serve
much more directly the interests of private landlords
and speculators who would be interested indeed in
acquiring city-owned properties whose rents have been
'restructured.' "
He also said that if this bill were approved, the "city's
poorest and least mobile citizens, in the large part the
elderly and handicapped" would be the most penalized.
Both Katz and Councilwoman Ruth Messinger (O-
Man.) have been very critical of the city's reliance on
using federal Community Development (CD) funds to
repair and maintain its In Rem properties.
Leventhal and HPD officials' lobbying for Intro. 594
and 594A have said that if the legislation were passed,
the city would have a much better chance of receiving
CD funds to run its tax-foreclosed properties because,
under this legislation, they hope to be able to sell the
property back to the private sector-a move that is
supported by the federal government.
During the committee debate on 594A, Messinger
stated that it was inappropriate for city officials to rely
on CD funds to maintain the In Rem housing as a way
for the city to duck its responsibility for handling this
property.
"I think you should go a little bit easy on CD fund-
ing," she said to Marvin Markus, HPD's representative
who helped draft 594A. "We're tired of hearing about
CD. What you're really doing is asking not to codify
[any requirements] for repairs, and yet you want to
restructure rent."
Messinger also said that any rent restructuring should
involve correction of major violations on buildings.
When she asked Leventhal to support this amendment,
he refused.
Several Councilmembers claimed that they were
uneasy voting for 594A but stressed that they were
supporting the bill to show "good faith" in the Admin-
istration.
Councilman Stanley Michels (D-Man.) explained his
vote in favor of the bill this way.
"I voted for it because I wanted to be sure that there
was a cap on rent cor..trol. I wanted to save rent control,
and I think this bilI does ... I also wanted to believe in
the commissioner [Leventhal]. He spoke to us before
the vote, and said our support was very important."
Alan H. Wiener, area director of HUD, also lent his
support to the legislation in a letter directed to Leventhal
that was read at the Council.
Referring to HPD's plans to dispose of the In Rem
properties, he said, "HPD's policy guidelines for the
sales of In Rem buildings to non-profit entities in CD
eligible areas is one such step. Another step that should
be given serious consideration is an adjustment in the
present workings of the rent regulatory system as it
applies to In Rem buildings."
The main problem with 594A is justifying the pay-
ment of more rent for little or no services. Critics have
said repeatedly that they support rent restructuring in
buildings enrolled in the city's treatment programs
(e.g. community management, interim lease) because
they are receiving services.
The city claims it must raise rents because the In rem
program is exorbitantly expensive.
And tenants claim that they must receive services if
they are to pay rent. 594 A will be heard April 10. 0
SOLAR MECHANICS
HUD has extended until April 26 the deadline for
applying for solar energy grants under the fifth and
final cycle of the federal demonstration program, which
so far has equipped 11,500 residential dwelling units
with solar systems.
Round Five, which contains more than $2 million,
stresses for the first time solar installations in multiple
dwellings housing low and moderate income families.
Projects by neighborhood housing organizations that
combine rehabilitation with energy efficiency are
eligible.
There will be two stages to Round 5. The first will be
a competition for design. HUD expects about 25 awards
of $5,000 each to help organizations design a solar
system to be used when multi-family buildings are
rehabilitated. Those with winning designs will receive up
to $50,000 to construct and install their systems.
A second category will be energy conserving solar
systems in new single-family homes.
In New York City, a program that will train 15 people
to install and maintain solar energy systems is about to
be launched. Called SUEDE (Solar Utilization,
Economic Development and Employment), the
program will result in the installation of 12 solar energy
systems, half in single-family homes and half in multiple
dwellings for a total of about 65 units.
The $400,000 plan, which was prepared by the Energy
Task Force, combines funds from the Department of
Energy and the Community Services Administration to
pay for the solar equipment with funds from the
Department of Labor (CETA) to pay salaries. The
Board of Estimate has to approve the CET A funds for
7
SUEDE.
The goals of the program, according to ETF, are to
provide training that will lead to jobs in the solar or
related fields and to reinforce the need to apply the
most appropriate energy technology in low income
neighborhoods.
The ETF plan also addresses a couple of troubling
issues, mainly the absence of a strong solar energy
market at the present time due to the high cost of solar
equipment for low income people and the relatively
small level of government subsidies available.
"Federal solar dollars are somewhat in question as
there does not appear to be any guarantee of HUD
demonstration dollars in 1980," ETF said in its propos-
al. One alternative suggested by ETF is Community
Development Block Grant funds, although New York
City has never allocated CD funds for solar energy. "It
is [hoped] ... that both solar installations and solar
employment will develop near enough in the future to
provide ongoing commercial expansion of the industry
and at the same time employment for low income
trainees."
Most of the 12 energy systems to be installed will
include rooftop solar collectors, purchased from
Standard Solar Collectors, a minority-owned company in
Brooklyn, and will range in cost from $1,200 for single-
family homes to $36,525 for the largest mUltiple dwell-
ings. Two of the systems will be passive solar wall
heaters, panes of fiberglass bolted to outside walls that
collect and radiate heat.
No sites for the solar systems have been set as yet.
ETF said it is having difficulty finding single-family
buildings that both meet the federal low-income guide-
lines and are in good enough condition to justify the
investment of the solar equipment.
ETF, which provides educational information and
technical assistance to community organizations on
alternative energy issues, has been out of funds since
January but expects to return to full-scale operation
with the start of SUEDE.
Energy, Retrofit
On a related topic, a five-story tenant-owned and
managed building at 219 East Fourth St. in Manhat-
tan is saving energy thanks to a series of improvements,
including thermal shutters, new wall insulation, valves
to control the flow of hot water and installation of a
second entry door.
The cost was about $8,500, paid for by a CSA grant,
and the" payback period is expected to be five to eight
years, according to Chip Tabor of ETF. He said ETF
would like to perform what he calls the "Occupied
Building Energy Retrofit" on four other buildings.
ETF also offers an energy auditing service in which,
for a very small fee, a specialist will assess the thermal
efficiency of a building, recommend ways of cutting
down heat loss and estimate costs. ETF's chief energy
auditor is Larry Levan. ETF's number is 675- 1920. 0
CETA JOBS RESTORED
HPD, which proposed last November that the CETA
VI program of the Association of Neighborhood
Housing Developers be slashed from 335 jobs to 80
jobs, has agreed to restore a large number of the slots.
In several negotiating sessions held since a demonstra-
tion by about 200 people at HPD on Jan. 29, the
housing agency has yielded to the following:
-A doubling (to 160) of the number of jobs for groups
in the disputed ANHD package.
-The inclusion in the ANHD umbrella of several organi-
zations not recommended for any jobs under HPD's
initial proposal.
- The right for ANHD to decide about allocations of
job slots among the 38 housing organizations under its
CETA umbrella.
HPD, in turn, obtained ANHD's agreement to take
administrative responsibility for a couple of subcontrac-
tors not in its original proposal, bringing the total
number of jobs in the contract to 194.
Although the current CETA contract expired at the
end of March, ANHD has received approval to extend it
until the end of May and will be seeking Board of
Estimate approval to roll it 'over under Sept. 26, when
the new contract would begin.
ANHD has also been fighting for an increase beyond
the nearly 5,000 CETA slots currently available to the
non-profit sector on the assumption that New York City
will n6t be able to meet the low average income ($8,690
per year) required by the federal government for CETA
public service employment. New York City is not even
close to the recommendation by the Department of
Labor that a "substantial" proportion (generally inter-
preted as one-third) of CETA VI jobs be allocated to
non-profits.
At a March 8 meeting of the citywide CETA VI
coalition, a spokesperson for ANHD asked the coalition
for cooperation in pressing this demand; volunteers
from Colony-South Brooklyn Houses and the College
for Human Services offered to work with ANHD on
developing strategies.
The coalition's transition committee has been meeting
regularly with Department of Employment staff to
develop mechanisms to assure that current CET A VI
employes will be able to transfer into projects under the
new contracts.
Representatives from CETA organizations in the
ANHD umbrella met with staff aides to the borough
presidents of Manhattan, Brooklyn and the Bronx in the
hope of getting assistance for the effort to win more
jobs for the non-profit sector. In each case, ANHD
people were told the borough presidents agreed with the
ANHD position, but none expressed a willingness to
take the lead in setting up meetings with city officials.
Susan Gould
8
ANHD NAMES BETTY TERRELL
AS ITS. EXECUTIVE DIRECTOR
The appointment of Betty Terrell as executive director
of the Association of Neighborhood Housing Devel-
opers has been announced by ANHD President Margaret
McNeill.
Terrell, director of the Moris Heights Neighborhood
Improvement Association in the Bronx in 1977-78, has
more than 10 years of experience working with tenants
who have housing problems. She has designed a model
for a community corporation to own and manage build-
ings under control of the tenants.
Her housing career began when she organized her
own apartment building. Later she worked as a volun-
teer with the Metropolitan Council on Housing and
MHNIA before becoming its director.
Terrell, who is 36, attended the Monroe Business
Institute, Bronx Community College and Hunter College.
MILLIONS UNSPENT FOR CD
Nearly half of the $343 million in federal Community
Development funds allocated to New York City from
1975-78 has not been spent, according to a City Council
report that was sharply critical of the city's management
of the program.
Mayor Koch, acknowledging the criticism, agreed to
a request in the report that the city's CD application be
submitted for approval to the Council as well as to the
Board of Estimate.
"When I took office in January, 1978, I too, found
the program poorly sup<:rvised, lacking coherence and
badly managed and took steps to improve its adminis-
tration," Koch said in a statement. D
NEIGHBORHOODS ON THE AIR
"New York Considered, " a weekly radio program on
WNYC-AM and WNYC-FM, takes a listen at life in
New York City's diverse neighborhoods.
The format includes news, features and a documen-
tary-style exploration of a local community. Recent
programs have focused on Roosevelt Island, the Banana
Kelly Community Improvement Association in the
South Bronx and Woodside on the Move in Queens.
"New York Considered" is aired every Tuesday (4:30
p.m. on WNYC-AM and 6:30 p.m. on WNYC-FM) and
re-broadcast at the same time on Fridays.
It is produced by Marty Goldensohn and Peter
Freiberg.
For information call Peter Freiberg at 566-4577 or
758-7939 or write to WNYC, 2500 Municipal Building,
New York, N.Y. 10007. D
HPD APPOINTMENTS
Charles Reiss, former director of housing at the City
Planning Commission, is the new assistant commission-
er for community development at HPD. His appoint-
ment is effective April 9.
Reiss replaces Barry Light, who, after ten years with
the city at HPD and CPC, is going to work for the State
Urban Development Corporation.
Asked to explain his reasons for leaving HPD, Light
said, "I thought it was time for a change. I have been
with the city a long time. I wanted to try something dif-
ferent. " Light described his employment plans at UDC
as "intriguing," but said that he could not comment
further on his new job as he is not sure what his duties
will be.
For the past eight months Reiss has served as director
of housing at CPC and, prior to that, he was director of
the Staten Island office of City Planning where he was
in charge of waterfront and water quality studies. From
1968 to 1971 he served with the mayor's office as execu-
tjve director of the Urban Design Council.
"I am looking forward to my new job," Reiss said,
stressing that he hoped to run his department as "effi-
ciently as Barry did. "
In his new job Reiss expects to push for more con-
struction of one- and two-family homes in low and
moderate jncome neighborhoods. He also said that his
office would be revitalizing the old Section 235 pro-
gram in an effort to stimulate low cost mortgages and
provide for home ownership on vacant city-owned
urban renewal sites around the city. This program, he
explained, allows for low-interest four-and-a-half per
cent mortgages.
Philip Johnson, director of project planning and
development at HPD, has been assuming the assistant
commissioner duties on a temporary basis while inter-
views for Light's replacement were going on.
In other HPD business, the departure of long-term
Deputy Commissioner Peter Joseph in the Office of
Development has been widely rumored but not con-
firmed.
Reached by City Limits, Joseph acknowledged the
talk of his imminent departure in housing circles but
refused further comment. D
NEIGHBORHOOD PRESERVATION
Additional funding for the state's Neighborhood Pre-
servation Companies program has been the subject of
negotiations as the state legislature and the governor
moved toward adoption of an executive budget for the
fiscal year, beginning April 1. Gov. Hugh Carey had
requested $4,925,OOO-the same amount appropriated
last year.
9
The New York State Tenant and Neighborhood Co-
alition has been lobbying to increase this appropriation
to at least the $7,925,000 requested by the State Division
of Housing and Community Renewal. NYSTNC main-
tains that Carey's request will result in no new groups
being funded and a freeze in the grant amount currently
made to 118 neighborhood organizations funded under
the program.
As City Limits went to press, legislative leaders
seemed to be heading toward agreement to increase the
appropriation to $6,925,000 either in the executive
budget or the supplemental budget to be adopted later
in the session. D
SCHOOL FOR ORGANIZERS
Peoples Housing Network has begun another series
of training sessions for people interested in learning
about community organizing.
The to-week program, which began March 27, covers
community and tenant organizing, sweat equity home-
steading, rent control, fund-raising insurance redlining,
the state legislature and community reinvestment.
The classes are $3 each or $25 for the entire course.
PHN also offers specialized on-site training sessions
for organizations that wish to have their staff trained.
For further information call Roger Hayes or Michael
McKee at 533-5650.
CD CONFERENCE PLANNED
The New York City Housing and Community
Development Coalition will hold its fifth annual CD
Conference May 3 from 9 a.m. to 4:30 p.m. at the
Harlem State Office Building: Contact Brian Sullivan or
Pat Swan at Pratt Center, 622 - 5026.
_CITY LIMITS.
published monthly by the Association of Neighborhood Housing
Developers Inc., Pratt Center for Community and Environmental
and the Urban Homesteading Assistance Board.
Editorial Office: 115 East 23rd Slreet, New York, New York 10010
(212) 674-7610
Editor ...•.••. •• . . .•... . ....... • .•• . ....... . . • . Bernard Cohen
Assistant Editor .......•.... ..• ...... .. • . ........ Susan Baldwin
Design and Layout ...... • . . ...... • ..•....... _ . ... Louis Fulgoni
Copyright 1979. All rights reserved. No portion or portions of tills
jourlUll may be reprinted without the express written permission of the
publishers.
This issue was funded by grants from Citibank, Bankers
Trust Co. and Riverside Church.
City Limits wishes to express special appreciation to
the Consumer-Farmer Foundation for its encourage-
ment and support.
HUD PROPOSES WAYS TO BLOCK
EARLY·SALE OF SECTION 8'S
by Bernard Cohen
Despite some doubts about how real the problem is,
HUD is taking steps to prevent owners of subsidized
low-income (Section 8) housing developments from
cashing in on low-cost borrowing and tax benefits, then
quickly selling their properties and displacing poor ten-
ants.
Two steps under serious consideration by HUD
would prohibit an owner from pre-paying a federally
insured mortgage to get out from under federal supervi-
sion and would bind the owner to the full 20 to 4O-year
term of the Section 8 contract, doing away with the cur-
rent practice of allowing owners to renew or opt out of
the contract every five years. The latter proposal is
being incorporated in a revision of the Section 8 regula-
tions that will soon be proposed by HUD.
The purpose of the proposed changes is to prevent the
loss of low income housing units; although interviews
with a dozen federal, state and New York City housing
officials turned up widespread doubt that early conver-
sion of Section 8 projects to unsubsidized housing will
be a problem in the forseeable future, particularly here.
"The factual circumstances do not exist as far as I can
see in the City of New York," said Roger Simons, act-
ing executive director of the New York City Housing
Development Corp., which is financing 3,000 to 4,000
units of Section 8 housing. "I'm not going to say it can't
happen, but I think it is highly unlikely," said Deputy
Commissioner Peter Joseph of the city's Department of
Housing Preservation and Development.
Nevertheless, since the housing subsidy program is
barely five. years old, and since no contracts would have
come up for renewal as yet, officials acknowledged that
it was too soon to pass judgement. Some say they could
conceive of scenarios in which there might be market
conditions in areas of growth that would be conducive
to conversion of projects in the future.
'Section 8 is a rent assistance program in which the
federal government.pays the difference between 15 or 25
per cent of a low-income family's adjusted income and
an established rent for the apartment. It was created in
1974.
Although HUD says it has been aware of it for some
time, the sale issue lacked visibility until January when
the General Accounting Office published a letter to Sen.
William Proxmire, chairman of the Committee on
Banking, Housing and Urban Affairs, stating that it
had detected a serious problem with the Section 8 pro-
gram.
"This problem could immensely reduce the effec-
tiveness .and increase the costs of housing assistance by
10
allowing private investors who own and operate Section
8 housing to sell their projects or convert them to con-
dominiums in as little as five years. This would likely
result in the displacement of low and moderate income
tenants and is in marked contrast to the much longer
service which. can be expected from a program such as
conventional public housing which should serve subsi-
dized tenants for at least 40 years at much lower costs."
Predicting that the cost to the public of premature
sales could run into the hundreds of millions of dollars,
the GAO letter blamed the five-year renewable contracts
combined with the rapid build-up of tax shelter benefits
that provide an economic incentive to unload the pro-
perty after 10 years. It estimated that after recapture
and capital gains taxes are paid, investors could expect
yearly rates of return of about 28 per cent and 32 per
cent on multi-family properties sold after five or 10
years respectively.
HUD officials said privately that the GAO letter was
"alarmist" and that GAO's analysis was based on
hypothetical conditions that were so favorable that they
lacked credibility. "I think many on staff here feel the
GAO financial analysis does not reflect the real situa-
tion of owners," one said.
Joseph Burstein, counselor to HUD Secretary Patricia
Harris, said, "I know of no such case where this has
ever happened. The question has been raised theoreti-
cally by the GAO and we are taking care of it; but it has
never happened to my knowledge."
Another HUD staff 'member, who asked not to be
identified, said the five-year intervals had been written
into the contracts for the benefit of HUD. "It was not
to allow them [owners] to escape. It was to allow us to
look at the project." He predicted that developers will
be delighted to get a stronger lock on a 20-year Section 8
contract.
One of the confusing elements of the problem is that
ther.e is a variety of methods for financing buildings that
will have the Section 8 subsidy. Among them are con-
ventional bank loans; HUD/FHA mortgage insurance;
below market rate interest loans from state and city
finance agencies, which sell bonds; Section 202 loans to
build housing for the elderly poor; Farmers Home Ad-
ministration loans for housing in non-metropolitan
areas. The newest financing mechanism involves sale of
tax-exempt bonds by a Public Housing Agency.
The first modification that HUD is proposing, prohi-
biting early refinancing, would apply to Section 8 pro-
jects with HUD-insured mortgages, said to cover about
90 per cent of the rent assistance program. As of now,
there is nothing to stop an owner from paying off the
HUD-insured mortgage and finding another means of
financing, such as a conventional bank loan. "If anyone
got into our program and got the advantages of our
insurance and Section 8, I think they have the obligation
to stay with us, but legally they have the right not to stay
with us," said Alexander Naclerio, director of housing
for the New York area office of HUD.
The second modification, requiring adherence to the
Section 8 contract for at least 20 years, would apply to
all developments.
In New York City, there are a number of existing
factors weighing against premature sales.
Any Section 8 developments financed with bonds sold
by the State Housing Finance Agency or the New York
City Community Development Corporation, are gov-
erned by state law, which prohibits refinancing for at
least 20 years and requires approval of the supervising
agency (HFA or CDC) for any sale. In addition, the law
provides for substantial recapture of tax benefits from a
housing company that is dissolved early on. Stringent
rent laws protect tenants from summary evictions.
Beyond the legal protections are the weak market
conditions of most New York City neighborhoods
where Section 8 is being built, according to many local
housing officials. Saying it was difficult to imagine the
buildings surviving on their own, they asked what devel-
oper would buy without the subsidy attached and what
tenant who did not need the assistance would move in.
By definition, "the structure needs Section 8, and with-
out it it is not feasible," said Naclerio. "It isn't very
relevant to New York," said Linda Field, who assembles
Section 8 loan packages for developers.
While agreeing with that view, Stanley Berman, a tax
lawyer who represents major housing developers, said
the GAO criticism nevertheless was valid. He said Sec-
tion 8 projects are going up in suburbs and in so-called
transitional urban neighborhoods that could appreciate
in value sufficiently in five or ten years to make conver-
sion through refinancing, outright sale or filling vacan-
cies with unsubsidizea tenants an attractive proposition.
Joseph said developer contacts of his also foresaw such
possibilities. "If in fact the purpose of the subsidy is to
assist low income people then HUD is remiss in not re-
quiring a minimum of 20 years with no prepayment,"
said Berman. He noted that other federal housing pro-
grams, including the 236 mortgage insurance program,
included such a condition.
Ronald Shiffman, director of the Center for Com-
munity and Environmental Development at Pratt Insti-
tute, said the Clinton neighborhood on Manhattan's
West Side was an example of an area that could develop
sufficiently in the near future to make conversion of a
Section 8 project a possibility.
The GAO report said the potential. problem was un-
covered in the midst of a study of the strengths and
weaknesses of the different ways of financing housing
11
that has the Section 8 rent assistance. "We stumbled on
this as a side trip," said William Gainer of GAO'·s
Program Analysis Division.
Gainer said he saw nothing wrong with offering lucra-
tive incentives to build low-income housing "as long as
there are sufficient controls to assure that the housing
serves needy tenants for 20 years." D
ANTI·REDLINING RULES
The state Banking Board recently adopted by a vote
of nine to one regulations to combat wholesale redlining
of communities by banks.
The board's action came three months after state
legislators met with Governor Carey and received a
commitment from him to secure these regulations.
Modeled after federal guidelines under the Community
Reinvestment Act of 1977, the regulations require banks
seeking to merge, expand, or open new branches to
show how they meet the credit needs of the communities
they serve. This information is to be on file for public
scrutiny. 0
MUSLIMS CLOSE LOAN
After a number of months of delay, the city's first
sweat equity participation loan was closed and 14
Muslim families are living in spacious low rent homes in
West Harlem.
The two rehabilitated buildings, 55 St. Nicholas
Avenue and 132 West 113th Street, were renovated by
the Sunni (Orthodox) Muslim community whose
Mosque is located in a renovated brownstone at 257
West 113th Street. Funds for the rehabilitation came
from HPD's Participation Loan program supplemented
by a Ceta Title I rehab contract.
The cost of rehabilitating each unit was about $22,000
for a monthly rental of about $50-a-room. Chemical
Bank provided the construction mortgage. The New
York Bank for Savings is handling the permanent 25-
year mortgage.
In t h ~ participation loan, the city puts up a portion of
the mortgage money needed for the rehabilitation at one
per cent interest and the private lender puts up the rest
at the market rate.
Commenting on the closing, Theodore Ferguson of
Chemical Bank, said, "We're out of it now. We're
happy that the people are living on the property. The
workmanship is superior."
The Muslims expect to rent the commercial space as a
herbal tea room and health food market within the next
few months. D
CETA VII LOOKS TO PRIVATE SECTOR
by Gini Sherry
On October 27, 1978, when President Carter signed
the Comprehensive Employment and Training Act
(CETA) Amendments of 1978 into law, a new CETA
era was quietly ushered in. Embodied in Title VII, a new
section of CETA, is a two-year demonstration program,
the Private Sector Initiative Program.
Title VII represents a potentially significant new
thrust in national CET A policy. It is, specifically aimed a
increasing the participation of the private sector in em-
ployment training programs in order to increase the
level of permanent unsubsidized job placement for
"economically disadvantaged" persons. How this goal
will be accomplished is suggested by the federal Depart-
ment of Labor's proposed regulations for the Title VII
program, which call for the creation of a "local partner-
ship" between private sector business and industry and
each CET A prime sponsor (that is, the government unit
requesting CETA funds; in New York's case, the City of
New York).
The partnership is to be spearheaded in each city by a
Private Industry Council (PIC), an organization which
must be formed or designated by each prime sponsor
interested in receiving CET A VII funds. To assist cities
and other prime sponsors to establish PICs, the Depart-
ment of Labor is providing $25,000 planning grants to
450 prime sponsors nationwide.
Broad Responsibilities
PICs will be the center of Title VII activities in each
prime sponsor area, and the proposed regulations indi-
cate they will have broad power and responsibility for
policymaking, research and analysis, program
development, and funding and administration of
grants, contracts and programs. Members of the PIC
board are to be appointed by the prime sponsor;
majority position on the board is reserved for private
sector business and industry representatives. The regula-
tions further suggest, but do not mandate, that at least
half of these representatives be from businesses and
industries employing less than 501 employees. Other
required membership on the PIC board i\lcludes repre-
sentatives of organized labor, community-based organi-
zations and educational agencies or institutions,
although no specific representation formulas are pre-
scribed.
It appears that the program is intentionally designed
to allow prime sponsors and PICs an enormous degree
Gini Sherry is on the staff of the Pratt Institute Center
for Community and Environmental Development. She
is working on neighborhood economic development
issues and strategies.
12
of flexibility in their approaches to training and
securing permanent private sector jobs for the
unemployed and underemployed recipients of CET A
VII services. In fact, an explicitly stated goal of Title
VII is a reduction in the number of CET A-subsidized
private and public sector jobs, a goal echoed in the
Administration's fiscal year 1980 budget. The Carter
budget proposes a $729 million slash in CET A,
including a reduction in the number of public service
(Title VI) jobs from 625,000 as of September 1979 to
467,000 as of September 1980. At the same time, the
budget includes a $400 million appropriation request for
Title VII to be used during the current fiscal year.
Clues to the direction and design of CET A VII
programs permeate the proposed regulations. A major
emphasis is placed on identifying and plugging the labor
demand needs of the private sector-discovering where
permanent job opportunities are available and training
people to fill these jobs. Techniques for accomplishing
this include entering into on-the-job training contracts
with private businesses and industries for partial trainee
wage reimbursement; development and administration
of other training programs; and entering into contrac-
tual agreements with private firms, neighborhood-based
organizations and educational institutions to achieve the
increased job opportunity goal.
Local Economic Development
Precisely because the scope of Title VII is broad and
rather open-ended, it is critical that the specific goals
and objectives of a prime sponsor's approach to the
program be carefully reviewed and analyzed, particular-
ly from the viewpoint of how funds can best be utilized
to support local economic development activities. Since
the aim of Title VII is to increase permanent job
opportunities in the private sector, it seems clear that
funds should be directed, as much as possible, to those
businesses and industries with potential for expansion
and growth. In addition, criteria should be developed so
that preference is given to private sector firms that are
labor intensive, locally owned and managed, and
generate a demand for additional locally produced
goods and services, thereby further expanding the local
ecomonic base.
In New York, this approach would suggest that the
PIC work closely with citywide and neighborhood-
based nonprofit organizations involved in the design
and planning of economic development strategies and
programs to identify existing and new enterprise job op-
portunities most appropriate for Title VII support.
Keeping in mind that the emphasis of Title VII is to
train people for permanent jobs in private sector
businesses and industries, the program could be used to
assist the following kinds of efforts:
• Supporting the retention or expansion of locally-
based firms capable of providing training and long-term
jobs for neighborhood residents presently lacking skills
needed by these firms.
• Providing special assistance to the small business
sector of New York's economy; authoritative studies
indicate that almost all new private sector jobs are
generated by the small business sector of the economy,
and that about 80 per cent of these jobs are created by
firms with 250 or less employees and a full 50 per cent
by firms with 50 employees or less; by targeting CET A
VII assistance to small businesses with growth potential,
aid could be given to that section of the private sector
which tends to be locally owned and managed.
• Supporting innovative efforts of neighborhood
organizations to develop locally-based businesses under
worker cooperative ownership or joint worker-
community ownership.
Nothing In Writing
New York City's Title VII planning and polic),making
process is yet to be disclosed. The Department of
Employment's office of Policy and Program Develop-
ment, charged with oversight of the program, has no
written material available as of yet concerning the
expected design and operation of CET A VII. Likewise,
the city's Private Industry Council is unable to supply
interested organizations with a written programmatic
agenda outlining the anticipated focus and range of ac-
tivities expected to occur under Title VII. Community
groups-especially those involved or interested in ad-
dressing economic development needs in their neighbor-
hoods-should become familiar with CET A VII issues
and opportunities, in order to be able to effectively
respond to the city's Title VII Plan. The Plan, according
to the proposed regulations, must be made available to
all interested parties for review and comment prior to
submission to the Department of Labor. 0
HOMESTEADING MOVES TO BROOKLYN
The month of June may turn out to be an important
milestone for the HUD multi-family urban homestead-
ing demonstration program in New York City.
If all goes according to schedule, the first of eight
buildings being rehabilitated under Phase I of the sweat
equity program, 1178 Washington Avenue in the South
Bronx, will be completed. At the same time, the first
loans for the 13 buildings under Phase II will be closed,
officially launching the second stage.
The federal demonstration project, which began in
the South Bronx and the Lower East Side and has been
expanded to two Brooklyn neighborhoods, marks the
first time that HUD has provided mortgage financing
for multi-family low income urban homesteading.
For Phase I the sponsors were Adopt-a-Building on
the Lower East Side and People's Development Corp. in
the South Bronx. Although the program has moved
slower than anticipated for a number of reasons, at least
two of the eight buildings are scheduled to be finished
by early summer. Three more buildings are still in the
early stages of rehabilitation. Three others await loan
closings.
The demonstration has now been expanded to Brook-
lyn, where Los Sures in South Williamsburg plans to
rehabilitate nine buildings with 50 units and the Ocean-
hill Brownsville Tenants Association will rehabilitate
four buildings with 50 units also.
Each of the groups intends to hire about 65 workers
13
who will do the rehabilitation and then move into the
buildings as co-operators. They will buy the buildings
for $500 and will pay monthly carrying charges of $45 to
$50 per room.
Although HUD has committed $2.2 million in low-
interest (3 per cent) loans for the second phase, Los
Sures and OHBT A have been confronted with a city-
wide cutback in CET A job training (Title lIB) funds
with which to pay homesteaders during the rehabilita-
tion. As a result, for many of the jobs they have had to
substitute another CET A program (Title VI) which is
not nearly as suited for housing rehabilitation.
Lydio Rivera of the Urban Homesteading Assistance
Board, which is providing technical assistance to the
hoinesteading organizations, said HPD had committed
$400,000 to help cover the loss of training funds
necessitated by using Title VI.
Rivera also said a strong effort will be made to
improve on the disappointing past record of finding
jobs for homesteaders at the end of their training. "If
we want to continue to use CET A, all housing groups
need to concentrate on the problem of placement
rates," he said, adding that the goal of a 60 per cent
successful placement rate had been set for placing
trainees in the demonstration into unsubsidized jobs.
HPD has approved the preliminary drawings for the
13 buildings in Phase 2. The next step vyill be submission
of detailed working drawings. 0
TOTTERING DEMOLITION PROGRAM
SHORED UP AFTER NEAR COLLAPSE
by Bernard Cohen
345 East 99th St. in Manhattan set for demolition.
HPD resumed registering buildings for demolition in
March after a four-month pause to reorganize the pro-
gram in the wake of a report that tore down nearly every
aspect of the city's system for removing unsafe build-
ings.
In a one-week stretch, HPD signed contracts totalling
$1.1 million with nine demolition companies to take
down 104 buildings. It is an almost insignificant num-
ber, compared with the estimated 12,000 unsafe build-
ings that are standing around in various parts of the
city. But it is a beginning, according to Deputy Commis-
sioner Robert Davis, of HPD's effort to correct its own
flawed management of the program and to make sure
that private demolition companies begin to take their
contracts more seriously.
"Guys were sitting on contracts for months, years,"
Davis told City Limits recently. "The time is over for
stockpiling contracts and getting around to the build-
ings when it is convenient. We have been severely criti-
cized by the planning boards for not satisfying the pace
of demolition and seal-ups. It has had an impact on all
of us."
14
HPD's response has been to remove demolition from
the Office of Code Enforcement, headed by Assistant
Commissioner Frank Dell' Aira, who has been seen by
planning boards and neighborhood organizations as an
obstacle to the program, and place it directly under
Davis. The director of demolition is Frank Juliano. His
assistant is Larry Yermack, who helped compile the re-
lentlessly critical report on the demolition program for
the city's Office of Management and Budget.
That report confirmed complaints by neighborhood
groups dating back to 1974 that HPD's handling of the
program was a disaster. It cited vague lines of authority
and responsibility; lack of trained and properly utilized
staff; an inefficient clerical system, faulty paperwork
and missing files; lack of an information system to de-
termine the number of buildings at various stages in the
program; long delays in processing payments; no clear
policy on unsafe buildings placed on "hold;" inefficient
clustering of buildings in contracts; buildings not released
for demolition in a consistent manner; general lack of
enforcement of contract provisions; unsystematic
inspection procedures leading to waste of too much
time; failure to recover costs of demolishing privately
owned buildings.
While criticizing the practice by private demolition
companies of stockpiling buildings to improve their
work flow, the report said the haphazard way HPD re-
leased buildings for demolition and grouped them in
contracts also discourage efficiency.
In cases where a building was put on "hold" in the
middle of the pre-demolition process-for example, if a
community organization raised objections to demolish-
ing the structure-the "status can be in limbo for
years," the report said.
In 1977, the city signed 614 contracts to demolish
1,609 buildings at an average cost of $6,700 per building
and a total cost of $10.8 million. More recently, produc-
tivity sank to 150 buildings per month. "No matter
what we did, that number did not change," Davis said.
Davis said both HPD and the contractors were to blame
for the dismal performance of the demolition program.
He added that. there were a great many factors that
could prevent completion of a contract, including a sin-
gle building dangling on "hold" or delays in replacing
torn-up sidewalks or erecting fences around the demoli-
tion sites.
Nevertheless, he stressed that with the resumption of
demolition contracts, HPD intends to monitor compan-
ies very closely to make sure buildings come down
promptly (he hesitated to specify what promptly meant,
but said 30 days, 60 days and 90 days at various times)
and would deny future business to firms that don't live
up to their current contracts. HPD does business with
approximately 55 small and medium-sized demolition
companies in the New York City area, although about
80 per cent of the work goes to about half of them.
CM CONTRACTS APPROVED
Two six-month Community Management contracts
that were laid over at the February 8 meeting of the
Board of Estimate were approved at the March 22
meeting.
They are the United Block Association, $179,164 and
the Urban Renewal Committee of South Jamaica,
$110,377.
A third contract of $201,331 to Neighborhood Com-
munity Renewal Corporation, which had been post-
poned with the other two, was not heard. 0
1978 REHAB FIGURES
Some 7,800 city-aided housing starts in rehabilitation
programs make up almost half of the total housing
starts for 1978, according to a report from Mayor
Edward I. Koch.
15
A major recommendation of the OMB report was the
HPD should work with much larger, more sophisticated
companies outside New York City and greatly increase
the size of contracts. Davis said he has had discussions
with about 12 such companies but that no decisions had
been made. However, another source said the city was
preparing a contract with one company to knock down
500 buildings.
"That's not the final answer to the number of unsafe
buildings," Davis said, adding that HPD would be
developing other options, which he declined to specify.
One idea that has been floating around the agency is to
import the U.S. Army Corps of Engineers and the U.S.
National Guard to do some of the work.
Asked if HPD was again contemplating using dyna-
mite to demolish buildings, an idea the agency dropped
more than a year ago after it triggered an explosion of
community protest, Yermack said, "We are not looking
at it right now." He added that most city buildings can
be razed by conventional means at no greater cost, and
local opposition remains a strong deterrent.
The size of the 70-member demolition unit has not
been increased. Davis said he wants to see how the reor-
ganization and effort to implement the report's recom-
mendations affects productivity before he thinks about
enlarging the staff.
Despite Davis's assurance of "an increased focus on
demolition coming out of HPD," good intentions have
not yet been translated into reality. The agency was still
unable to answer a question about how many contracts
involving what number of buildings were currently
open. "We won't have a fix on that until our analysis is
in place," Davis said. 0
Commenting on the rehabilitation figure which repre-
sents a total of more than $175 million in construction
funds, both public and private, Koch said, "The starts
in rehabilitation are particularly significant because they
mean not only improvements in many cases for tenants
in occupancy, but they are also a major weapon in the
fight against building abandonment because owners
who re-invest in their property will not walk away from
it. "
The figures under the various city rehabilitation pro-
grams are as follows: Section 8-3,600 units worth
about $150 million in construction investment; Article
VIlla "Mini Loan"-2,200 units representing $3.3
million in construction work; Participation loans-465
upgraded apartments and committed funds for an
additional 1,300, combining $3.6 million in CD funds
with $3.3 million in private financing; and the REMIC
mortgage insurance program-l,400 units for $4.2
million in loans. 0
CITY, REP. GREEN ASK FEDS TO FUND
S100M CD PLAN FOR CITY-HELD UNITS
by Susan Baldwin
New York City was put on notice by Washington last
August. It was to develop a self-sufficiency plan by
February 28 to run its tax-foreclosed (In Rem) housing
or condemn itself to a no-man's-land housing disaster.
The city has developed the plan for dealing with its
ever increasing number of problem dwellings. And it
has gained an advocate in Congressman S. William
Green (R-Man.), the former director of HUD's N.Y.
regional office, who supports the city in its effort to
secure $100 million from the federal Community
Development Block Grant fund to maintain its deterior-
ated In Rem housing stock.
"I certainly think the city should be given the op-
portunity to try to maintain its property and try to stay
on top of it," Rep. Green told City Limits recently,
noting that he plans to recommend to the House
Banking, Finance, and Urban Affairs committee that
HUD give the city $100 million for the CD V year to run
its tax foreclosed properties. Green is a member of the
Housing and Community Development Subcommittee
of the House banking committee.
"But the real question here, aside from the support
money," he was quick to add, "is whether the city's
various alternative programs can develop the capacity to
take on this large number of properties. This could
develop into a large political football with devastating
effects on the city's future."
In a report to the House subcommittee submitted at
the end of February, Green referred to his meeting in
January with HUD Assistant Secretary Robert C.
Embry, Jr., during which Embry questioned the
continued use of CDBG funds to operate the city's In
Rem program. Embry noted that HUD had permitted
an emergency allocation of $41.1 million for CD IV and
that "clarifying legislation might be in order."
Subsequent to the meeting, Green received a letter
from the HUD assistant secretary dated January 29 in
which he stated that continued use of CDBG funds
would not be allowed for the InRem program.
Green held a fact-finding session on the city's In Rem
dilemma February 12 where community housing groups
and city experts testified in support of continued use of
CDBG funds to maintain city-owned property. Joining
him at the forum were Representatives Theodore Weiss
(D-Man.) and Jonathan Bingham (D-Bx.) who also
endorse the continued use of this funding to save the
city's housing stock.
"In my report I have pointed out that both interior
and exterior maintenance of the buildings is allowable
under the statute," Green explained, noting that a series
of public services covered by Sections 104 and 105 of the
16
Housing and Community Development Act of 1974
permit these funds to be used for In Rem purposes.
According to Green, the city's major responsibility is
to target how it will use the money for the properties.
New York is expected to receive a total of $241 million
in its CD V fundings, of which $100 million, if
approved, will go to the In Rem program and about $22
million will be used for alternative management
programs.
In the city's self-sufficiency plan submitted on the
February 28 deadline to HUD's New York area office,
Housing Preservation and Development Commissioner
Nathan Leventhal pointed out that the city projects
some 83,000 occupied units in city ownership by CD VII
(the third year of the In Rem program) and that these
properties must be "treated simply and returned to
private ownership" as soon as possible.
According to Leventhal's statistics, the city has
approximately 37,000 occupied units at the present
time.
Noting that HPD has "rejected a large scale return to
the traditional kind of public auctions which in the past
served as the principal means of disposing of city-owned
property," Leventhal outlined the following three main
options for disposing of the city's vast holdings: "(I)
restricted auction sales; (2) net leasing properties for a
one-year period while an owner secures private
financing and demonstrates good management and tax-
paying ability; and (3) providing a series of financial
incentives, including rent restructuring and reassess-
ment of appraised values to enable auction buyers to
upgrade and successfully maintain such properties."
Opponents of the city's auction sales policy were
successful in mid-November in calling on the Board of
Estimate to impose a four-month moratorium on the
auction sales of the city's residential properties. The
first renewal of such sales are planned for late in May.
In addition to outlining these three basic options
for handling In Rem property, HPD's plan also calls for
the disposal of a "significant number of properties
directly to public and private developers who would
utilize existing substantial and moderate rehabilitation
programs to acquire and rehabilitate city-owned
property." Programs available to developers, the report
pointed out, include Section 8 substantial rehabilitation,
rehabilitation by the New York City Housing Authority,
Sweat Equity rehabilitation, REMIC mortgage insur-
ance, and Section 312 loans.
By CD VII, according to Leventhal, HPD hopes to
dispose of more units of In Rem housing through alter-
native management programs and public auction sales
than will enter city ownership each year. The commis-
sioner's predictions also suggest that by CD VII, the city
will need "some $280 million annually to fully fund all
costs of the In Rem management and treatment
programs," with $200 million of this amount being non-
city funded.
In addition to requesting changes in state and local
legislation that would permit the city to restructure
rents, HPD, in its report, has also said that it will rely
more heavily on its recently adopted consolidation and
improved demolition and seal-up programs to carry out
its proposed self-sufficiency program.
By CD VII, the report projects, the city's request for
CD funds will grow to $200,600,000 unless some other
funding source can be found, and the tax levy cost to the
city of maintaining the properties will rise to
$52,300,000. At the same time the city expects to
provide city funding for all the fuel and utility costs,
two ineligible CD expenditures. The city also hopes to
receive about $27,910,000 by CD VII in rent revenues
from alternative management buildings.
HUD Area Director Alan W ie ner could not be
reached for comment on the city's plan, but Ginger
Macomber of the Community Planning and
Development Division at the area office said, "I must
study it in greater detail, but from a first reading I think
they [HPD] tried hard to furnish us with the statistics
that we asked for."
Officials at HPD and HUD will be meeting with each
other on a regular basis over the next few months to
develop the fmal application for the In Rem program,
which must be submitted to Washington by the end
of June. The CD V funding year begins September 1,
1979.
In the meantime, Congressman Green will continue to
lobby in Washington for approval of the $100 million to
manage and repair the In Rem property. At one point
earlier this year, it had been hoped that the federal
government might have an additional $100 million to
run these properties so that the city would not have to
devote $100 million of its CD-total of $241 million to
this program.
"Money is tight in Washington, and there just isn't
that much extra to go around," Green said. "The city
will be lucky to target this $100 million for the program.
"And in order to do this right, I am hoping that HUD
will provide the city with the technical assistance it needs
so that an innovative anti-abandonment housing
program will be developed," Green continued. "I think
we're in for some tough decisions down the road, and it
remains to be seen whether HPD can manage its In Rem
properties or not."
Noting that some 113 cities across the nation have
housing abandonment problems, Green has called on
HUD in Washington to "do more to assist local govern-
ments to turn the tide of housing abandonment and
property tax delinquencies."
"In spite of the severity and scope of housing aban-
donment," he added, "HUD-as I learned from
Assistant Secretary Embry's January 29 letter-has 'not
provided any special kind of assistance to cities
regarding housing abandonment, nor do we [HUD]
keep data on the amount of block grants for - that
purpose.' This approach must change," Green
concluded. 0
BOARD TO STUDY MUNICIPAL POWER
The City Council has named a nine-member review
board to study why New Yorkers pay such high utility
rates and to explore the feasibility of replacing Consoli-
dated Edison and Long Island Lighting Co. with a pub-
licly owned utility.
The Public Utility Review Board is composed of three
utility representatives, three consumer representatives
and three public representatives selected by the City
Council's rules, privileges and elections committee.
The board, which is unsalaried, is to reports its findings
by June 30,1980.
Only one of the nine choices, Rev. Morton Van Allen,
drew any controversy. Councilman Stanley Michels, D-
L-Manhattan, charged that Van Allen, a consumer
representative, lacked the necessary qualifications.
Michels said he favored Robert Lekachman, an
economics professor at Lehman College, or Rose Kry-
cak, an activist with senior citizen and energy issues.
17
The following are the members of the review board
with background as provided by the resumes they sub-
mitted.
Public Utility Representatives
Edward Livingston-Acting vice president for public
affairs, Consolidated Edison.
Jerome Katzin-Managing director of Lehman Bro-
thers Kuhn Loeb Corp. , investment bankers; former
government attorney, Securities and Exchange Com-
mission.
William Kirrane-International vice president of
Transport Workers Union; president of TWU locall0}
AFL-CIO; chief union negotiator with Brooklyn Union
Gas Co.
Consumer Representatives
Martin Seham-Partner, law firm of Surrey Karasik
Morse and Seham, general counsel for the Owners
Committee on Electric Rates Inc., representing the
continued on page 19
ACTION GRANTS PASS BY NEEDY AREAS
Within the next few weeks, the city will be announc-
ing the awarding of several pending Urban Develop-
ment Action Grants (UDAG) , but applications from
low and moderate income neighborhoods around the
city where such a grant would have a major impact will
be conspicuously absent.
"It really is a shame that the city has not provided
more assistance to these communities so that they would
learn what the UDAG program is all about and have a
chance to compete for these monies in Washington,"
said Ronald Shiffman, director of the Pratt Center for
Community and Environmental Development, the
organization that provides substantial help to low and
moderate income neighborhoods in their applications
each year for Community Development (CD)-eligible
activities.
Shiffman's major criticism of the city's implementa-
tion of the UDAG program is its "inability or unwilling-
ness" to help these communities develop viable econo-
mic development or commercial revitalization plans.
A total of $400 million a year for three years is avail-
able under this program created by the Housing and
Community Development Act of 1977. Of this total
amount, $300 million a year will be available for larger
cities, while 25 per cent of the program funding must go
to cities with populations of 55,000 of less.
"UDAG funds are to provide support for projects that
are intended to aid in the revitalization of the city's
economic base or in the reclamation of neighborhoods.
The intent of the program is to private dollars
for development and revitalization:' said Joan Malin,
who 'processes UDAG applications upon their submis-
sion to City Council President Carol Bellamy's office.
"The definition of what constitutes an eligible activity
for UDAG funding is quite broad," she added. "Basic-
ally all development activities, exclusive of planning
costs, allowed under the CD program are eligible. "
Among allowable activities, she said, are property ac-
quisition, construction and reconstruction of public and
neighborhood facilities, rehabilitation and demolition,
and economic development activities directed toward
alleviation of physical and economic distress.
Project applications are accepted by HUD during the
first month of each quarter (January, April, July, and
October). And, if an organization submits an applica-
tion in January, for example, it should expect to hear
from HUD by April.
According to Shiffman, there are no strict criteria
that must be followed to enter the national competition
for the funds.
"But," he said, "the city has done terribly in getting
UDAG's-only $3.5 million last year-because it only
goes with big, polished plans." In Shiffman's estima-
18
tion the city should and could have gotten anywhere
from $35 to $40 million last year if it had submitted
smaller, more modest, neighborhood-oriented plans.
Two areas that have expressed interest in the UDAG
program are Manhattan Valley on Manhattan's Upper
West Side and Flatbush in Brooklyn.
"At this point I don't even know if we will go after a
UDAG," said Nancy Foxworth of the Manhattan Val-
ley Coalition, whose group is trying to develop a plan
for a neighborhood sports center and skateboard facil-
ity and a youth hostel and restaurant in an underutilized
school and an abandoned nursing home.
According to Foxworthy, the coalition is having a fair
amount of difficulty getting CD IV money "pried
loose" to hire an architect to develop the plan.
In Brooklyn, the Flatbush Development Corp. is
working on a revitalization plan for community use of
the Loew's- East Kings, an abandoned movie theatre.
The UDAG proposal, Joyce Coward of the Flatbush
organization said, will be developed carefully and sensi-
tively so as not to interfere with the economic viability
of the existing commercial strip in the neighborhood.
She noted that the community in another Brooklyn
neighborhood-Red Hook-is opposing the conversion
under UDAG of an abandoned factory formerly owned
by Goya because it will hurt other existing neighborhood
business by causing an increase in storefront
abandonment.
Other "big, polished" UDAG plans include the
proposed $172-million Portman Hotel for the Times
Square area; a $3-million fund to match loans from con-
ventional sources to provide 90 per cent of the financing
for cogeneration-type diesel plants to generate electri·
city and recover waste heat; renovation of a vacant
department store in Jamaica, Queens, for use by Alex-
ander's; and the development of the South Street Sea-
port area as a retail and museum complex.
"Our hope in the future is to involve the city's low
and moderate income neighborhoods in the UDAG pro-
gram," Malin concluded. "But one of the major prob-
lerns faced in these poor, impacted neighborhoods is
getting the commitment of private money. " She stressed
the difficulty of involving the banks and private devel-
opers in these neighborhood proposals. According to
her figures, for every dollar involv(!ment of public
money, the community must guarantee 'three private
dollars.
The city's Development Funds Steering Committee is
headed by Deputy Mayor Peter Solomon. Other com-
mittee members include Council President Bellamy,
Who chairs the UDAG City Planning
Chairman Robert Wagner, Jr., Director of the Office of
Management and budget James Brigham, and Commis-
sioner of the Department of Employment (now Human
Resources Administrator ) Stanley Brezenoff. 0
Utility Board continued
majority of industrial and commercial utility consumers
in New York City.
Rev. Morton Van Allen-Executive director, Urban
Crisis Task Force, a multi-service agency in the areas of
crime prevention, consumer services, youth counseling,
senior citizen services, housing employment, education
and job training; pastor of the Downtown Baptist
Church.
Rev. Robert Emerick-Pastor, Grace United Metho-
dist Church; member Manhattan Community Board 7;
president of New York City POWER (People Outraged
With Electricity Rates), a coalition of 30 church, labor,
tenant, civic and consumer groups organized around
energy issues.
Public Representatives
Charles Hughes-President of the 18,OOO-member
Local 372 of the American Federation of State, County
and Municipal Employees, AFL-CIO; chairman of the
political action and legislation committee of District
Council 37 AFSCME.
Donald Moore-President, New York Chamber of
Commerce and Industry; trustee, Brooklyn Public
Library and Brooklyn Botanical Gardens; director,
Brooklyn Academy of Music.
Amalia V. Betanzos-President, Wildcat Service
Corp.; former commissioner, New York City Housing
Authority; former commissioner of youth services;
former deputy administrator/commissioner Depart-
ment of Relocation.
Under its mandate from the City Council, the review
board is to study "those factors which have contributed
to the excessive costs chargeable to the New York City
consumer and those mechanisms, including the potential
of a creation of a publicly owned utility, which with
ameliorate this situation. "
Approximately 25 persons asked to be considered for
the board. 0
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IN THIS ISSUE
• Eviction Unit
• SectionS
• Demolition
• CETAVII
• Intro.594
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