Lower East Side Co-op Gets Funding Lifeline to Fix Crooked Staircase

What began 15 years ago as a hallway renovation at a co-op on the Lower East Side has morphed into a major project to realign the building’s sloping staircase. “It’s been a frustrating journey,” says board president Tania Levey. However, the first step has finally been achieved — securing a $300,000 loan to repair broken hallway tiles and crooked stairs. The prewar, 10-unit building at 153½ Stanton St., which is a Housing Development Fund Corporation (HDFC), overcame this major hurdle thanks to financing approved from Shared Capital Cooperative, a Community Development Financial Institution (CDFI).

When an engineer highlighted the tilting steps and misaligned beams more than a decade ago, there were no reserves to address the problem. “It’s like the spine of the building, and goes from the ground level to the roof,” says Josh Koppel, president of H.S.C. Management, who took over the co-op’s management in the middle of the recent loan application process. “It’s an old building from 1920 and with water damage over the years the beam sagged,” he says. Since the crooked steps didn't present a structural hazard, the board held off on repairs.

Putting the co-op on solid financial ground to do the work has taken time. In 2022, the HDFC’s 30-year regulatory agreement with NYC Housing Preservation & Development (HPD), which outlines the rules by which HDFCs can operate, expired. Under the old agreement, flip taxes from apartment sales were paid both to the HDFC and to HPD. Now, the fee is no longer paid to HPD and the board has been able lower flip taxes to the HDFC from 30% to 10%, making sales more profitable for shareholders. Two apartments quickly changed hands. 

Even so, the windfall from flip taxes was not enough to fund the deferred maintenance. “We were living off the sales and not bringing in enough money,” Levey says. The co-op has two commercial spaces, but has kept rental rates low in order to attract retailers. Realizing additional funding was needed, the board weighed loan options in order to finally tackle the hallway and stairs. A traditional bank loan was considered too expensive. “Interest rates were too high,” Levey explains. Another option was a HPD loan, but it would require a new regulatory agreement with the city and a ban on subletting, which wasn’t appealing when it was presented to shareholders. 

Through the non-profit Urban Homesteading Assistance Board (UHAB), the co-op board discovered CDFI financing, which is available to ensure co-ops can get access to capital. Even so, the application needed reams of paperwork to be sourced from the building’s accountant or created from scratch. Levey took on the task. She had to learn about business plans and create one for the co-op as well as compile board member bios, demographic information about shareholders, and a budget and timeline for the work. “I spent almost two years on the application,” Levey says.

To demonstrate the financial viability of the building, maintenance was increased by 60%, with shareholders seeing an average monthly increase of $200. “The lender wants to make sure that the income coming in is sufficient for the building’s operating expenses,” says Yolanda Rivera, director of the co-op improvement program at UHAB, who supported the board’s application. While the higher maintenance is a strain on shareholders, Levey says the co-op would not have had the loan approved without it. The board also seized an opportunity to almost double the rent for one of the commercial spaces. 

With the funding in place, the board expects to spend at least $200,000 on the staircase repairs. An asbestos inspection to figure out what’s required to ensure worker and shareholder safety is the next step. When the remediation finally gets underway — hopefully next month — levers will be used to shift and move the staircase while the structure is replaced piece by piece. Any remaining funds from the loan will go towards roof repairs, fire escape maintenance and fixes to the ceiling and walls in the basement. “It’s been a long difficult process with a lot of disappointments,” Levey says. “But when this is done, it’s going to be amazing.”