Those two little buzzwords played a big role in getting Bill de Blasio elected mayor of New York City in 2013. While it’s still too early in his tenure to know if he will live up to his campaign promise to provide New Yorkers with homes they can actually afford, it’s worth remembering that some people in this city of ever-rising real estate values have been fighting for decades to keep their homes both affordable and livable. Some, against increasingly stiff odds, have even managed to succeed.
Consider the 16-unit co-op at 572 Sterling Place in the Crown Heights section of Brooklyn. In the early 1980s, it was an abandoned shell, a last destination for junkies, garbage, and dying animals. The pastor and parishioners of St. Theresa of Avila Catholic Church, located across the street, saw potential in the eyesore, and so they put together a proposal to the city’s Department of Housing Preservation and Development (HPD) “Sweat Equity” program.
If I Had a (Sledge) Hammer
With the help of Catholic Charities, a $440,000, 30-year mortgage was secured. The property was incorporated as a co-op under the city’s Housing Development Fund Corporation (HDFC). That entity had been formed in the 1970s as a way of turning the city’s many abandoned buildings into limited-equity co-ops – or, in today’s parlance, affordable housing for low- and middle-income residents. Applicants to HDFC co-ops must meet income guidelines, and sale prices are regulated, which insulates these co-ops from the pressures of the city’s ever-hotter real estate market.
Each unit at 572 Sterling Place was valued at $27,500 (affordable even in the 1980s), and shareholders agreed to contribute sweat equity equal to 10 percent of that sum, including demolition work and installing flooring, trim, and cabinets. If you wanted to live in the building, you had to learn how to use a crowbar and a sledgehammer.
“You had to have a strong back and be highly motivated to do this work,” says Claudia Clark, a retired nurse who was one of the original shareholders and still lives in the building and serves on the board. “It was extremely difficult.”
But worth it. By 1985, after a contractor completed the finish work, the former shell was reborn. It was ready for people to move in.
One of the first people to arrive, along with Clark, was Brenda Reed, an Alabama native who was just getting started on her career in the big city and decided to take the risky plunge into homeownership in the summer of 1985. She joined the very first board of directors and still serves as secretary. She and the other members of the original board were determined to keep costs down, and they agreed that a key to success would be self-management.
“In our naïveté, we said there’s nothing to managing a 16-unit building,” says Reed, who works as an executive assistant for Chase in Manhattan. “With the management scandals of the ’80s, we decided we didn’t want to manage the manager. Because we were all green and new to home ownership, we thought we would be taken care of.”
While Reed says she doesn’t regret the decision to self-manage the building, she admits that the board members learned they couldn’t do everything by themselves, or simply rely on the kindness of strangers. “You have to look after your interests and have your own advocates,” she says. “Now we have an attorney and an accountant we can call on. We don’t try to do things on the cheap anymore.”
This shift in philosophy became crucial about a decade ago, when the co-op began to show its age. A roof-to-cellar survey by Rand Engineering & Architecture revealed that the building’s major systems were nearing the end of their life expectancies. The building would soon need some major capital improvements: new windows, boiler, and fire escape, and also exterior brick pointing and repairs to the hallways and basement drains. But thanks to a history of affordable monthly maintenance charges and no assessments – two other keys to affordability – there wasn’t enough money on hand for such a flurry of big jobs.
Enter Ann Henderson, associate director of co-op preservation with the Urban Homestead Assistance Board. She helped the co-op secure a $147,000 loan from HPD with a 3 percent interest rate, and she provided some much-needed guidance. The loan will be paid off, through a share of monthly maintenance collections, in 2027.
“Ann has been a tremendous help in training us, getting us up to speed on filings that have to be done, steering us into classes,” says Reed. “She spoke to the contractor on our behalf. If I had a question, I could give her a call. She was a consultant who led us in the right direction.”
The board had learned another lesson. The original contractor in the gut rehab had done some less-than-stellar work. The windows were cracked and leaking, the heating pipes were improperly installed, and the framing was not done according to code. The board decided that this time around, oversight was crucial.
“We hired an engineer to keep an eye on the contractor,” Reed says. “On a couple of occasions he stopped the work. He made sure the contractor did the work as contracted.”
The projects got another assist. Mauricio Guerrero, an immigrant from El Salvador who manages a Manhattan restaurant, had recently moved into the building and been elected president of the seven-member board, which meets once a month. His energy was infectious.
“When I joined the board, I didn’t know what I was getting myself into,” Guerrero says, “but when I see a need, I jump on it. People saw that I’m a hands-on type of guy. I think because I was in charge of these projects, people cooperated.”
But there was some resistance, especially when it came time to install new security gates in some of the 90 windows that were replaced. The Fire Department of New York now requires that window gates open inward so that they don’t impede egress for people trying to flee the building on the fire escape. But some shareholders were adamant about keeping their old, outward-opening gates.
“Change is stressful,” Reed says. “You have to explain to people that it’s not arbitrary. You have to stop and pause and breathe and explain that the outward-opening gates might stop people from escaping a fire.”
Getting people to serve on the board has been another struggle. “Everyone has an opinion, but nobody wants to work,” Guerrero says. The answer, he has found, is to approach shareholders as individuals. “I encourage people to serve on the board so they know where their money is going and how the board operates. It has worked. Almost every new shareholder has served on the board for at least one year because I approached them personally.”
Greed Is Not Good
Problems have also surfaced when apartments go up for sale in a building that is supposed to be “affordable.” Simply put, some shareholders were delighted by the low prices when they bought, but when they got ready to sell, they saw things differently.
When one shareholder announced that he was putting his apartment up for sale, the board already had potential buyers lined up, a couple they very much wanted to get into the building. “But the man selling that apartment had another buyer in mind,” says Guerrero. “He wouldn’t let us see the buyer’s application, which was fishy. It turned out he wanted to sell for more [than the allowable maximum]. It got very ugly in the end.”
The board prevailed, but it wasn’t the last time the members had to push back against a seller who, in an improving economy in an improving neighborhood, started having visions of large dollar signs.
Notes Reed: “We tell [potential buyers that] the benefit is living here, not leaving here. For some reason, people think the rules are going to change when they want to sell.”
Not likely at 572 Sterling Place. Guerrero says flatly, “We do not want to be one of those HDFCs that bend the rules so people can sell apartments for $300,000.”
Ralph Pinero, the board’s vice president, moved into the building in 2008 and bought into the original shareholders’ philosophy that affordable housing is something worth sacrificing – and fighting – for.
“The biggest challenge is always helping shareholders understand that this is an adventure,” says Pinero, a retired banker. “One shareholder wanted us to go to market rate on apartment sales, but we helped him appreciate that if that were the case, we would no longer be an HDFC co-op. We would just be another co-op in Brooklyn. Where does the word ‘affordable’ come into that? Market rate may be good for the seller, but we want to keep the building affordable.”
The building doesn’t have a super. Shareholders haul their own garbage to the curb for thrice-weekly pickups. And Guerrero has exhibited a knack for finding shareholders who can make contributions to the building free of charge. For instance, one was approved partly because he’s a skilled plumber, electrician, and locksmith. Guerrero has also found a neighborhood handyman who’s willing to work cheap. If a hallway’s paint needs a touch-up, board members pick up a paintbrush.
“When I interview potential buyers,” Guerrero says, “I’m always thinking, ‘What can you do for us?’ I’m always looking for plumbers, accountants – people who can help us out.”
Sometimes he provides the help himself. When he moved in building, there were two other vacant apartments, a studio and a two-bedroom, that weren’t selling because of HDFC’s income and resale restrictions. Guerrero put ads on Craigslist and took it upon himself to hold open houses until the units sold. He and another resident also do the yeoman’s share of work maintaining the communal garden behind the building.
This board dislikes surprises almost as much as it likes saving money. The roof will have to be replaced soon, so the co-op has been setting aside $1,000 a month from maintenance collections for that inevitable rainy day.
A curious thing about 572 Sterling Place is that the struggle to keep the building affordable is driven not only by personal interest, but also by a concern for future generations.
When Guerrero arrived in New York from El Salvador in 1988, he spoke little English. He took a job as a dishwasher in a Greenwich Village restaurant and proceeded to teach himself English, earn his G.E.D., and take college courses. Today, he manages the restaurant where he started out as a dishwasher. He’s both proud and grateful to be living the American Dream.
“When I moved here from Chelsea 10 years ago, my family thought I was crazy,” Guerrero says. “The neighborhood was a little iffy, but now there’s new construction; rents are high. Personally, I don’t want to say I got the opportunity and nobody else is going to. I want to help the next generation.”
Adds Reed: “This building has gone from a shell to a jewel. It’s like a precious painting. You want to preserve it for as long as you can. It’s for future generations, too.”
A Can-Do Co-op
The board at 572 Sterling Place deals with challenges every day. “Sometimes it gets pretty hectic, especially when we’re doing a major capital improvement,” says the board president, Mauricio Guerrero. “And there are always surprises. Last Saturday, I went down to the basement to check on things and noticed water dripping out of the water heater. It was a lot of work getting a plumber, finding a new water heater, removing the old one, and installing the new one. By Wednesday, we had it fixed, and people were without hot water for only about five hours. That was a bump in the road. It doesn’t happen all that often. Generally, things run pretty smoothly because we don’t let things slide.”
For instance, the board is strict about collecting maintenance and arrears. “After a shareholder fails to pay maintenance for a second month, we start legal action,” Guerrero says. “We don’t want it to drag on for months and months, because that’s bad for the building.” Only once in his 10 years there did the board evict a shareholder for failure to pay maintenance.
The key, board members say, is that instead of picking up the phone and calling a manager when problems and challenges arise, they’re willing to roll up their sleeves and take on the task themselves. Or, as Board Vice President Ralph Pinero puts it: “Nowadays, if you want a place to live that’s decent and affordable, you’re going to have to get your hands dirty.”
Last winter, for example, when Arctic-grade snowstorms raked the city, board members and shareholder volunteers pitched in to shovel the sidewalks. “It became routine,” Pinero says. “We just grabbed the shovels and did it, and it didn’t cost anything.” – B.M.