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Kingsbridge Armory and the Dance Around ULURP


Image from Curbed

This month the City Council will be the scene of a showdown in a long-brewing battle between one of the city's biggest developers on one side and a tight coalition of labor and community groups on the other. The issue at the center of the battle is living wages – setting a minimum of $10 per hour for full-time employees at the project site. The outcome could set a precedent for future development deals.

Beyond that and the fate of a Bronx community, the dispute also calls into question the issue of agreements negotiated between community groups and developers and the city's entire land use review process. Is this really a path-breaking effort to require living wages at all public projects, as labor representatives claim? Or is it the familiar last act of a scripted dance around the city's Uniform Land Use Review Procedure in which developers sign on to non-binding concessions to win City Council approval of the deal at hand.

From Armory to Mall

The project this time involves the Kingsbridge Armory, the biggest armory in the nation. On Oct. 19, the City Planning Commission approved a deal giving the Related Companies, one of the city's largest developers, control of the now-vacant armory. Related plans to convert it to a shopping mall.

Related is buying the city's property, appraised at $20 million, for a quarter that amount. The city also has promised a giant package of tax incentives.

In return, a coalition of labor and community groups, the Kingsbridge Area Community Alliance, or KARA, wants Related to sign a Community Benefits Agreement that commits businesses in the mall to pay at least $10 per hour plus benefits and hire local residents. The agreement would exclude a supermarket that could kill local stores. The alliance also wants Related to provide discounted community space and a public plaza at the armory site.

Related has said it could agree to most of this, and the company has claimed it only hires union labor for construction. But Related has stopped short of agreeing to a living wage for all employees at mall businesses.

Although such Community Benefits Agreements may not be enforceable, their use has been growing as government, which is not a party to them, looks the other way. Projects at Bronx Terminal Market and Willets Point went to the City Council with community and labor groups threatening to stop them. They passed after last-minute concessions spelled out in the separate agreements. The City Council has rarely turned back a land use proposal supported by the mayor.

The ULURP Ballet

In the first action in the land use process for the Kingsbridge project, Community Board 7 approved the project. The board placed several conditions on its approval, but the City Council could approve the project without adopting any of them. Despite that, Related has signaled it will agree to some of the conditions, including establishment of an ongoing community advisory group, free wi-fi in the mall and a World Peace Atrium, and has said it is open to establishing a youth recreational facility as proposed by the community board.

The community board supports a supermarket in the mall. A local grocery store group that employs 400 unionized workers opposes the market.

Then, Bronx Borough President Ruben Diaz Jr. came out against the project. He complained that Related has not responded seriously to his concerns about traffic issues and the impact the mall would have on local businesses. This suggests that, with some concessions by Related, the borough president might not oppose a final deal.

In any case, the deal can go through without him. Even though representatives of three other borough presidents and the public advocate voted against the project at the City Planning Commission, the majority of mayoral appointees guaranteed support for the project. And if the community board, City Planning Commission and City Council approve the mall, the borough president's vote would not matter. The council member representing the Bronx district where the armory is located, Maria Baez, is a lame duck noted for her extensive absences. Since the full council usually defers to the members in whose district projects are located, there is likely to be a leadership vacuum.

Labor's Interests

If past agreements can serve as a guide, a community benefits agreement could help win City Council approval even though Community Benefit Agreements are not formally part of the land use review process and could prove difficult, if not impossible, to enforce. Those who question the agreements say they tend to reduce the importance of official public forums and favor back-room deals involving developers, government officials and selected community representatives.

City government has long maintained that such agreements are of dubious legality and can undermine the decision-making process set out in the city's charter. But the Bloomberg administration has turned a blind eye to these side agreements when they give an extra boost to unpopular projects like Yankee Stadium. And many community organizations see them as useful tools for extracting concessions from developers.

The agreements also raise the issue of who really represents the community. This has emerged as a key issue in the Kingsbridge saga where a critical question is whether, by focusing on the living wage as the make-or-break issue, labor has put its interests ahead of those of community based groups. Union involvement also highlights the chasm between organized construction workers and the service workers who will work in the mall and make less than half the average construction wage.

Out in front on the living wage issue is the Retail, Wholesale and Department Store Union, backed by a broad array of union locals and the construction trades as well as the AFL-CIO. According to Desiree Pilgrim-Hunter, a community activist with KARA, the living wage also is a community issue "because we live in the poorest urban county in the nation and we need good jobs with living wages."

But Crain's recently reported that the Building and Construction Trades Council of Greater New York "supports the development of the Kingsbridge Armory and all necessary approvals for this project by the New York City Council," without insisting that living wages be guaranteed for service workers. This raises a question about whether labor is really united on the issue.

Fred Lemoine, vice president of the building trades in the Bronx, said the construction unions simply wanted to clarify the position taken by the Central Labor Council supporting KARA and the agreement but "stopping short of drawing a line in the sand." With construction jobs way down in the current economy, these locals are sending a clear message that they support the plans for the mall. Project supporters will surely see this as a split in labor that can only help them at the City Council.

Even if labor got everything it has asked for, would it truly be getting a living wage? It is demanding only $10 an hour. While slightly higher than the minimum wage, this would put the average full-time salary just under the Bronx's already low average per capita income. While labor has demanded the promised jobs be full-time with benefits (in which case they pay go up to $11.50 per hour), those crucial details could get lopped off the list as the finale approaches.

The Community's Interests

Despite community support for labor, labor's demands seem to have eclipsed the concerns of community groups. The first community meetings about the armory in 2003 ended with a consensus that the priority in redevelopment should be additional schools, since classes in the district suffer from severe overcrowding, and other community facilities. After an initial promise to build schools on the site, the Department of Education backed out.

Instead, the city's Economic Development Corp. issued a request for proposals that favored market-based development and eventually accepted Related's bid. Six members of KARA took part in shaping the Request for Proposals, which could make it difficult for the group to mount any strong opposition now.

In the end, by reducing the land use issue to one of economic development, Related and its City Hall backers may have deflected discussion away from the more far-reaching issues of long-term sustainability. The armory project is the latest of several giant suburban-style malls that are getting dropped into the city's dense fabric without the roads and infrastructure that the suburbs enjoy. The onslaught of well-capitalized national chains moving into subsidized space threatens the very survival of existing small and medium-sized businesses in the area.

These developments also encourage greater dependency on auto use. The new mall would include 400 paid parking spaces, and the borough president and some community groups, instead of prioritizing better transit, are fighting for the lots to be free, which would spur even greater auto use.

Neither the land use process nor the debate over the community benefits process dealt with these vital issues of long-term sustainability. They, along with other planning issues, escaped scrutiny at the City Planning Commission, where they should have been the prime focus. In sum, the big loser in the whole dispute over the Kingsbridge Armory may be the land use review process itself.

The City Council is expected to vote in November and take a bow for putting on a good show in the final act of this familiar ballet that usually surrounds big development deals.

Tom Angotti is professor of urban affairs and planning at Hunter College, City University of NY, editor of Progressive Planning Magazine, and a member of the Task Force on Community-based Planning.

Going for the Gold


Photo by Kimberlee Hewitt for nyc.gov
Bloomberg, Queens Borough President Helen Marshall, and NYC2012 announce Olympic Village design winners.

One hallmark of Michael Bloomberg's tenure, journalist Joyce Purnick writes in her new biography of the mayor, has been to pursue "bold projects full of political risk." That includes shaking up the city's schools and all but banning smoking. The following edited excerpt from "Mike Bloomberg: Money, Power, Politics" (PublicAffairs) looks at one instance where Bloomberg could not make his vision a reality.

Michael Bloomberg wanted his mayoralty to be defined by big moves -- the ban on smoking, the revitalizing of the schools and, most spectacular of all, luring the 2012 Olympics to New York.

New York has never hosted the Olympic Games. The very idea of staging the Olympics in New York drew yawns. While New Yorkers backed the idea of the Olympics bid, there was no excitement, no wellspring of support for it in the city.

Doctoroff's Dream

Deputy Mayor Daniel Doctoroff was having none of New York's trademark diffidence. He'd had a light-bulb moment in 1994, while watching a World Cup soccer match at Giants Stadium. "The stands were packed with screaming, flag-waving Italian and Bulgarian New Yorkers. I wondered, why hasn't New York ever hosted the Olympic games?"

Doctoroff founded NYC 2012 to promote an Olympics bid. Bloomberg became a donor, a board member and his mentor. Tall and handsome, Doctoroff left a managing partnership of an investment firm to join the administration as the mayor's $1-a-year deputy for economic development. Bloomberg was profoundly influenced by him -- unduly so, as far as critics were concerned.

Doctoroff knew that mishandled, the Olympics could be a drain on the city's finances. But handled right, the games could remake a city. As Doctoroff saw it, sections of New York would stir to life in preparation for the games through upgraded zoning and improvements.

His centerpiece was an ambitious plan to transform a neglected section of Manhattan from 30th to 42nd Street west of Eighth Avenue into a sparkling new neighborhood. The Olympics plan was to be a catalyst for new roads, a Park Avenue-like boulevard, office towers, hotels, luxury apartment buildings, parks, a subway extension and expansion of the Jacob Javits Convention Center.

At the heart of the plan would be a "multi-use facility" with a retractable roof to lure the Olympics, return the Jets football team from New Jersey and accommodate conventions. The Jets were to contribute to the stadium's cost, but it would take at least $600 million more in public funds and the approval of the state power brokers in Albany -- the infamous "three men in a room."

Enter Sheldon Silver

Just about any major undertaking in New York State involves the governor and the leaders of the two legislative chambers. They control the obscure Public Authorities Control Board that must coordinate all public spending, and any one of the three has veto power.

Gov. George Pataki, a Bloomberg ally, posed no problem. The leader of the Republican-dominated Senate, Joseph Bruno, could probably be won over if the leader of the Assembly came along. Unfortunately for Doctoroff and Bloomberg, the third member of the Albany troika was the speaker of the Democratic Assembly, the powerful, elusive and cagey Sheldon Silver.

When it comes to almost anything of political importance in New York State, the frustrating guessing game is always, what will Shelly do? Silver knows politics like Bloomberg knows finances. It took the mayor a while to realize it, but he had met his match.

The Final Hurdle

Doctoroff and Bloomberg, impatiently pursuing the Olympics, ignored the local community boards, bypassed the City Council and focused instead on gaining support from high-rolling business executives and construction union.

Their strategy, however efficient, failed to build consensus. Their project arrived in Albany with few allies, leaving Silver even more flexibility than usual.

Developing the far West Side of Manhattan was not to Silver's liking. He wanted state resources funneled to Lower Manhattan. Ground Zero lies in the heart of his district, as does Chinatown, which suffered greatly after 9/11. Months passed before Bloomberg and Doctoroff realized the speaker had to be energetically wooed -- and by the time they tried it was too late.

Courting Silver

The Olympics plan had plenty of opposition, as development always does in New York. Community residents and some city planners were sure that an Olympics-size stadium was far from the best use of such valuable land, while businesses and leaders of industrial unions embraced it as a generator of jobs and economic activity.

The battling factions might have neutralized each other if not for the most potent of the opposition. It came from the rich and powerful Dolan family. The Dolans, Silver contributors, control Cablevision and Madison Square Garden. They saw the stadium as competition to their arena and mounted a costly campaign against it.

Silver raised concerns about the plan but portrayed himself as neutral, the better to wrench a series of concessions from Bloomberg. As his associates winced, Bloomberg attended the bris of two Silver grandsons, paid a condolence calls when the speaker's brother died, renewed his support for a new public school downtown and endorsed a package of generous business subsidies for lower Manhattan.

The day before the crucial vote, Bloomberg and Silver both attended a charity breakfast in the Roosevelt Hotel. The two met in a side room and the mayor pushed, cajoled, persuaded and refused to give up.

Next day, Silver and Bruno's representatives to the Albany control board abstained from voting to fund the stadium. And so it died. When asked it the stadium deal was really done, Silver replied with a wicked grin, "It was never alive."

Bloomberg was furious. "You think you have an agreement with him and then Shelly sticks out his hand and says, 'Wait a minute. One more thing.' The city suffered at Silver's hand," he charged.

New York's Olympics submission no longer had its dream stadium. The Olympics dream collapsed, and the designation finally went to London.

The stadium failure stands as Bloomberg's greatest miscalculation and embarrassment. Doctoroff and Bloomberg misjudged not just the politicians but also ordinary people.

The public did not want that stadium. One poll found that 58 percent of New Yorkers opposed the stadium and an even larger percentage was less likely to vote for Bloomberg because of it.

Paradoxically, by shattering Bloomberg's Olympics dream, Sheldon Silver saved Mike Bloomberg from himself. His veto was cast five months before Election Day. It removed the greatest obstacle to the mayor's election.

"We sent flowers to Shelly Silver," said William Cunningham, Bloomberg’s first-term communications director. "Big, red roses."

From the book Mike Bloomberg: Money, Power, Politics by Joyce Purnick. Excerpted by arrangement with PublicAffairs, a member of the Perseus Books Group. Copyright © 2009.

Correction: Due to an editing error at Gotham Gazette, this article originally said the stadium vote was five days before Election Day; it was five months.

 

Democratic Mayoral Candidates Would Plan from the Bottom Up


As they seek to chip away at Mayor Michael Bloomberg's many advantages in this year's mayoral race, his challengers hope to find votes in communities throughout the city where residents may see the mayor as having ignored grassroots, neighborhood-level politics. While Bloomberg's campaign mailings and releases stress the city's diverse population, interests and communities, his big picture approach, his opponents charge, ignores the importance of civic involvement at the community level.

City Comptroller William Thompson Jr. and City Councilmember Tony Avella, the two candidates in September's Democratic primary, are waging increasingly strong challenges to Bloomberg in the city's hundreds of neighborhoods. And Green Party candidate Billy Talen continues to raise his faux preacher's voice in the five boroughs. Many of the concerns moving the debate have to do with neighborhoods. After all, issues like zoning, neighborhood preservation, and affordable housing are surely among the most important ones on the streets where New Yorkers live and work.

I asked the two Democratic contenders for their views about Bloomberg's policies and how they would do things differently in the city's neighborhoods. I also asked them for their views on the role of community boards and the planning and budget process.

While both candidates criticize Bloomberg for being a "top-down" mayor and want a larger role for communities, Avella is the one with a long record of advocating community involvement. As chair of the council's Zoning and Franchises subcommittee, Avella has staked out a role as one of the most consistent critics of Bloomberg's land use policies. Though Thompson may have the edge on Avella in the polls, when it comes to neighborhoods Avella seems to have been there longer and ready to go much farther.

On the other hand, based on their responses to questions, it is hard to find substantive areas where Thompson and Avella disagree, and the differences may be more in the degree to which they want to break with the Bloomberg years and its imperial mayoralty.

Neighborhood Needs

Both Democratic contenders believe Bloomberg has ignored the specific concerns of individual neighborhoods.

"I don't think Bloomberg believes New York City neighborhoods have their own needs," Avella said.

Thompson said, "The mayor too often acts unilaterally, with no collaborative planning or community engagement. He has decided what the communities' priorities should be without talking to community boards and spending any time in these neighborhoods."

As examples of what he sees as the mayor's disregard, Avella cites the administration's extensive rezoning of city neighborhoods and notes that he opposed controversial rezonings such as 125th Street in Harlem and the recent Coney Island plan, which he said "will destroy that area's amusement character." But, in Avella's view, the problem goes beyond individual plans to the mayor's underlying approach. "Real estate controls the agenda. They [the city's planners] don't do planning, and they are reactive to real estate development," he said.

Avella said he supports rezoning in general and points to his backing of contextual rezonings in Queens, which are intended to reshape new development so it will be more consistent with existing buildings in the area. But, he said, the administration puts pressure on neighborhoods to allow new development in order to get the contextual rezoning they want from the city. "Communities should get protection without having to give something up," he said.

Avella also slammed the city's mixed-use zoning, which allows a combination of residential and industrial uses in a community, as "a dismal failure that resulted in the destruction of the manufacturing base."

 

Thompson shares many of the same views. "Much of the zoning and rezoning we see today has been driven by the mayor's desire to create real estate wealth, not to improve the lives of people in these communities," he said. "These rezonings have zoned out of existence nearly 20 percent of our available manufacturing space. Just imagine if instead of focusing so intently on zoning and real estate we had instead worked to create affordable housing, infrastructure, schools and jobs."

The Community's Voice

Avella has been a vocal critic of developer-initiated and controlled plans such as Atlantic Yards in Brooklyn. He also opposed the plan for redevelopment of Willets Point in Queens, prepared by the city's Economic Development Corp. Avella's approach favors "bottom up" planning that involves local residents and businesses and does not resort to the use of eminent domain to promote private real estate projects

To accomplish this, he has been a vocal advocate for community-based planning and has worked with the Municipal Art Society to craft legislation that would support communities that do their own plans. "I've been saying these things all along. Other cities are ahead of us. Community planning sets the stage for all of the issues in neighborhoods. We shouldn't just give neighborhoods opportunities to plan but also the funding to address their needs," he said.

There are around 100 community-based plans in New York City, but according to the citywide Task Force on Community-based Planning they do not receive sufficient support from city government. (I am a member of the Task Force).

Thompson also calls for more -- and more strongly supported -- community plans. "Community-based planning that includes input from local community boards, elected officials, and other stakeholders is incredibly important and, like community board budget priorities, should be better incorporated into an overall citywide framework," he said. "Once developed, zoning changes and siting of facilities should be considered in the context of these collaboratively created plans."

"Urban planning," said Thompson, "is about so much more than real estate or finding ways to accommodate population growth. It's about stepping back, looking at our city and asking ourselves what do we want New York City to look like in 10, 20 or 30 years. We should decide what we want our communities to look like first and then develop toward that goal. We need a vision of a livable city, not an accommodation, and I believe that comprehensive neighborhood plans are required, not merely zoning changes."

Grassroots Government

The city's 59 community boards provide a means for those kinds of local concerns to be heard and considered. Both Democratic candidates state they would strengthen the panels, whose role is advisory, and they assailed the mayor's efforts to weaken, if not eliminate them.

In particular, Thompson criticized the mayor's effort - later withdrawn -- to cut an average of $35,000 from the budgets of individual community boards, which average less than $200,000.

"I strongly opposed these cuts." Thompson said. "Community boards are the primary way most New Yorkers participate in and interact with our city government. They are also a vital source of information for millions of New Yorkers. …. We need to invest more time and resources in training community board members."

Beyond that, both contenders think the city should listen to the community boards. "I would absolutely change the way the city deals with community boards," said Avella. "They're going to have some real power."

For example, community boards submit annual budget priorities, but according to Avella, "the city doesn't pay any attention to their budget priorities. Nobody knows the community better than the people who live there. I have proposed that community budget priorities be included in community plans and implemented."

Thompson sees community board members as "knowledgeable, dedicated, conscientious and passionate. They understand the process, needs, issues and character of our communities better than anyone. That's why community board budget priorities must be better incorporated into the overall city budget framework."

The City's Plan

In his almost eight years as a "big picture" mayor, Bloomberg's biggest picture item has been PlaNYC2030, the long-term sustainability plan he unveiled on Earth Day 2007.

"Great press release," says Avella. "PlaNYC2030 is a nice outline with a lot of good things in it but they don't lead to changes. Except for congestion pricing, which really won't affect the environment" -- and which, of course, failed to win approval from the state legislature.

Thompson, on the other hand, criticizes the mayor's plan because it "is all about infrastructure, not people. There is scant mention of the need for affordable housing, even though the plan anticipates a million more New Yorkers by the year 2030. We certainly need a long-term plan to meet our city's anticipated population growth. But that plan must consider and incorporate economic development, affordable housing, job creation and expansion of human services."

The Big Picture and the Hood

In many respects, PlaNYC2030 encapsulates the mayor's top down, big picture approach, which has won him fans in much of the business community and part of the media. On the big-picture questions of the budget, government efficiency and long-term sustainability, Bloomberg, to them, seemed a natural. So it is not surprising that the leading pundits and pollsters have rushed to confirm the election as a "done deal." But voters tend to view city politics as both a top down and bottom up process. For Democrats, a key question may well be whether their calls to strengthen the role of communities will make a difference on Election Day.

Tom Angotti is [rofessor of urban affairs and planning at Hunter College, City University of NY, editor of Progressive Planning Magazine and a member of the Task Force on Community-based Planning.

Closing the Landmarks Loophole


Photo from Save St. Brigid
St. Brigid's Church in the lower east side was recently saved from demolition by an independent wealthy donor.

Correction: When first published a caption in this story originally said St. Brigid's Church was saved by a landmark designation. It was in fact saved by an independent donor. This story also incorrectly said that an owner of a property could get a landmark designation overturned if it could show economic hardship. The owner could only appeal to get his or her permits back, if they were withdrawn by a landmark designation.

The battle between preservationists and building owners in New York City seems perennial. To an average observer, this struggle escalated over the last 15 years as two consecutive pro-development mayoral administrations and a red-hot real estate market combined to make building construction accelerate at a pace that has made heads spin. Despite their tremendous efforts, proponents of historic landmarking have witnessed countless examples of architecturally important buildings renovated, altered or destroyed.

At the very core of the city's land-marking laws overseen by the 11-member Landmarks Preservation Commission lies a fundamental paradox that allows one city agency to function in virtual isolation from what another agency may be doing. The landmarks commission must give advance notice of possible designation to a building owner -- or for a historic district, owners. This, along with the time lag before any landmarks proposal goes on the calendar for consideration, creates a de facto loophole in the law.

Specifically, the Department of Buildings can grant work permits even when the landmarks commission has a building within its sights, a trick that has given more than a few developers time to alter a building sufficiently to make preservation irrelevant. Much has been written over the years discussing this loophole, including an editorial in the New York Times last December, urging legislators and the mayor to take action to prevent this from continuing. Now, some members of the City Council are heeding that call.

Closing the Loophole

Manhattan Councilmember Rosie Mendez has a bill, which she first submitted to the Landmarks, Public Siting and Maritime Uses subcommittee in 2007, that seeks to improve communications between the landmarks commission and the buildings department.

The legislation requires that landmarks notify the buildings department, when a property has been "calendared" for designation as a landmark and, conversely, that the buildings department tells the landmarks commission when it has received applications for work on a building being considered for landmarks status. The buildings department also would have to inform the landmarks commission when it receives applications for work on buildings that have been calendared for designation as a landmark. If a building eventually is designated as a landmark, the bill would revoke permits for façade work previously issued by the buildings department.

Calendaring refers to the scheduling of a full Landmarks Preservation Commission public hearing on a property. Only the commission chair can determine whether or not a property comes before the entire commission. The landmarks commission does have 40 days from the time a property owner applies for a building permit in which it can decide to designate a property and so stop the permit from being issued.

Intro. 542A was given its second public hearing in June after languishing for two years following an initial one. "We're hoping this time ... we're getting through," said Mendez's chief of staff, Lisa Kaplan, who said she is unsure what the bill's current status is. "It's not clear where were going from here," she said, adding that the council's legal team is reviewing the bill's wording.

It is also unclear exactly why the bill received another hearing after all this time. Andrew Doba, a spokesperson for Council Speaker Christine Quinn, said the legislative process takes time "to get things to where we want them to be ... where there is widespread consensus." Doba added, "There are quite a lot of moving parts in this ... complicated bill."

The East Village Example

Mendez was spurred by the long-running fight to preserve the CHARAS building in her East Village district. That former public school had been converted into a community and arts center and was subsequently sold by the Giuliani administration. Even though community activists successfully rallied to convince the landmarks commission to award CHARAS landmark status, the new owner took advantage of pre-existing permits to remove vital architectural characteristics after the designation.

Many preservation groups support the proposed changes in Mendez's bill. In testimony at the June hearing, Andrea Goldwyn, director of public policy for the New York Landmarks Conservancy, cautioned, that what she-called "pre-emptive" permits should not be allowed to prevent or circumvent the designation of worthy historical sites and structures."

For its part, the landmarks commission has expressed some support for Intro. 542-A. In his testimony, commission counsel Mark Silberman said, "The bill attempts to address a serious issue, of property owners pulling permits for inappropriate work in an attempt to foil landmark designation. Fortunately, this is a rare occurrence."

Opposing Arguments

The legislation would allow a property owner to have the permit withdrawal overturned by the city's Board of Standards and Appeals if it would cause the owner economic hardship or if the owner has already made a significant investment in the property. Despite this, the Real Estate Board of New York testified against 542A arguing that the proposed appeals process would be "very expensive." Even in the event the Board of Standards finds in a developer's favor, the Real Estate Board argued, the lag between the challenge and the decision would create delays, cost the developer money and could jeopardize financing.

The bill "would impede development and renovation, delay many desirable projects and reduce construction jobs," the board's representatives testified. "It’s simply unfair to owners working in good faith to rescind a validly issued permit and it’s hardly a recipe for lowering development costs and revitalizing our economy."

A Question of Timing

Meanwhile, Queens Councilmember Tony Avella has submitted two landmarks-related bills, while wrangling with city lawyers on a third. That bill would go even farther than Mendez's, essentially overriding the buildings department and allowing the suspension of existing work permits. "There's no reason why it's [not] in the public interest to drop demolition permits" at any point during the landmarking process, Avella observed.

Landmarking activists have repeatedly expressed concern about the timing and sequence of buildings department work permits on one hand and landmarks status on the other. In an April letter to Robert Tierney, landmarks commission chair, about the pending South Village Historic District, Greenwich Village Society for Historic Preservation executive director Andrew Berman wrote that his organization has "very strong concerns about ... the very real potential for further and accelerated losses depending upon how the designation of the first phase of the proposed district is handled."

While testifying against 542A, the Real Estate Board of New York also addressed the time factor. "Building calendaring can come unexpectedly and quickly, making the building permits [a] meaningless pieces of paper. ... It is not always clear what buildings the [commission] is considering," it said.

The situation for owners and developers gets even dicier, the board testified, because the commission may leave matters open-ended. "After calendaring, it’s unclear when, if ever, they will make a decision about the designation. ... Some buildings that had not been designated after several reviews still have gotten reviewed again. Years of preparation work and expenditures on the part of a developer can be lost in a few weeks when the [landmark commission] decides to take yet another look at a property."

Avella's Intro. 1034 creates a specific timeframe for the landmarking process and directs the commission to schedule (calendar) a nominated building for consideration within 90 days, after which a public meeting must be held. If at that meeting three or more commissioners agree with the designation, the commission would have 60 days to make it official.

Avella's other bill, submitted in 2008, requires "experience-based qualifications" for landmarks commissioners. As presently written, the landmarks law requires the commission to be comprised of at least three architects, one historian, one city planner or landscape architect, and one realtor along with at least one resident of each borough. As Avella pointed out, there's no requirement for any member to have experience with historic preservation. The closest they get, Avella said, "is the historian -- but [no one] has to have any knowledge of our historical or architectural heritage."

Jillian Jonas is a freelance journalist focusing on local and national politics, government and public policy. She is a former national political analyst for U.P.I.

As Trade Center Plans Falter, City Could Have a Sense of Deja Vu


Photo (cc) StrahlemannBE

Once again redevelopment of the World Trade Center site is looking more like an epic struggle in a Greek tragedy. Even those characters who may be aware of their fate are locked into the logic of the post-9/11 hubris and are forced to play along as the saga reaches its ultimate consequences. Mayor Michael Bloomberg’s recent attempt to fix things could have been the miraculous deus ex machina of Greek tragedy, in which gods drop onto the stage at the end to avert tragedy and make a happy ending. But that didn’t happen and now Gov. David Paterson has volunteered for the rescue mission.

The latest turn in the drama suggests that it won’t be over any time soon. After the breakdown of negotiations with the Port Authority of New York and New Jersey, developer Larry Silverstein called for arbitration to settle a dispute over financing. Silverstein, the major leaseholder, wants $2.6 billion in loan guarantees from the authority to build two towers that it is estimated will cost $4.2 billion to build. The authority says it will guarantee $1.2 billion for one of the towers, but only if Silverstein raises $625 million privately.

Silverstein blames the authority for the financial deficit because it has fallen behind schedule in construction of the transit hub and the Vehicle Security Center on the site. For its part, the Port Authority says that it would be too risky to put so much money behind the construction of such a huge amount of new office space in the current market, where private lenders have withdrawn.

So while both public and private sectors are at an impasse, the press and public stand on the sidelines witnessing what may well be the second disaster at Ground Zero -- not just the failure to rebuild but the looming possibility that the whole plan will never be implemented and New York will wind up with a new set of twin towers on the site that will create for lower Manhattan many of the same problems that the World Trade Center once did.

Maybe it is time to go back to the drawing board, reconsider the original plan, buy out the private parties and start again by asking the question what’s best for both New York and world peace, as many civic groups did after 9/11.

The Failed Plan for Ground Zero

From the start, the logic of the World Trade Center plan was to put back on the site most of the 11 million square feet of office space that was lost on 9/11. After eight years of planning, disputes over insurance money and financing, battles among architects, and a regular drumbeat of assurances from the protagonists that things are moving forward, the market for office space has caved in. Crain’s reports a 44 percent drop in rents for Manhattan office space in the first half of 2009. Projects already in the ground face a troubled market and revenue shortfalls.

But the current market is not the only problem. The way the plan was devised has exacerbated the situation.

Short-term planning was in charge right from the beginning. "Rebuild the tower" was the rallying cry of Silverstein, who owned the largest long-term lease on the site, and it was raised to patriotic heights by then-Gov. George Pataki, with support from the Real Estate Board of New York. Despite reservations, the city’s new mayor, Michael Bloomberg, went along with that goal.

An initial burst of civic interest, discussion and debate following 9/11 produced many proposal for innovative alternative development of the site. In response, Pataki moved swiftly to approve a slightly scaled-down version of an office park with some 10 million square feet of office space. The international design competition managed by the Pataki-controlled Lower Manhattan Development Corp. was all about how to make it look good, with a memorial and cultural center thrown in to assuage the demands of the victims’ families to preserve the site as a memorial and the desire of the local neighborhood to make it a mixed-use development.

The reaction of architectural critic Ada Louise Huxtable to the first round of plans for Ground Zero was prophetic. She said they were dedicated to "the restoration of all the commercial real estate by dumping it back in the same place in a slightly different form." She concluded, "This is dĂ©jĂ  vu all over again for those who remember the urban renewal destruction of lower Manhattan in the 1960s.”

Back then, urban planners, architects, office workers and local residents objected to plan for the original Twin Towers because of the way the project was separated from everything else in lower Manhattan by its vast, barren and wind-swept plazas. While the latest design for the site features signature buildings by famous architects including Norman Foster and Richard Rogers, the recent collapse of the real estate market suggests that for the foreseeable future only two of them -- at most -- will be built.

The Revenge of the Twin Towers?

Only two towers? Are we looking at an historic repeat of the original Twin Towers? And the new buildings, with anti-terrorist design features including monstrous bases encased in steel and titanium, will make the pre-9/11 versions look like pastoral wonders.

With the rest of the master plan for the site postponed indefinitely, the towers could again be surrounded by vast empty spaces or, at best, a couple of lonely memorial sites and a small cultural center. And the office buildings could have lots of empty space. The original Twin Towers, which opened in 1973, had so many vacancies that public offices were brought in to fill them up. No wonder the Port Authority doesn’t want to subsidize Silverstein up front.

So after eight years of wrangling over exactly how to dump the office space back on the site, this may be a good time to stop and go back to the drawing board. Maybe the critics were right in the first place. Perhaps it would be better to look at the site as an opportunity to express the diversity of interests and needs of New Yorkers. Since most victims of the attacks were not New Yorkers and 9/11 had repercussions far beyond Ground Zero, the focus might appropriately move beyond those who happen to own the land. Maybe New York could learn from the leading examples of rebuilding on sites destroyed during war, like Hiroshima, Japan – a city that dedicated its plan to the cause of global peace and is today a destination for visitors from around the world.

Tom Angotti is Professor of Urban Affairs and Planning at Hunter College, City University of NY, editor of Progressive Planning Magazine, and a member of the Task Force on Community-based Planning.

Unlocking the Apartment 'Warehouse'


Photo by Joel Cook
Housing advocates and East Harlem residents rallied March 17 outside a vacant building on Madison Avenue. The action was meant to bring attention to warehoused property that could be used for housing, and to push for the City Council to adopt legislation to combat vacant property.

On a rainy June evening in the office of Rev. Billy Talen's mayoral campaign a group of New York activists, part of the Housing Not Warehousing coalition, discussed how to find housing for people who need it.

"What's the quickest way to get low-income people housing?" asked Rob Robinson, a housing organizer with Picture the Homeless, a grassroots group run by homeless and formerly homeless people.

Frank Morales, a housing activist, suggested direct action. Others agreed, saying they should take over vacant buildings. That is hardly surprising coming from a group who has taken "they say gentrify -- we say occupy" as a kind of slogan.

City lawmakers, though, are developing less confrontational ways to tackle the problem of vacant, or warehoused, property that could be used for affordable housing. The Housing Not Warehousing coalition, which consists of 30 organizations ranging from faith groups to anti-gentrification activists to public housing advocates, says that the legislation could be a major step in securing and sustaining affordable housing in the city.

Unused Space

In 2006, in tandem with Manhattan Borough President Scott Stringer, Picture the Homeless conducted a survey of vacant property in Manhattan, and found that 24,000 apartments could come out of the vacant buildings and lots they canvassed. The report noted that while the count only covered Manhattan, "highly visible clusters of boarded-up buildings in neighborhoods exist throughout the five boroughs." Picture the Homeless said that the vacant property could house the entire homeless population of New York City.

The vacant buildings found in Manhattan took different forms, the report explains. In wealthier neighborhoods, the exterior of vacant buildings is usually maintained, while in neighborhoods such as Harlem or the Lower East Side, vacant buildings tend to look dilapidated.

Why Warehouse?

Landlords keep property vacant for a variety of reasons, according to Frank Ricci, director of governmental affairs for the Rent Stabilization Association, a pro-landlord group.

Ricci said many buildings remain vacant because the property is tied up in an estate or the landlord might think that using the property would not be profitable. Other reasons include structural problems with buildings, or property owners who tire of managing, Ricci said.

Mario Mazzoni, an organizer with the Metropolitan Council on Housing, a tenants' rights group and member of the Housing Not Warehousing Coalition, sees another factor. According to Mazzoni, gentrification is the main motivator for landlords to warehouse buildings.

"Warehousing today is all about gentrification. That's all it’s about," he said. "If you're holding on to a building, paying and maintaining the cost of taxes, sitting on an investment you're not profiting from, it's for a reason, and it's because you plan on making more money in the future."

For decades, vacant property above 110th St. in Manhattan, where there is a high concentration of warehoused property, was taxed at a lower rate than properties elsewhere in Manhattan. That lower tax rate made it less costly for landlords to keep the vacant property. A bill proposed by state Sen. Jose Serrano and Assemblymember Herman Farrell Jr. that equalized the tax structure passed in June 2008 and took effect at the beginning of this year.

Legislative Solutions

The Bloomberg administration and City Council Speaker Christine Quinn have recently announced the Housing Asset Renewal Program, an initiative to turn vacant or stagnant condominiums into affordable housing. Other city legislators are looking for solutions to convert warehoused property into housing for low-income and homeless New Yorkers.

Councilmember Tony Avella, a Queens Democrat running for mayor, is working on a bill aimed at stopping landlords from keeping vacant property off the market.

Landlords "want to warehouse to [assemble] whole blocks for development," said Avella, a frequent critic of the real estate industry. "They don't want to be regulated. But they have to be, because if we're ever going to change the housing situation in this city, we have to regulate the real estate industry."

The legislation championed by Avella, currently in draft form, would empower the city Department of Housing Preservation and Development to fine owners who keep buildings empty and would create a fund to "provide capital for the rehabilitation of distressed vacant units." Half of the rental homes that come on the market as a result of this legislation would be set aside for homeless people.

The bill has not yet been introduced in the City Council, and, according to Avella's legislative counsel, has encountered potential legal problems raised by council staff. Avella's counsel said that these barriers may include the 1971 Urstadt Law, which prevents the city from enacting rent laws stronger than New York state's, and a 1989 decision by the New York Court of Appeals that struck down a City Council law that imposed a moratorium on the conversion or demolition of Single Room Occupancy hotels. According to the New York Times, the court ruled that the law was unconstitutional because it "deprived owners of the right to determine how their property would be used."

Avella plans to continue to work on the legislation and to introduce it as soon as possible to move the discussion forward.

Councilwoman Melissa Mark-Viverito, who represents East Harlem, Manhattan Valley and parts of Mott Haven in the Bronx, is working on a companion bill focusing on city-owned vacant buildings.

The Mark-Viverito bill would mandate a citywide census count of vacant property. In addition, Mark-Viverito indicated that, as part of her bill, city-owned apartments that become available would, in at least some cases, be set aside for low-income people.

Since Mark-Viverito's bill targets city-owned property, it has a better chance of passing than Avella's bill. The city, however, owns only 7 percent of the total vacant property stock, according to the Picture the Homeless survey. City-owned housing has dwindled significantly since the late 1970s.

Despite the relatively small amount of property involved, Mazzoni said, "It's strategically smart at this point to focus on city owned property. There's a great deal of ability to influence what the city does with property that it is controlling."

Mark-Viverito's bill "is a step in the right direction," Avella said. "Obviously, we need to do a lot more, but even if we take a baby step at this point, it's better than nothing."

Winning Passage

Andrew Doba, a spokesperson for City Council Speaker Christine Quinn, did not say whether Quinn would support either bill. "Affordable housing is a constant challenge in our city," Doba wrote in an email. "Warehousing is a complicated problem, and the Council is reviewing what can be done to ensure that decent and affordable housing is available to all New Yorkers."

At a meeting in April between Quinn, Mark-Viverito and members of Picture the Homeless, video provided by Picture the Homeless shows Quinn saying, "My goal is to get to a piece of legislation which Melissa [Mark-Viverito] will let me co-sponsor. ... And if I put my name on a bill, I'll do everything to move it. But I'm not going to put my name on it until I know that we can do it legally."

If the arduous legislative process does not produce anything, Robinson says the Housing Not Warehousing Coalition is prepared to take matters into its own hands by using direct action and civil disobedience.

During a period of economic distress, "the time is good for this type of thing to happen, but we really have to seize the moment," said Robinson.

Gold from the Faucet


Photo (cc) Shannon K

On the edge of Newtown Creek, which separates Brooklyn and Queens, eight giant egg shaped structures emit a blue glow into the night. But the complex is more than an architectural experiment. It is a wastewater treatment plant that extracts water from the sludge treated there and, as a result, helps improve the quality of surrounding waterways.

The plant's upgrade, already the largest wastewater treatment plant in the state, is one of the city's biggest long-term infrastructure projects ever. Although the federal and state governments ordered the upgrade, its expected final price tag of $4.8 billion will be almost entirely funded by the city.

To pay for projects like this as well as other components of a water system that delivers 1 billion gallons of drinking water and processes 1.3 billion gallons of wastewater daily, New Yorkers are charged for water.

Costs for that system are rising as revenue declines, so the price of water is likely about to go up once again. The Water Board will vote on a 14 percent rate hike on Friday. If approved -- as is all but certain -- the new rate will go into effect July 1. Together with past increases, the latest hike means the cost of water in the city will be 60 percent higher than it was four years ago. More increases are also expected.

But elected officials and activists argue that the water rate hike isn't fair and that the Water Board, which sets those rates, is in need of reform. They say the board could spend its money more efficiently. Furthermore, its efforts at recouping bills from those who have not paid have been condemned as anti-consumer by some. The board itself is also lambasted as insular and too close to the mayor.

"These water rate hikes have amounted to nothing more than a backdoor property tax increase," said Councilmember and comptroller candidate David Weprin.

The Water Board

The state government created the Water Board as a publicly owned, financially independent utility in 1984 when the city was still recovering from the 1970s fiscal crisis. "During the fiscal crisis, the State Legislature didn't want a utility as important as water to be subject to political pressures," explains Don Capoccia, a board member.

The board sets rates to support the system. It also creates rules and regulations regarding rate payments and access to water meters on private property. The board's seven members are appointed by the mayor for two-year terms. Rather than being financed by bonds backed by general tax revenues, the water system is funded mostly through the charges it sets on water usage.

While the board is supposed to be independent, critics charge it is accountable only to the mayor. "It's a sham. There's no independence," said Councilmember James Gennaro, chairman of the council's Environmental Protection Committee. "They get all the information they use to make their decisions from the mayor's office."

Last year, Jim Tripp, the board's chair at the time, was reportedly forced out because Mayor Michael Bloomberg viewed him as too independent.

The Rate Increase

A 14 percent increase in the water rate would translate roughly into an extra $100 per household annually. The board expects to raise an extra $330 million from the higher rates and new proposals to limit late payments.

The board argues that the rate increase is needed due to increasing costs and declining revenues. After a spate of construction, expansion and renovation -- most of it mandated -- the Water Board is now paying off bonds issued to pay for it all. The costs associated with the mandated projects are the largest driver of water system costs for this year and the next. Operating expenses -- such as electricity and chemicals to treat sewage, as well as pensions -- have also grown considerably. (See Gotham Gazette's features on the water and sewer systems.)

Added to all this, water consumption has dropped an "unprecedented" 6 percent, which the board blames on the economy, so less money is coming in. To make up for that, the board is raising rates and so, some say, penalizing people for conserving.

"Revenue has fallen in this recession because people are using less water and because residents are struggling to pay their bills as it is," said Councilmember Vincent Gentile. "I would suggest that raising rates in reaction to residents' proven financial hardship is not just nonsensical and insensitive. It's cruel."

Paying the Rent

Elected officials, activists and candidates contend the board could find other ways to solve its financial problems.

The biggest issue, some argue, is the rent paid to the city by the board for the use of its water infrastructure. Once debt service becomes large enough -- as it did starting in 2005 -- the Water Board pays the city rent equal to 15 percent of the money spent repaying debts.

This year, the rental payment – as it is called - was $160 million. Next year it is estimated to be $198 million. The idea is that the payment helps shore up the rating of the bonds used to finance the system's capital projects. The rent money goes into the city's general funds. Last year, $55 million of it went to reimbursing various city agencies, such as $30 million for the Sanitation Department to keep debris out of the sewers and $5.7 million to the Fire Department for hydrant inspections.

William Thompson, the comptroller and a mayoral candidate, has called for an end to the rental payment. Instead, he suggests investing half of that money back into the system, which he points out would save money in the long term. Thompson would use the other half to reduce rate increases.

The city says that the arrangement is common nationwide, like in Philadelphia and San Francisco, among others. "One of the things that the Water Board's ongoing rate study has determined is that most large water utilities make a similar payment to their municipalities," said Mercedes Padilla, a Department of Environmental Protection spokesperson. "In fact, many large utilities pay substantially more to their municipality than DEP does, and in most cases, they do not get as many services in return as we do."

But in Los Angeles, where the water utility there pays into the city's general fund, a state court issued a tentative ruling last month that called the practice unconstitutional.

New York City's Department of Environmental Protection will examine such arrangements, as well as alternative rate structures, in a study to be released at the board's June public meeting. The report itself has become a subject of criticism, with some officials saying it has taken too long to draft.

The rental agreement is not the only part of the board's operation that has sparked concern. The environment department, which operates and maintains the water system, has about $40 million in a holding fund to cover any unexpected water needs. The Independent Budget Office last year recommended cutting that fund in half.

At a recent hearing, City Councilmember James Vacca asked Steve Lawitts, the acting environment commissioner, what it was used for, he didn't get much input. "He had no answer," Vacca told the Observer. "I didn't think that holding codes were allowed in agencies"

Unpaid Bills

In 2007, a private consulting firm recommended the city place liens on property owners who don't pay their water bills. The move could collect over $400 million that had been overdue for more than a year.

The city began the process in December of that year. Property owners not paying their bills are now forced to settle up because the board places a lien on the taxes they owe, which, if unpaid, could eventually lead to foreclosure.

Although these efforts have brought in most of the missing funds and helped avert a mid-year hike, the prospect of putting thousands of properties -- many of them residences -- at risk of foreclosure during a housing crisis has become an issue.

To further pursue cheats, the Water Board has proposed two regulations to accompany the rate hike. It would impose large fines on customers suspected of stealing or barring access to water meters. But these have not been received kindly in some corners.

Hershel Weiss, president of the New York chapter of the American Society of Plumbing Engineers, called the proposals "two of the most anti-consumer documents ever written by the DEP." He says they will punish people with fees that could climb into the millions because the board suspects they are stealing. "There is no requirement for the DEP to prove that any theft is taking place."

Chinatown Looks for a Way to Survive and Thrive


Photo (cc) woohoo

A second-generation Chinatown native, Willie Rosado longs for the old neighborhood feeling of Chinatown. He misses getting a roast pork bun down the street where everybody knew everybody.

"It is not the old neighborhood anymore," said Rosado, the son of a Puerto Rican father and an American-born Chinese mother. "Many mom-and-pop restaurants are closed. The area is getting very crowded and all my friends moved out."

Rosado is not alone in his nostalgia. Christina Mei, a native of Taishan, Guangdong Province, moved to Chinatown in fifth grade. She attended P.S. 42 and I.S. 131, and frequented shops and restaurants in Chinatown.

"Now you see all the new condos," said Mei. "They are very expensive. Local residents don't have the money to buy them. Those non-Chinese people are paying over a million dollars for one-bedroom apartments."

Some 26 luxury residential buildings have recently been built or are under construction in Chinatown, along with 25 new hotels, and 118 new high-end boutiques and cafes, according to a report by the Urban Justice Center and Committee Against Anti-Asian Violence, or CAAAV. The report also pointed out that there were 195 commercial construction permits filed with the Department of Buildings in Chinatown between January and November 2008.

So, has gentrification finally arrived in one of New York's oldest ethnic neighborhoods?

Years of Change

Many said the transition began years ago. "Gentrification in Chinatown is not a new phenomenon," said Esther Wang, project coordinator for the Chinatown Justice Project at CAAAV. "What we have seen in Chinatown in the past few years is that development has really picked up."

"In the real estate market, Chinatown is probably the last frontier", said Justin Yu, president of the Chinese Consolidated Benevolence Association, popularly known as Chinese Community Center on Mott Street. "But most of the designs of the new buildings are contradictory to what we have."

"The gentrification of the New York Chinatown community has been going on for the past five years or so," said Paul Gong, who founded Friends of Columbus Park and is a former president of the Asian American Youth Center. "Only a few can afford this expensive living environment. So that means new tenants, new people other than Chinese, new stores and a whole new environment catering to our new neighbors."

"All this has resulted in many Chinese moving and settling in Brooklyn," said Gong, referring to the satellite Chinatowns in Sunset Park and Sheepshead Bay. "It has become harder to afford and live in Manhattan. Poor and recently arrived immigrants and low-income Chinese are being forced out of New York [Manhattan] Chinatown or are forced to live in overcrowded conditions where multiple families share a tiny apartment."

Residents worry that the city's recent rezoning of the Lower East Side next door could accelerate the process. That neighborhood, of course, has seen a major transformation as cafes, bars and boutiques as well as high-rise condos have sprouted in the area. In November, City Council approved a plan that limited the height of new buildings to no more than 80 feet and provided for affordable housing. The rezoning triggered fear among Chinatown residents that developers of luxury high-rise buildings -- now restricted in the adjacent Lower East Side -- will push their projects south to Chinatown.

Chinatown Unites

When the council approved the Lower East Side rezoning, the Bloomberg administration reportedly indicated it would try to protect the character of adjacent areas, particularly Chinatown. Meanwhile, in order to present a more united front and build consensus, more than 30 community-based groups, including Manhattan community boards 1, 2 and 3m formed the Chinese Working Group last year.

"One of the purposes is to speed up Chinatown's rezoning," said Yu. "The best thing is to preserve the characters of our community, protect the rights of the local residents to stay here, and we would also like to attract some new investors to build new construction."

The group holds a monthly meeting and has several sub-committees that specialize in various issues such as education, recreation, economic development, and transportation. In one to two years, it hopes to come up with Chinatown’s own community or 197-a plan, offering its own ideas for local development, improvement and growth. The Chinatown plan will include a rezoning proposal as well as other measures to improve Chinatown. The rezoning of the Lower East Side followed this model.

The community organizers said they want new development, but not at the expense of the low-income residents.

"Development is inevitable. There has to be development for progress to take place," said Charles Lai, executive director of the Museum of Chinese in America. For example, he thinks that dilapidated buildings constructed at the turn of the 20th century need to be repaired or replaced to be fit for human habitation. "But the flip side of development is who is allowed to work, live and play in the neighborhood," Lai continued. "When people are pushed out, it is not good."

Margaret Chin, a long-time community advocate who is running for the City Council, agrees. "There is a lot of history in Chinatown that needs to be preserved, but it doesn't mean that we should be living in dilapidated housing," she said. "We want new housing in Chinatown. But it has to be affordable so that people who live in the community can stay in there."

Some in the community say the new buildings do not fit in with the neighborhood's overall look. "We would like some new buildings but the condition is that the design has to be similar to what we have," said Yu.

Old Neighborhood, New Challenges

Starting from only a few city blocks in the late 1800s, Manhattan's Chinatown is one of the largest Chinatowns in the world. It has served as a neighborhood for working-class Chinese and recent immigrants -- and as a major tourist attraction.

"When you go to Chinatown, you'll see how vibrant it is," said Wang. "New York City is a city that is known for being diverse and cosmopolitan. ... When those values are trumped instead to favor real estate values, everybody loses something really important in terms of cultural vibrancy and the things that make a city a great city."

Still recovering from the economic impact brought by the devastating 9/11 attacks in 2001, Chinatown faces many challenges in addition to the current recession. But community leaders are optimistic.

"We have competition from Flushing, Sunset Park, Sheepshead Bay and New Jersey," said Yu. "But Chinatown is still the center of Chinese activities in the metropolitan areas. Most of the Chinese organizations are here, and most of the Chinese churches and temples are here, and people still come here to worship."

Meanwhile, the residents and New York's Chinese community seek to adapt to new conditions. Working to protect Chinatown involves "preserving the historical fabric of what is old Chinatown and what that means to people who are from here and grew up here, but also integrating the new generation of Chinese Americans," said Beatrice Chen, director of education at the Museum of Chinese in America. "That's why there are different types of shops and businesses that you wouldn't normally associate with the old-school Chinatown."

At the end of the day, unlike Little Italy which has few new immigrants, the steady streams of incoming immigrants from China will probably ensure Chinatown's growth.

"Chinatown is an established community," said Wang. "Immigration from China to New York City is going to continue and that's a factor will keep Chinatown a pretty vibrant community for a long time."

Home Shops: 'One Stop' on the Road to Foreclosure


Haydee Sanchez first learned about United Homes of New York in 2001. While riding the F train on her daily commute to her job on the Upper West Side, she saw an advertisement for the company with the slogan: "United Homes -We Make Your Dreams Come True."

Pregnant with her second child, Sanchez, a Honduran immigrant who worked in a clothing store, and her husband Freddy, then a manager at Restaurant Depot, wanted to move from their cramped one-bedroom rental apartment in Jackson Heights.

A few days later, the Sanchezes were in United Homes' offices on Queens Boulevard, where, they recall, they met the company’s president, Yaron Hershco, and an employee, who said they could buy a home with just 3 percent down. After making a $7,000 payment and taking out a $238,250 mortgage from Cambridge Home Capital, where they say they were referred by a United Homes salesperson, the Sanchezes purchased a freshly renovated two-family two-story house at 462 Chestnut St. in East New York.

Soon, though, their dream house became a living nightmare. About six months after moving in, the dining room ceiling collapsed, leaving termite infested piles of rotten sheetrock on the floor and table. Haydee said that after she called United Homes to complain, workers showed up to perform some perfunctory repairs. But they left behind termite-infested walls and rotted floors, which the family discovered after they looked under the carpets.

Haydee, who breaks into tears as she tells her story, said that, after repeated calls to United Homes that were not returned, she left a stern message for its owner, Yaron Hershco. "I told him that if he did not come and repair my house I would be on the news the next day," she says. "And then he called and told me, 'I have a lot of money and I can kill you and your family. If you do that tomorrow, you are not going to be alive.' "

Hershco adamantly denied the Sanchez’s allegations. “I wouldn’t threaten anybody,” said Hershco who said during a phone interview that he has sold thousands of homes over the past 15 years. “Quite frankly I don’t even remember even speaking to them -- I don’t know these people.”

 

The High Cost of Convenience

Housing advocacy groups and legal services corporations say that United Homes operates a business commonly known as a one-stop shop. Such companies simplify the home purchase process for their customers by providing a real-estate salesperson, financing, inspection and appraisal. In New York City, many one-stop shops buy a significant portion of the homes they then sell at foreclosure auctions and distress sales. Often these houses are in poor condition. After doing rudimentary repairs, one-stop shops sell the properties months later at significant profit.

Lawsuits against New York City one-stop shops charge that they engaged in various kinds of fraud including concealing damages in houses they sold, arranging appraisals that put too high a value on the home and setting buyers up with inflated mortgages. Housing activists and others say that one-shop stops have contributed to the growing foreclosure epidemic in the city's low-income neighborhoods by inveigling people into mortgages that they could not afford and selling them homes that were in disrepair.

The lawsuits also charge that one-stop shops engaged in "property flipping," in which a home is quickly resold for considerable profit at an artificially inflated price, often aided by collusion between a lender and an appraiser."

"The first time homebuyer was often taken advantage of by 'one stop shopping enterprises,'" said a July 2008 New York State Commission of Investigation Report entitled A Perfect Storm: Easy Money and the Mortgage Meltdown. "While this appears to be a convenient arrangement for the home buyer, it not only bears a significant potential for conflict of interest, but it can serve as a breeding ground for fraud."

So far, though, the government has only started to rein in the operations. The city apparently has little jurisdiction in this area, and while the state has passed a law that could limit the types of predatory loans that these one-stop shops have relied upon to make their sales, it does little to help homebuyers, such as the Sanchezes, who have already bought homes.

Fueling Foreclosures

Hershco has achieved prominence for developing projects such as the Oro, a 40-story luxury condominium in downtown Brooklyn, and he serves on the board of directors of the Downtown Brooklyn Partnership, a local development organization. He also operates a web of companies, a number of which are registered to 87-20 139th St. in Briarwood, N.Y.Many of these home his companies sold have been in predominantly minority neighborhoods hard hit by the foreclosure crisis such as Bedford Stuyvesant, East New York and Jamaica.

A substantial percentage of houses sold by several New York City one-stop shops, including those operated by Hershco, ended up going back into foreclosure, according to data compiled for Gotham Gazette by the California-based real estate data company, RealtyTrac. Two of the Hershco-controlled companies -- the Galit Network LLC and the United Property Group both of which are registered to the 87-20 139th Street address and are being sued -- have especially poor records. Out of 208 properties sold by the Galit Network during a four-year period between 2002 and 2006, at least 54, or approximately 26 percent ended up in foreclosure.

Customers of United Property Group had a similar foreclosure rate: Out of 64 homes that the company sold during the same four-year period, at least 18 or slightly higher than 27 percent ended up going into foreclosure.

The customers of Better Homes Depot of the Bronx and the Queens-based Better Homes Depot Inc., another one-stop shop that is the target of a lawsuit, also experienced high rates of foreclosure. Between 2002 and 2006, out of 522 houses sold by the two Better Homes Depots, 129 or approximately 25 percent, ended up going into foreclosure. Currently, Better Homes Depot is being sued in the United States Court for the Eastern District on charges of defrauding several first-time minority homebuyers. Repeated calls by the Gotham Gazette to Eric Fessler, who is listed as CEO od the Queens-based Better Homes Depot Inc., were not returned.

The rates of foreclosure on homes sold by the Better Homes Depots and Hershco controlled one-stop shops are extremely high comparison to annualized foreclosure data. The overall foreclosure rate for New York City was .71 percent for 2008, according to RealtyTrac. And in the Cape Coral-Fort Myers area of Florida, believed to be area in the country hardest hit by the foreclosure epidemic, the rate was about 12 percent in 2008. The rate for so-called sub-prime mortgages tends to be somewhat greater.

Even so, the high rate of subsequent foreclosures on properties sold by one-stop shops sold "sticks out like a sore thumb and indicates that there is something strange and out of whack going on," said Daren Blomquist, a spokesperson for RealtyTrac. "It would indicate that this is more than just a problem caused by the environment or location of the property," he said, adding that the numbers of foreclosure filings are probably even higher than the ones he cited because foreclosure databases tend to be incomplete, especially for foreclosure notices that were issued before 2005.

Hershco said that that there were a number of possible explanations for his customers ending up in foreclosure. “Maybe they got divorced, maybe they lost their job, maybe they are on disability, or maybe they cannot make their payments,” he said, “Can you check what the rate of divorce in those families?” he said adding that he didn’t think that the RealtyTrac data was accurate.

Behind the Renovated Facade

The Sanchez's story offers a case study of how the practices of the one-stop shops fuel the foreclosure rate. For months after the ceiling collapse, their home became a dusty construction site where workers, prodded by frantic phone calls from the Sanchezes to United Homes offices, would show up, only to disappear again. At one point, the family had to live in their basement, while workers opened up walls on the first floor to replace rotten beams.

Eventually, the workers stopped showing up altogether, leaving the Sanchezes with a house that, eight years later, still has rotten walls and ceilings in several rooms. The couple set about trying to fix the house on their own, but even though Freddy now has a better-paying job, they fell into debt. To pay for past renovation expenses as well as future ones, they refinanced their first mortgage in the fall of 2007 on terms they say they were deceived about. In February 2008, after falling behind on their payments, the Sanchezes were in foreclosure. They blame the expenses they incurred fixing up the house.

Then there is the case of Sandra Barkley of Brooklyn. An acquaintance referred her to United Homes and received $1,000 for her trouble. Barkley said that a United Homes representative told her that the company would take care of all aspects of the home buying process. According to Barkley, she and other customers were steered to the Olympia Mortgage Corp. to get financing. Two weeks later, Barkley closed on a two-story house in Bedford-Stuyvesant that was priced at $359,000, with a $10,000 down payment. Unbeknownst to her, United Homes had purchased the house only three months before at a foreclosure auction for $153,000.

An appraisal allegedly commissioned by Olympia from appraiser Thomas Messina had concluded that the house was worth $359,000. However several months after she purchased the house, Barkley hired her own appraiser who put the house's value at $260,000. A subsequent appraisal commissioned by Barkley’s attorneys found that the house was worth only $235,000.

According to court papers, at the time Messina conducted Barkley's appraisal, the federal Department of Housing and Urban Development had suspended him from doing appraisals on federally insured mortgages because he had overvalued at least one property. HUD officials confirmed the suspension. Messina did not return messages left at his Massapequa office.

The Legal System

There have been successful lawsuits against one-stop shops. In 2003, Better Homes Depot settled a lawsuit by New York City's Department of Consumer Affairs for allegedly misleading many first-time homebuyers. It paid more than $525,000 in restitution to 36 New Yorkers and a $100,000 civil fine.

Advocacy organizations say, though, that it is difficult for victims of one-stop shops to obtain justice through the legal system. The one-stop shops can intimidate people, and many low-income homeowners cannot afford legal representation for lengthy and complex court battle. The Sanchezes, for example, said that they considered taking legal action against United Homes but were deterred by the expense.

Some cases, though, are wending their way through the legal system. Barkley is a plaintiff in a suit brought by South Brooklyn Legal Services that has been in the courts since 2005. It deals with six homeowners who purchased houses from United Homes and its affiliated companies between 2002 and 2003. The lawsuit charges United Homes with being at the center of vast and far-ranging conspiracies to defraud low-income homebuyers that included appraisers, a lender, a lawyer and even a major financial institution, Credit Suisse First Boston.

Hershco dismisses the allegations. “We sold thousands of homes over the years and they came up with six lawsuits,” he said, "and some of the allegations they made on the complaint were false.”

The suit alleges that, according to forensic appraisals, United Homes and its affiliates sold houses to the Barkley and five other homeowners at prices based on over-appraisals ranging from 53 percent to 75 percent. The lawsuit also alleges that a review of 60 properties sold by United Homes and its affiliated companies in New York City between 2002 and 2003 revealed that, after purchasing and holding properties for only a few months, the company resold them for an average markup of over $165,000.

The inflated appraisal on Barkley’s house passed muster at Olympia Mortgage Corp., where Barkley and other homeowners were steered by United Homes. From 1991 through 2004, there were 54 complaints against the Olympia. In October 2004, a month before Fannie Mae initiated a lawsuit against Olympia alleging fraud, the state-banking department suspended Olympia’s mortgage banking license. The company, one of whose principals was recently sentenced to eight years in prison for defrauding Fannie Mae of $44 million, approved Barkley for two mortgage that required no verification of either her assets or income.

Hershco says that he is unsure as to whether or not United Homes referred Barkley or other customers to the Olympia. “I don’t know—I wasn’t involved personally in any of the sales,” he said, “I never met the buyers, never met the appraisers, I never met the banks, and this is on the record under oath. …. Maybe they saw me once at a Christmas party.”

According to court papers in 2005 Barkley's combined monthly mortgage payments under the two loans, with taxes and interest included, totaled $2,565. Barkley had a monthly salary of $2,332. But the attorney that she claims she was introduced to by United Homes, allegedly assured her that she would be able to afford the payments with a $1,600 monthly income from a rental apartment in the house.

The 'Establishment' Lenders

Whatever concerns there may have been about the unusually high appraisal on Barkley's house or her ability to pay her mortgages, Olympia appears to have had little trouble selling the Barkley's loans and those of her co-plaintiffs. A company called DLJ Mortgage Capital, a subsidiary of Credit Suisse First Boston, readily bought the mortgages.

Deals such as the one involving Barkley's home would not have been possible without the involvement of large financial institutions, according to Navid Vazire, a staff attorney, at South Brooklyn Legal Services. "It is impossible for me to believe that none of these banks knew that there was widespread fraud against borrowers," Vazire said, "and that all of these mortgages, which turned out to be unaffordable, were not being pushed onto people who were being deceived."

Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, agreed. Investment banks, he said, both lent money to shady mortgage originators to finance their operations and purchased the shaky mortgages, which were then packaged into securities and sold to investors.

“ There was no regulation of the subprime mortgage market,” said Zinner, former director of the Foreclosure Prevention Project at South Brooklyn Legal Services “Federal regulators completely abdicated responsibility to regulate these markets. Unscrupulous lenders could make unaffordable loans with impunity and sell them on the secondary market at a big profit, and it made these one-stop shops -- these property-flipping schemes -- highly profitable. Speculators always knew that they could wildly over-appraise these properties and if they could find someone to buy them, they could always get financing for the borrower.”

On Barkley's house and others, Olympia allegedly tailored its loans to conform to underwriting guidelines for a "no asset no income program" and a similar "low documentation" program for lenders seeking to sell loans on the secondary market, both of which were allegedly advertised on a Credit Suisse Website until fall 2007. According to court papers, even before closing on Barkley's mortgage, Olympia had completed required the required Fannie Mae documentation to sell her loans on the secondary market.

DLJ Mortgage Capital purchased Barkley's loan from Olympia, despite the fact that an underwriter for the company had obtained an automated review of Messina's appraisal of Barkley house, which valued it at $236,000, an amount commensurate with the appraisal commissioned by Barkley’s attorneys. Barkley's loans were then sold by DLJ to another Credit Suisse subsidiary, Credit Suisse First Boston Mortgage Backed Securities Inc, which in turn sold Barkley's loan to a mortgage backed security called the Credit Suisse First Boston Home Equity Mortgage Trust. Yet another Credit Suisse subsidiary called Credit Suisse First Boston LLC then allegedly sold shares in the trust to investors.

Allan Taffet, a lawyer representing Credit Suisse, said that the company did not know Messina's appraisal of Barkley's home was inflated. "We bought the mortgages through the originator, and there were certain representations made about the mortgages," he said. Citing the pending litigation, a spokesperson for Credit Suisse, Duncan King, declined comment.

The 'Anything Goes' Era

The one-stop shops existed against the overall backdrop of the real estate boom and lax regulations. "It was the Wild West, and nobody had the ability to closely monitor these organizations," said Michael Hickey, executive director of the Center for New York City Neighborhoods, an organization founded by the New York City and non-profit partners to study the foreclosure crisis.

Here, as in so many other parts of the financial world, regulators, policymakers and advocates are considering if -- and how -- they can rein in the system and what answers they can offer the people who feel victims of the abuses of the last few decades.

The state agencies, along with local realty boards, knew what they had to do, Hickey said, but "were just outgunned by a fraudulent industry. The Banking Department has only 16 examiners of mortgage banks and brokers for all of New York State. Glorimar Perez-Gonzalez, press secretary for the banking department, said that her agency is working to add more.

The state's Banking Department and Department of State are both part of the state's Interagency Task Force to Halt Abusive Lending Transactions, or HALT. It has been examining the business practices of one-stop shops. Jane Azia, director of the New York State Banking Department's Non-Depository Institutions and Consumer Protection unit, said the task force is still in the midst of its examinations. So far, its reviews of one-stop shops have led to a total of $250,000 in customer restitution.

There are, she said, state laws that regulate one-stop shops and the department will consider whether the shops complied with these rules. "We are looking to see whether they [mortgage brokers] disclose to consumer the relationship with the realtor," Azia said, "That there might be a conflict—that you [the consumer] are giving up your right to undivided loyalty."

Fixing the System

Last summer, Gov. David Paterson signed a sub-prime reform lending bill that would prohibit state chartered institutions from issuing the kinds of mortgages that were made to Barkley and her co-plaintiffs. It requires verifiable income guidelines and establishes stricter underwriting standards to address the borrower’s ability to repay the loan. However, a lot of federally chartered institutions are preempted from having to comply with the state law, according to Zinner.

The state law also provides some relief for homeowners who took out sub-prime mortgages. It requires companies that service mortgages give any homeowners who took out sub-prime or nontraditional mortgages between Jan. 1, 2003 and Sept. 1, 2008 90-days notice before initiating a foreclosure proceeding. And before launching a foreclosure, mortgage servicers must appear at a court-monitored settlement hearings with the homeowner to explore the possibility of loan modification.

That only goes so far however, said Zinner. The settlement conferences do not require companies to modify mortgages. Furthermore, in New York City, where property values haven't fallen as drastically as they have in other parts of the state, mortgage firms have been willing to reduce the interest rates but loathe to write down the mortgage principal.

The lawyers at South Brooklyn Legal Services want the mortgages of the homeowners they represent to be voided. "They [the new mortgages] should be written down to the actual value of the house at the time it was purchased," and the homeowner should get credit for they inflated payments already made, said Meagan Faux, co-director of the Foreclosure Prevention Project at South Brooklyn Legal Services, "Right now the mortgages are inflated because the purchase price of the house was artificially inflated due to fraud."

The most significant change cannot be made in City Hall or in Albany, according to Zinner, but in Washington. There, he said, federal legislation that would allow bankruptcy judges to reduce the principal on mortgages remains stalled in the Senate.

He sees this as an essential reform. "There are many people out there who cannot afford their properties because of the one-stop shops and the over-appraisals," Zinner said, "If this law goes through it will help a lot more people than just those who go into bankruptcy court -- it will be the stick to push mortgage servicers to do loan modifications by cramming down the principal balance of the property, whereas right now there is nothing to really push them to do that."

Alex Ulam is a freelance writer who covers urban affairs, architecture, and real estate.



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