City Limits Magazine, June/July 1979 Issue

8/3/2019 City Limits Magazine, June/July 1979 Issue

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CITY LIMITSCOMMUNITY HOUSING NEWS

JUNE/JULY 1979 VOL. 4 NO.5GARDENS, PARKS SUPPLANTVACANT LOTS IN THE BRONX

Tires which have been converted into planters line Barretto Street Park.by Penny Wolfson

The people of the South Bronx, armed with shovelsand shrubs, are well on their way to converting a patchwork of barren lots into their own urban version of theNational Park System .A 75-foot by IOO-foot plot on Barretto Street, rescuedby the neighborhood from an asphalt future, is alreadytaking shape. It has a vegetable garden planted byschoolchildren, a sculpture made from telephone poles,a dogwood tree and a park bench. Outside the fencesurrounding the unfinished park is a sign that reads,"Adopt-a-Lot/Adoptar Pedazo de Tierra. Barretto St.Block Association. With Help from the Bronx Frontier

Development Corporation."The sign only begins to tell the story. The lot on Barretto Street, which at one time was destined to 00- pavedover for a parking lot, is being transformed into a rec

reational and park space with help from everyone fromthe U.S. Interior Department to the Hunts Point Industry and Commerce Association.Barretto Street Park is one of fifteen vacant sites inthe southeast Bronx now being developed as gardens,playgrounds and parks by a coalition of neighborhoodgroups called the South Bronx Open Space Task Force.More than $1 million in federal and state land and watercontinued on page 2 I


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OWNERS PLAY 'POMP' AND CIRCUMSTANCE,GET $1.5M CD FUNDS FOR IN REM UNITSby Susan Baldwin

A new and controversial $1.5 million program thatpermits private management companies to use federalfunds to operate and maintain the city's better tax-foreclosed housing stock will go into effect early in August.Originally scheduled to begin in June, the program,known as the Private Ownership Management Program(POMP), invites private firms to manage In Rem properties in neighborhoods where they already have realestate interests and to develop a modest treatmentprogram that will lead to the purchase of these buildingsin a year's time . The management firm has the firstoption to buy the properties.

POMP critics charge that the program reserves thebest buildings for the private sector and does not involvecommunity groups in the selection of the managementfirms.In its contract with the private management firm, thecity's Department of Housing Preservation and Development allocates Community Development funds to coverthe maintenance and repair of the buildings. It alsounderwrites a ten per cent management fee. In addition,the company uses the rent rolls to cover expenses. Thefunds do not cover major rehabilitation costs. Rather,they cover repairs ranging from $2,000 to $3,000 perunit.

HP D also pays the management firm to do a detailedsurvey of each building proposed for the POMP program. This fee is paid even if HPD rejects this buildingfor the program."W e are viewing this program as a one year experiment," said Assistant Commissioner Philip St. Georges,head of HPD's Division of Alternative Management(DAMP). "W e are talking to and screening firms all thetime, and we are hoping to choose at least two more forthis program this year." Each management firm willhandle between 300 and 500 units of housing.

The Board of Estimate approved the first POMPcontrac t May 24 when it awarded $548,326 to the Stephen _Leon Management Co . of the Bronx. The Leonfirm will manage 492 units. Two other firms under HP Dconsideration are the Viva Management Co. in EastHarlem and Lemle and Wolff, Inc. in Manhattan'sWashington Heights.

The management phase of the program was originallyscheduled to last two years. According to St. Georges,the one-year deadline was imposed because HPD isanxious to assess its "experiment" as soon as possible.Noting that there has been a "fair amount of criticismof the program," the assistant commissioner asserted,"What we are supposed to be doing with all the alternative programs is trying every approach to manage these

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properties and not have the city as the only manager.We have to find out what works and what doesn't . . .That's why we have implemented a broad variety ofprograms. "

"I have no immediate problems with the concept ofPOMP," said Lorraine Holtz, district manager ofCommunity Board 5 in the Bronx, an area where threeof the first nine POMP buildings to be managed byLeon are located. "But, what does concern me is thequality of the management company. The companyshould have a very good reputation for management,and if HPD is picking companies that have been operating in the neighborhoods, the companies are known tothe people. The community should be considered first."According to Holtz, computer records of a number ofbuildings managed by Leon "showed a good deal of C(major) violations."

"These violations should never have been there ifthere had been competent management of these properties," she argued. " I t is these details that the cityshould investigate before this program is implementedand the best buildings are sold of f to these privatemanagement firms. We do not want to turn these buildings back to the worst slumlords. Some call the city theworst, but I think the private sector can easily be theworst. History has proven that."

Jerome Waxenberg, vice president of the Leonmanagement company, confirmed that his firm hadmanaged properties with major violations that had alsogone In Rem, asserting "if our clients had been willingto take $10,000, $15,000, or $20,000 to fix up the property, this would not have happened . . . Many of them(owners) are retired and expect to get an annuity fromthe buildings . . . not a tremendous liability on top. Butright now we have no In Rem buildings."Jerry Mooney, an organizer with the NorthwestBronx Community and Clergy Coalition and an advocate of the Tenant Interim Lease program (TIL),attacked POMP on another level.

"Maybe I wouldn't have a problem with POMP if thecity turned the worst buildings over to private management," he said. "But that is not the case here. The KochAdministration is giving them the best buildings-buildings that could manage themselves. They (POMP) arealso getting the rent rolls and fees and monthly CD payments. This is unfair, particularly when you look at theinterim lease program where the tenants have to screamand fight to get any money from the city for repairs."

The 150 buildings in the interim lease program receiveabout $347 per apartment each year under the program's $1 million budget. Unlike POMP, the manage-

continued on page 17


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EDITORIAL LIMITSWhat as locally based housing and Community

Development groups do , how we do it and how much isdetermined not only by the capability of our own organ ization but also by policy and administrative decisionsmade by others in other cities . We have all learned thatpressure on City Hall is a necessity whether the administration courts us or confronts us . What we have notlearned is how to effectively participate in national coalitions, legislative action , and adm inistrative rule making .Whether we like it or not that is where the rules of thegame are written and the resources allocated . If we learnhow to play that part of the game it will be easier for us tobe on the offensive at home . Such issues as anti-redliningmeasures , targeting of Commun ity Development BlockGrant funds to low income neighborho ods , and the Co-opBank bill were won, in part , because neighborhoods temporarily united .However, other issues were lost. Money for the livablecities was cut out entirely , the Co-op bank was underfunded , as was the Self-Help Development Fund . Wecannot afford these kinds of setbacks. We cannot affordnot to participate in the development , evolution , an d ad ministration of domestic programs .

We would like to underline the word domestic andpoint out that the word urban was purposely not used .The 1980 U.S . Census in all probability will result in a

decrease in urban representation . If we are to survive theconservative drift of our SOCiety and map out a progressive domestic agenda for the 1980's , we will have toforge meaningful coalitions with low and moderate income people whether they reside in large or small cities,counties , suburbs, or rural areas.Neighborhood organizations have a responsibility tothemselves and to their constituencies to participate inthese coalitions and networks. The upcoming presidentialelection, the development of party platforms, theemergence of a third party-the Citizens Party-provideuse with opportunities to shape future domestic programs. Efforts are already underway by the ProgressiveAlliance , the National Association of Neighborhoods ,ACORN, National Peoples Action , and others . Weshould join their effort now . 0Progressive Alliance, 1625 L St. , N.W. , Washington ,D.C. 20036 ; Tel : 202-452-4800 .National Peoples Action, 1123 West Washington St.,Chicago , Ill. 60607 ; Tel : 312-243-3035 .Association of Community Organizations forReform Now (ACORN), 52 3 West 15th St. , LittleRock , Ark. 72202 .National Association of Neighborhoods, 1612 20thSt. , N.W., Washington , D.C. 20009 ; Tel: 202-332-7766 .____________ Notice to our Readers:

City Limits is jOintly sponsored by the Associa-tion of Neighborhood Housing Developers, PrattInstitute Center fo r Community and Environ-mental Development and the Urban Homestead-ing Assistance Board.Shared sponsorship of City Limits is intended tostrengthen the housing movement; meet the needfor a reliable source of timely and useful informa-tion, broaden the publication 's base of support,

combine resources of the sponsor organizationsand avoid duplication of similar efforts; build aneffective working partnership among the sponsorsand enhance the editor ial quality of City Limits.We are gratified by the positive response CityLimits has received from community organizations,funding sources and others who are dedicated tomaking neighborhood preservation and revitaliza-tion a major national , state and local priority.

_CITY LIMITS.City Limits is published mont hl y except June/ July a nd August/ Sep

tember by the Associa ti on of Neighbor hood Housing Developers,Pr a tt Insti tute Center for Co mmuni ty a nd Environmental Development a nd the Urban H omesteadi ng Assistance Boa rd. Subscrip tio nrates: $20 per yea r; $6 a yea r for communit y- base d orga ni za tions a ndind iv idu a ls. A ll co rrespondence should be ad dressed to C ITYLIMITS , 11 5 East 23rd S t. , New Yo rk, N.Y. 10010. (212) 674-761 0Application to ma il at second-class pos tage ra tes is pending a t NewYor k, New York 1000 1.Edi to r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bern a rd Co hen\ ssistant Editor . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . Susa n Baldwin

Design a nd Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loui s Fulgo niBu siness Assistant. ................. . . . . . . . . . . . . . . Ca rolyn WellsCopy right 1979. A ll rights reserved. No portion or portions oj thisj ournal may be reprinted without the express written permission oj thepublishers.This issue was funded by New York Community Trust.


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DELAYS, REGULATIONS HAMPEREFFECTIVENESS OF SA LOANSby Bernard Cohen

Theodore Angelis's six small buildings in the SunsetPark section of Brooklyn were already not in the bestcondition when he applied to the city for a $175,000low-interest loan in Apri, 1978. He planned to installnew boilers, replace pipes, upgrade the electrical systemand put on new storm windows.Although housing records continue to list the twostory buildings as being in the loan pipeline and "movingtoward closing," in fact the structures have fallen intosuch ruin that they now require far more work than the$5,000 per unit limit allowed by the loan.

The buildings were destroyed by the over-long processing time that has plagued the Article 8A loanprogram since its first loan in November, 1976. Theloans are administered by the Department of HousingPreservation and Development." I t was a total disaster," said Ida May Staiano of theSunset Park Redevelopment Committee, who tried tohelp Angelis obtain the loan. "I cannot account for ayear's time wasted. I've been down to HPD eternally.Each time it was, 'You're missing this, you're missing

that.' It was a constant thing. I think they work onepage at a time."The buildings were not in great shape to begin with.

HP D told us it would take six to eight weeks to processthe loan. Going by what they said, he stopped makingrepairs in anticipation of the loan. Now, more than ayear later, the buildings are a total wreck-they need atotal gut rehab."Although some loan applicants had much fasterservice, a recent report by the city's Office of Management and Budget said, "Overall average processing timeper loan has not been reduced. It takes approximately10 months to process each loan, due to a lack of ownerexpertise, lack of staff and cumbersome requirements.Three months of backlogged applications await assignment."

Although 8A loans have enabled some 120 owners tomake major repairs in buildings they might otherwisehave abandoned, the four-year-old program has alsoleft a trail of disappointed loan applicants who simplygave up in frustration over the time-consumingpaperwork, regulations they could not satisfy and thefeeling that some administrators of the program wereindifferent to their needs ."There's a point where you just give up," said Mrs.

Roman Occasio, who applied in December, 1977, for an8A loan for her two buildings on upper Park Avenue inManhattan. HP D rejected the application in August,

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1978, saying she had not submitted contractor bids. Herown records show bid documents were obtained fromthree contractors between August and October, 1977."I was so disgusted that I dropped it " after receivingHPD's notice. "I did a lot for those buildings," puttingin more than $3,000 of her own money into fixing theboiler, repairipg the roof and upgrading apartments. "Ican't afford to do any more."

Low IncomeThe 8A program provides loans of up to $5,000 perunit at 3 per cent interest. The loans, which are restricted to buildings occupied by low income tenants , gofor eliminating code violations; replacing antiquated

buildings systems such as heating, plumbing and electrical; repairing roofs, windows and walls and installingbuzzer systems. Owners must show inability to obtainconventional private financing by producing bankrejection letters. They are eligible for tax abatement as away of keeping to a minimum rent increases to pay forthe improvements. Rents may not exceed $80 per room.The city has set aside $8.15 million in CommunityDevelopment funds for the first four years of theprogram. Some $2 million remained uncommitted as of

June I, but housing officials said they expect to have itcommitted by the end of August. Another $5 millionhas been set aside for CD Year V, beginning September1. Interviews with more than a dozen successful and unsuccessful 8A loan applicants, administrators of theprogram and other city and federal government aidesturned up the following points about the program: Although loans are supposed to be restricted tobuildings with low income families, it is impossible tosay if that is happening. The city measures benefit by

IHector Lozano in an apartment he is renovating without a city loan.


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the economic and racial makeup of the census tract ofthe 8A building, not the actual tenants. In addition, thecity's records of where the loans are going appear to beinaccurate. A computer printout used as the basis foridentifying who is benefitting from the CD programsshows 16 8A loans in the Bushwick section of Brooklyn.In fact, no loans have been made there. HPD does not have an adequate number of loancoordinators. It began the program with three and isnow up to seven, each with a caseload of about 25applications. Fifteen coordinators would be preferable,according to loan officials. In addition, the level oftraining varies greatly among coordinators. Rules prohibit 8A loans for buildings on whichtaxes are owed. In many cases, this disqualifies ownerswho assumed the back taxes at the time they purchasedthe building from being able to improve it. As a result,lower income landlords denied loans have difficultyholding onto longtime tenants, and vacant apartmentsbecome very difficult to fill as the buildings continue todeteriorate. The program is supposed to keep costs down andencourage participation by minority and small contractors, but certain procedures work against thosegoals. The delays of up to one year in loan processingresult in higher prices that some borrowers said had tocome out of their own pockets. Moreover, while theloan is made in installments, the payments occur afterportions of the work are completed. This creates severestart-up problems for owners and contractors who lacksufficient.capital or do not have a sizeable line of credit.

Owner ExpertiseSatisfaction with the loan program seems to berelated to the expertise of the owner applicant and howexperienced he is in dealing with the city . Acknowledging that "I'm not typical" of 8A borrowers, Norwood Campbell said that he was very satisfied with theloan he received for two of his buildings, totaling 110units, at 770 and 780 Garden Street in the Bronx. Hesaid it took HPD five or six months to approve hisapplication and that the loan administrators had beenvery responsive. " I t has to be judged in the context ofworking with bureaucracy. I knew what they wanted.To the extend that owners know how to satisfy therequirements, they will be successful."

Other borrowers were not so happy, a lthough they allended up with loans. "What I found out is there is toomuch waste of time, too many people," said the ownerof two Queens buildings."you go from one office toanother. I just about gave up last year because of the redtape business. 8A called me themselves and told me tocome around and talk it over."

The owner of a building in upper Manhattan put itthis way. "I think they fell asleep on it (the application).I have more important places to spend my time thanwaiting for the city to approve one of these loans."

Owners commonly said they made 15 to 25 trips to theloan office at HPD before approva l was granted.Henry Warshavsky, director of the 8A loan program,acknowledged the discouraging delays associated withthe program, but said the major holdup was due to lack

of owner expertise. He cited failure to obtain therequired cost estimates in particular. " I f we get anowner who knows what it's about, in some cases we canprocess a loan in four months."Warshavsky said HP D is trying to speed up the processing by assigning the less experienced coordinators tothe early steps of the application, then turning it over toa veteran.

Tax ArrearsOne of the most frustrating obstacles to low incomelandlords who want to borrow is the prohibition on taxarrears. When Hector Losano bought his 26-unit apart-ment building at 2172 Amsterdam Avenue in Manhattanfor $9,000 in June, 1977, he inherited $17,000 in backtaxes from the former owner. His total tax bjte. comesto $2,100 per quarter, which he has been paying. InSeptember, 1978, a fire ravaged two of his apartmentsand caused less serious damage in three others. When hetried to have his building re-assessed, he was told itcould be done only during the annual assessment periodin February or March and that if he began to renovatethe damaged apartments immediately, the assessmentwould actually be increased, with no consideration forthe period the building was burned.

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Losano, who is the (7A) administrator of a neighboring building, decided to apply for a $50,000 loan torepair the damaged apartments, renovate all the bathrooms, replace windows, waterproof the roof and fixthe brickwork. According to him and Louise Halady,who helped him apply for the loan while she wasworking at the Urban Homesteading Assistance Board,an HPD loan official advised that the back tax rulewould be waived since the arrears had been incurred bythe former owner, and Losano was paying them off..Losano filled out the forms, obtained the requiredestimates and bank rejection letters and took the complete package down to HPD. This time he met withanother official and a different decision. No back taxesallowed. "I really got discouraged when they told me I.must pay $17,000 and recommended that I go to aneighborhood bank and get a $17,000 loan. I was nevernotified officially. I just said, ' If you think I'm notgoing to get a loan don't waste any more time .' "Losano is now slowly trying to fix up the apartmentsout of the rent roll.Asked why HP D would bar someone like Losanofrom getting an 8A loan, Warshavsky said that unless allback taxes were paid, he could not receive the tax abatement which is necessary to offset part of the rent increase that would otherwise be levied on the tenants. Inaddition," He must have bought the building at a lowcost" with such high tax arrears so there is no necessity



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DIVIDED STATE RENT COMMISSIONGRAPPLES WITH HOUSING ISSUESThe Temporary State Commission on Rental Housing was created in 1977 for the purpose of making a studyof rental housing and recommending changes in the rent control laws to the Legislature and the Governor.Establishment of the Commission was the political price demanded by the Republican-controlled Senate in

1977 in return for renewing the Emergency Tenant Protection Ac t and upstate suburban rent controls until June30,1981.The Commission is a ten-member body. Four of the commissioners have a history of affiliation with tenantorganizations (Michael Patrick Doyle, Jeffry Gallet, Joseph Klein and Michael McKee); four represent the realestate industry (Robert Fougner, Abraham "Bunny" Lindenbaum, Burton Resnick, Edward Sulzberger). Two"swing" members are chairman Jacob Ward and Henry Cohen.The commission was originally due to render its report by November 15, 1978, but the deadline has beenextended twice by the Legislature and Governor. Its report is now due by August 15, and it goes out of existenceon September 30.

by Michael McKeeDuring recent weeks the Temporary State Commission on Rental Housing has been engaged in some heavy

voting on the future of New York State's tenant protection laws. After more than a year of torpor, thecommissioners are finally punching each other silly,trying to get the six votes necessary to pass a motion forinclusion in the commission's report.Since April 10, enough six-vote motions have beenadopted to constitute a "package" in two areas: conversions of rental housing to cooperatives or condominiums, and rental assistance to low-income retired anddisabled tenants.

In addition, it is clear that the 'commission intends torecommend elimination of many existing tenant rightsand drastically weaken rent control laws. This despitethe fact that the mandate of the commission to make acomprehensive study of rental housing throughout thestate has never been carried out.

Among the recommendations already adopted are: anaccelerated phase-out of New York City rent control,transferring the fewer than 400,000 units remaining, under this law to the growing rent stabilization system;establishment of a full-time, staffed statewide rentguidelines board to set annual rent increases; allowingany municipality in the state to opt into the new system;and establishment of a permanent "oversight commission" to evaluate periodically the need for rent controls.A tenant-sponsored motion to repeal the scandalplagued New York City Rent Stabilization Association,the "voluntary" owner organ ization created by the 1969stabilization law, failed to pass when Cohen abstained;Ward voted with the four tenant members.

The coop-condo recommendat ions are a mixed bag of30 motions adopted at three lengthy meetings amidsttortured maneuvering by all three sides. The overallthrust is to "encourage" conversions, while "pro-tecting" tenants who can't buy their apartments. Thereis no internal consistency to the package and anyone

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knowledgeable about conversions will surely concludethat it was put together by ten fools.The elderly and handicapped package is, by contrast,a well-balanced and even well-designed revamping ofthe present "senior citizen rent increase exemption/ taxabatement" program, allying the fiscal needs of localgovernments with protection to low-income tenants whoare over 62 years of age or disabled or handicapped.State law has for several years allowed municipalitiesto exempt low-income senior citizens under rentcontrols from paying rent increases if they pay morethan one-third of income for rent, or if the increasewould push their rent over one-third. The landlord receives a credit against his real estate taxes equivalent tothe increase; the municipality loses the tax revenue.The commission calls for the state to reimburse thelocal taxing authority for 50 per cent of the lost revenues. This will be an unpopular recommendation because the Legislature and Governor will be loathe to

appropriate funds for this or any other new program .But they will have difficulty ignoring the unanimousvote of the commission, with tenants and landlordsagreeing that it is unrealistic for local governments tocontinue to bear the program's full cost.At present the City of New York loses some $26 million annually through these abatements, and the cost ofthe program grows each year. Several municipalities inthe surburban counties of Westchester and Nassau haveopted into the program, but many more cannot afford

to do so . Partial state reimbursement would encouragemore localities to opt in, thus bringing protections tomore retired persons.

The package also calls for a two-tiered reduction ofthe rent-to-income ratio: to 25 per cent of income under$4,000 per year, and to 30 per cent if the tenant'sincome is between $4,000 and $6,500. The commissionfurther voted to recommend that the tenant's rent bereduced to the appropriate rent-to-income ratio. At


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present the tenant's rent is merely frozen when enteringthe program, even if far in excess of one-third ofincome.Another recommendation is a periodic review by theLegislature of the $6,500 income eligibility level in thelight of inflation. A means test, or assets test, beforetenants could qualify was beaten off, but the landlordspushed through a $400 per month rent cap, above which

the tenant will not be eligible. Commission chairmanWard and dean Henry Cohen provided the two swingvotes.A majority also voted to extend the program to thelow-income disabled and handicapped, who at presenthave no protection against rent increases. Only Cohenand landlord Burton Resnick voted against this motion.The relatively rational and cohesive recommendationsin this area are due largely to excellent research by TedWeinstein and Paula Ryan of the commission staff (incontrast to other areas which have been researched not

at all) and to the fact that aid to the elderly and handicapped is less controversial than other matters underdebate; after all, it doesn't cost landlords anything.

More than 75 tenants, includin$ many retired persons, picketed theNew School for Social Research on June 12 to protest the anti-tenantpositions taken by Center for New York City Affairs Dean HenryCohen, a "swing" member of the Temporary State Commission onRental Housing.

During the summer, the commission will generallymeet weekly, struggling to complete voting on rentcontrols. I believe that readers of City Limits would findmonitor ing these meetings, which by law are open to thepublic, to be a fascinating and revelatory experience.Meetings are held on the 60th floor of 2 World TradeCenter; call the commission at 212/ 488-4502 for theschedule. See you there. 0Michael McKee, coordinator of the statewide PeoplesHousing Network, is a member of the Temporary StateCommission on Rental Housing.

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RENT HIKES UPSET TENANTSAmid stormy reactions from some 100 tenants attending its June 27 session, the New York City Rent Guidelines Board voted to raise rents as much as 20 per cent inthe city's 850,000,rent-stabilized apartments.Under the new regulations, effective July 1, leaserenewals will be 8.5 per cent for one year, 12 per cent for

two years, and 15 per cent for three years. In addition,the board approved a five per cent increase for a new tenant who moves into a vacant rent-stabilized apartment.This tenant must also sign a vacancy lease.

I f a tenant is paying $300 a month in rent now, hisnew rent under the three-year renewal rate will be $345.Commenting on the RGB's decision, Jane Benedict,head of the Metropolitan Council on Housing, said,"They did precisely what they wanted to do. Themeeting was a joke. The anger of the people is so justified . . . The average person and the poor will have tobear the burden . . . The hysteria is over the fuel costs,but why don't they make the landlords show what theypay?"According to Benedict, the steering committee of theCoalition Against Rent Increase Passalongs (CARIP)plans to bring a law suit against the RGB.In a related manner, Mayor Edward I. Koch hasasked the City Council to raise rents up to five per centin the city's 350,000 to 400,000 rent-controlled apartments to cover the rising cost of fuel. Rent controltenants already pay an annual 7.5 per cent increase intheir rents under the Maximum Base Rent (MBR) formula.Membership on the RGB consists of nine mayoral appointees, with two representatives each for tenants andowners. Since its inception in 1969, the RGB had not setsuch high increases as were mandated June 27. In 1969,increases ranged from 10 to 15 per cent for renewals,while a ten per cent increase on vacant apartments waspermissible.

On April 10, the RGB met and adopted a special"add on " order for increased fuel costs, occuring sinceN o ~ e m b e r , 1978. This surcharge, retroactive to March1, 1979, permitted rent increases of 7, 8.5, and 9 percent for one, two and three-year leases signed in1978-79.. In the only pro-tenant action June 27, the RGB votedagainst allowing landlords to charge additional rentwhere the owner pays for the electricity. In the past,owners were permitted to charge between .05 and 4 percent for electricity. 0


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FUEL PURCHASE PLANNineteen neighborhood groups and eight tenantassociations in New York City communities have joinedtogether to buy fue,l cooperatively for about 170 low and

moderate income buildings.The fuel consort ium, which will be administered bythe Association of Neighborhood Housing Developers,

Inc., will purchase over five million gallons of oil in thefirst year alone.Two years ago, ANHD conducted a feasibility study

of community groups' purchasing f).lel in large quantities and determined that the consumption rate did notwarrant an independent fuel cooperative. An updatedresearch project performed by VISTA workers this yearproved the opposite. Increased community and tenantmanagement of buildings and the overall dramaticincrease in fuel costs have made the concept of aconsortium a cost-saving reality.

The Federation of Protestant Welfare Agencies, Inc.will negotiate with fuel delivery companies within thenext few weeks to establish a basic price formula for theplan member organizations. [In this bidding procedure, the per-barrel Exxon price, which is publishedweekly in the Journal of Commerce is translated into aper-gallon price (42 gallons in a barrel), and a marginabove that per-gallon base price is agreed to. Howevermuch the base price varies, the margin-.0053 per gallon, for example-will remain the same.]

Through group purchasing, the fuel plan hopes tosave between 10 and 15 cents per gallon. It cannotpredict what oil prices will be this year as they may riseto anywhere from 80 to 90 cents per gallon . On a samplebuilding last year's prices (average 71 cents), a savingof 15 cents per gallon would result in a monthly rentalsaving of $11.75 on an apartment that rents for $190.

Under the guidelines of the consortium, buildingsmay be added over the fall and winter months, but thosebuildings joining in mid-winter will not receive the sameprice advantage as the original members.The balance for all buildings will be deposited in a

"ready assets fund" which will yield about nine per centin interest-enough to cover ANHD's administrativecosts and possibly, at a later date, provide surplus fundsfor rebates to members.Boiler and burner service will be guaranteed to eachbuilding as the plan will not do business with companiesthat do not provide service. Contracts for service, however, will be made on an individual basis between thecommunity group or tenant association and the fuelcompany.

Each building will be billed on an "even monthlyusage" basis w h i ~ h means that if it consumes 24,000gallons of oil annually, it will receive bills each month of2,000 even though its actual usage in June, for example,may be 1,000 and in January, 4,000.

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ANHD will send estimated fuel delivery bills at thE"beginning of each month. I f ANHD overestimatesdollar amounts to cover costs over the contract period,it will refund the full amount of the surplus in April and

May, 1980, in the form of lower fuel bills.Buildings managed by tenants associations or neighborhood groups will be eligible for membership in theconsortium as long as they serve primarily low incometenants, and are a non-profit organization. There is noapplication fee .A group or building may withdraw from the consortium by giving written notice, and the total amount in thefund balance after payments have been made for allfuel delivered will be refunded.In a year ' s time, ANHD plans to add two more jointpurchasing plans-liability and fire insurance-to itsfuel purchasing consortium. 0 Anne Hartwell

CALIFANO FAVORINGWELFARE PROJECT

Health, Education and Welfare Secretary JosephCalifano is likely to approve, probably in July, MayorKoch's request to allow the city to place thousands ofwelfare tenants in the West Bronx on an automatic rentpayment system, City Limits has learned.

Califano would have to waive two laws in order forthe city to expand its existing policy of selectively issuingwelfare checks that can be used only to pay rent (twoparty checks) or paying the rent to the landlord directly.

I f Califano approves the "demonstration" projectand HEW sources say he will-it will be over the opposition of many welfare rights groups, tenants organizations elected officials and social welfare agencies. Theym a i ~ t a i n it will provide a windfall to landlords, will notlead to better housing and will illegally deprive welfarerecipients of their rights.

The Downtown Welfare Advocate Center has alsoargued that the demonstration should be rejected on thegrounds that the city currently violates the law in theway it defines "mismanagement" of benefits as justification for issuing two-party checks to some welfarefamilies.There are 355,000 families and single persons whoreceive welfare benefits in New York City, 250,000under Aid to Families with Dependent Children and105,000 under Home Relief. Restricted checks are nowissued to 40,000 families and individuals under AFDCand 10,500 unde r HR, according to city figures.In 1977, the New York State Legislature eliminatedfrom the Home Relief program the last remnants ofrecipient control over welfare benefits. AFDC, however, is governed by federal law, which puts two legalobstacles in the way of expansion of the restricted checksystem. First, recipient control of how AFDC benefitsare spent may be restricted only if the agency finds mis-


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management of funds affecting the welfare of the children in the family. (This is the law the city currentlyviolates, according to DWAC, by issuing a two-partycheck whenever a landlord, including the city, claimsthat rent has not been paid without even checking withthe tenant). Second, there is a 20 per cent ceiling on thenumber of AFDC recip ients whose control over benefitsmay be restricted . New York City is very close to thelimit now.These are the two laws that Califano would bewaiving in approving the demonstration to be run inBronx Community districts 5 and 7. AFDC recipients inthose areas whose landlords enrolled in the projectwould be issued two-party checks for rent if their landlord said they had paid rent late for whatever reasonduring any of the previous six months; if the city saidthe recipients had not returned a form which would besent to them explaining the project or if they "voluntarily" agreed to participate.

Opponents of the demonstration contend that guaranteeing rent payment by welfare tenants removes theonly real incentive landlords have to provide servicesthe knowledge that rent can be withheld if they do not.

The New York City chapter of the National Association of Social Workers issued a position statement inMay, declaring that welfare families are concentrated inthe worst neighborhoods with the poorest housing, that$500 million in public funds spent annually for shelterallowances only perpetuates those conditions and thatexpansion of the two-party checks system would be a"non-solution" that "would not alter this situation."Also on Califano's desk is a request from the state ofMichigan to institute a restricted payment system for theentire city of Detroit. 0

SHARE THE WEALTHPrivate developers of Section 8 housing projects willbe required to share part of their tax shelter proceedswith locally-based community organizations in the

future, according to a new city policy.For now, the policy is limited to Section 8 contracts inten neighborhoods specially designated as Neighbor

hood Strategy Areas.With 5,000 Section 8 units set aside for NSA's, the

share of the tax shelter proceeds earned by communityorganizations is expected to total several million dollars.In the past, developers backed by investors built thehousing and reaped the lucrative financial benefits. (SeeCily Limits, May, 1979)

In announcing the policy, HPD said locally-basedgroups will be designated by Community Boards. Allagreements between developers an d the boards,including how the community'S share of funds will bespent, will require approval by HPD, according toSteven Grathwohl in the agency's community development office.

9

The city has been accepting Section 8 applicationsfrom sponsors of rehabilitation or new constructionprojects in the ten NSA's. They are Kingsbridge/ Bedford Park in the Bronx; Sunset Park, Bedford Stuyvesant, North Flatbush and Crown Heights in BrooklynHamilton Heights, Washington Heights, ManhattanValley and Harlem Gateway in Manhattan and FarRockaway in Queens.

The policy of linking developers with communityorganizations could be expanded to all Section 8projects approved by the city if it is considered successful in the NSA's, according to HPD officials. 0

DAVIS-BACON ESCAPESThe House of Representatives, by a vote of 244 to155, has rejected a renewed attempt to exempt neighbor

hood self-help housing projects from the Davis-Baconact.

Enacted 44 years ago, Davis-Bacon requires construction workers on federally supported projects to be paid"prevailing" wages. The law was designed to protectunion sca le wages by preventing a builder from importing lower-paid workers from outside the area.

Compliance with Davis-Bacon standards has posed aserious problem fo r community organizationssponsoring sweat equity or other rehabilitation projectsin low income neighborhoods because of the high laborcost. The law has created a conflict betwen legitimatehousing production goals and legitimate employmengoals.

The law has been waived for projects using federal312 loan funds but not for those with Community Development Block Grant funds. The requirements applyto buildings with eight or more units.The House upheld the banking committee in rejectingthe exemption, which was proposed by Rep. GeorgeHansen, R-Idaho, as an amendment to the fiscal 1980housing authorization bill. Last year, a similar proposawas beaten by only 29 votes, 217 to 188. 0

JULY 19 - BOARD OF ESTI MA TEMEETING

On July 19, the Koch Administration will present itssales policy to the Board of Estimate. Without protection for tenants, the sale of city-owned buildings to theprivate, profit-making sector will lead to displacementand further deterioration of this housing. It is importantfor everyone in New York City concerned with housingto attend this meeting and testify.

For further information, call Sandy Bayer or MarilynPhelan at 566-0719 or 566-0709. 0


10/24

STATE CUTS INSURANCE RATESAS GROUPS FIGHT REDLINING

by Marion SwanThe sky high cost of insuring properties in many areas

of New York State that are being redlined by privatecompanies will drop dramatically as a result of a newbill approved by the State Legislature.

The bill is a compromise that vastly reduces the ratesfor properties forced into an insurance pool called FairAccess to Insurance Requirements, or the FAIR Plan.However, it does not go far enough to bring the stateinto compliance with federal law that ties eligibility forriot reinsurance to lower FAIR Plan rates.Meanwhile, efforts by neighborhood and tenant representatives to require insurance companies to disclosethe number, type and location of policies they approveand refuse-information similar to what banks have toreport-have fallen on deaf ears at the State InsuranceDepartment.A meeting in Albany on May 17 between 35 representatives from neighborhoods across the state andState Insurance Commissioner Albert Lewis endedabruptly after a mere 30 minutes. Lewis became visiblyupset when he discovered that he wasn't able to controlthe meeting. When confronted by a demand for publicdisclosure, Lewis said, "The fact that you need disclosure is not something I have to respond to." Insistingthat he would not be cross-examined, Lewis said, " I fyou had information, would you do anything with it?"As the meeting continued to heat up, Lewis began towalk out, cursing the delegation as his path was blockedmomentarily. Following the stormy session, members ofthe group met with Michael DelGuidice, a top aide toGovernor Carey, to demand Lewis's resignation andpress further for public disclosure.In a subsequent letter to DelGuidice, TimothyO'Hanlon, project coordinator with South BrooklynA.I.D., wrote that, "A serious prerequisite to seriousdiscussions is disclosure by these companies of the location of their policies."

The FAIR Plan was created because of the blanketdenial of fire and homeowners insurance in many lowerincome neighborhoods. FAIR Plan rates, however, areup to five times higher than those paid in the privatemarket. The highest prices, therefore, are paid by thosewho can least afford it. The withholding of insurance ona basis of general location and the setting of rates thatmake the cost of insurance prohibitive are among anumber of recognized causes of neighborhood decline.Federal law requires states to reduce FAIR Plan ratesequal to the level charged for private insurance or sufferthe loss of riot reinsurance under which the federalgovernment shares with private insurers the risks posedby urban disorders.

10

New York State lost its eligibility for the riot reinsurance in March by not complying with the law. Thatwill remain unchanged by the new state legislation,which sets the following FAI R Plan rates: one- to-fourfamily owner occupied buildings-20 per cent aboveregular market rates; one-to-four-family non owneroccupied and five-to-eight family buildings-30 per centabove market rates; more than eight-familybuildings-40 per cent above market rates.

A similar scale applies to commercial property withsmall "mom and pop" stores paying no more than 20per cent above market levels and 30 per cent higher forother businesses.

The bill, which must be signed into law by GovernorCarey, makes it illegal to di scontinue or deny insurancebased solely on the location of the policy. It provides forfines of up to $5,000.Pressure by the New York State Tenant and Neighborhood Coalition and other groups helped break thestalemate between the Assembly and the Senate to produce the compromise legislation.

[The Illinois Department of Insurance slapped twounusually large fines totalling $104,000 in June on twoinsurance companies in Chicago that were found tohave denied homeowners policies solely because ofwhere the housing was located.The state fined W.W. Vincent & Co . $50,000 forusing zip code lists to refuse insurance policies and finedthe Insurance Co. of Illinois $54,000 for the same violation plus filing incorrect information.Allegations of insurance redlining were broughtagainst the two companies by the Metropolitan AreaHousing Alliance of Chicago.]The F AI R Plan earned $11 million in profits last year.An aide to Assemblyman Vincent Nicolosi, D-Queens,chairman of the Insurance Committee, said the reduction in the rates is expected to create a $14 milliondeficit, all of which should be made up by a state insurance reserve fund. Additional deficits would be coveredby premium increases of up to one per cent (50 cents peryear) for the average customer.The Assembly earlier approved a bill that would havecut FAIR Plan rates to market levels. The Senaterefused to go along.

Community organizations in the Midwest and Northeast have been negotiating directly with insurance companies concerning policies suitable to urban areas, location of brokers, local advertising, reinstatement ofcancelled clients and reinvestment in rehabilitationprojects. For example: Representatives of 22 insurance companies met


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12/24

QUESTIONS REMAIN AS CO-OP BANKMOVES TOWARD EARLY 1980 STARTby Michael Freedberg

The Co-op Bank is moving steadily through Congresstoward making its first loan. When operational, thebank will provide major financial and technical assistance to all kinds of consumer cooperatives, includinghousing co-ops.As City Limits went to press, funding for FY 79seemed likely-giving the bank operating funds as earlyas mid-August, although it will probably be early nextyear before the bank actually begins to provide loans.Soon to be announced are the nominations by President Carter of the 13 members of the board of directors(see separate list) and the important director of theOffice of Self-Help Development and Technical Assistance. The nominees must be approved by the Senateafter which they must find a location for the bank,appoint executive officers, hire staff, promulgate rulesand regulations and establish lending and technicalassistance procedures.

AppropriationsOn June 6, the House voted to appropriate $12.5million for the bank's FY 79 operations. This includes$8 million for the general market rate loan fund, $3million for the low interest loans and technical assistance from the Self-Help Development Office and $1.5million for bank administration.This compares quite favorably with the Administration's original request. The House also approved a $74million appropriation for FY 80, as against $88.8 million requested. The House action was encouraging tobank lobbyists, considering the budget-cutting, antiinflation mood of Congress. They expect the Senate togo along with the House figures. Additional moniesaround $300 million-are authorized by the bank legislation for the next five years.Low Income Benefits

The Bank's success thus far in Congress is due to theactive support given the legislation by an unusually widecoalition of community, cooperative, church, consumerand labor groups. Housing and neighborhood groups inneed of additional funding for co-op housing andcommunity-based economic development stand tobenefit from the bank. There is a specific provision inthe legislation requiring the bank to make its "bestefforts" to provide at least 35 per cent of its resourcesfor low income cooperatives. The Self-Help Development Fund must target all its funds to low income andnew cooperatives. In addition, initial indications arethat the proposed board nominees will be responsive tolow income, neighborhood needs.Despite the potential benefits, community groupsshould be aware that real statutory and structural prob-

12

lems have emerged in terms of the bank's ability to meetlow income needs. Among them are: Severe limitations on the bank's capacity to providestart-up venture and equity financing. Extremely limited funds for technical assistance. High interest rates under the bank's general (andprimary) loan fund. Pressure on the bank to make "safe" loans to existing cooperatives because of the need to go back toCongress for additional appropriations. A conservative bias which may develop as the banktries to sell bonds on the private bond market.In addition, proposed rules and regulations for the

bank, which have been drafted by a federal interagencytask force, appear to be too restrictive for neighborhoodgroups. The task force's credit requirements would beprohibitive for many low income communities, while itsnarrow interpretation of the Self-Help DevelopmentFund could reduce the bank's effectiveness in meetinglow income credit needs. The task force has also notdeveloped a plan for local bank branches, with theresult that the bank may adopt a highly centralizedorganizational structure.

Not BindingLuckily, the task force's proposed regulations are notbinding on the bank. The new board will draft its own.To do this, it will probably hold public hearings in thefall, providing neighborhood and community groups areal opportunity to influence the bank's role in supporting non-profit housing and neighborhood projects.There are still many unanswered questions about thebank. What incentives will there be for rehabilitationover new construction? What balance will be struckbetween the need for existing home improvements asagainst new co-op housing? Will there be limits on therole of developers, speculative and non-profit, and willcommuni ty groups be encouraged to play an active role?Should the bank place special emphasis on housingprograms designed to involve co-opers in the planning,and construction of their housing? Will the bankdevelop anti-displacement guidelines? Will loans coverso-called indirect costs including fire insurance, energyconservation, management fees, legal services andrefinancing?

If the bank's enormous potential is to be realized,neighborhood groups should be monitoring the bank'sregulations, participating in public hearings andbeginning to develop cooperative plans as an importantpart of their community development effort.

For further information, contact the Co-op BankMonitoring and Assistance Project, 1901 Que St. NW,


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Washington D.C. 20009 or call (202) 234-9382; forcurrent information on the appropriations, contactCongresswatch, 133 C Street, SE, Washington D.C. orcall (202) 546-4996. 0

Michael Freedberg is on the staff of the Conferenceon Alternative State andLocal Policies in Washington.

City Limits has learned that the following people wereon President Carter's final list of nominees for theboard of the Co-op Bank:PublicJoseph Hansknecht, Director of Public Affairs, LeagueLife Insurance Co., Board Member, Southern Cooperative Development FundDerek Shearer, Public Interest Economist, member ofCo-opportunity in Santa Monica, CaliforniaFather A. J. McKnight, President, Southern Cooperative Development FundFrances Levenson, Director of Urban Housing, NewYork Bank for Savings, New York CityJuan Patlan, Founder and Executive Director of Mexican-American Unity Council, San Antonio, TexasRon Gryzwinski, President, South Shore Bank, Chicago

GovernmentLawrence Connell, Administrator, National CreditUnion AdministrationMsgr. Geno Baroni, Assistant Secretary for Neighborhoods, Voluntary Associations and Consumer Protection, HUDSam Brown, Director, ACTIONRoger C. Altman, Assistant Secretary, Department ofthe TreasuryDr. Patricia Burr, Assistant Administrator for Management Assistance, Small Business Administra tionGraciela Olivarez, Community Services Administrat ionCarol Tucker Former, U.S. Department of Agriculture

AdvertisementNeighborhood, The Journal For City Preservation,

is a publication of the New York Urban Coalition thatfocuses on the importance of strong neighborhoodsfor the preservation and revitalization of cities . Toachieve this end, Neighborhood educates, informs,and advocates policies which advance the interestsof neighborhoods. Each issue profiles a particularNew York City neighborhood , examining that neigh-borhood in depth through its social and civic organ-izations, its vital statistics, pertinent governmentprograms, and other relevant information. As aregular feature, Neighborhood also includes aninterview with a seminal thinker in urban/environ-mental affairs. Subscriptions: $8 for four issuesfrom Neighborhood, New York Urban Coalition,1270 Avenue of the Americas, N.Y.C. 10020.

13

NEW PUBLICATIONSHow to Get Your Day (Or Night) in Small Claims Court.Available from New York Public Interest ResearchGroup (NYPIRG) Publications, 5 Beekman St., Room1,000, New York, New York 10038 or call 212-349-6460;50 cents each; lower rates available for bulk purchases.The 27-page booklet lists the locations of the smallclaims courts and explains when and how to file a claim,how to prepare for a hearing, what the hearing procedures are and how to collect a judgment.Residents' Satisfaction in HUD-Assisted Housing: Design and Management Factors. By Guido Francescato,Sue Weidermann, James R. Anderson and RichardChenoweth of the University of Illinois Housing Research and Development Program. Available fromPolicy Development and Research, HUD, WashingtonD.C. 20410 or call 202-755-5544. It is also for sale at theU.S. Goverment Printing Office. This study has concluded that tenants in government-subsidized housingare happier without the integration of different social,economic and cultural groups, and recommends againstthis policy of integration.The Redline Continues: The Community ReinvestmentAct Statements: The Reality Behind The Rhetoric. Areport from the New York City Coalition Against Redlining, March, 1979. Available from the People'sHousing Network, c/ o Roger Hayes, 115 East 23rd St.,New York, New York 10010; 50 cents each . This reportdetails the complete disregard local banks have displayed for the New York consumer and the law againstredlining.Thinking Small: Transportation's Role in Neighborhood Revitalization. Published by the U.S. Departmentof Transportation, Urban Mass Transportation Administration. Available from NTIS, 5282 Port Royal Road,Springfield, Virginia 22151; the cost is $8.00 each. Thisreport, prepared by the Conservation Foundation, discusses small-scale transportation solutions as a meansof revitalizing urban neighborhoods. It reports onciti?en involvement in planning for improved transportation, and cites examples in several cities wherecitizens have been involved in successful planning.A Survey of Residents' Perceptions of NeighborhoodServices in the Southeast Bronx and Central Harlem.Conducted by Louis Harris and Associates for the Community Service Society of New York, May, 1979. Available through CSS, 105 East 22nd St., New York, NewYork 10010 or call Vera Avery at 212-254-8900, ext.336. The study interviewed 1,000 residents in CentralHarlem and the Mott Haven area of the SoutheastBronx and found that a majority of the people believedthat the quality of life and most city services haddeteriorated in their neighborhoods in the past fewyears. Most residents also expressed feelings of alienation from government and government officials. Thepoorer the resident, the greater was his alienation. 0


14/24

BOWERY SHELTER UNDER SIEGE-GENTRIFICATION AT THE GATES

Men lounge around on the street in front ot the Shelter waiting for the supper hour to begin.by Susan Baldwin

"I think the only humane thing to do would be toclose this place down. It's overcrowded and there is nodelivery of services. Ou r children cannot grow in thisneighborhood because of it."

Richard Boodman, a longtime Lower East Sideresident who deals in residential and commercial realestate in the vicinity of the Shelter Care Center for Menon Third Street between Second and Third Avenues,offered this projection for the future of this Boweryrefuge for homeless men which, since its founding in1949, has been the only city facility to deal with thebasic needs of one of New York City 's most neglectedpopulations.

"This Shelter is a program of last resort, and forevery man we serve here, there are at least ten others likehim ou t there who are not being served," said CalvinReid, as he showed a visitor around the premises on arecent tour. Reid is the embattled administrator of thecity's only shelter for homeless men. "W e are alwayshearing about depopulating, decentralizing, or closingthis facility down," he added. "Our cachement area isthe entire city of New York and that includes the five

14

boroughs. "Reid's domain is a rambling, red brick former YMCA

that could be mistaken for a school, complete with aplayground, sometime parking lot, next to it.

It is supper time and shabby men wait in a cavernouslobby, filled with the blast of disco from loud speakers,to be called to the Dickensian mess hall below in thebuilding's basement. This night they would eat tuna fishcasserole and beet salad and then be turned ou t to thestreet with a hotel voucher for the night.

Outside the neighborhood residents appear not tonotice the ritual. A ma n is giving his dog a bath in anopen fire hydrant. A young woman sweeps a play-ground across the street in anticipation of a summeryouth program. As often, appearances can be deceiving,for the Shelter and its clients are much on the residents'minds.

For years, this Lower East Side neighborhood hasbeen coping with the Shelter's clients who once wereprimarily harmless, elderly alcoholics and are now agrowing band of younger violent and psychotic men.Recent neighborhood statistics list this new population


15/24

at between 55 and 65 per cent."W e know that the neighborhood feels threatened,

but anytime you talk about any alternative plan to theShelter, you're talking about money," Reid explained,noting that the funding is hard to come by and proposedplans to relocate "mini-shelters" in the other boroughsare almost impossible.

According to his figures, the annual Shelter budget isabout $2 .5 million. The average cost per day tomaintain each client is $12.

At present, the Shelter serves three meals each day tobetween 1,100 and 1,500 men. The annual regular population receiving services ranges from 8,000 to 10,000cl ients.

In order to be accepted at the Shelter, a newcomermust establish that he is homeless and destitute. He isasked his name, birthdate, and social security number.He must be X-rayed for tuberculosis and, if he seekshousing, he can receive a hotel voucher for the maximum of 30 days. The Shelter issues about 950 hotel chitsper night.

The Shelter is not a residential facility. As a result, themen who come there for meals spend a great deal oftime on the street outside during the day and into theevening. And if the local lodgings or "flop houses" arefilled or off-bounds to them, as many as several hundred men have been known to spend a cold winter nightsleeping on the floor and in chairs in the Shelter's "bigroom," a major holding area for the facility's clients.

According to Reid, there are only five hotels in thearea that the Shelter still uses for the men because mostof the others have been sold for other use.

"There is a very frenzied real estate market on theBowery," he explained. "The result is that we have ahousing crisis and so does the neighborhood." In thepast, he added, the Shelter had an overnight capacity of580 beds.

The most recent neighborhood proposal to improveconditions at the Shelter recommends that the population be decreased to 400 men and that mini-shelters beset up in the other four boroughs to handle the rest ofthe clients. Proponents of this plan maintain that it willdiscourage the influx of recently released mental patients into the Lower East Side.

"We have been meeting on a regular basis with Senator (Manfred) Ohrenstein and have pushed ou r ultimatum-that there be one facility in each borough," sa idSister Elizabeth Kelehan, chairwoman of the Coalitionon the Men's Shelter. "B y the end of the year, we hopeto have a facility in one more borough and to have setup a firm policy to locate each patient released fromarea mental hospitals into halfway houses in the samezip code area."

State Senator Ohrenstein (D-Man.), at the behest ofsome community residents, recently was instrumental inholding up $300,000 in state funds to underwrite aspecial crisis intervention and stabilization team to

15

screen the psychotic patients."These residents believe that this psychotic screeningservice will serve as a magnet to attract more clients to

the Shelter, bu t I don't think that is the case. Mostpeople don't want to be screened," said Sarah Connell,deputy regional director of the State Department ofMental Hygiene. "I think the only solution to movingthese people out is funding this team."

Connell also said that the state facilities do not releasepatients directly to the Shelter but that it is possible thepatients end up there because they are familiar with theneighborhood.

Susan Leelike, chairwoman of the rehabilitation committee of Community Board 3, maintains that the cityhas no choice but to decentralize the Shelter."The city's administrative code states that we have

the responsiblity to feed and provide shelter for thehomeless, but it never said that you had to do it in oneplace," she asserted ,emphasizing that the present, antiquated facility is being used beyond capacity.

"It used to be that the presence of the Shelter decreased the value of real estate around here," she said."Now with all the renovation and speculation in general, the real estate value is going up in spite of theShelter. And those of us who have stuck it ou t to saveour affordable housing are now being threatened bybeing bought out."Leelike fears the intrusion of large real estate interestsin the neighborhood, while Anne Pollon, a socialworker who lives in a loft on Fourth Street, believes thatinstitutions such as New York University or CooperUnion have their eyes on the neighborhood.

"NYU has said repeatedly that it needs to expand inorder to survive," said Pollon. "But we do not wantthem east of the Bowery."

Pollon is proposing a plan to thin out and identify theShelter patients, while making essential capital repairsto make the facility habitable.

"I do no t want to close down the Shelter. I just wantto fix it up, and I think we must do this right away if wedo -not want chaos in this neighborhood."

Pollon has also recommended that the Shelter beginto notify state mental hospitals, all social agencies, andchurches of its plans to reduce the population.

" I f we fix up the Shelter and reduce the number ofmen, while excluding those with histories of violence,we have a chance to save ou r neighborhood and keepthe speculators out."

The current city budget has allocated $200,000 inCommunity Development funds to fix up the Men'sShelter.

"I think this is a ridiculous waste of $200,000," saidCarlos Perez, chairman of the Cooper Square Community Development Committee. "This place doesn'tneed to be fixed up with paint. This money could bemuch better used to buy some place away from the cityfor the men to live." Perez has proposed that the Shelter



16/24

EQUAL EMPLOYMENT: WHO CARES?by Bernard Cohen

Not enough is really known about whether New YorkCity discriminates in hiring ,according to interviews withcity and federal officials. Its system of collecting employment data is regarded as antiquated and inefficient.Responsibility for monitoring compliance with equalopportunity laws is scattered among many governmentagencies. And there is a belief among at least someofficials that the whole issue of fair hiring has not beentaken seriously enough.Federal equal employment opportunity (EEO) lawprohibits discrimination in employment on grounds ofrace, color, national origin, religion or sex.Every year, the city must submit to the federal EqualEmployment Opportunity Commission a report on thenumber of employees it has, broken down by so-called"protected" category (female, black, etc.) and salaryrange. In addition, the U.S. Department of Housingand Urban Development monitors the city's EEO performance for agencies and projects that use CommunityDevelopment funds .

How reliable New York's data are appears to be aquestion in the minds of knowledgeable officials. Independent research conducted by City Limits discoveredthat the official figures for the number of employes inthe city's housing agency in 1975 and 1976 are of f bynearly 700 per cent. What is more alarming is that thefigures have never been corrected, although the errorwas detected in 1977.

"One would think that the City of New York wouldhave the most sophisticated system for compiling thisinformation," said an official of the Department ofPersonnel, which collects and computerizes employmentdata for all the city agencies. "In fact, it is so manuallyput together and half of it is wrong."

Two years ago, HUD determined that the city'srecord of hiring and promoting blacks, Hispanics andother minority employes was inadequate. HUD orderedthe city to rectify the imbalance, including the establishment of "indicators" for each agency. No indicatorshave ever been established, and HUD officials say theyare still waiting for the city to supply accurate employment information.

"W e asked the city to develop a system we could relyon at the end of 1977, beginning of 1978," said FrankTorres, who is in charge of equal opportunity monitoring at HUD . "Thelcity said it would try to develop asystem. They gave us a draft later in the year, but all itdid was describe the system. There were no results. Weasked them to modify it to show results. The final document never came back. A few days ago we asked themfor it again, by coincidence."

In Washington, the EEOC said the city is late in submitting its 1978 report.

16

The complexity of the problem and the stubbornnessof bureaucracy can be seen in the example of whathappened in 1975 and 1976 with the housing agency,then called the Housing Development Administration(HDA) . The employment figures for those years aregrossly inaccurate, showing 657 housing workers in1975 when in fact there were 4,394. Naturally, thefigures for di stribution of jobs among the protectedsubcategories are meaningless since they are based onthe wrong total.Why? Laila Long, assistant housing commissioner incharge of equal opportunity blamed the problem on acomputer snafu-apparently only one section of HDAwas counted two years in a row-plus general confusionamong different city agencies over EEO authority and atwo-year tug of war between HDA and PersonnelDepartment for employment data compiled by thehousing agency.In late 1974, Mayor Beame issued Executive Order 14requiring each city agency to designate an EEO Officerand prepare an EEO plan. In 1975, Long said, HDAconducted a survey of its employes and sent the rawdata to the Personnel Department, without keeping acopy. "They were to computerize the information andsend back the survey. With the change in administration, there was confusion about whether they were tosend the survey back to us or we were to just updatetheir records. We did not get the documents back fortwo years."

Long said she pointed out the discrepancy in theemployment figures in a letter to the Personnel Department in February, 1977, apparently to no avail. Thefigures have never been corrected. As recently as May,1979, the city published the wrong data in the GranteePerformance Report, which Long's office contributedto and the city submitted to HUD in compliance withCommunity Development Block Grant regulations.Long said she did not know the report's figures werestill wrong because her office is responsible for a di fferent section of the document.She said that after she learned of the problem in 1977,the housing agency repeated the survey so that figuressubmitted directly to HUD for 1975 were accurate. Shewas not sure about 1976.Criticism of the system tends to be blunted somewhatby a tolerance based on recognition of special difficulties faced by the city due to its size and the internal upheaval brought on by the years of fiscal crisis. Justmonitoring the city is a mammoth undertaking. "Whenyou talk City of New York-where one section of HPD(Housing Preservation and Development, the currentname) has more people than HUD's Area officeyou're expecting a lot," said Torres.


17/24

However, a source in the Office of Mangement ofBudget who is familiar with housing an d communitydevelopment said weak enforcement by HUD was alsoto blame. "One of the major problems is that HUD hasno credibility whatsoever," he said. "W e do what wesee is in our own best interest. We know damn well thatpushed against the wall, HU D will fall over. It's a conditioned response."

The following is an analysis by City Limits of employ-ment patterns at HPD based on a comparison of 1979figures with accurate 1975 data supplied by the agency.HP D lost 1,300 jobs or 30 per cent of its staff between1975 and February, 1979. A comparison of the distri

bution of jobs during that four-year period shows thatwomen went from 40 per cent to 43 per cent of theagency, up 3 points; blacks went from 25 per cent to 35per cent, up 10 points; Hispanics went from 7 per centto 8 per cent, up I point.In the h i g h e r ~ a i d categories ($IO,OOO-a-year andabove) women went from 14 per cent to 24 per cent, up10 points; blacks went from 13 per cent to 21 per cent,up 8 points; Hispanics went from 3 per cent to 4 percent, up 1 point.

POMP continuedment fee is six per cent, and no CD funds are availableon a guaranteed basis to underwrite needed repairs. Fo rthe most part, the TIL buildings must pay for repairsout of the rent roll.Early in May, the Task Force on City-Owned Property, a 60-member coalition of community and tenantgroups and public officials, sent HP D a document thatwas highly critical of POMP.

"The Task Force questions the fiscal sanity of takingscarce funds and applying them toward a managementfee to the same private firms that originally wrote of fthese buildings," the report charged. It also asserted thePOMP "lacks safeguards to insure the proper expenditure of city funds and to protect tenants living in thosebuildings.' ,Deputy Commissioner of Property ManagementCharles V. Raymond answered the charges in a letterdated June 1 in which he stressed that POMP is "onlyone of several alternative management programs withwhich we are experimenting."POMP is one of the least expensive alternativemanagement programs, largely because the firms wehave chosen to work with are well-established withorganizations that can accommodate our buildings withonly small staff increases, which are covered by themanagement fee." HP D does not pay for additionalstaff hired by the management firm to run POMP.

The task force and other critics are fearful that tenants-many of whom are on fixed incomes-will bedriven out of the POMP buildings by higher, restruc-

17

For 1979, it is only in the lower salary echelons of$6,000 to $9,999 that female employes outnumber maleemployes (774 to 223) and blacks outnumber whites (525to 288) in 1979. Hispanics number 175 and Orientalsnumber 9.

Among other findings of the analysis, all 1979 figures: HP D has 111 employes who earn more than

$25,000-a-year. Of these, 83 per cent are male, 90 percent are white, 8 per cent are black, 1 per cent areOriental and 1 per cent Hispanic.

HP D has 510 employes who earn between $16,000an d $24,999. Of these, 80 per cent are male, 78 per centare white, 17 per cent are black, 3 per cent are Orientaland 2 per cent Hispanic.

HP D has 688 employes who earn between $13,000and $15,999. Of these, 81 per cent are male, 74 per centare white, 21 per cent are black, 4 per cent are Hispanicand 1 per cent Oriental.

HP D has 774 employes who earn $10,000 to$12,999. Of these, 60 per cent are male, 46 per cent arewhite, 41 per cent are black, 10 per cent are Hispanicand 3 per cent are Oriental. 0

tured rents.According to St. Georges and Reed Orenstein, director of POMP, the rents will not be raised until all thenecessary repairs are made.St. Georges also said that HP D was in the process ofnegotiating with the Housing Authority to reserve atleast 1,000 units of existing Section 8 subsidy money tosupplement increased, restructured rents in hardshipcases after the buildings are sold under POMP and theother alternative management programs.

POMP will be monitored on a month-to-month basis,and all tenant complaints will be given serious consideration, Orenstein said. In addition, if a management firmfails to live up to HPD's POMP criteria, its contract willbe cancelled immediately.

"W e must take all the programs very seriously, if weare to solve the city's housing dilemma. That is why weare working hard to develop an overall procedure fordealing with our properties," St. Georges concluded.In the meantime, others wonder if POMP belongs inthe alternative management program, as it does notinvolve tenant input in solving the In Rem housing

management crisis."They call it an experiment, an d if it fails they canexcuse it for that reason," said Marilyn Phelan of thetask force. "On the other hand, if it proves to be efficient, they can play it off against the other tenant andcommunity-oriented programs an d say, 'Let's push this

one (POMP) because it costs a lot less . . It may jeopardize the other programs." 0


18/24

ALTERNATIVECD BUDGET UNVEILEDby Brian Sullivan

As a result of a day long conference attended by over400 people, a citywide organization of communitygroups and technical assistance organizations hasunveiled an alternative Community Developmentbudget to that proposed by the City of New York forCD Year 5. The group known as the New York CityHousing and Community Development Coalition, presented its findings to representative of the City Counciland Board of Estimate.

Each year since 1974 the City of New York has prepared a budget representing its plans for housing, publicservices and facilitites and economic developmentactivities to be undertaken as part of HUQ's Community Development program. Each year, the CDCoalition has held city-wide conferences, workshopsand seminars. The Coalition tries to get maximum inputfrom residents of low and moderate income neighborhoods, who, according to federal law, are supposed tobe the primary beneficiaries of CD funded activities.Increasingly, the Coalition has become the only effective voice for an equitable community developmentpolicy in New York City.Mayors Beame and Koch ma.de persistent attempts todirect CD benefits to the politically more important"transition" neighborhoods (largely white, moderate tomiddle income neighborhoods threatened by racial orethnic changes in their population), or to divert CDfunds to bail out Capital or Expense budget programs.Althoug . both of these tactics are clearly in violation ofthe spirit as well as the letter of the CD Act, it is onlywith the constant threat of legal action and appeals toWashington that the Coalition has forced HUD to enforce its own regulations.The Coalition's efforts have, over the years, beensuccessful in focusing public attention on the vital issuesinvolved in community development, so much so thatan estimated $100 million dollars has been redirectedinto low and moderate income neighborhoods anddirect benefit programs.Although the amount of money available this year ishigher than any previous year ($257.8 million) thecompeting demands on these fund continue to grow at astaggering rate: Housing funds requested by HP D exceeded $100million. In Rem (city-owned) properties were variously projected to need $100 million to $128 million. Neighborhood Strategy Areas had been tentativelydesignated for $50 million to $60 million. Model Cities Administration had been drasticallyreconstructed but its programs still represented at least$30 to 35 million. Economic Development had become the

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Mayor's top priority citywide and could easily absorb$15 to $20 million in CD funds.Clearly, these items exceeded the total available without even considering the huge administrative budgetthat the city takes of f the top for its own staff.This was the context in which the Fifth Annual CDConference was convened . Once again the representatives of low-income neighborhoods gathered to discussthe CD budget with city officials. Nathan Leventhal,commissioner of HPD, and Alex Garvin, Director ofComprehensive Planning at the City Planning Commission, told those gathered that there was virtually nomoney available for addressing new neighborhoodpriorities. It was all to be spent on carrying on the ongoing CD programs and meeting other urgent needs. Asthe day progressed, however, it became clear that thebudget projections cited above were far from fixed.

In Rem properties are actually budgeted for only$78 million ($16 million of which goes to CommunityManagement, an ongoing HP D program) and $13.6million for repairs to more than 32,000 apartmentsabout $450 per unit. NSA projects add up to only $25 million for the tenneighborhoods targeted. All services (including former Model Cities programs) added up to $45 million.This leaves over $100 million dollars which should beavailable for neighborhood priorities like housing, jobsand improvements to local community facilities likeparks.Instead, the city's budget proposed: Another $15 million for the Participation LoanProgram which just doesn't work and which certainly(with the banks' interest rates increasing every quarter)is not getting any better at providing affordable rents tolow-income tenants. Over $22 million for Code Enforcement, most ofwhich is a direct transfer from other funding sources tofund Housing Court and HPD staff who used to be paidout of city and state monies. Almost $16 million in nonsensical economicdevelopment programs to give loans to real estate packagers, put in more street lighting in the garment center,and improve industrial security. None of these seems toguarantee any new jobs for low and moderate incomeNew Yorkers . Over $43 million to pay for administrative andsupport staff on the city payroll. ($1.5 million goestoward preparing the CD application-draft copies ofwhich were over ten days late in getting to the public.)

In response to this the Coalition drew up a counterbudget for CD 5 which reflects the priorities of the lowincome neighborhoods rather than the priorities of the


19/24

bureaucrats who control the purse strings. The counterbudget calls for: Cutting the Participation Loan program to $7.5million. Increasing the Sweat Equity program by $4.5million. Expanding the SHIP program to more neighborhoods and making available grants as well as loansto low and moderate income homeowners. Each CD Economic Development proposal shouldbe reviewed to see that it in fact can produce more jobsand contributes to the long term development of thecity's neighborhoods as its economic base. Over $4million in the city's economic development packageshould be scrapped or funded from other sources. The allocation of $2 million to develop CD projectsthat can employ CETA staff in neighborhood improvement projects, e.g., housing rehab. About $2.3 million to be used to develop plans forthe next twenty-three Neighborhood Strategy Areas so

8A Loan continuedto give him a special break.The uncertainty over whether the program is going tobenefit those for whom it is intended pertains to otherCD-funded programs as well. "The reporting forms arenot useful. They don't assist one to do an analysis of theprograms," said a housing specialist at the City Planning Commission. "The forms have never kept up withchanges in the programs. Because of that they are a verypoor tool for trying to get out information."A source at the area office of the U.S. Housing andUrban Development Department echoed his words."Right now the city does not have the informationgathering system that enables it to pull together data attlie program level. We assume if its in a low and moderate income census tract, that it is benefitting low andmoderate income persons unless there are substantialfacts and data to the contrary."Asked how 16 Bushwick loans were erroneouslyincluded in the computer printout for the SA program,an HPD spokeswoman said the agency had switched theapplications into a different loan program withoutchanging the records immediately. In fact, the loanswere transferred in late November or early December.The records were not submitted to the City PlanningCommission to be converted into census tracts andcomputerized until the last few days of March, fourmonths later.

As a result, it remains difficult to say whether the SAloan program satisfies the mandate that CD funds bespent principally for the benefit of low and moderateincome persons. 0

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that they won't be rushed through a mock planningprocess as the first ten were. Funds should also qe madeavailable to structure the current ten NSA plans to effectively address the n e i g h b o r h o o ~ s ' true needs and notthe city's convenience . An increase of over $25 million to go directly intodeferred maintenance and repair of In Rem buildingsand to expand the Community Management Program.The net result of the Coalition's counterbudget is toturn the city's CD 5 budget on its head-to look at theCD program not as a way to save the city money inCapital and Expense Budget lines, but to respond to thepriorities of the low income neighborhoods. CoalitionCounterbudget is available from the Pratt Center. Call636-34S6 for a f r ~ e c o p y . 0Brian Sullivan is a senior planner with the PrattInstitute Center for Community and EnvironmentalDevelopment.

Men's Shelter continuedbe relocated in a non-residential area in a closed-downhospital or school. His sentiments are shared by otherswho claim that the Shelter's clientele hurts neighborhood business.Meanwhile, Robert Trobe, an associate administ ratorin the Human Resources Administration's adult servicesprogram, and Councilwoman Miriam Friedlander (OMan.) defend the expenditure, stressing that the repairs are necessary if basic amenities are to be provided.

"Talk of closing down the Shelter and not fixing upthe toilets and crumbling walls ranges from self-centeredness to vigilantism," Friedlander charged. "We mustdo something to cope with this terribly serious ' community problem. But there is an increase in crime inmany communities. Ours is not the only one wherepeople are killed, mugged, and raped. There is a concentration of violence in all low income neighborhoods,and we cannot blame all our problems here on the menin the Shelter. "As controversy swirls around it, the sluggish rhythms

of the Shelter continue unchanged from day to day. Onerecent Sunday, a local street watcher contemplating thescene idly suggested that the place be bombed, whileacross the street the ragged knots of men shuffledtoward their evening meal.As City Limits went to press, city and state officialswere working on a decentralized plan calling forseparate shelters in all five boroughs with a clientcapacity of 150 to 175 men each. Under this plan, thepresent Shelter would be stabilized at 400 to 500 men.The estimated cost of this plan is $11.5 million. 0


20/24

ASK $12 MIIJLION FOR CREDIT UNIONSby Selwyn Eiber

Legislation to provide $12 million in seed money forfederally chartered community development creditunions has been introduced in Congress . The Community Services Administratiotl (CSA), working jo intlywith the National Credit Union Administration(NCUA), could provide applicants with a maximumloan of $200,000 in start-up capital according to WilmerTheard of NCUA in Washington, O.C., who is a coordinator of this proposed capitalization program.

"This program is in response to President Carter'surban policy proposal made in March, 1978 which callsfor related agencies to cooperate towards a singleeffort," says Theard. I f the $12 million budget isapproved by Congress, CSA would be in charge of thefunding while NCUA, a federal regulatory agency,would oversee the chartering of Community Oevelopment Credit Unions (COCU's) as well as providingtechnical assistance.Existing federally chartered neighborhood creditunions could also apply for an official designation as aCOCU and they would then be eligible for continuationfunding. Eligibility of state chartered credit unions isless certain. Credit Unions are borrowing resources forresidents of low-income neighborhoods who have difficulty acquiring high interest loans from private sources.Also, COCU's reinvest funds back into the neighborhood, which stimulates community developmentactivities.A main feature of this proposed capitalizationprogram, according to Theard, would be the elimination of the 25,000 population restriction which nowstands as a stipulation fo r receiving a federal charter. Byabolishing the population restriction, COCU's wouldhave a much broader base from which to draw capitaland thus stand a greater chance for survival.

The maximum $200,000 loan would be a substantialincrease over what COCU's in the past have used as seedmoney, although an accurate, figure on what is necessaryfor start-up capital is difficult to determine, accordingto AI Alayon who is president of the National Federation of COCU's. Alayon estimated that between $1.5million and $2 million in assets is needed for a COCU tostand on its own."The impact of this proposed $12 million program,"says AIayon, "i s minimal if you're only talking about 60credit unions throughout the country receiving funds,

bu t we will be able to measure how successful a COCUcan be with proper seed capital and management. Thereal promise is if we can get the Credit Union NationalAssociation turned on because then you have peoplewith know-how and money who can help."

In order for a group to start a COCU, the specificcommunity the group wishes to serve must be desig-

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nated as a special impact area or an area involved in revitalization. This designation could come from anyfederal or state agency.Jim Clark, executive director of the National Feder

ation of COCU's, wants to ensure that the proposedprogram not only provides groups with seed capital butalso with technical assistance "and substantial training.He feels that "without the back-up management you arecreating disaster and this is why so many credit unionsin the past have failed. People just weren't trained."Officially designated COCU's that receive CSA fundsmust realize, Clark added, that the money is in fact seedcapital and should not be looked upon as a governmentsubsidy. " I f the capitalization program is perceived as agovernment give-a-way the COCU's will go down thedrain. "

The $12 million proposed budget did receive a setbackin early June when the House Approporiations Committee did not include funds for COCU's . The Committee stated in its report that "this proposed newprogram is of lower priority than many others." However, money could be obtained for COCU's when thebudget proces

Documents

City Limits Magazine, June/July 1979 Issue