Independence Plaza North (left) in Tribeca was originally a Mitchell-Lama development . New tenants pay
market rate. (Photo by Andrew Schwartz)
Our Town downtown
February 19, 2007
It’s a cold, but clear day, and from the terrace of John Scott’s 38th floor apartment on Greenwich Street, you can see the Empire State Building perfectly. You might think that in a location like this the rent is as high as the altitude, but it’s not, for now.
For the modest two-bedroom, which he estimates measures close to 1,000 square feet, he pays just $1,423 a month, but, he adds, that amount will go up soon because his landlord, a developer named Laurence Gluck, recently announced that he was going to begin submetering and adding electricity to each tenant’s monthly bill.
It may sound like Scott’s place is a steal, but he says it costs him about two weeks’ pay to come up with the rent.
Scott moved here, from Brooklyn, in 1975, when Tribeca was not yet Tribeca. It didn’t have a school; it didn’t have a supermarket; it was deserted at night and was more of a shadowy back lot to the Financial District than a place where people actually lived.
This is why World Trade Center workers, for whom this complex, Independence Plaza North, was intended, were not interested.
In response, the original owners, Duane Street Associates, enrolled the development, which was completed by 1975 and comprises three 39-story towers and 75 attached townhouses, in the government-subsidized Mitchell-Lama housing program. And in doing so, they filled its 1,329 apartments to capacity with low and middle income residents like Scott that same year.
Scott credits Independence Plaza with planting the seeds that later sprouted Tribeca, which Forbes rated as the country’s twelfth most expensive ZIP code (10013) in 2006.
The residents came together and worked to transform the area into a neighborhood, Scott says. In 1982 they were successful in getting the prices on nearby commercial spaces affordable enough that the first supermarket, a Food Emporium, could move in. They also lobbied the city so they could create Washington Market Park with their own hands, and succeeded in having the government build PS 234 (still called Independence School), which was completed in 1988. Scott’s daughter was part of the six-student class that “opened the school.”
The first signs of trouble came in the late nineties, when residents were made aware that Duane Street Associates was planning to buy out of the Mitchell-Lama program so they could begin renting out vacated apartments at market rate, and raising rents for the existing tenants.
(According to a recent report on Mitchell-Lama housing by city Comptroller William C. Thompson, Jr., “the majority of Mitchell-Lama rental units that have withdrawn from the program are eligible to raise their rents to market rate.”)
Residents also started to notice deteriorating building conditions around this time, Scott says. “They started to fire the doormen. And the building … was starting to go downhill as far as the elevators were broke, the carpets were dirty. So we got involved,” Scott says.
The residents raised “a few hundred thousand dollars,” determined to buy the development from Duane Street Associates. Their plan was to make Independence Plaza an equitable co-op, and allow people who couldn’t afford to buy a co-op to stay in their apartments. “And it wouldn’t have been a for-profit type co-op.”
But for some reason, Duane Street Associates chose to sell Independence Plaza to Gluck in 2003, which tenants found out about in a letter. Just a day later, Gluck let them know he planned to leave the Mitchell-Lama program within a year.
Today Independence Plaza is no longer a Mitchell-Lama building and vacated apartments are being rented to new tenants at market rate.
The existing tenants negotiated with Gluck.
Now half of them receive federal subsidies that are determined according to their income. The other half, including Scott, are charged their last Mitchell-Lama rent, plus whatever the rent stabilization increases are for a given year. But according to Scott, new tenants are paying approximately $4,000 a month for two-bedrooms like his, and he, for one, will eventually be forced out.
He also says there is a disparity in the way these new tenants are being treated as compared to the tenants who came in under the Mitchell-Lama program.
“He’s taking all this money from the federal government and if a person’s refrigerator breaks, what he’s doing is giving you a secondhand refrigerator [that] doesn’t work well. The services, he’s giving less, but he’s giving you know, services, to the new tenants that are paying higher rents.” New refrigerators, for example.
After repeated attempts to get in touch with representatives of Laurence Gluck via e-mail and telephone, Our Town downtown was able to speak with Kathleen Cudahy, a spokesperson for Gluck, on the telephone, on the day this article went to press.
Cudahy stated that she had very little time to answer questions about Independence Plaza. But when asked about the secondhand refrigerators, she said that “under the law, you are permitted to do that.”
It’s no secret that as the housing boom continues to flourish, it’s getting harder and harder for New Yorkers of moderate means to remain in Manhattan and the city in general, with steep rents leaking into the outer boroughs, Brooklyn in particular.
Last March, Mayor Michael R. Bloomberg announced an expansion of his already ambitious affordable housing plan, billed the “New Housing Marketplace Plan.”
His original goal was to “create or preserve 65,000 units of affordable housing by 2008,” and then that number was expanded to 68,000.
The latest figure, which he referred to in this year’s State of the City address, is 165,000.
According to the New York City Housing Authority, which is working on the mayor’s plan along with the Housing Preservation Department, the target date for the completion of this new housing is 2013.
The stated cost of the program is $7.5 billion and the mayor is calling it “the biggest affordable housing initiative ever undertaken by an American city.”
The housing initiatives of “Plan 2030,” which he announced in December, are based on the newly created Office of Long Term Planning and Sustainability’s projection that the city’s population will reach nine million by that date.
“In order to welcome New Yorkers from every background we must also fix the persistent housing and land shortage that’s driven prices to record levels. Already, nearly a third of renters in New York City pay more than 50% of their income toward rent,” a Plan 2030 brochure reads.
One strategy for preserving affordable housing is the Tenant Empowerment Act (TEA), introduced by District 1 Councilman Alan J. Gerson, which would give tenants in buildings (and their supporters) whose owners are opting out of subsidy programs the right to buy their building at market value. It would also give them the right to match any offer, no matter how high, that their landlord might receive from outside bidders.
The New York City Council passed this act “over the mayor’s veto, and now it’s in court because as expected the real estate industry is suing and we’re [awaiting] the judge’s ruling,” Gerson says in a phone interview.
Whether or not it becomes law, Gerson also wants to create an affordable housing preservation trust fund that, starting with the next city budget, would designate a “significant amount of money every year … to give to tenants a real opportunity to buy out … with the condition that if they take advantage of this fund they have to keep the developments affordable.”
Two “broad strategies” for creating new affordable housing that Gerson is working with are rezoning and building on available city lands.
He says that by enabling developers to build higher and in some cases denser buildings than current zoning allows, there would be more room for affordable units. Pricier apartments tend to be those that are higher up, so the affordable units would likely be on the lower floors of the given building. This way, the building would have more units.
Gerson says these types of developments could be built on underutilized sites on the Lower East Side, on larger streets like Chrystie and Allen, and certain parts of East Houston, and on other, smaller streets.
Both ideas are included in the Department of City Planning’s Lower East Side rezoning proposal.
Developers working in other areas, in Chinatown for example, could be given the ability to “add just two or three floors” to existing buildings and the older “apartments could be kept affordable or renovated as affordable,” Gerson says.
Michael Ragolia, who is in charge of housing policy for Gerson’s office, says in a phone interview that another of Gerson’s goals is to increase the number of affordable units in Lower East Side buildings built under the 421-a tax incentive program.
That program currently requires participating developers to set aside 20 percent of all units for affordable housing in their buildings. “Hopefully in the upcoming Lower East Side rezoning, we will get more than 20 percent affordable units. That’s absolutely our goal,” Ragolia says.
Manhattan Borough President Scott M. Stringer also supports increasing the percentage of units in these buildings from 20 percent to 30 percent.
And on his Web site, Stringer writes that the city should make the income requirements for rent-stabilized housing more flexible.
He will host a conference to address the concerns of Mitchell-Lama residents on March 3rd at the John Jay College of Criminal Justice.
When the first Mitchell-Lama rentals and limited equity co-ops went up in 1955, and the prototypical two-teacher families moved into them, the city’s real estate market was vastly different. There was more space, the market was weaker, and there was a greater need for multifamily housing period, rather than multifamily housing that was affordable.
Mitchell-Lama developments built after 1973 can be bought out, enabling landlords to raise rents in those buildings to market value.
Owners of these buildings, who have taken part in a city tax incentive program designed to help them with renovation costs, are required to notify tenants about their participation in the program because it restricts the amount of rent they can charge tenants.
But in 2005, the Independence Plaza North Tenant Association (IPNTA) says it discovered that the original owners took part in the program, known as “J-51,” and never notified the residents.
“As a result there may be legal grounds to challenge [the] purchase by [the] current owner,” Gerson says.
A group of Independence Plaza tenants are currently doing this and are waiting for State Supreme Court Justice Marcy S. Friedman to issue a ruling. If she rules in their favor, they could have their rents dropped to the regular rent stabilization rate.
About recent development taking place downtown, Gerson says that “if we don’t do anything, downtown will become a ghetto for the very rich and a disproportionate amount of which will be people who are just keeping, you know, second apartments here … and other folks who are … jet-setting around the world.”
He believes “there’s a place for that, but not an exclusive place.” He says Wall Street executives are concerned about where their employees will live too, and also, that there’s an underreported lack of affordable housing for the elderly, meaning assisted living facilities.
Richard Grossman, a downtown sales director for Halstead Property, thinks that even if rent regulation were to phase itself out, it wouldn’t happen for “generations.”
In a phone interview, Grossman describes what he sees as a civic benefit to deregulation. As buildings “phase out rent regulations, I do believe the city will be able to charge more in taxes, because then those apartments will be more valuable … Taxes are figured on the income of a building. As those incomes increase, the taxes for the building go higher, and the more income the city will have as a … municipality. And we need the money I’m sure.”
He believes the city should have people at all income levels “from a cultural point of view.” And when I describe the higher buildings that Gerson mentioned, he says he thinks it could be a viable strategy.
At least some deregulated apartments will not become luxury housing, he thinks, because “newer people will be entering that housing market and sort of be redefining what middle class is … for that housing.”
He says a lot of deregulated buildings are not “intrinsically” upscale, and so they’re harder to modify in that way. The hypothetical example he gives is of a vacated Mitchell-Lama apartment, where the rent leaps from $500 to $2,500. “It’s one thing to rent one apartment for $2,500 a month, but now you have 300 to rent – I don’t think it’s as easy.”
The real estate boom is “redefining what middle class in the city is going to look like,” and Grossman sees people who were once Manhattan’s middle class continuing to migrate to the outer boroughs in increasing numbers, in the future. “People are looking at Brooklyn and Queens in ways they haven’t … for generations.”
John Scott is convinced that if the original Independence Plaza residents are forced out of the neighborhood, the services and amenities will disappear with them.
What he calls “transients” – young people who share an apartment and move after a year – have already begun moving into his building.
He believes that if deregulation and new development continue in the area in the way they has been, eventually “you’ll have a sterile white community.”
To Scott, the real estate values in the neighborhood are the result of hard work by “pioneers” like himself.
“It was us who [were] here first with the schools and volunteered; it was us with the parks; it was us with the Little League and the greening of Greenwich Street. You know, we are still the ones that water the plants and are active [on] the park board. But the rich people that are among us are not as involved as we are.”
His worries about development and deregulation go beyond Independence Plaza. At a recent town hall meeting, he stood up and spoke about new construction projects in the area that are not zoned to include twenty percent affordable units. He would like to see that, at least.
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