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D .. Ul'nIEII'I'I
Short Term Notes
Trouble for Fulton Landing . .... .. ............. 3
New Housing Maintenance Chief ..... .... ..... . 4
New York and Boston Top Rents ................ 4
BankAmerica Makes NYC Loans ............... 5
City Views
Loft Board Leaves Tenants in Limbo .... . .... .. . . 6
The Bank Knows Best for Harlem'. Dunbar .. ...... . 8
Tenants of an historic Harlem building reject a bank's co-op plan,
but fight on for repairs.
Neighborhood Hospitals and Neighborhood Health 12
Why the coming boom in hospital expansion may not benefit
neighborhood health.
CO .... OIftIIIG TIlE UII'I'-I£I lEU
Landlord'. End-Run . ............ ...... ......... 18
The Fail-Safe Business of Rehab ................. 18
How some savvy building owners are playinq a no-risk game called
Mel.
Mirabel Gets State Rent Post ........ . ... . . . ..... 23
D£PAJrrJIEIft'I
Legislation: Albany ............................ 24
Review
Real Estate's Capitalist Engine .. ... .. . .. : . .... 26
Letters . .. . ........... .... . ... . . ....... . .. . . .. . 28
Resources/Event •... . .. .. . . .. .. . . .. . .. ... . ..... 30
Workshop ..................................... 31
To Our Readers: Issue Change
This issue is dated February-March because it represents
an attempt to catch up time we have lost since last fall. Sub-
scribers will still get their full year's worth - ten issues,
and hopefully, we'll be able to stay up to date. The next is-
sue, April, will focus on low income homesteading in New
York City. City Limits staff.
CITY LIMITS/February/March 1984 2
--
QTYLIMI1S)

Volume IX Number 2
Cit)' Umits is published teo times per year. monthly
except double issues in June/July and Augustl
September. by the City Limits Community Informa-
tion Service. Inc . . a nonprofit organization devoted
to disseminating information concerning neighbor-
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three organi7.ations. The sponsors are:
Association of Neighborhood Housing £H.·elopers.
Inc .• an association of over thirty community-based.
nonprofit housing development groups. developing
and advocating program; for low anll moderate in-
come housing and neighborhood stabili7.ation.
Pratt Inst;tute Ctnrer for Community alld Elwiron-
menIal Development. a technical assistance and ad-
vocacy office offering professional planning and ar-
chilcctural services (0 low and moderate income
community groups. The Center 31'0 analyzes and
monitors government policy and performance.
Urban Assisra"ce &lard. a technical
assistance organization providing assistance to low
income tenant cooperatives in management and sweat
equity rehabilitation.
Subscriplion rates arc: for individual s and communi-
ty groups. S9/0ne Year. $ISlTwo Years: for
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City Limit> (ISSN 0199-0330)
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. . . . . . . .. .. Tom Robbi n,
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Copyright 1984. All Right> Re,erved.
No portion or of this journal may he
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publ i,he,, _
Cover photo by Jim Mendell
Trouble for
Walentas's
Fulton
Landing
By Michael Henry Powell
L
ESS THAN ONE YEAR after cele-
brating his "conditional designation" as
the city's developer for the Fulton Ferry
waterfront in Brooklyn, David Walentas is
the subject of a city investigation into his
building management history. Charges of
housing malpractice were raised before the
Industrial and Commercial Incentive Board,
which must vote on his application for tax
abatements at Fulton Ferry.
Meanwhile, in response to protests from
local elected officials and businessmen, the
city administration has taken a second look
at Walentas' proposed eviction of Fulton
Landing's manufacturers - whose firms
employ over 2,000 workers.
The turnaround in Walentas' fortunes has
been swift. Only a few months ago, his plans
for the area between the Brooklyn and Man-
hattan bridges seemed impregnable. His
proposed $156.5 million project - includ-
ing plans for a marina, back office space,
a park, restaurants and shops - had the
backing of the Public Development Corpo-
ration and Brooklyn Borough President
Howard Golden. And Walentas had hired
some powerful political fixers - notably,
lawyers John Zuccotti , former head of the .
City Planning Commission, and Andrew
Fisher, son of Harold, the fonner MTA head
and Brooklyn Democratic Party power -
to push the project's approval with the city.
But political feuding and outcry over
Walentas' record as a building manager,
landlord and co-op sponsor have slowed
down, if not stopped, the project. Walcntas'
3
CITY LIMITS/February/March 1984
checkered history was revealed two years
ago by Jim Miskiewicz in the Brooklyn
Paper. However, it took a protest by City
Council members Ruth Messinger of Man-
hattan and Sal Albanese of Brooklyn, and
Brookyn Assemblyman Joe Ferris, to spark
an investigation. "The allegations against
Walentas are embarrassing," said Messinger.
That is not the sort of developer the city
should be dealing with."
A Pattern of Mismanagement
Attention has focused on four of his
projects: the Alywn Court co-op on West
58th St., the Park Terrace Gardens co-op in
Washington Heights/Inwood, the Dunbar
Apartments in Harlem and the Kew Gardens
Hills projects in Queens. Each project
evinces the same pattern of building code
violations, evictions of tenants and conflicts
with the City'S housing inspectors and
Buildings Department.
In Kew Gardens Hills, over 500
predominantly black, low income tenants
were evicted. Walentas has claimed that
"what we did . . . saved the neighborhood."
At the landmark Alwyn Court building,
Walentas proceeded with construction in the
building interior despite the Department of
Buildings' issuance of at least 3 stop work
orders. Later co-op sales to Walentas em-
ployees sparked tenant complaints and an in-
vestigation by the State Attorney General's
office which confirmed the charges. Today,
Alwyn Court has 114 housing code viola-
tions, three of which are class C, or life-
threatening.
Charges of harassment and shoddy
maintenance have also characterized Walen-
tas' relations with tenants at Park Terrace in
Inwood. At one point, building inspectors
talied 319 building code violations, enough
for HPD to deny Walentas annual increases
in his rent-controlled apartments for four
years. He was later forced to reduce rents
by over $10,000. Today, the building's con-
ditions and financial status have prompted
the cooperators to file suit against Walentas.
Most unsuccessful of the Walentas
projects was the attempt to renovate the
historic Dunbar Apartments in Harlem [see
article page 8]. In 1971, he purchased the
apartment complex for $300,000 in cash
plus additional mortgages totalling $1.8 mil-
lion. By 1977, Dunbar Associates fIled for
bankruptcy. The property was taken over by
the New York Bank for Savings. Walentas
and his backers forfeited their initial invest-
ment, lost their tax shelters and were forced
to pay federal sales taxes on the mortgages.
On Dec. 31, 1977, Walentas' chief partner
in Dunbar Associates, J. Frederick Byers
m, son-in-law of CBS president William
Paley, committed suicide. His note, accord-
ing to the police, mentioned "business
problems."
A well-connected man, Byers had pulled
a group of investors into the project ..:. in-
cluding Kenneth Lipper, now deputy mayor
for economic development and responsible
New Housing Maintenance Chief for City
shifted to the State Division of Housing and
Community Renewal in April this year.
Felstein, 42, has been with the City for
12 years. She was appointed Deputy
Commissioner in the Buildings Department
in April 1983. Prior to that she was Assis-
tant Director of the Mayor's Office ofOper-
ations for three years. She also worked at
for overseeing the Fulton Landing project.
Messinger said, ''To put it mildly, the pub-
lic has to assume a less than arms-length
relationship between Walentas and Lipper."
Fall Out From Koch-Golden Feud?
In filct, given the sorry end to the Dun-
bar affair, it is not clear if Walentas' past
dealings with Lipper are an advantage. Ac-
cording to several people within the city ad-
ministration, Lipper has taken a hard line
against concessions to Walentas. Similarly,
Walentas' careful cultivation of political con-
tacts - he reportedly contributed $5,000 to
Koch's campaign warchest - may have
back-fired.
It is rumored that Koch has recently taken
a hard-line on the project because Howard
Golden favors it. Koch opposed Golden's
successful candidacy for chairman of the
powerful Kings County Democratic club.
Thus, with political and personal relations
between the two men at a low, Walentas' Ful- '
ton Landing project could become a victim
of political hardball. "rve heard about this
fight," Ferris said, "and I would prefer to be-
lieve that we have simply changed Koch's
mind. but anyway you look at it, the chances
for defeating the project are better."
Messinger added that the city should have
learned anod(er lesson as well: "The ICm
should be embarrassed that they do not
check an applicant's record and reject those
with violations, agency and court sanctions
like Mr. Walentas."O
HPD from 1977 to 1980 as the Director of
the Office of Program Performance and
Review. Previously Felstein worked in the
Department of Social Services in various
capacities.
Felstein, a native of New York, lives in
Brooklyn with her two sons, Mark Vecchio
age 23, and Richard Vecchio age 19. 0
C
arol Felstein, a former aide to
Deputy Mayor Nathan Leventhal, has
been named Deputy Commissioner of the
Office of Rent and Housing Maintenance
of the Department of Housing Preservation
and Development. She replaces Daniel Joy
who was elected Civil Court Judge in
Queens last November. Most recently, Fel-
stein served as a Deputy Commissioner in
the Department of Buildings.
NEW YORK AND BOSTON TOP THE RENTS UST
The Office of Rent and Housing Main-
tenance has responsibility for the enforce-
ment of the Housing Maintenance Code
and the State Multiple Dwelling Law. It en-
compasses a number of programs to man-
tain and rehabilitate housing, including the
Central Complaint Bureau, Code Enforce-
ment, 8A Loan Program, Community Ac-
tion/Tenant Assistance Unit, and the
Housing Litigation Bureau. HPD's office
of Energy is being added to this Division.
The office's Rent Control division is being
CITY LIMITS/February/March 1984
A
PARTMENT RENTAL PRICES in
Boston and New York City led the na-
tion in cost in 1983, according to a study
released in January.
As reported in the Real Estate U£>ekly, the
study found a typical 850-square-foot
apartment in New York City renting for
$446 per month. The median rent for the
same size apartment in Boston was $475.
The study, conducted by the Chicago-based
Institute for Real Estate Management, is an
annual research survey which examines the
4
nation's rental market. It is bases on medi-
an monthly metropolitan-area rents for an
average one-bedroom apartment. The study
included all types of buildings.
According to the survey, San Francisco
was the third most expensive urban area
with rents of $419. Of other northeastern
cities, Philadelphia was 22nd, with rents
of $343, and Newark 28th with $312. Of
the 40 cities in the study, Greenville, South
Carolina has the lowest median rent,
$247. 0
BankAmerica Makes Loans
to New York Groups
I
N COORDINATION WITH THE
Local Initiatives Support Corporation,
the BankAmerica Foundation has created a
SIO million fund for low interest short tenn
loans to nonprofit community development
projects. Two million dollars of the fund,
which will be administered by LISC and
loaned at three percent interest, has been
targeted to projects in Brooklyn and the
South Bronx. Another $5 million will go to
projects in Seattle, Chicago and Southern
California.
Each of the projects involve added fund-
ing from other government or private
lenders. According to a LISC spokesman,
none of the loans have yet closed.
The seven New York City projects are:
• $250,000 to the YWCA of Brooklyn to
rehabilitate a residence for single, most-
ly minority, low income working wom-
en in downtown Brooklyn. The loan will
provide one-half the financing of the
S500,000 project which will create 52
single rooms, two communal kitchens
and lounge areas.
• $250,000 to St. Nicholas Neighborhood
Preservation and Housing Rehabilitation
Corporation to assist in the construction
of a 10,000-square-foot retail space in east
Williamsburgh. The loan will provide a
write-down of the interest costs anticipat-
ed in the $600,000 project.
• The Southern Brooklyn Community
Organization, a Borough Park, Brooklyn
group, will receive $250,000 to assist in
the moderate rehabilitation of 17 units for
moderate income families.
• In buildings adjoining the SBCO project,
the Sunset Park Redevelopment Commit-
tee will rehabilitate 72 apartments for low
income families, receiving $250,000 to
reduce thecost of the $1.8 million rehab.
• A $500,000 loan will go to the Mid Bronx
Senior Citizens Council to assist the con-
version of a vacant, privately-owned
South Bronx facility into a congregate
care residence for 200 low income frail
·elderly. Almost a third of these will be
drawn from homeless shelters. The total
project cost is $2,230,000.
• The South Bronx Development Organi-
zation will receive a $300,000 loan to
support an experimental "incubator" fa-
cility for young South Bronx businesses.
Using a work crew composed of public
assistance recipients, the city and feder-
ally sponsored group will spend a total
of $476,000 renovating a now vacant
manufacturing building. Additional
financing will be provided-by the city's
Public Development Corporation.
• A $200,000 loan will go to the South
Bronx Overall Economic Development
group to help leverage private and pub-
lic sector loans to credit-worthy manufac-
turing businesses seeking to expand or
relocate to the South Bronx. The group
is seeking to assist loans totaling up to
$4,000,000.0
LOW INCOME
HOUSING
STRATEGIES
CONFERENCE
The National Low Income Housing Coa-
lition is holding a conference in June in
Washington D.C. to help create new effec-
tive strategies for affordable housing issues.
The conference will be held at Howard
'University, from June 24-28, 1984. Regis-
tration is $30 for those registering before
June 1, $40 for those who wait until after that
date to sign up.
The conference has three goals:
I. To develop an action plan to imple-
ment a people's housing policy;
2. To galvanize a national coalition of
diverse interests for low income
housing;
3. To provide a forum for information
exchange and how-to workshops in
low income housing management
and development.
To register for the eonference, write to:
NLIHC, 323 Eighth Street, N .E. Washing-
ton, D.C. 20002. For more infonnation,
call: (202) 544-2544.0
Govemor Seeles Cuts in Neighborhood Group Funding
I
N HIS PROPOSED Local Assistance
Budget, Governor Cuomo recommend-
ed that funding for Neighborhood Preser-
vation groups be slashed from the current
$9.6 million to $7.5 million and Rural
Preservation groups from the current $3.2
million to $3 million in Fiscal '85.
Under the Neighborhood Preservation
Companies (NPC) and Rural Preservation
Companies (RPC) Act, nonprofit commu-
nity organizations receive state funding for
operating and organizing activities rather
than for brick-and-mortar development
efforts.
The NPC/RPC program is regarded by
many community and housing activists as
currently the state's most effective contribu-
tion to the preservation of housing and com-
munity stabilization in low and moderate
income neighborhoods. In a study conduct-
ed by the Association for Neighborhoods
and Housing Development of four NPCs in
N.Y.C. in early 1983, ANHD discovered that
$1,200,000 in funding to local groups helped
generate a total of $76, 838, 566 million in
other public and private funds.
Although the Governor recommended
decreased funding for NPCs, he recom-
mended lifting the $300,000 cap on total
grants for participating groups. Under this
5
ceiling, a group is dropped from the pro-
gram when it reaches the cap.
If the Governor's proposal is accepted by
the state legislature, it could result in ap-
proximately 80 currently funded communi-
ty groups (calculated at an average grant of
$50,(00) losing their funding, or in signifi-
cant cuts to all currently funded groups and
the exclusion of any new groups.
NPC groups and their supporters are
demanding $12.5 million for the program,
!he amount recommended by the Governor's
own agency, the Division of Housing and
Community Renewal, as adequate funding
for NPCs.O Victor Quintana
CITY LIMITS/February/March 1984
KOCH'S LOFT BOARD
LEAVES TENANTS IN LIMBO
The 10ft law is on the books,
but residents have gotten little relief.
By Lisa Wilde
Lower Manhattan Loft Tenants Rally, 19'79.
O
N JUNE 21, 1982, MANY LOFT
tenants felt that the battle was finally
over. That was the day Article 7-C of the
New York State Multiple Dwelling Law,
otherwise known as the "Loft Law," was
signed. After years of struggle, hiding and
fear, loft tenants were finally being recog-
nized as residents of the New York housing
universe. Written with the intention of
most loft housing, the new law
defined tenant protections and laid out the
course to be followed for legalization of the
buildings. The law is aimed at those build-
ings used for living but which lack residen-
tial certificates of occupancy.
CITY liMITS/February/March 1984
Predictably, real estate industry opposi-
tion was enormous to a law.which would
give thousands of tenants residential rights.
As a result, Article 7-C was the product of
much negotiation and many compromises,
but ultimately did protect a large percentage
of loft tenants in residence. It promised them
rent stabilization and a one-time right to sell
the fixtures and improvements made to con-
vert their spaces from abandoned manufac-
turing units into living and working
quarters.
In order to implement the law and to write
needed regulations, a nine-member board,
appointed by Mayor Ed Koch, was created
6
in October 1982. The board includes four
members representing the public, one
representati ve of loft tenants and one mem-
ber apiece representing owners and
manufacturing interests.
Through the statutorily defined goal of the
legalization of thousands of residential lofts,
the Loft Board could have accomplished
something significant indeed in terms of the
survival of moderate income housing and
the preservation of living and working
quarters needed by artists.
What has happened since the Loft Board
was established?
1. Article 7-C is entitled "Legalization of 10-
terim Multiple Dwellings;' yet not one
legalization guideline has been drafted.
2. No violations have been issued to delin-
quent loft building owners for failure to oh-
tain requisite building permits by thc
statutory deadlines.
3. More than 80 per cent of the applications
for relief brought by both tenants and land-
lords have not been heard.
Legal Challenges
There have also been major legal
challenges brought against the board in
those areas where it has moved.
The first law suit filed against the new Loft
Board contested what was virtually their
first official act, the implementation of what
the statute deemed as a one-time rent in-
crease until the loftlords legalized their
buildings. According to Michael Kramer,
one of the plaintiffs in the Article 78
proceeding filed in New York State Supreme
Court against this regulation, "This rent in-
crease of seven to 39 per cent was entirely
arbitrary and based on inapplicable data.
There is no reason why they imposed the in-
creases they did."
The second law suit, the first to be de-
cided, contested the Loft Board's May 1983
regulation authorizing landlords of
registered interim multiple dwellings to
bring eviction proceedings against tenants
whose units were not their primary resi-
dence. State Supreme Court Judge Bruce
McM. Wright wrote in his decision over-
turning the regulation, "It must be con-
cluded that the Loft Board has stepped
through an administrative Looking Glass,
there to engage wonders never contemplat-
ed and thus excluded by the text of Article
7-C . .. After all , the statute is a remedial
one . . . it seeks to keep people in residence,
as opposed to circumscribing their occupan-
cy with conditions of vulnerability." Judge
Wright concluded, ~ . (the regulation) is the
territorial imperative of the Legislature and
not that of an administrative body such as
the Loft Board."
The next questionable interpretation of
Article 7-C resulted in a regulation dealing
with prime- and subtenants in lofts, which
levied an additional rent increase nowhere
indicated in the statute. Lower Manhattan
Loft Tenants spokesperson Patty Gallagher
suggested that this was one of the most divi-
sive regulations passed by the Loft Board,
pitting tenant against tenant and postponing
the crucial regulations regarding legaliza-
tion and sale of tenant improvements and
fixtures. She commented,"The prime/sub
regulation is confiscatory, extra-statutory
and discriminatory. There are a lot of tenants
out there who are waiting to test the legali-
ty of this regulation but the unfortunate part
is that the financial and emotional burden
fulls to the tenants, while only the landlord
gains from this brutal regulation."
Fixture Sales a Volatile Issue
One of the most important, as well as
volatile, issues to loft residents is the sale
of fixtures and improvements. Between July
1983 and January of this year, the Loft Board
held three separate public hearings concern-
ing the fixture or sale of improvements regu-
lation, but to date there is no regulation in
place. Voting on various drafts of the regu-
lation has been repeatedly scheduled and
cancelled by the Loft Board.
The fixture sale regulation is based on
Section 286-6 of the Loft law, which gives
tenants a one-time right to sell improve-
ments at fair market value to the landlord.
If the landlord buys the fixtures at fair mar-
ket value, he/she then gains the right to
deregulate the unit and charge market rents.
Because of this incentive offered to land-
lords, the fixture fee regulation has been the
source of much controversy, with the land-
lords proposing that "fair market value," as
written in the statute, be changed to mean
"actual cost minus depreciation," or to use
a phrase coined by loft tenant Tom Conroy
at the first public hearing, "the price of used
lumber."
The filet of the three public hearings alone
has caused many tenants to lose faith in the
Loft Board. Loft tenant Mark Hellermann
said, "I went to the first public hearing and
listened to all the politicians and lawyers
supporting the concept that fair market value
is fair market value, like it says in the legal
dictionaries. Then, I hear another public
hearing is scheduled and there still is no
regulation. Then in December they hold
another public hearing, which makes me
\Wnder if they were listening at the first t\W.
At the same time, I had some friends who
had to move and ended up selling their fix-
tures to their landlord at one-quarter of what
they put into them. They lost their invest-
ment, the landlord got a deregulated unit
and all because there still is no regulation."
The draft currently before the Loft Board
seems to have incorporated many of the
landlord's ideas and is considered by many
to be illegal and extra-statutory. It includes
the concept that "fair market value" can be
challenged on grounds of "actual cost," an
extra-statutory vacancy allowance and an in-
coming tenant disclosure statement which
is phrased as blatant disincentive.
Attorney Robert Hartman, in a letter to
the Loft Board discussing this regulation,
wrote, "I believe that the promulgation of
these regulations substantially exceeds the
Loft Board's jurisdiction and scope of
authority. Based on previous Court deci-
sion:;, I have no doubt that the Board's regu-
lations will be challenged and ruled illegal."
Assemblyman Dick Gottfried testified
against this proposed regulation at the third
public hearing, emphasizing the pro-
landlord bias, "I stress that the 'fair market
value' provision in Article 7-C is one of the
basic safeguards in that law for tenants.
Eroding that standard unfairly deprives the
departing tenant of the real value he or she
has created. Toward what end? To make it
cheap and easy for the landlord to escape
from reasonable rent regulations and charge
excessive rents from new tenants."
Chainnan Departs
At a lower Manhattan town meeting in
late November, in front of hundreds of an-
gry loft tenants, Mayor Koch was asked for
his opinion on the performance of the Loft
Board and Chairman Carl Weisbrod. He
responded by saying that he had un-
equivocable confidence in Carl Weisbrod
based "on the following: that both landlords
and tenants dislike him intensely." One
month later the Loft Board passed a regu-
lation mandating minimum heat standards
for lofts fur below any other form of hous-
ing or city institution, making this the se-
cond winter loft tenants have had to endure
Loft Board mandated stubstandard temper-
atures.
The most recent development is the
resignation of the Loft Board's t\W main
policy makers - Chairman Carl Weisbrod
and Executive Director Suzanne O'Keefe -
a month apart. Patty Gallagher, a
spokesperson for Lower Manhattan Loft
T ~ n a n t s , noted, "While we sought Mr.
Weisbrod's resignation on grounds of his
flagrant-lack of respect for Article 7-C, we
are very concerned about the next appoint-
ment which will be made by Mayor Koch.
The cynical · criteria he expressed to that
Town Meeting seemed to indicate only dis-
respect - for the Loft Board, for loft
tenants and for our system of government."
The Loft Board's ineffectiveness and
fililure to follow the letter and spirit of Ar-
ticle 7-C has resulted in confusion, insecu-
rity and more battles in the courts for loft
tenants. A law which was intended to create
a legalized universe still lacks all the major
regulations needed to make it functional.
While Mayor KoCh begins his 1985 cam-
paign with promises of both moderate in-
come and artists' housing, the casualties in
the loft community to rise. On January Ist,
t\W loft tenants died in a fire on West 20th
Street caused by an illegal fireplace. In-
adequate housing maintenance standards
coupled with lack of legalization guidelines
insures the continued possibility of these
kinds of tragedies.
Nineteen months after the passage of Ar-
ticle 7-C loft tenants now realize the battle
is not over. While they have been accord-
ed certain rights by statute, the real ques-
tion is if and when they will be accorded
those rights in reality. Loft Board tenant
representative Chuck Delaney said, "Un-
der state law, loft tenants are now legal resi-
dents. Unfortunately, the Loft Board's
overall performance has denied loft tenants
the real protections all tenants should have.
The Loft Board itself has now become part
of the problem it was created to solve.
Much depends on whether the next chair-
person has a real commitment to safe and
legal rental housing."
The future of lofts as legalized regulat-
ed housing is still unclear. However, in-
creasing anger on the part of loft tenants
may be just what is needed to put the "Loft
Law" back on the right track. As loft tenant
Patty Kirschner says, "At this point I am
willing tb do anything, including trying to
defeat the Mayor if that is what it is going
to take, to make this law workable. rm too
mad to let Article 7-C become meaning-
less and I think the only way I can combat
my disgust with the Loft Board is through
action."O
Lisa Wilde is an active member of Lower
Manhattan Loft Tenants.
7
CITY LIMITS/February/March 1984
...
THE BANK KNOWS BEST
For Barlem's Ihmbar Houses
Tenants of an historic Harlem building reject a bank's co-op plan, but light on for repQ1r5.
Mary Madison, a Dunbar teoaat since the I94Os.
CITY LiMITS/February/March 1984
By Jill Nelson-Ricks
VOR SAMUEL HAWKINS, Mary Ann Holman, Teena
.I' Potter, and most of the over four hundred residents of
the Dunbar Houses on 149th Street between Adam C.
Powell, Jr. and Frederick Douglass Boulevards in Harlem,
the heyday of the housing complex, when the famous and
infamous of the black community made their homes there,
are simply stories they have heard from old-timers. Even
for Mary Madison, who moved into the Dunbar in 1942,
the days when W.E.B. DuBois, A. Phillip Randolph, Bill
"Bojangles" Robinson, and Matthew Henson, not long back
from his journey to the North Pole with Admiral Peary,
lived and worked in the 536 unit complex, are only legend.
What brought these people and their neighbors to the Dun-
bar houses in the 40's, 50's, and early 1960's were not tales
of its past glory but its reality as a stable place to live,
work, and raise a family. .
"The Dunbar was a self-contained community, like a
small town," comments a woman who has lived there since
1948. "When you talk about the stars that lived here, you're
talking about the 1930's. I'm talking about later, in the 40's
and 50's, when it was a good place to live for working peo-
ple. It was safe, clean, and services were good. The only
thing we didn't have were elevators, but we had someone to
respond to our problems as they came up. It was a very
viable place to live."
Built by John D. Rockefeller as co-op apartments for
Harlem's growing Black community in 1926, the Dunbar has
been the target of downtown financing and management
Schemes ever since. Some of these plans have been benevo-
lent, some not.
When Rockefeller's co-op plan failed in the midst of the
depression, he bought the complex back again, only to sell
it in 1937. The New York Society for the Methodist Church
provided sympathetic management through the nineteen-
sixties. But in the seventies, the Dunbar started experienc-
ing the other side of for-profit real estate investment. Under
the ownership and management of David Walentas's Two
Trees Inc., the property plunged into disrepair and deterio-
ration.
Then, in 1978, led by the New York Bank for Savings,
which had held the mortgage since picking it up from
Rockefeller in 1937, tenants were taken on a dizzying finan-
cial loop. A hefty refinancing package, involving city, feder-
al and private funds was prepared and the building slated to
again become a co-op. But now, after two years of what
many tenants say have been meager and inadequate repairs,
that scheme too has faltered and the Dunbar is about to be
sold once more. It is only in ~ e s e recent years that tenants
have become aware of the multi-level financial plans that
8
have been readied for them. And a good deal of their time
is spent trying to unravel them.
Deterioration and Decline
According to tenants at the Dunbar, upkeep of the
building, slowly deteriorating for several decades, took a
dive for the worst in 1971 when Two Trees bought it for
$2.1 million. Once a building where, as Samuel Hawkins
says, "The amenities gave it it's character," the Dunbar
rapidly became a building noted for its lack of them. Not
only are the uniformed doormen, resident carpenter, sculp-
tured gardens, building porters, and organized educational
and recreation programs for the children of tenants gone,
but so are many basic services.
"The thrust of the decline started after the church
turned the building over in 1963," says Samuel Hawkins,
"But the building was so well kept prior to that that it took
a while to notice it. It was in the 1970's that we began to
see a visible decline." Deferred maintenance, the process of
putting off minor structural repairs .until they become major
problems was the law of the day. Roof leaks and plumbing
problems were not repaired, minor faucet leaks were left
dripping for months due to a lack of maintenance staff.
With ten street entrances and 44 internal entrances
through the massive courtyard, security is a major concern
of Dunbar tenants. During this period, the security force
was drastically cut. By the late 1970s, conditions at the
Dunbar had gotten so bad that a number of tenants moved
out . Major roof leaks, impacting most heavily on tenants
living on the sixth floor, drove a good number of tenants
out, and by 1978 the Dunbar had in excess of 100 vacant
apartments, this in Harlem, in Manhattan, where apartment
vacancy is less than one percent.
By 1978, the situation at the Dunbar had become un-
tenable, not only for the people who lived there, but 'for the
N.Y. Bank for Savings, which held a $5 million mortgage
on the building.
The bank, threatening to foreclose on Two Trees' Dun-
bar Associates, went to court. According to court papers,
Frances Levenson, Vice President and Director of Urban
Housing for NYBS, testified that, " . .. we cannot work out a
feasible operation with the present ownership. To maintain
the property it needs responsible ownership, and ownership
that is concerned with the welfare of the property, the wel-
fare of the tenants, and based on our past experience with
the current owner we do not believe that he [Walentas] is in
that position."
At that time Dunbar Associates/Two Trees was in tax
arrears, behind in mortgage payments, and deferring all
major maintenance. In 1978 the bank, seeking to avoid
lengthy and expensive foreclosure proceedings, bought the
building for $110,000 and a promise to improve conditions
there. But according to tenants, conditions at the Dunbar
got worse once the bank took over.
"We hoped that conditions here would get better when
the bank took over, but it didn't happen," says Mary Ann
Holman, a resident of the Dunbar for nearly 20 years and
active in the Dunbar Tenants League. "From 1982, when
my ceiling fell in, until 1983 when it was repaired, 1 sat on
the toilet with an umbrella over me to keep the rain off me.
Services went totally down, and it was impossible to get 3
even the smallest repair, like a washer for the faucet," she
says. Tenant Mary Madison waited nearly a year to have a
water damaged wall in her living room replaced, and when
it was, the work was shoddily and cheaply done; her new
wall has already started to buckle and peel. There were
open sewers in the building and the basement was infested
with cats and fleas, and things were getting worse.
According to George N. Brooker of Webb and Brooker
(a member of the advisory committee NYBS) , whose
firm was hired to the Dunbar in 1978, "We said we
would be willing to manage the building because of a
pledge by the NYBS to restore the Dunbar to its original
elegance. This was one of the reasons we got involved."
However, tenants scoff at the notion that either Webb
and Brooker or the NYBS got involved with the Dunbar out
of a commitment to either the building or its tenants. Ac-
cording to Dunbar residents the building continued to de-
teriorate. Renovations of the parapet on the top of the
building resulted in the removal and disappearance of lime-
stone and terra cotta figures along with bricks, this in ap-
parent violation of the building'S landmark status, granted in
1970. Stacks of bricks weighing several tons were left on the
roof by workmen in the process of repairs, causing further
structural damage to the roof. Brass mailboxes, door knobs,
and commemorative plaques were removed and disappeared.
Slate walkways across the courtyard were paved over, and
individual apartments continued to deteriorate.
Tenants Come Together
But as the building continued to fall apart, its tenants
began to come together. "I was lazy for a long time," com-
ments 'a woman now actively involved in the Dunbar
Tenants League. "I was getting heat and hot water, working,
and I was busy. It wasn't until the last few years I've felt 1
had to get involved in the tenants league as a matter of sur-
9
CITY LIMITS/February/March
vival." According to longtime tenant Mary Madison, "People
started getting together when Webb and Brooker came up
here with a gang of people in 1981 telling us the place was
going co-op. They told us, 'Never mind what you' re going
to say, it's going co-op, whether you like it or not!"
But according to bank director Frances Levenson, ')\
group of tenants came to us in 1981 and said they thought
the building should be a co-op." But current tenants say they
know neither who these other tenants were, or on what
authority they made such a request. What is clear is that
major repairs were needed in the building and that the
bank, already holding a $5 million mortgage did not want
to put more of its own money in. Some sort of package had
to be put together. But there is much disagreement between
tenants and bank officials concerning who will benefit from
the financial package eventually assembled by Goldome [the
succesor to NYBS] to rehab the Dunbar.
"In 1981, we finally put together the program that exists
at this time," says Levenson, "the tripod structure with the
National Consumer Co-op Bank, the City Housing Preser-
vation and Development's Participation Loan Program, Gol-
dome Bank, and Moderate Section 8 Rehab." This package,
put together based on the Dunbar eventually going co-op
and without adequate consultation with a substantial number
of Dunbar tenants, involved loans of $5 million from the
Co-op Bank, $3 million from Goldome Bank, and a still
fuzzy figure, somewhere between $3.8 and $4.6 million,
from HPD's PLP program. The package, totaling in excess
of $12 million, is earmarked for rehabilitation of the physi-
cal plant and the 536 apartments-particularly 150 that have
been vacant for a number of years-and to bring the build-
ing up to code and to the point (cosmetically, the tenants
Ultimately, residents of the Dunbar
seem to agree that what the building
needs is not rehabilitation but basic
repairs; the $12 million rehab pricetag
is more than they can afford.
say), where the co-op plan can take effect and apartments
begin to be sold.
Responsibility for this new mortgage of at least $12 mil-
lion will fall to the tenants, most of whom live in either
rent controlled or rent stabilized apartments, and whose
average rent is $200 per month. While a good number of
the building's residents are elderly people on fixed incomes,
and most will probably qualify for federal Section 8 subsi-
dies, there are no provisions for those tenants who do not
meet Section 8 guidelines. And while most of the tenants at
the Dunbar accept that their rent should increase by some
amount, they argue that to be penalized for negligence on
the part of past managements in not issuing new leases or
correcting violations pursuant to increasing rents, and thus
hit with rents increases of possibly 200 or 300 percent, is
unfair. Ultimately, residents of the Dunbar seem to agree
that what the building needs is not rehabilitation but basic
repairs, and that the $12 million price tag for rehabilitation
is far more than they can afford to have passed along in
their rents.
"We live in a walk-up building, have no waste disposal
services, and many of our apartments are a total mess," says
Teena Potter, a media consultant arid Dunbar resident since
CITY LIMITS/February/March 1984
10
1973. "When they talk about going co-op, you wonder, for
what, for who? What are we going to get out of it except
higher rents and a bigger mortgage? There are no basic
services here, and zero amenities." Charges Samuel
Hawkins, a tenant for 16 years who at one time was em-
ployed by Webb and Brooker, "The bank has let the build-
ing go down, they have warehoused vacant apartments, and
it has all been a waiting game until the bank could put
together a plan and the financing to get its own money out
of the building."
Repairs or Rehab?
While some of the tenants at the Dunbar were open to
the idea of going co-op when rumors first began in early
1980, many of them have become increasingly skeptical as
they have come to understand the money involved in financ-
ing such a plan and seen the nature of the "rehabilitation"
being done, as well as the immediate costs to themselves.
According to a number of the tenants, it is not rehabilitation
that the Dunbar needs, but massive repairs, although Gol-
dome's Frances Levenson dismisses this argument as "A
question of language."
According to Mary Ann Holman and others, callers to
the offices of Webb and Brooker seeking repairs have been
told, "Take rehabilitation or nothing." Comments Holman,
"As far as I can see, the rehabilitation they're pushing is just
some quick, cosmetic work so that the apartments will look
good and be sold. The work that they did do is shoddy,
both in the quality of the materials and the workmanship. In
my apartment, compound and plaster was used to smooth
out violations caused by rotting wood on the window
frames, ledges, and cracks in the walls. People who have
allowed them to rehab their apartments have complained
about newly installed cabinets falling off the walls. And for
this our rents are going to go up astronomically so we can
payoff $12 million in loans we didn't ask for?"
While officials of Goldome, the Co-op Bank, and HPD
choose to dismiss tenant dissatisfaction with the plan to re-
hab the Dunbar and go co-op as "grumbling" by "so-called
activists," who essentially don't understand how good the
plan will be for them, residents have very specific reasons
for resisting the co-op plan. First, it straps them with a
mortgage over twice the $5 million figure that Goldome
held prior to the co-op plan. Second, they argue that under
the plan their rents, now averaging $200 a month for a two-
or three-bedroom apartment, will increase by at least 200
percent, and likely more, to payoff the mortgage. Thirdly,
tenants insist that major repairs could have been made more
cheaply, easily, and aesthetically than the current rehabilita-
tion plan. Finally, they insist that they were never consulted
as a group about the co-op plan, but were essentially told,
once the deal had been put together, to take it or leave it.
Court Moves
That there is any good faith between landlords and
tenants in New York City in 1983 is rare, and it is not sur-
prising that there was none between the Dunbar's tenants
and its owner/managers/investors. In March of 1983, having
worked for several months with Met Council toward a
solution to the situation at the Dunbar, the tenants went out,
on a rent strike. On October 28, housing court Judge Ralph
Waldo Sparks appointed an administrator for the Dunbar to
collect rents, pay utility bills and salaries. He also ordered
Entl'1lllCe
to tile
Paul Laurence Dunbar
Apartments.
the landlord to begin repairs immediately, and enjoined the
shell corporation set up by Goldome Bank to facilitate the
co-op plan, Dunbar #1 Co-op Apartments .
from warehousing the 150 vacant apartments. Despite thiS
three-month old order, tenants report that numerous repairs
have still not been made, and that none of the 150 vacant
apartments have been rented.
Oddly, Ooldome officer Frances Levenson as late as
mid-January described the rehabilitation as "pretty much
finished." But according to tenants and this observer there is
still a massive amount of work to be done. Although leven-
son made no mention of the co-op plan having been aban-
doned,in a subsequent interview with Robert K. Davis,
deputy commissioner for operations at HPD, he stated
the. bank is now shifting from a co-op to a rental scheme,
adding that the total amount of HPD's investment in the.
project would probably be less a plan. DaVIS
also indicated that negotiations With prospective buyers for
the Dunbar had already been begun by the bank, but
declined to name any individuals or corporations involved
in those meetings. Levenson, asked about the purchasers,
said they were "experienced, New York-based" firms.
If Davis is correct and the plans to co-op the Dunbar
have been abandoned, that puts the National Consumer
Cooperative Bank in an position, since ,
money is to go only to thIS won t be
the first time for the bank, which engaged In what some
call a conflict of interest and others, more kindly, bad
judgement, in making the initial loan to the
Goldome set up for the purposes of the co-op plan while
Goldome officer Levenson was a member of its board of
directors.
11
That there is any good faith between
landlords and tenants in New York City
in 1984 is rare, and it's not surprising
that there was none between the Dun-
bar's tenants and its own-
ers,manaQers"fnvestolS.
"The crucial thing is that Goldome had charted its course,
and now they have run into difficulty," comments John Gorman,
legal counsel to the Dunbar tenants since April of 1983 and a
partner in Levenson, Gorman, and Finder, who was brought into
the Dunbar by Met Council's Bess Stevenson. "It is clear that
Goldome wants to get rid of this building in some form. They
had a problem and looked for a device to get rid of it," explains
Gorman, "And I think this three-sided deal between PLP, Co-
op Bank, and Goldome was what they decided would help them
get rid of the building. But the tenants are saying, 'Wait a se-
cond, I don't want to pay millions of dollars for a lousy rehab
job, I don't want to pay all these fees that are not worthwhile."
Gorman, Stevenson and the Dunbar tenants will be back
before Judge Sparks to get rent figures for the 150 vacant apart-
ments from the owner. But given Goldome's shift away from the
co-op plan it's unclear what effect this will have on future negoti-
ations.
One thing that is certain is that the tenants of the Dunbar
will not stop fighting to preserve their building as a home for
working people, a struggle that many joined reluctantly, some
joined late, but that most have come to as a matter of survival. 0
Jill Nelson-Ricks is afreelance writer born and raised in Harlem.
CITY LIMITS/February/March 1984
NEIGHBORHOOD HOSPITALS AND
NEIGHBORHOOD HEALTH
Why the coming boom in city hospital expansion may not benefit neighborhood health.
--- --
By Judy Wessler
T
HE STATE OF NEW YORK has fi-
nally attempted to grapple with the
serious issue of the costs of hospital capi-
tal construction. Just how well the State and
local health plaiming agencies have done
in coping with this heavily political issue
is an open question. And there are reasons
why many of us - not just health advo-
cates - should be concerned.
The Problem
Although the amount of health dollars
being used for capital construction projects
has been an issue of concern for many
years, it was not until 1982 when four
major "so-called" not-for-profit or volun-
tary Manhattan medical centers proposed
massive rebuilding projects totalling over
$2 billion that the state government became
truly alarmed. The hospitals have
claimed this is private money. But. is it?
Hospital modernization and construction is
financed through the tax exempt bond mar-
ket and guaranteed with mortgage insur-
ance provided under the Federal Housing
Administration's 242 program. Also, in-
terest cost on this debt financing is an al-
CITY LIMITS/February/March 1984
lowable cost for hospitals and therefore
increases the hospitals' daily reimburse-
ment rate, much of which is paid for
through public dollars such as Medicaid
and Medicare. One hospital projected that
their daily reimbursement rate per oc-
cupied bed would increase by $145 per day
just to pay for the construction. Addition-
ally if all of these hospitals go to the bond
market to borrow construction money, they
will be competing with the city and the
state, both of which need money to rebuild
our infrastructure (the subways and bridges,
etc.) as well as to build or renovate new
housing. This is hardly a private in-
vestment.
There are other reasons this is of vital
public concern. A total of $10.7 billion was
spent in New York City in 1980 for health
care expenditures; $5.7 billion of this total
was spent on hospital care. This total would
increase by leaps and bounds if all of the
hospitals were given approval for their con-
struction plans.
The analogy can be made to the new con-
struction or rehabilitation of housing in the
city, which is so costly that tenants cannot
afford to live there. In many of the hospi-
tals where construction has already begun
or been completed, the costs of care have
increased so that many former patients will
have no access to these beautiful new build-
ings for their health service.
We should also understand that these
building proposals are almost solely
designed to add to the prestige of these
major medical teaching hospitals, and to
keep them competitive with the hospital
market. As a matter of fact, the proposals
mainly move these hospitals toward provid-
ing more specialized care (or in the lingo
- tertiary care) than they already do; med-
ical care that only at most 10 percent of the
total patients require.
At the same time, the Reagan adminis-
tration has cut back .drastically on public-
ly funded health programs: Medicaid and
Medicare have been reduced (and the
elderly are continually paying more out of
their own pockets for their medical care);
the funding for important community
health care programs, such as Communi-
ty Health Centers and Maternal and Child
Health Programs, have also been reduced.
These cuts are on top of drastic reductions
12
, , " , I I I
\. ,
\ II
--
-----,.-.:---..=
that the city has made in the Health Depart-
ment's clinics and in the public hospital sys-
tem. Since 1976, about 26 community or
public hospitals have closed in New York
City and most of these were located in fed-
erally designated Medically Underserved
Areas.
New York Still Unhealthy
Despite the huge concentration of medi-
cal care resources in New York City and
the large dollar amounts expended, many
New Yorkers are basically unhealthy. Ac-
cording to the Health Systems Agency of
New York City (the federally funded
Health Planning Agency), there is an esti-
mated 2.9 million New Yorkers residing in
federally designated Health Manpower
Shortage Areas. There are also between 1.1
million and 1.3 million (between 16 to 18
percent of the population) who are medi-
cally indigent (no medical insurance or un-
derinsured) . And the Children's Defense
Fund found in a national survey, that New
York State has the highest percentage of any
state of minority women receiving late or
no prenatal care during their pregnancies.
The infant mortality rates per 1,000 live
births increased from 1981 to 1982 in 16
.:
out of the 30 Health Districts in the city.
Thberculosis cases reported to the New
York City Department of Health increased
17 percent between 1978-79, the first sig-
nificant increase in the past 30 years. In
Manhattan, for example with the greatest
number of hospitals and hospital beds, 3
out of the 7 health districts showed dramat-
ic increases in the death rate due to pneu-
monia and influenza between 1970 and
1980. .
These startling statistics raise serious
questions about access to health care ser-
vices for a large portion of the city's popu-
lation, and the maldistribution of health
care monies and services. They raise ad-
ditional questions and concerns about peo-
ple's living conditions, particularly the
quality of their housing, most especially the
rise in the TB rate and the number of deaths
from pneumonia and influenza.
Housing advocates should also keep in
mind that many of the major medical
centers are also large landlords. An incal-
culable number of tenants have been dis-
placed over the last twenty years to make
way for hospital expansion plans, although
some of these evictions were fought and
won (eg. the Cabrini Hospital tenants on
East 19th Street). The Presbyterian Hospi-
tal in upper Manhattan is already evicting
its own nurses to make way for its planned
expansion (see article) . Some of the hospi-
tals have allowed the buildings that they
own to deteriorate and therefore have be-
come slumlords - adding to the housing
and health problems of tenants.
What Did Tbe State Do?
In mid 1982, responding to the potential
crisis in capital construction, then Gover-
nor Hugh Carey appointed a Health Care
Capital Policy Advisory Committee that
was to make recommendations to him on
this issue. In December 1982, this body
made its recommendations to the Gover-
nor and the state agencies and bodies that
regulate hospital construction. The Com-
mittee urged that a one-year moratorium be
placed on the review and approval of health
care facilities construction applications. In
the interim it said state and local health
planning bodies should establish relative
priorities amongst the capital proposals;
and that medical affordability be a chief
aspect of the review. The committee also
sought limited state guaranteed loans for
some financially distressed institutions to
fund capital projects and a legislative
in the membership of the State
Hospital Review and Planning Council (the
State appointed body that advises the
Commissioner of Health on health faCIlI-
ties construction and purchase of equip-
ment) so that there would be more
participation by payors, consumers, labor
and business. The membership of this body
currently is almost entirely composed of
hospital and health facility representatives.
The moratorium was begun in January
1983, and the "planning process" to develop
a Statewide Medical Facilities Plan was in-
itiated. This initiative by newly elected
Governor Cuomo and the State Health
Department was applauded by many, but
concerns were raised as to how the planning
process would be carried out. The Hospi-
tal Construction Thsk Force of the Public In-
terest Health Consortium of New York City
wrote: "We support the concept of a morato-
rium, but only if this period of time is used
for serious evaluation of the current health
planning process rather than merely a de-
lay of approval of the major construction
proposals. The issue of population-based
planning must be incorporated in this
process in order to bring about meaningful
change in the ... review." This change did not
occur.
The State Department of Health devel-
oped guidance material for the eight local
Health Systems Agencies around the state
so that they could develop a Medical Facil-
ities Plan. The state's guidance indicated the
need to look at regionalization and accessi-
bility, but did not define these terms.
On paper and in federal law, the Health
Systems Agencies (HSA) are to have a
majority of consumers (defined as not
providers) on their Board of Directors. In
practice, especially in the New York City
Health Systems Agency, the large provider
(mainly hospital) interests dominate the
agency with the help of a willing staff. Also
in federal regulations and in the HSXs own
documents, there is language that defines
need and accessibility; that is almost total-
ly ignored. Also federal regulations man-
date that reviews of capital construction
seriously examine how the population, par-
The Original Proposals Of The Big Four
Presbyterian Hospital (Wasbington Heights) -This proposal to look
responsive to community needs. It is a four-part proposal that mcludes: 1. c?n-
struct a new 750-bed facility with more critical-care beds on the present
2. a 300-bed community hospital because this area has lost so many
in recent years, but the planned site is all way the of .Island
so that some community residents are mcknammg thiS proposed faCIlity the
"Riverdale Hospital" (a wealthy community nearby in the Bronx); 3. an 80-bed
Residential Health Care facility for patients with specialized needs; and? a Home
Health Agency. The cost of this proposal was projected at $485 million.
Mount Sinai (East Harlem)-This hospital basically ignored the surroundi.ng
community of East Harlem by saying that their primary catchment area servl.ce
was the City of New York. Their to new faCIlity With
800 replacement beds, also with more cntlcal care or mtenslve care beds.
proposal also contained an I.M. Pei designed d?me". The cost of thIS
proposal was projected at $458 million. Mount Smal projected that by 1988, af-
ter the construction, their daily reimbursement rate would be over $1,000 per day.
St. Luke's-Roosevelt Hospital (West Side) -To our this proposal
has not been completed as yet. But discussions include: movmg of the serv-
ices and beds currently at St. Luke's Hospital downtown and new beds
at the Roosevelt site on 59th Street. A report prepared for the s
nity Board by a consultant showed that the greater need for was 10 the
community surrounding St. Luke's Hospital. The C?st for was
projected at around $434 million, leading to a $136 mcrease m the daily rate.
New York Hospital (Bed Pan Alley on the East proposal has not
yet been seen publicly, but seemed to involve a "!tlhon bed
project. This would be in addition to a current $120 mIlhon construction project
at this institution.
In addition, Montefiore Hospital (in the Bronx) got in the wire before
the moratorium was begun and got approval for a at a cost
of $263 million. This proposal also contained more cntlcalmtenslve care beds.
To find out when public hearings are scheduled for these proposals call the
Health Systems Agency at (212) 460-9300. DJ.W.
13
CITY LIMITS/February/March 1984
ticularly the poor, minorities, women, the
elderly and the handicapped, are likely to
have access to those services.
These concerns were ignored in the de-
velopment of the Medical Facilities Plan in
New York City. The hospitals and other
health facilities were never asked these ques-
tions. It is interesting to note that State
Health Commissioner Dr. David Axelrod
was quoted in the January 20th, 1984 New
York Times as saying "any renovation by a
large teaching hospital that did not fill com-
munity health needs would not be approved."
The State Health Planning apparatus has ap-
proved the New York City plan, but they still
have not looked at community needs.
The moratorium on hospital construction
ended on December 31st, 1983. The special
loan guarantee program for financially dis-
tressed hospitals, and the legislative change
in the membership of the State Hospital
Review and Planning Council, both recom-
mended by the Governor's panel, will not
happen.
The Governor is now readying legislation
to propose to the State Legislature that only
deals with the concepts of relative need and
affordability - or how much in dollar value
is the state willing to approve every year for
capital construction for health facilities. The
words access and quality are mentioned
In Manhattan, 3 of the 7
health districts showed
dtamatic increases in
deaths due to pneumonia
and influenza. These and
other statistics taise seri-
ous questions about ac-
cess to' health care for a
large portion of the cityS
population.
once in the legislation and never defined.
Some of the construction proposals
will proceed with some changes to reduce
the proposed cost with no one ever having
examined community health needs and/or
an institution's plans or willingness to meet
these needs.
Indeed, the same costly and non-
responsive hospital-dominated medical sys-
tem will remain in place with some new
buildings. The health care needs of the
minority, poor, elderly and handicapped
populations of this city will continue to be
ignored. 0
Judy Wessler is currently a Revson Fellow
at Columbia University for this year. on
leave from her job as the Health Advocacy
Coordinator at Community Action for Le-
gal Services. She is an active member of the
Hospital Construction Task Force of the
Public interest Health Consortium of New
York City.
For more information on hospital con-
struction plans contact the Public Interest
Health Consortiwn at (2U) 222-5900, ext.
226/227.
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CITY LIMITS/February/March 1984
14
306 FIFTH AVE.
NEW YORK. N.Y. 10001
(212) 279-8300
Ask for: Jean Carbonari
Presbyterian Ousts its Nurses
'ORESBYTERIAN HOSPITAL, the city's
C largest medical center located in the
Washington Heights section of northern
Manhattan, is already making way for its
still to-be-approved modernization and con
struction program by uprooting a group of
its own employees. The medical center has
moved to evict 300 of its nurses, aJJ of whom
were lured to work at the center with the
pledge of the provision of subsidized
housing.
In response, the nurses have organized a
tenant association, and at least half ofthem
are committed to battling the giant medical
complex in court.
Cathy Fol som, vice-president of the
tenant group, is fairly typical of the nurses
being evicted: "I moved in last August, af-
ter choosing Presbyterian over other hospi-
tals because it was offering cheap,
subsidized housing," she said. "One of the
nurse recruiters confided to me that Pres-
byterian was getting more nurses because it
had housing to offer." Hospitals in the city
have experienced a nursing shortage over the
past year and have actively been vying with
each other for personnel.
But sometime last fall the hospital decid-
ed it could do without the nurses' residence
and sent letters to the tenants of 165 and 179
Fort Washington Avenue and 617 West 168th
Street, giving them a February 29th, 1984
deadline to be gone.
Richard Zucker, a hospital spokesman re- ~
fused to comment on any aspect of the evic- ~
tions except to say that a professional ~
relocation service had been hired to help the ~
nurses find new lodging. Zucker also had ...
no comment on what use the former resi- \\Wking-oo UYing: Presbyterian DUrses outside
dences would be put to in the medical their residence at 617 W. 168th St. The hospital
, d' $485 illi od ' is seeking their evictioo to make way for Its
center s pen mg m on m errnza- ode' tio .......... Ift. From left: Nancy Ed-
. d . &: hi h ' m rruza 0 p.-.... - ..
hon an construction program lor w c It moods, Kathy Held and Cathy Folsom.
is currently seeking state and federal
support.
But state Health Systems Agency officials
confirmed that the center is applying to
demolish two of the three buildings to make
way for a new 750-bed acute and general
care hospital. The third residential building
is expected to house a relocated nursing
school.
However where Presbyterian's nurses will
live may be an ongoing problem. Moderni-
zation plans were formulated as early as
1981 but nurses say they were told nothing
about the impending demolition of their
housing. Yet right into this January, Pres-
byterian continued to advertise for staff cit-
ing subsidized housing availability.
According to Folsom, however, there is lit-
tle in their income range available in the
hospital vicinity.
The nurses, who earn between $20,000 to
$25,000, were offered $1,000 payments to
leave before the February deadline, an
amount which didn't help them find safe and
affordable housing, said Folsom. Housing
suggested by the relocation firm was "far too
expensive," she said. Within recent months
two Presbyterian nurses were murdered in
nearby neighborhoods, and for most, safe-
ty is a major concern. Folsom and Kathy
Heid, president of the nurses' group, say 120
residents have pledged to fight eviction in
court.
Presbyterian, which will be describing its
modernization program before public hear-
ings in coming weeks, has apparently decid-
ed it can meet its nursing needs without the
lure of housing. But it may have to explain
to community critics how its plan will meet
their health needs in a compassionate man-
ner when it's having such a tough time with
its own personnel. 0 T.R.

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ft
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15 CITY LIMITS/February/March 1984
TBE
Tenant leaders speak at City Hall rally, February 9, to denounce the landlords' proposed new rent code. From left: William Rowen 01 New
York State Tenants and Neighborhood Coalition, Jane Bendict of the Metropolitan Council on Housing.
O
N THE VERGE of the end of its quasi-
official status, New York's largest land-
lord group has attempted a major end run
around existing tenant protections.
The Rent Stabilization Association,
which loses its IS-year legal guardianship
of some 25,000 New York City owners of
buildings with rent stabilized apartments on
April 1st, submitted a proposed new code
in January that has left tenants outraged,
politicians looking for legal loopholes and
city housing commissioner Anthony Glied-
man in a tight spot.
The code is to supply the regulatory lan-
guage for recent changes in rent stabiliza-
tion law. It was submitted in compliance
with the Omnibus Housing Act of 1983,
passed by the state legislature last summer.
That law made a number of major changes
affecting city tenants including the consoli-
dation of all rent administration under the
state's Division of Housing and Communi-
ty Renewal. This means both the Concilia-
tion and Appeals Board, which enforces the
rent stabilization system and has long been
submerged beneath an avalanche of tenant
complaints, and the RSA, the legally-
mandated membership organization for
most large building owners since 1969 and
the funder, via members' dues, of the CAB,
CITY LIMITS/February/March 1984
are out of business on April 1st.
But the new law also called on the RSA
to draft and submit a revised rent code which
would incorporate the changes in landlord-
tenant law. The code would in turn be
scrutinized and approved or rejected not by
the state DHCR which will have to use it,
but by the city's Department of Housing
Preservation and Development, an agency
that will henceforth have no direct role in
overseeing rent administration or use of the
code.
And like an ousted boss trying to cling to
power, the rent code fashioned by the RSA
contains so many clinkers that tenant groups
believe it would take months before the full
impact is felt.The code proposed by the
landlords would let owners set rents in some
instances with no certification, give co-op
boards virtually total authority over non-
purchasing building tenants and provide a
legal basis for tenants to "waive" their legal
rights. I
Already, every tenant organization has
denounced it and called for rejection in its
entirety, a demand echoed by a bevy of po-
litical officials ranging from state attorney
general Robert Abrams to numerous state
legislators and city council members.
16
IS-Year Contradiction
This last official act by the landlord group
has dramatically underscored the crude bi-
ases of a decade-and-a-half of owner self-
administration. When the Emergency
Tenant Protection Act of 1969 tapped the
RSA to be the official custodian oflandlords
with stabilized apartments, it also put a hefty
politi<;:al weapon in the group's hands. The
RSA, with the power to exact dues from ev-
ery landlord who wanted to be protected un-
der the generally more lenient sta!Jilization
system, used that dues-generated treasury
for extensive lobbying, owner propaganda
and a general campaign against tenant pro-
tections. A lawsuit filed by Attorney General
Abrams which challenges the use of those
funds is still pending. Generally, the RSA
has had free reign to use its money and pow-
er within the system.
Predictably, the R S ~ s code, produced
with $100,000 in state-awarded funds and
another $100,000 of its dues money, resur-
rects all the wishes and long-sought advan-
tages which the group has tried to win for
building owners.
In response, state senator Emmanual
Gold and assembly member Saul Weprin,
both Democrats of Queens, have introduced
I ••• .,.S ......... S
lOS' END BUN
legislation which would revoke the clause
of the Omnibus Housing Act that gave the
RSA code-writing duty, and shift the task
over to the state's DHCR. There, a new rent
administration unit is being fonned to han-
dle its vastly increased responsibilities. That
bill has the support of all major New York
tenant organizations.
However, Assembly Housing Committee
chair Pete Grannis, Democrat of Manhat-
tan, the chief sponsor of the Omnibus Hous-
ing Act last year, has said the code can and
must be amended. At hearings called by
HPD on February 15th, Grannis called on
the agency to insist that the RSA provide le-
gal citations for all of the changes in the
code. Without them, said Grannis, no real
evaluation of the code can be made. He also
points to 47 law violations which should be
excised before approval.
But even with those citations, other crit-
ics of the code have been far more blunt. The
New York State Tenant and Neighborhood
Coalition points to ffl violations of current
landlord-tenant law, and Attorney General
Robert Abrams cites 50.
NYSTNC, along with the 36-group mem-
ber Association for Neighborhood and
Housing Development, the Coalition
Against Rent Increase Passalongs and the
Metropolitan Council on Housing, have said
that the best option is to reject the tenant-
hobbling code and live under the old one un-
til a new code can be written by an indepen-
dent body such as DHCR. While that old
set of rules doesn't conform to recent law
changes, it has, long been out of date and
tenants say there is little to fear from a few
more months of its use. Most important, the
old code contains many tenant rights which
the new one takes away.
How RSA Got the Job
As copies of the RSA code were being
handed around in late January, many tenants
asked themselves just how they wound up
with the RSA producing the rules under
which the new law would be implemented.
Although there was substantial disagree-
ment about the merits of the Omnibus Hous-
ing Act, there was a universal tenant
welcome to divorcing the RSA from the
system.
According to Grannis, the provision call-
ing on the RSA to draft the code was thrown
into negotiations over the housing act at the
last minute. The Republican leaders of the
state Senate housing committee, said Gran-
nis, refused to allow either the city, via HPD,
or the state, through DHCR, to write the
17
code. Once it was accepted as political fact
that the law wouldn't pass without the RSA
code-writing provision, Grannis said he felt
more comfortable with HPD being given the
opportunity to review what the landlord
group produced.
"New York City is always going to be
Democratic," said Grannis, "but should a
Lew Lehrman [the unsuccessful Republican
gubernatorial candidate in 1982] get in, he
would gut all tenant protections." Asked
whether he had expected the resulting RSA
code to be as biased as he found it, Grannis
said yes. "But," he added, "It's in good hands.
[City housing commissioner] Tony Glied-
man can be trusted to deal with it ."
Tenant critics have insisted to the con-
trary that even a purge of the most blatant
excesses would still leave much illegal anti-
tenant language untouched.
"Any attempt to unweave this corrupt
IOI-page document in order to conform it to
law is doomed to fail," said NYSTNC chair
William Rowen at the February hearing.
Jerry O'Shea, director of the Flatbush
Tenants Council in Brooklyn, capsulized
the landlord's code caper: "This was their
attempt to go out in a blaze of guns and
glory. But it's really only blazing saddles.
They've put themselves outside the law."O
CITY LIMITS/February/March 1984
THE FAIL·SAFE BUSINESS OF REHAB
How some savvy building ownezs are playing a no-risk game called MCI.
By Bonnie Brower
M
AKE NO MISTAKE, rehabilitating New York's ancient and crumbling housing stock
is serious business. Serious, mind you - not risky. How else can you explain a housing law that,
as implemented, regularly produces these stark, contrasting results: on one hand, huge, unearned and guaranteed
profits ranging from 250 percent to over 600 percent for owners who take no risk, make little or no cash outlay
and receive deep public subsidies, and, on the other hand, enormous, excessive and frequently unaffordable
tenant rent increases that leave tenants in the position of paying all of the economic costs and receiving none
of the economic benefits?
New York City under the old rent code ..... . .
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
18 CITY LIMITS/February/March 1984
~ ~ - - - - - - - - - - ~ - - -
The old housing concept of assuring
"reasonable returns" to landlords has been
replaced in practice with a fail-safe system
of mega-buck profits. This is business, not
housing, with a vengeance.
The business in question is "major capi-
tal improvements" - known in the trade as
MCI - rehab work in rent stabilized build-
ings. Any owner can undertake this work
almost at will and have the full costs of it -
and more - paid by tenants and the public
in the form o( substantial rent increases and
deep subsidies, without either the
or participation of the tenants, or the pnor
review of the need, scope, cost or cause of
the work by any public agency. Any
building-wide repairs, rehab or replace-
ments that fall within the Internal Revenue
Code's definition of a depreciable item quali-
fy as MCI work. And any MCI work quali-
fies for major rent increases which are not
calculated to reflect the real net cost of the
rehab. These become built into the base rent
of an apartment, escalate at compounded
rates and get charged and collected for as
long as the building is standing and tenant-
ed. This may strike you as a lot like old John
D. Rockefeller's notion of free enterprise: it's
free only to owners - tenants and the pub-
lic pay dearly and forever. .
Given the desperate dual need m New
York City for decent and affordable hous-
ing, the significance of the MCI i.ssue is
large and compelling: it squarely raIses the
fundamental question of how best and most
equitably to allocate both the nec.essary
costs and resulting benefits of housmg re-
habilitation between owners, tenants and the
public in order to prevent the displacement
of tenants and the destabilization of neigh-
borhoods while ensuring the necessary up-
grading of the housing stock. the
current practice under the MCI provISIons
of the Rent Stabilization Law doesn't deal
with the fundamental problem either fairly
or reasonably.
An Eight¥ear-umg Mistake
Some background is necessary to explain
how we got to where we are and what op-
portunities exist now to bring about change.
The system that has developed is the product
of more than eight years of misinterpreta-
tion and misapplication of the MCI rent in-
crease provisions of the Rent Stabilization
Law by the soon-to-be-defunct and un-
mourned Conciliation and Appeals Board
(CAe) . The CAB was greatly enabled in its
perversion of the law by the Rent Stabiliza-
tion Association (RSA), the landlord's trade
association, which wrote the Code. '
The state legislature'S passage last June of
the Omnibus Housing Act of 1983, which
becomes effective on April 1, 1984, offers
new opportunities' to housing and tenant ad-
vocates to creatively raise MCI-related and
other issues of housing quality and afford-
ability at the same time that it significantly
raises the stakes involved. I t does this in two
ways. First, the act mandated the transfer of
the administration of the rent control and
rent stabilization laws from the City to the
state Division of Housing and Community
Renewal (DHCR), which changes $e actors
and the forum for developing and im-
plementing tenant protections. (For exam-
ple, with one crucial exception, the RSXs
quasi-official authority over rent stabilized
buildings was eliminated.) Second, the act
made enough substantive changes in the
provisions of rent stabilization to warrant
revising the existing Code in order to make
it conform to these new provisions of law.
(The Code is the compilation of rules that
govern the day-to-day administrative im-
plementation of Rent Stabilization.)
The old concept of assur-
ing reasonable retums to
landlords has been
replaced in practice with
a fail-safe system of
mega-bUCk profits. This is
business, not housing,
with a vengeance.
That's the (potentially) good news. The
bad news is that to implement the Code re-
vision, the state legislature, for reasons best
known to itself, dipped into its old trade-off
bag, amazingly assigned the revision to the
now toothless RSA, and, further heaping in-
sult on injury, awarded the RSA $100,000 for
its efforts. The act also conferred power to
accept or reject the RSXs draft new Code,
not on DHCR, but on the City's Dept. of
Housing Preservation and Development, the
very agency being stripped of its authority
to administer rent stabilization under the
new unified system. More on this crucial
matter later.
In order to understand the potential for
improvement or disaster that these major
changes present, a description of how the
MCI system currently works is in order. It
is, in theory, at least, the essence of simplic-
ity. Take the following example which ap-
peared in a letter from a Queens real estate
maven that was published in the October is-
sue of the Apartment House Institute News-
19
Letter, a real estate trade journal. The owner '
of a 160-apartment, rent stabilized building
decides to install 894 new windows to save
money on fuel cost. The windows cost $160
apiece (total cost $143,040) , and carry a debt
service of $3,401.50 per month (at 15 per-
cent interest per year) . The landlord using
only some of the real estate tools at his dis-
posal, will make more than the original in-
vestment back by the third year. From there
on its all gravy. (See Box)
The letter writer expressed his dismay that
not all owners take advantage of this incredi-
ble, multi-benefit program. In fact, the MCI
profit picture he paints is woefully inade-
quate and underestimated. An owner's real
life MCI-generated profits are, in fact , sub-
stantially greater than in the example be-
cause the normal CAB practice of
calculating MCI rent increases contains
several features of benefit to landlords which
the example does not accurately or fully
reveal:
• The example's 10-year cumulative to-
tal income from the rent increases is a low-
ball estimate, because actual MCI rent in-
creases are greatly compounded by regular
lease renewal increases set by the Rent
Guidelines Board and imposed on top of tile
MCI increases;
• The example fails to show other
sources of financial benefits to the owner
(such as the interest deductions from the 15
percent loan, and depreciation) which will
add to the profits. Under the current system,
owners may fully realize all sources of
benefits, however multiple and cumulative
they are, without any offset or reduction of
MCI rent increases being conferred on
tenants.
Although the writer's example fails to
deduct the owner's monthly debt service
from his revenue, our extensive research on
the workings ofthe MCI system reveal that
even when it is deducted from income, the
real profits to be made by an owner doing
MCI work are nothing short of staggering,
and make writer's estimate'look positively
puny. In one building, for example, the land-
lord's net profit over only 20 years was 475
percent; in another, a mere 250 percent.
And this is just a brief part of the story. We
are not quibbling over pennies here: in one
building with MCI rehab costs of just un-
der $140,000, slightly over $1 million in MCI
rent increases - without Rent Guidelines
Board compounded increases - will be col-
lected from the tenants in twenty years. And
that figure will keep on going and growing
forever.
CITY LIMITS/February/March 1984

.. "
qf Benefit
1-51 Tax Abatement
Rent Increases
InvestQ1ent 'Thlt Credit
Fuel Savings
Given the magnitude of these profits, the
most likely explanations for why all land-
lords don't use the MCI provisions of rent
stabilization seem to boil down to: 1) ignor-
ance (which, while the real estate industry
tries to cure it by letters like the one above,
training courses and printed materials like
the sixty-page manual entitled "How to Get
a Rent Increase for Major Capital Improve-
ments from Rent Stabilized Tenants," pub-
lished by the Apartment Law Insider)
nonetheless to exist, especially
among owners of one or few buildings; 2)
lack of available capital or access to private
or public sources of financing; and 3) per-
sonal or corporate agendas for properties
that don't include their continued use as rent
stabilized rental buildings. (On this last pos-
sible cause, creative owners who plan to
convert their buildings to co-op or condo
ownership have figured out how to partial-
ly finance those longer range plans by un-
dertaking MCI rehab work and passing
those costs on to the new co-op or condQ
owners, without their input as to the scope,
cost or necessity of the work.)
It is both ironic and unfortunate that the
owners and the buildings who may have the
greatest need of M CI work may not be tak-
ing advantage of the system that promotes
and pays. for it, and this situation may require
remedial action. Nonetheless, the fact re-
mains that there is a large and growing num-
ber of landlords who do use it, many
excessively and questionably, and, ali a
result, the whole area ofMCI ,!¥ork and the
extravagant profits to be made from it re-
quires the close attention of housing and
Total
"
.{j9

14,304 .. Q()
9,000.00<

planning professionals, not bankers or real
estate moguls.
How Do Tenants :Fare?
Input from housing people is essential be-
cause the excessiveness of the owners' profit
side of the MCI coin is only one-half ofthe
picture. Consider the other, perhaps more
important, side: the undue and often un-
affordable economic burden on tenants from
MCI rent increases and the destabilization
and disruption oflow and moderate income
neighborhoods, where tenant displacement
results from costly and possibly unneces-
sary MCI "improvements." This is neither
a small nor obscure problem. ANHD's
research indicates that over the past eight
years, at least 60,000 tenants have incurred
MCr rent increases -in excess of 6 percent per
year, with some · soaring as high as 42
percent .
Even more disturbing, the general pat-
tern of steep MCI rent increases is more
severe and pronounced in buildings receiv-
ing publicly subsidized loans through the
City's Article 8A Loan Program, despite
the specific statutory mandate that 8A
Loans be used to fund rehab only in build-
ings housing low income tenants, and that
their use not result in the displacement of
sucli tenants. The Association for Neigh-
borhood and Housing Development has
discovered, for example, that in 1982 alone,
over 75 percent of all apartments rehabili-
tated with 8A financing received rent in-
creases above 6 percent, with the average
increase reaching 15 percent and many in-
creases exceeding this. And we are not
referring to MCI increases that add 15 per-
cent to abnormally low rents. Rents in
many 8A buildings surveyed frequently
rose to the mid- to high-$300's, with some
peaking at above $450. Remember, these
are buildings occupied by low income peo-
ple; the inflated MCI rent increases mere-
ly establish the new base rent for the
apartments, which will be compounded by
Rent Guidelines Board increases and paid
in perpetuity.
The point these figures make is that the
massive windfall profits and double- and
triple-dipping that the Mel system allows
must be viewed within the critical context
of the unconscionable rent increases they
have produced, the general inflation rate
they stimulate, and the destabilization of
low and moderate income neighbornoods
that will result.
The truly astonishing fact is that both
the unwarranted profits and the uncon-
scionable rent increases have occurred for
over eight years despite clear and unequivo-
cal contrary protective provisions of the
Rent Stabilization Law. Originally enact-
ed to "prevent exactions of unjust, un-
reasonable and oppressive rents ... and to
forestall profiteering, speculation and other
disruptive practices .... ," the Rent Stabili-
zation Law was amended in 1975 to include
the following provisions that limit and res-
trict MCI rent increases:
• An absolute limit of 6 percent per year
on collectible rehab-related increases;
• The amortization of rehab costs for a
definite, limited five year period;
• The limitation on the amount of overall
_____ ____ ---------------__
rehab-related increases to the sum of three
real cost factors (annual maintenance and
operating costs; and allowance for manage-
ment services and annual debt service plus
an 8.5 percent profit on the owners equity.)
These statutory restrictions on MCI rent
increases unfortunately remained the best
kept secret in town - until November, 1983,
when a lawsuit, Bryant Avenue Tenants As-
sociation, et al. v. Koch, et al., was flled,
challenging the substance and procedures
of several CAB decisions that resulted in
rent increases far exceeding the 6 percent
legal limit. How could such a secret be kept
for so long in New York, a city where 75
percent of the residents are renters and,
therefore, potential victims of such sys-
tematic and illegal rent increases? Simple:
the RSXs old Code, the practical rulebook
by which the CAB implemented the Rent
Stabilization law, just omitted these provi-
sions! (To this day, the CAB denies they are
contained in the Rent Stabilization law.) It
is poetic justice that an ANHD non-legal
staffperson "discovered" the provisions.
The question of whether the upgrading
and stabilizing of New York's housing will
be treated as an of a free enterprise
system run riot or as a matter of public poli-
cy involving housing as a necessity of both
individual and community life is an issue
whose time has come. You don't have to be
a proponent of public housing to recognize
the intolerable social costs of the current
system and to advocate for substantial
reforms.
Changing the System
There are several fronts on which the
MCI issue will be pursued and from which
reforms can spring. There is the pending
lawsuit, which attacks the legality of the 'old
Code and the rent increase practices of the
CAB under it, and challenges the validity
of rent increases already imposed or in
process that . ignore the restrictive provi-
sions of the Rent Stabilization law that were
omitted from the Code. ANHD will be fil-
ing an amicus brief in this lawsuit which
will be joined by a broad array of housing
and tenant groups and public officials. This
suit covers past practices and sets the stage
for dealing with the provisions of the Om-
nibus Housing Act of 1983, which remains
unchanged from those of the stabilization
law, and contain both the restrictions of that
law and its ambiguities. The lawsuit will
take years wending its way through the
courts. If it is allowed to proceed as a class
action, its eventual resolution may affect
tens of thousands of tenants already sub-
ject to excessive and illegal MCI rent in-
creases,
In a different forum, there is the battle
over the new Code. Future-oriented, this
struggle has all the earmarks of an old-
fashioned Armageddon, Not surprisingly,
the RSXs draft new Code in every respect
makes the existing one look like a Magna
Carta for tenants, In drafting the document ,
the RSA finally lifted what remains of its
mask and virtually seized state power by
assuming legislative powers to repeal the
housing act and to replace it with its own
laws. These literally strip DHCR, the new
regulatory agency, of many existing tenant
protections, ranging from the definiton of
who is a tenant , to tenant's remedies for
lack of services if the tenant is found to
have engaged in "interference" or a bad
"course of conduct."
With respect to the MCI provisions, the
new Code not only perpetuates the dele-
tion of the old restrictive MCI provisions,
but also gilds the lilly by creating new, un-
limited categories of yet additional rent in-
creases for unspecified work that is done
"in connection with and in addition to a
concurrent 'building-wide MCL"
The battle over the Code is a big one,
that goes well beyond the MCI issue. Un-
der the act, HPD is mandated to hold pub-
lic hearings before deciding whether to
accept or reject the draft new Code. For-
tunately, the byzantine scenario created by
the state legislature has not confused hous-
ing and tenant advocates in New York City,
who have put aside ancient hostilities and
distrust and are mobilizing together to
make the views of housing consumers
known and heard at that hearing. By the
time this issue of City Limits reaches you,
HPD will have held such a hearing, and
mayor not have rendered its decision to ap-
prove or reject the Code.
Whatever HPD's decision about the draft
Code, there is little doubt that the con-
troversy over the Code will continue in
other forums.
At the same time, ANHD, in conjunc-
tion with other housing and tenant advoca-
cy groups and some elected officials will
press for the adoption of a series of legis-
lative reforms of the MCI provisions that
ANHD has developed. These reforms (see
box) address the more glaring abuses of
...
I A LRW .
Demonstrators at City
bearings on new rent code.
February 15.
21
WRITTEN BY

! To PROTECT
\ IENflNTS
\ I:; AFRfJU 0

RETE<:T (ODE!
CITY LIMITS/February/March 1984
An Equitable Rent-Improvement System
Could Work
Below are legislative reforms proposed by the Association for Neighborhood and Housing Development to
the Major Capital Improvement (MCI) provisions of the Omnibus Housing Act of 1983. For more informa-
tion, contact ANHD at (212) 239-9410.
1. TERM OF MCI RENT INCREASES: MCI rent increases
are temporary surcharges that do not become part of the base
rent of an apartment and that may be charged and collected
only for as long as it takes the owner to recover the allowable
MCI costs.
2. ELlGmLE MCI WORK: MCI work eligible for temporary
MCI surcharges shaH be limited to work that is: a) essential .
to the continued or improved functioning of a building; and
b) necessary because of the actual condition of the system or
item to be improved or its useful life; and c) not caused by
the acts or negligence of the current or former owner(s) .
3. ALWWABLE MCI COSTS: The total MCI cost that may
be passed on to tenants as temporary MCI surcharges is the
allowable cash cost of eligible improvements (excluding interest
and finance charges) minus the total amount of real estate tax
abatements under J-51 or other similar programs. The allowa-
ble cash cost will be fixed at the rates set out in the schedule
of Certified Reasonable Costs promulgated by HPD for J-51
benefits or by a comparable schedule to be promulgated by
DHCR for counties outside of New York City.
4. METHOD OF CALCULATING AND COLLECTING MCI
SURCHARGES: 8. A plan for MCI work must be filed along
with the application for MCI temporary surcharges with DHCR
prior to the beginning of any MCI work; b. The allowable MCI
costs will be amortized on a 5-year schedule; but at no time
may the collectible MCI surcharges be greater than 6 percent
of the legal rent; c. If either the 5-year amortization schedule
or later additional MCI work results in MCI surcharges ex-
ceeding 6 percent of the legal rent, the term of collection shall
be extended and the surcharge shall be collected at a maxi-
mum, constant rate of 6 percent for as long as it takes to reim- ·
burse the owner for the allowable costs and then shall be
discontinued .
5. TENANT CONSENT:No application for MCI surcharges may
be approved unless an owner submits the written consent of 2/3
of all tenants in residency to the work for which (s)he is seek-
ing MCI surcharges with the workplan and application for sur-
charges unless DHCR, after holding a hearing on notice to the
tenants, makes a written finding that the MCI work involves
an essential building system and is required by the Warrant of
Habitability and is not the result of the acts or negligence of
the current or former owner(s). If DHCR makes such a finding
and pre-approves the MCI surcharges, it shall give written no-
tice to tenants of its finding and of the tenants' right and the proce-
dures to appeal. On the application of a tenant, DHCR may stay
the beginning of the MCI work for the period during which an
appeal may be filed, unless DHCR finds that the MCI work
is an emergency.
6. WW INCOME AND HANDICAPPED PERSONS' EX-
EMPTIONS: All persons or families (including senior citizens)
whose combined household incomes make them eligible for
Section 8 rental assistance, and all handicapped persons, shall
be exempt from paying any MCI rent surcharges. In buildings
where such persons constitute 5 percent or more of the resi-
dent tenants, an owner will be eligible for enriched J-51 or other
tax abatements in an amount equal to the MCI exemptions. Such
abatements will continue for the same term as the MCI sur-
charges.
7. ANTI-HARASSMENT AND ANTI-DISPLACEMENT
FINDING:DHCR may not approve any applicaiton for MCI
surcharges until and unless it makes a written finding a) that
the owner has not harassed any resident tenant in connection
with the MCI surcharge, and b) that no tenant will be displaced
as a result of the MCI surcharges being sought. DHCR shall
send a copy of these findings to all resident tenants with a no-
tice of the process and time limits for contesting them.O
past MCI practices that our research has
documented, both by closing or narrowing
some of the gaping loopholes and by try-
ing to construct a coherent and equitable
MCI system that will encourage and
reasonably compensate owners for under-
taking necessary building-wide im-
provements.
the way in which MCI rent increases are
calculated and implemented in the SA
providers a unique and timely opportunity
to raise and pursue the fundamental ques-
tion in a way that begins to clarify the is-
sues and offers a coherent, constructive (if
partial) approach to dealing with it. The ad-
ded bonus is that, with proper education
and organizing, the initiatives to re-think
and revise the current system of funding
major capital improvements could provide
some cement to bind housing advocates and
non-profit housing providers and tenants
together in a broad-based campaign to turn
the business of rehabilitation into a hous-
ing issue.O
program.
None of these efforts-the lawsuit
challenging past MCI rent increase prac-
tices, the Code campaign, the legislative
proposals or the administrative recommen-
dations on SA-either alone or even joint-
ly can adequately address or resolve the
overriding issue of improving New York's
Finally, an ongoing rehab committee, housing stock which keeping it affordable
staffed by ANHD and composed of to low and moderate income residents.
community-based and citywide housing Only a new federal housing policy and sub-
groups, which was formed as a result of stantial federal appropriations can really
ANHD's anti-displacement work, will be deal with this twin issue, and these seem
pressing HPD for a series Qf administra- but a fantasy at present. The state and 10-
tive reforms of the City's SA and Partici- cal approaches described here do, however,
pation Loan programs, including reform of offer housing and tenant advocates and
Bonnie Brower is Executive Director of the
A.ssociationfor Neighborhood and Hous-
ing Development.
CITY _____ ________ -------______ ---
MIRABAL GETS STATE RENT POST
T
HE PERSON TO WHOM the over-
whelming number of New York City
tenants and building owners will be turning
for aid and redress of their grievances be-
ginning next month is a six-year veteran of
the Koch administration who once served
as a housing aide to former Congresswom-
an Bella Abzug.
Manuel Mirabal, an assistant comissioner
in the city housing department, has been
tapped by state housing chief Yvonne
Scruggs-Leftwich to head up her agency's
new rent administration unit and take charge
of what are expected to be mammoth new
responsibilities for one of the state's most
low-key agencies.
Mirabal will serve as Deputy Commis-
sioner for Rent Administration in the Divi-
sion of Housing and Community Renewal.
That newly created position will have
responsibility for all of the ' city's rent-
regulated apartments when the DHCR as-
sumes administration on April 1st. That in-
cludes some 300,000 units under rent
Control , and a figure ranging from 900,000
to 1,000,000 under the rent stabilization sys-
tem. In addition, the office will continue the
state's current oversight of 110,000 rent regu-
lated units in Nassau, Rockland and West-
chester counties, and another 20,000
upstate.
The addition of the city's regulated apart-
ments represents a ten-fold expansion of the
agency's current caseload. The agency's
budget, so far, however, does not reflect that
vast increase. This year the state's rent unit
gets $9.1 million to administer to the 130,000
units outside New York City. According to
Charles Hogg Of DHCR, the governor's
budget for the next fiscal year for rent ad-
ministration is $26 million. Whether that
New state rent administrator Manuel Mirabal.
will be enough to cover the immense ad-
ministrative tasks remains to be seen and
will be one of the more important issues fac-
ing the incoming director. "I took the job on
the basis that there would be adequate fund-
ing," said Mirabal recently.
To Handle Complaints
The office's needs will be many. For the
first time, New York City's owners of rent
stabilized apartments are required to register
rent levels along with the services they now
furnish. Access to that information will in the
long run make administration simpler. But
because the Omnibus Housing Act of 1983
also placed a March 31st deadline for com-
plaints on rent overcharges prior to 1980,
there will be a swelling of new complaints.
These will be added to the unresolved
mountain of complaints on that and other
issues that the soon-to-be defunct Concili-
ation and Appeal sBo()ard hands over to the
state. Because it has been estimated by state
officials that over half of the city's rent stabi-
lized tenants are paying illegally high rents,
tenants are being urged to file complaints be-
fore that deadline.
Those two administrative tasks, along
with establishing an enforcement mechan-
ism, will be a major undertaking.
Mirabal, who is 33 years old, comes to
those tasks having run several city housing
programs. Since 1980 he has been Assistant
Commissioner for Community Develop-
ment and Neighborhood Preservation with
responsibility for implementing many of the
government-funded housing programs as
well as generating plans for city-owned ur-
ban renewal and in rem property. These have
included much-disputed development plans
on the Upper West Side and Lower East Side
of Manhattan, and in Williamsburgh,
Brooklyn. He was also in charge oftechni-
cal assistance contracts with community
groups, as well as the string of eleven neigh-
borhood preservation offices.
Previous to that post, Mirabal directed the
city's office of relocation where he de-
veloped and implemented the consolidation
program for the then-quickly growing num-
ber of dilalpidated tax -foreclosed city-owned
buildings. He joined the Koch adminstration
soon after the mayor took office in February,
1978, working in the mayor's Community
Board Assistance Unit. Before that, Mirabal
served as district manager of Community
Board #9 in Harlem and the Upper West
Side, having been a housing aide to former
Congresswoman Bella Abzug from 1973 to
1977.0 T.R.
CAB Eases Rules as Overcharge Complaint Deadline Nean
U
NDER MOUNTING PRESSURE
from tenant organizations, including
a brief takeover of its offices in January, the
Conciliation andAppeals Board, the outgo-
ing enforcer of rent stabilized apartment
regulations, has simplified its procedures
for filing rent overcharge complaints.
Tenants are no longer required to attach
a lease or rent receipt to their complaint
forms, the CAB has ruled.
Tenants who believe they may be paying
higher rents than legally allowed since be-
fore April, 1980 have until March 31st this
year to file overcharge complaints with the
CAB. If no complaint is filed for an apart-
ment, the rent in place on that date becomes
the l e ~ a l base rent , providing owners with
a statute of limitations on past overcharges.
The CAB also has said that because of the
limited availability ofthe official complaint
forms , tenants can write out their complaint
and mail it in. These letters do not substi-
tute for fIling the required "grey" forms
which will be mailed to the tenant and must
be filled out. They do, however, reserve the
right for the tenant to challenge overcharges,
valid from the date written.
State Attorney General Robert Abrams
23
said his oftlce has won over $10 million in
rent overcharge repayments and that
"hundreds of thousands" of New Yorkers
continue to pay rent at higher levels than le-
gally allowed.
In an effort to race the clock to the statute
oflimitations on overcharge filings, tenant
groups are urging all tenants in any doubt
as to their rent level to file complaints be-
fore the deadline. Copies of a free newslet-
ter and instruction sheet are available from
the New York State Tenant and Neighbor-
hood Coalition at (212) 964-7260.0
EYEING AI,.ANY'S
HOUSING
POTENTIAL
By Rev. Donald tAo Sakano
I
N THESE TRYING times the astute
housing advocate will have one eye
trained on the domgs in the state capital,
while the other eye is fixed firmly on what's
happening in Washington D.C. However,
the more one looks the. more it becomes
frustratingly clear that there is little or no
relationship between activities at the fed-
eral and local levels . . \.nd lately, anyone
who is watching closely _ isks going cross-
eyed as the Congress and state legislatures
strive to switch roles before one's very eyes.
The Congress, leaning into the Adminis-
tration's downhill slide on housing pro-
grams, has all but eliminated the new
construction and substantial rehab pro-
grams. On the upswing, the New York State
legislature, in a well intentioned if not
wholehearted attempt to do something to
fill the void, has enacted a number of meas-
ures designed to add new units to the hous- \
ing supply for low and moderate-income
people. One thinks of the Homeless Hous-
ing and Assistance Program and the Rural
Rental Assistance as examples of state
responses to the federal government's now-
you-see-me-now-you-don't manuevers of
late.
For the last fifty years, Washington has
been the backbone to the low and moder-
ate income housing movement. True, the
history is a rather disappointing series of
stop-and-go efforts that have lacked both
continuity and good program design. But
at least we had a sense of confidence that
the federal commitment was there. Now,
one can't be so sure. In fact, we have ev-
ery reason to believe that we have em-
barked on an era in housing history that
prompts us to recall the infamous Nixon
"moratorium" with a strange kind of roman-
tic longing. The federal government can
now look upop the ill-housed, the under-
housed and the non-housed of this nation
and say, "Not my job." Shaken and con-
fused, we find ourselves reaching out to our
must-be-balanced state budget and try to
squeeze blood out of a stone.
1ilsk Force on Low and
Moderate Income Housing
This year housing advocates should call
upon the Governor and the state legislature
to establish a coherent and coordinated set
of housing policies and programs. Current-
ly, no one seems to know which agency has
the responsibility to develop and implement
creative ways to expand and improve the
state's housing stock.
The present bureaucratic structure is a
confusing collage of functions and unrelat-
ed programs spread out over at least five
state agencies - the Division of Housing
and Community Renewal, the Department
of Social Services, the Department of State,
the mortgage fmance agency (SONYMA)
and the Housing Finance Agency. This "fol-
low the bouncing ball" approach to policy
formation and program development has
really got to go.
The Governor should appoint a Task
Force on Low and Moderate Income Hous-
ing composed of key staff from the vari-
ous state and local housing agencies as well
as experts from the non-profit and private
sectors. The paralysis in Washington alone
should compel the best housing minds we
have to come together to decide on a feasi-
ble plan of action for the use of limited
resources. Enough of fragmented and un-
coordinated programming at the state level!
While we struggle with the meaning of
the federal government's turning its back
on the. housing crisis, there are several im-
portant measures that will come before this
session of the state legislature that can al-
leviate the pain somewhat. First of all, the
Governor's State of the State Message and
Executive Budget propose to the legislature
CITY _____ ____ ------___ -------,.
that there be some new housing initiatives.
He suggests that the state expand its tax-
exempt bonding programs to create more
housing opportunities for first-time
homebuyers (SONYMA) and for low and
moderate income renters(Housing Finance
Agency). by referring explicity to the popu-
lar Nehemiah housing project in East
Brooklyn, the Governor calls upon the
voluntary, church and private sectors to
participate in the financing of housing. In
this way public subsidy dollars can be
leveraged to reach lower economic groups
that otherwise would not have access to
home ownership opportunities.
Expanding the Housing Supply
The Governor has also proposed to in-
crease the funding levels of the Homeless
Housing and Assistance Program ($7.5 mil-
lion above last year's $12.5 million) and the
Rural Rental Assistance Program ($5 mil-
lion more to leverage federal funds from
the Farmers Home Administration). Under
the category of new programs there will be
bills to establish a Housing Trust Fund,
fueled by a new "filing fee" of $100 per unit
for luxury co-ops and condos, generating
an expected $5 million during the first year.
Also, the Governor wants to see a new
Homesteading Program funded at $5 mil-
lipn that will assist some 500 units of
housing.
Neighborhood and Rural Preservation
Companies
A particularly unhappy paragraph to read
in the Governor's Executive Budget was the
one that recommended reductions in spend-
ing for the Neighborhood/Rural Preserva-
tion Companies and Urban Initiative
programs. To add insult to injury, no per-
manent solution is offered to raise or
eliminate the funding "cap" problem (cur-
rently a limit of $300,000 lifetime funding
for each group), but simply apes last year's
offer to extend funding to the "cap" groups
for another year. This piece-meal solution
has already proven to be a nightmare at the
level. These are hard-
working organizations which ought to be
treated better. It is time for the Governor
and state legislature to express its appreci-
ation for the work being done by Neigh-
borhood Preservation Companies by
eliminating the funding cap so that vital
groups will not go out of existence, victims
of their own success.
Low Interest Loans
A measure that should have been enact-
ed in Albany a long time ago is a state par-
ticipation loan program. Modeled after the
program in New York City, a below-market
interest rehab loan is created by blending
public dollars with funds from com'entional
lending sources. In the city, this is done us-
ing federal Community Development Block
Grant funds. There are several ways the
state could do this. Assemblyman Pete
Grannis (Chair of the Housing Committee)
has proposed using the interest income
from the SONYMA insurance fund (ap-
proximately $6 million annually). The in-
terest rate could be brought down even
further by engaging the use of funds raised
by tax-exempt bonds. These loans are crit-
ically needed to breathe life into the now
dormant projects of many neighborhood-
based nonprofit developers and others who
are committed to produce units for low and
Enough of fragmented
and uncoordinated hous-
ing progmmming at the
state level!
moderate income people.
Another creative source of funds for
financing housing rehabilitation is the pool-
ing of the state rent security deposits that
are now on deposit in special accounts all
over the state. Designed to bring down the .
interest rate to about 8 percent, this idea
is a sleeping giant waiting to be aroused.
Sponsored by Assemblyman Herman D.
Farrell, the New York State Comnumity In-
vestment Corporation .Act would establish
a mechanism for pooling up to
$450,000,000 in security deposits and still
make them returnable to tenants at 5 per-
cent interest.
Tenant Protections
While many housing advocates are busy'
lobbying their state representatives to enact
programs that will assist in the preserva-
tion of the existing stock and the expansion
of affordable housing units, we should not
neglect tenant protections as an important
part of that strategy. In the face of growing
gentrification in some areas and disinvest-
ment in others, displacement of low and
moderate income people must be prevent-
ed by assuring that there are laws to pro-
tect tenants from inappropriate rent
25
increases and arbitrary eviction proceed-
ings. This year we should push hard to ex-
tend rent and eviction protections to
uncovered areas of our housing stock -
mobile homes and three-to-six unit build-
ings come quickly to mind. Also, remem-
ber that most of the geographical area of
the state has never had the benefits of the
Rent Stabilization Law or the Emergency
Tenant Protection Act (ETPA). It is only
equitable to counteract the pressures of
"market forces, usually spurred by public
incentives," with a set of appropriate and
fair protections for tenants. Although this
is an 'off-year" for action on the ETPA, it
is the year to pass a measure that at least
asserts the place for a just-cause for evic-
tion provisions in every lease in the state
of New York. In this way, tenants will have
a right to lease-renewal and can only be
evicted for non-payment of rent or other
causes that are delinieated in the law.
Other important issues that relate to
tenant protections will come before the
legislature. There will be a proposal to ex-
tend Seniors Citizens Rent Increase Ex-
emption (SCRIE) benefits to the disabled
as well as to protect eligible senior citizens
from receiving rent increases due to capi-
tal improvement pass-alongs. Also, for the
luxury-rent but rent-gouged crowd, there
will be a serious attempt in Albany to keep
apartments built using the city's 421-A tax
abatement program under the Rent Stabili-
zation Law.
Go Get 'Em
Yes, the Albany scene is becoming in-
creasingly important as Washingtron con-
tinues to hide under the bed. A wise
advocate, however, will know that there is
just so much a state budget can carry and
that housing for low and moderate income
people requires a massive social commit-
ment (read dollars) that is only possible at
the federal level.
But there is so much more that state can
do to improve the existing housing stock
as well as stimulate the production of new
units for the surging demand for decent and
affordable housing. 1984 could be a turn-
ing point in Albany's attitude about hous-
ing. Our Governor and representatives in
the Assembly and Senate need to hear that
it is time to have a clear housing policy and
a coordinated set of housing programs that
have something to do with real honest-to-
goodness needs. Finally, it is you who have
to tell them.o
CITY LIMITS/February/March 1984
Real Estate's Capitalist Eagiae
By Rachel B. Godin
The Urban Real Eslllle Game: Playing Mo-
nopoly With Real Money, I7yJoe R. Feagin,
published by Prentice-Hall, Inc. $7.95214
pp .
. . . The so-called housing shortage,
which plays such a great role in the
Press nowadays, ... is not something
peculiar to the present . . .. On the
contrary, all oppressed classes in all
periods suffered more or less uniform-
ly from it. In order to make an end of
this housing shortage there is only one
means: to abolish altogether the ex-
ploitation and oppression of the work-
ing class I7y the ruling class.
-from The Housing Question,
by Friedrich Engels, 1lJ72
TT ISN'T ENOUGH THESE DAYS 1D
• write, as Joe Feagin does in The Urban
Real Estate Game, simply that "cities grow
and die largely in response to the needs of
capitalism." So, as they say, what else is
new? Calvin Coolidge, that great American
thinker, may have put it best more than half
a century ago with his pithy statement that
"the business of America is business."
In other words, the business of American
is not necessarily to foster so-
cial justice, economic democracy, or univer-
sal equality, unless any of them happen to
be easily attainable within the framework of
a political economy based on the pursuit of
profit. The U.S. populace, held in check by
the often illusory promise of upward social
mobility within the capitalist system, has
generally assented to this social compact.
But when living conditions have become too
trying as a result of "market forces," most
notably during the Great Depression of the
1930s, the public has sought government in-
terjection of "higher values" into the essen-
tially private sector decision-making that
has otherwise shaped the U.S.
What happens when the basic human
need for shelter has to be met in a capitalist
economy? Over the years the housing and
real estate markets, particularly in urban
areas, have proven sufficiently predatory to
provoke public outcry and political action.
This separates real estate and housing from
many sectors of the economy where virtu-
CITY LIMITS/February/March 1984
ally no activity is subjected to public scru-
tiny. It also puts government in a pivotal role,
right at the cutting edge of class conflict.
Government encourages investors' and
developers' accumulation of capital with
favorable tax laws and other incentive pro-
grams. In view of that, can measures like
zoning, tenant protections, and environmen-
tal impact regulations ensure that housing
needs of all people are met? The answer is,
in the absence of huge infusions of public
money creating an alternative real estate and
housing economy, of course not. Large scale
rehabilitation of New York City'S in rem
housing stock is typical of the kind of
government activity that rarely happens; it
would pose too immediate a threat to the
landlords and developers who count on a
scarcity of housing to buoy up demand-
and profits.
The context to be derived from a basic
Marxian analysis of real estate Js invalua-
ble to anyone who wants to understand why
housing and control ofland are such charged
political issues. About the most one can say
of .The Urban Real Estate Game is that at
least sociologist Joe Feagin tries to apply
this analysis to issues like plant closings,
gentrification, suburban sprawl, mass tran-
sit funding, co-op and condominium con-
version. But, alas, The Urban Real Estate
Game reads like a "Classic Comics lliustrat-
26
ed" version of Friedrich Engels' The Hous-
ing Question, a classic 19th Century
Marxian tract on the production and owner-
ship of shelter. Feagin's passion for the ob-
vious, coupled with a laborious prose style
devoid of irony or humor, make the book
painfully difficult to read perhaps especially
for those who agree with the author's basic
contention.
A Simplistic Analysis
Polemical overkill sets in early; well
enough is never left alone. A section on
citizen protests against shopping center ex-
pansion is entitled "People Who Hate
Malls." The facts about the social costs of
corporate flight, amply compelling on their
own, are supposedly emphasized by the
lengthy reproduction of the lyrics of a trite
song ("The corporation bosses with bloody
arrogance say 'profits aren't high enough, we
have to close this plant;etc.). At the end of
three stanzas, Feagin adds gratuitously,
"anger and pain are clearly evident here." As
if we hadn't guessed.
The complexities of urban decay - and ur-
ban society-are given short shrift. For ex-
ample, the author simplistically implies that
the Paramus, New Jersey Mall was basical-
ly responsible for the decay in downtown
areas of nearby cities like Newark. By this
.I
logic, a mall must be largely responsible for
the decline of the Hub in the South Bronx.
Housing abandonment gets a scant page of
attention, with no mention of government
policies that have either encouraged or dis-
couraged housing disinvestment. The
author throws out the stark fact that "fifty
to seventy-five percent of existing tenants
cannot afford condo-converted apartments,"
without explaining the skewed economics
of conversion versus rental housing costs.
Feagin frequently employs the disingenu-
ous technique of setting up straw men in the
form of "experts" with apparently obnoxious
or blatantly foolish points of view. The U r-
ban Land Institute is one of the author's
favorite foils, as are other industry groups
like the shopping mall and housing de-
velopers. On closer examination, though,
the "experts" aren't so much wrong as they
are playing the game by completely differ-
ent rules from Feagin's. For instance, a so-
cial scientist "argues that from the standpoint
of the city as a whole gentrification
represents good revitalization." Feagin coun-
ters that "this is mythology, for certain so-
cial classes benefit much more than others
PAYING
TOO
MUCH
from gentrification and condo-fication."
"Good revitalization" to the social scientist
is whatever brings the most wealth to the
city, be it in the hands of the many or the few.
Feagin is concerned only about the equita-
ble distribution of wealth. The "expert" may
be misguided, but his remark only amounts
to mythology if Feagin were to take on
directly the issue of why it is important that
wealth be distributed equitably. Occasion-
al sections go into this, but they rely on read-
ers' knee-jerk, "bleeding heart" reactions to
mentions of the homeless, the unemployed,
the non-white, and poor for their impact. It
is hard to imagine that the only reason an
average person can't afford housing in the
U.S. today is because he or she lost his or
her job when the plant moved to Hong Kong
or the suburbs or the sun belt, or because he
or she is discriminated against on the basis
of gender or color. Yet The Urban Real Es-
tate Game is sketchy about the effects of
demographics and the national economy on
housing costs.
Repetitious and poorly organized, the
book smacks of having been thrown together
in a hurry to cash in on the national atten-
tion being given "The Housi ng Crisis:' It
may be a small point , but Feagin fails even
to mention his philosophical mentors, Marx
and Engels. Perhaps he realized that he has
not served their memories well with The
Urban Real Estate Game. Under the cir-
cumstances, it's a shame that Engels isn't
around to write it himself.
What is meant today by housing short-
age is the peculiar intensification of
the bad housing coru:/.itions of the wor-
kers as the result of the sudden rush
of population 10 the big towns; a
colossal increase in rents, a stillfur-
ther aggravation of overcrowding in
the individual houses, and,for some,
the impossibility of finding a place to
live in at all. And this housing short-
age gets talked of so much only be-
cause it does not limit itself to the
working class but has affected the pet-
ty bourgeoisie also.
On second thought, maybe he already
has.D
Rachel Gor/in is afreelance writer who fre-
quently contributes to City Limits.
LOW COST ACCOUNTING
Financial Management Center is pleased to
announce its Low Cost Accounting Program.
Each client will meet at our office with em ac-
countant with extensive nOh-profit experience.
The cost may be as low as $720 for the year,
billed at $60. per month.
FOR
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any of the following services:
• Unlimited phone calls to our accountants
For more information about Low Cost Accounting
contact Francie Meth at .
, , ~ C FlNANaAI. MANAGEMENT CENTER
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27
to answer any questions.
• Set up books.
• Prepare quarterly tax filings.
• Review ledger quarterly.
• Preparation of W-2, W-3 forms, 1099
forms.
• Fiscal year and preparation of 990, 6750,
1120.
• Prepare year end compilation.
EEl (212) 575-1816
CITY LIMITS/February/March 1984
Jews/ Borough Park and ,Q Malodorous Cartoon
Dear City Limits:
Just finished reading your article on Borough Park ("Boro
Park's Untold Story," January, 1984). Brought back memories
of our struggle with the same forces, the same power structures.
Use of the Supreme Court, whose judges do the will of the Es-
posito machine and who make Housing Court efforts null and
void. Esposito's righthand man, William Garry, and his assis-
tants: the same heavies, used to crush the weak and defenseless.
The tragedies are heightened, of course, and horror mounts,
when you read of the victims, who were in most need of the
support and succor of a community that holds the aged and
defenseless and the poOr as a religious obligation.
We are indebted to you for your dedication and compassion.
Beth Steinberg
Brooklyn
Dear City Limits:
I would appreciate receiving four copies of the January issue
of City limits. I am interested in the article about Borough Park.
I am anxjous to put these copies into the hands of Borough 'Park
people I know who need the education this article will give them.
You're doing a fine job. A friend in my building subscribes
to the paper and keeps me informed from time to time. I cannot
subscribe. I have difficulty readjng - poor eyesight. Many
thanks.
Belle 1. Checkanover
Brooklyn
Dear City Limits:
Your article "Boro Park's Untold Story; appears to be a thorough
investigative report of a very sad scene - that of religious organi-
zations and individuals "emptying" Boro Park of residents in a
manner totally in opposition to the principles upon which that re-
ligious community is based. As a Jew-albeit not a Brooklyn
resident - I am distressed to see that such a scenerio is unfolding
especially at a time when cheap, affordable housing is needed by
many poor residents of Brooklyn, Jews and non-Jews alike. I am
not so naive as to expect "more" out of Jews and Jewish institu-
tions, but holdjng them to the same standard that we should ex-
pect of all landlords and neighborhood organizations, many are
found lacking, as Robbins' research clearly indicates.
It was heartening, especially in light of the details brought out
in'the article, to read of the work being done by Marvin Schick,
chairman of the Borough Park Housing - Senior Citizen Project.
, His work in the community and his periodic columns in such com-
munity newspapers as the Long Island Jewish Hbrld, are outstand-
ing counterpoints to the ugly activities now going on as the
neighborhood of Boro Park undergoes another in a series of peri-
odic transitions.
While reading this issue of City Limits. I happened to notice
the cartoon on page 16. This cartoon unfurtunately appears almost
identical to many anti-Semitic graphics that have appeared in ex-
treme right-wing periodicals, and may, in fact, have "slipped by"
someone on your staff. In any event, as we all know, even a whiff
CITY LIMITS/February/March 1984 28
of anti-Semitism (and the above mentioned graphic had a strong
odor to it ... ) can go a long way toward delegitimizing not only
"Boro Park's Untold Story; but also City Limits in general.
Arieh Lebowitz
Fifth Avenue
Manhattan
Dear City Limits:
I am awed by the excellence of issue after: issue of City Limits.
I read most articles and learn from each of them. I didn't think
I had much interest in Boro Park, but once I got started, I was
hooked by the thoroughness and excellent investigative depth
of the piece. Bravo to the whole staff.
Alas, I have one criticism. I was offended by the cartoon in
the January 1984 issue on page 16, which, to me, has gratuitous
anti-semitic overtones. The caricatures are grotesque and irrele-
vant to the valid point being made in the cartoon.
' Keep up the fine work, but watch out for unintended slights.
Frances Goldin
East 11th St.
Manhattan
Dear City Limits:
I particularly appreciated your tribute to the heroic efforts
of the late Harry Berger in combatting the harassment of the older
tenants in the building in which he resided ("Boro Park's Untold
Story," Jan. 84) .
It is indeed ironic that the rehabilitated building is to be con-
verted to housing for seniors. Though I am ill and cannot do so
in person, I am writing to The Boro Park Interagency Council on
the Aging and proposing that they demand that 1314 50th Street
be named after Harry Berger. May I have your permission to
reproduce sections of your article for this purpose?
Thank you fur introducing me to your excellent and admira-
ble magazine. Enclosed fmd my check for two-year subscription.
Blanche Brody
Lafayette St.
~ wish to thank readers Arieh Lebowitz and Frances Goldin for
making us take a hard look at our canoon from last issue. They
are right: it is offensive. Our apologies to all of our readers -
both those who werent, as well as those who were offended. City
Limits staff.
I
No House Sense
Dear City Limits:
Regarding the August-September 1983 and October 1983
Letters section of City Limits, I noted a position taken by Ms.
Sylvia Orans and a reply by Mr. Harry DeRienzo regarding the
"Housing Sense" Program of HPD.
While I can appreciate Ms. Orans' outrage regarding an un-
fortunate political remark, it would appear that her criticism
might very well be interpreted as professionally self-serving.
Perhaps no program developed by HPD as part of the ad-
ministration would be acceptable.
This program, no matter the source, carries with it broad
possibilities. Its potential effects outside of housing are
enormous.
It is a "dangerous program" in that it may expose future
voters to the mechanics whereby they "make the system work."
Properly expanded, this program could, long-term, have a
great impact upon delivery of community services and conduct
of government. Housing education is the least of its implications.
Sincerely,
1. O'Shea
Director
Flatbush Tenants Council
Brooklyn
Enough Co-op Taxes . Already
Dear City Limits:
The recent article "Building a Housing Trust Fund" (City
Limits - December 1983) contains a proposal to tax the increase
in value upon the resale of a cooperative. Our organization, com-
posed of housing cooperatives of all economic levels in New
York, is opposed to this tax proposal.
It is too simplistic to say that if you bought the stock in a
housing cooperative for "X" dollars and sold the stock for "Y"
dollars then you should pay a resale tax, at a rate to be deter-
mined by the number of years of ownership, on the increased
value ($Y-$X). Why would no adjustments be made for con-
tributions to capital, special assessments, apartment improve-
ments, sales costs, co-op flip or waiver of option fees and the
decreased value of the dollar from the time of original purchase?
The increase value or gain is now being taxed. Section 121
of the Internal Revenue Code provides for the one time exclu-
sion from taxable gain a certain amount on the sale of the prin-
ciple residence by a person who has attained age 55. Section
121 (d) (3) makes this exclusion applicable to tenant/stockholders
in cooperative housing corporations. Section 1034 IRC outlines
the limits on gains to be taxed on the sale of a principle resi-
dence. Section 1034(f) includes tenant/stockholders in cooper-
ative housing cooperatives. Both New York State and New York
City follow the Federal statute in taxing such gains. Why should
there be another tax? Why not earmark the revenues from the
existing tax on gains to this Housing Trust Fund?
Why are cooperatives and condominiums being singled out
for this tax to the exclusion of all residential buildings, both pri-
vate homes and other multi-family housing?
We are also opposed to the new tax on tenant/stockholders
proposed by Peter "A Luxury Housing Tax," in the same
issue. .
First. How is the value of the stock to be valued and by
whom?
Second. This is a tax on the value of some personal property,
the stock in a cooperative housing corporation. Why not a tax
on all the securities owned having a value exceeding $200,000?
Why stop here and not have a tax on all assets? The revenue
potential boggles the mind! Is this the tax wave of the future?
Third. Tenant/stockholders in housing cooperatives are now
paying more than their fair share of taxes which are included
in the carrying or ·maintenance charges paid to the cooperative.
These taxes include real estate taxes, school taxes, corporate fran-
chise tax, corporate income tax, special municipality assess-
ments, to name a few.
Decent housing at 'affordable prices, or what one is willing
to pay, is our goal too. Energies would be better spent in seeing
that the taxes we are now paying are better allocated and used
for housing rather than looking to impose another level of taxa-
tion which in the past has often proven to be counter-productive
where housing is concerned.
Charles Rappaport
President, Federation of New York
Housing Cooperatives-Section 213's.
Flushing
. .. a quarmly journal for housin, Ktivists .nd community
or,.nize,s. 01 SHEL TERFORCE contain information,
MWS and a".lysis that an't M found in any housin,
publication.
ANAlYSIS:
HOW TO:
REPOItTlNG:
PLUS:
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Propame, HouGn, Court ...
Buildinr • Ten.nt Union,
N...,u.tinr with Landlords,
Winnin, Rent Control, Pullin,
• Rent Strik . ...
Newe and An.lysi. of housing
.troI,l .. around the countl'y
. and .broad
Book Reviews, From the
Gr ... roota, Facts .nel Fi,urea,
Lecal Developments, Filma,
Jobs ...
SUBSCRIPl'ION: 18.00 for 6 iNa.. SAMPLE COPY: '1.50
Nme ______________________________ _
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SHELTERFORCE, lIIMaiftSt., EutOr .... e. N.J . 07018
CITY LIMITS/February/March 1984
c:? VOLUNTEERS NEEDED FOR
HOUSING COURT MONITORING
PROJECT: The City-wide Task Force on
Housing Court is in the middle of a massive
project revealing the effectiveness and the
problems in Housing Court. Housing Court
is one of the most utilized courts in New
York City with over 400,000 tenants a year
receiving summonses.
Throughout housing court's history, it has
received much criticism for its failure to ful-
fiU its mandate to "effectuate proper hous-
ing maintenance standards." With the city in
the middle of a major housing crisis, the
question to be asked is: "Does the Housing
Court help or hurt the housing stock and the
tenants of New York City?"
Volunteers are needed to observe in Hous-
ing Court. All volunteers will be trained to
become courtroom monitors. The Task
Force welcomes the help of students, seniors
unemployed, or anyone interested in hous-
ing issues. All participants will gain a bet-
ter understanding of housing court
procedures, landlord-tenant relations, and
our judicial system. For further information
please call 471-5900 or 583-8400.0
c:?LEGAL HANDBOOK FOR COM-
MUNITY ORGANIZATIONS: A new
handbook that provides answers to many of
the legal problems encountered by neigh-
borhood development organizations is now
available from the Community Develop-
ment Legal Assistance Center of the Coun-
cil of New York Law Associates.
The "Legal Handbook for Community
Development Organizations" was written to
assist groups in understanding and resolv-
ing legal questions faced in the various
stages of their development activities.
The handbook explains the unique fea-
tures of New York law as it relates to com-
munity development programs and details
the differences between straight not-for-
profit corporations, local development cor-
porations, housing development fund cor-
p<'rations and subsidiary corporations. A
major section of the manual explains how
groups can qualify for and maintain tax-
exempt status under section 501 (c) (3) of
the federal internal revenue code.
The handbook includes chapters on:
Whether To Incorporate; Forming a Not-
for-Profit Corporation; Adopting By-Laws;
Exemption from Federal Income Taxation;
Registration and Reporting Requirements;
Responsibilities and Potential Liability of
CITY LIMITS/February/March 1984
Directors; Conducting a Business through
a Subsidiary.
Two composite case studies are included
to illustrate the legal issues discussed in the
handbook. The appendix contains sample
forms for certificates of registration and
reporting requirements.
The "Legal Handbook for Community
Development Organizations" is available
from the Council of New York Law Associ-
ates, 36 West 44th Street, New York, New
York 10036 (212) 840-1541 at a cost of
$20.00, plus $2.00 for mailing.o
cr INTERNSIllPS IN COMMUNITY
ECONOMIC DEVEWPMENT: The
Public/Private Ventures & Development
Training Institute has announced that it is
accepting applications for the third class of
the National Internship in Community Eco-
nomic Development. The Internship is a
twelve-month program for managers of or-
ganizations working in low and moderate in-
come communities of rural and urban areas.
Joseph McNeely, Director of the Institute,
described the program as a "unique oppor-
tunity for active practitioners in communi-
ty based development corporations to get
comprehensive and high quality training
without leaving their important jobs." A
30
limited number of candidates employed by
public agencies or private business and who
work in neighborhood development are also
selected each year. "Priority will be given
to women and minority candidates," said
Linda Manick, Director of Admissions. The
deadline for applications is April 1, 1984.
The 1984-85 program will consist of five
intensive instructional workshops spread
over the twelve months. The curriculum
contains three major sequences: 1) Commu-
nity Economic Development Strategies; 2)
Project Development and Finance; and 3)
Management/Organization Effectiveness.
Between the workshops, staff of the Insti-
tute provide regular on-site assistance to the
Interns. A class of 35 Interns will kick-off
the 1985 Class with the first workshop in
July, 1984.
Individual internships are funded by na-
tional and local foundations and corpora-
tions. The Institute staff is committed to a
joint fund-raising effort to assist the appli-
cants and their employing organizations to
solicit funding sufficient to cover the costs
of participating in the Internship. The In-
tern's organization must agree to allow the
Intern adequate time to complete the re-
quirements of the program. Three impor-
tant criteria for the intern selection are:
• a career goal of work in community
economic development;
• current employment as an executive
director or development manager in a
non-profit community development or-
ganization.
• a minimum of three or four years of ex-
perience working with neighborhood
organizations.
As a condition for acceptance of financial
support in the program, each intern must
enter into a formal agreement with P/PV to
remain with his/her organization for at least
one year after completion of the Internship.
The Institute offers this class an oppor-
tunity to complete a Master of Science
degree in City and Regional Planning at a
greatly reduced cost. Following application
to the Pratt Institute and successful comple-
tion of the Internship, Interns are eligible for
39 graduate credits with Pratt. The Pratt In-
stitute is a private, fully-accredited univer-
sity in New York. Pratt also offers intensive
workshops to enable Interns to complete the
degree after the Internship year.
Applications and additional information
may be obtained by writing to: Linda Ma-
nick, 914 West 36th Street, Baltimore,
Maryland 212U, (301) 243-1920.0
Pratt Institute
Continuing Education
NEIGHBORHOOD CHANGE
THROUGH COMPUTER GRAPHICS
A new course for architects, planners. and com-
munity development organizations using com-
puter graphics to simulate the effects of zoning
changes. nevv construction. increased density.
and changes in land use.
Taught by Dr: Michael Zisser; Chairperson.
Department of City and Regional Planning. and
Dr. Gregory Matioff. Educational Technology
Specialist.
Saturday, March 31 and April 7, 9am-12pm, S85.
Cell 636·3453 to register.
Senior Urban
Planner"Mortgage Analyst
$16,000 per annum and up. Masters in Urban Planning
(or close to it) preferred. Basic assignment is to help
building owners of multiple family buildings to pack-
age building rehabilitation loan applications.
Contact Max Wiener. 212-365-7400. West Bronx Hous-
ing and Neighborhood Resource Center for inteflliew
appointment.
If you would like to:
• Bring dollars and jobs into your community
• learn the ins and outs of
- housing development
- industrial and commercial real estate development
- business development and job training programs
• Gain college credit while you learn
Then the PRArr COMMUNITY ECONOMIC DEVEWPMENT INTERNSHIP is for you.
This year-long on-the-job training program is for economic development managers in community-
based organizations. It includes four workshop retreats and several day-long seminars. The fee is $2,750;
financial aid may be available. For more information, mail in the coupon below to:
Patricia Swann; Pratt Center; 379 DeKalb Avenue; Brooklyn, NY 11205; 636-3486.
NAME _____________________ PHONE _______ _
ORGANIZATION __________________________ _
ADDRESS _____________________________ __
CITY/BOROUGH STATE ZIP ___ _
Please send me 0 more information on the Pratt Community
Economic Development Internship
o an application (deadline for
applications: MARCH 23, 1984)
31
CITY LIMITS/February/March 1984
Sweat Equity in
Harlem
Carter's Urban
Policy
Solar-Sense for the
Poor
Saga of the West
Side Squatters
Growth Agenda f~r
the Eighties, Pt. I
(Pt. IIphotocopy in.
eluded with this
purchase)
Pensions and
Housing
Shopsteading
City's
"Homesteading"
Is Clinton for Sale?
Jersey City's
Redevelopment
Battle .
How NY Got a New
Co.()p Law
Co-op Bank, Pt. II

Send me these specially-priced issues of CITY LIMITS: •
$1.50 each, 3 for $4.00, 4 or more $1.00 per copy.
MONTHIYR. MONTHIYR. MONTHIYR.
~aD1e _
Address/~p ___
Total Number of Copies__ Amount Enclosed__ Make checks payable to: CITY LIMITS.
Send to: BACK PAGES, CITY LIMITS, 424 West 33rd St. NY, NY '10001

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