Herc’s Building Saved, But What About Other Mitchell Lamas?

Photo by ra41 via flickr

BIRTHPLACE OF HIP HOP — The city’s housing department beat the wolves from the door of a Bronx building, saying no to a developer whom tenants feared would kick them out and flip their building—credited as being the birthplace of hip-hop—for a handsome profit.

Kool Herc, who pioneered hip-hop in the summer of 1973 in block parties he DJed at the Mitchell Lama building at 1520 Sedgwick spoke warmly of his life there and of the need to maintain places for people without buckets of money to live. “I didn’t know what this whole thing would turn into, but we never gave up,” he said of campaign dubbed “Save 1520″. “I just hope people realize it’s a we thing, not a me thing. It’s about everybody’s affordable housing, not just 1520. It’s about people getting that step into the American dream.”

But the wolves are still circling at affordable housing developments across the city. Tenants and housing activists say the decision that saved 1520 Sedgwick from a speculative deal needs to be repeated across the five boroughs.

This is the first time HPD has prohibited the sale of a Mitchell Lama building. But tenants at 1520 and affordable housing advocates hope it won’t be the last.

“We are hoping that this will be a model for other buildings,” said Maggie Russell Ciardi, executive director of Tenants and Neighbors, a statewide housing pressure group. “In the past few years 16,000 units of Mitchell Lama housing have been lost to speculative sales. It is imperative that HPD say no to speculators who are trying to flip these properties and are putting New Yorkers at risk.”

On Monday the city’s department of Housing Preservation and Development quashed a bid by Mark Karasick, a private real estate developer who wanted to buy 1520 Sedgwick from its current owner, saying the price was way too high.

“We felt the purchase price did not make financial sense,” said Neill Coleman, spokesperson for HPD. “Basically it was a decision on the economics of the sale price which we didn’t feel was supportable for a Mitchell Lama building,” he said.

HPD compared how much money the building generated in rent with how much Karasick would have to borrow to pay the undisclosed amount he and owner Frank Phelan were discussing and decided the numbers wouldn’t work, Coleman said. “Looking at what current rents are, what rent increases would be permitted under Mitchell Lama, what the costs of running that building are and acknowledging that they would want to make some profit, we determined they would not be able to make a profit without seriously cutting services, significantly increasing rents or deferring maintenance. We wouldn’t want to see that happen in any way.”

An attorney for Mr. Karasick did not return a phone call seeking comment on the quashed deal. HPD has jurisdiction over the building because it is part of the Mitchell Lama affordable housing program, under which private landlords receive a variety of tax breaks and financial assistance in exchange for keeping rents at prices low and moderate income people can afford.

Some Mitchell Lama buildings are supervised by the state and others by the city. Owners can take their buildings out of the program, renouncing the tax breaks and paying off debts to the city after thirty years. Once a building has left the Mitchell Lama program the city or state no longer holds supervising authority. Frank Phelan, the owner of the Sedgwick Avenue building has not taken it out of Mitchell Lama. Calls to his home and attorney were not returned Monday evening.

On Monday a score of tenants crowded into the first floor community room Monday to cheer as U.S. Sen Charles Schumer announced HPD’s decision and Kool Herc rallied forces for a broader defense of affordable housing. They called the HPD decision a bold rebuke to the culture of real estate speculation they feared would chase them from their homes.

“I think this decision is great, that HPD finally stepped up. It’s a victory, basically, but we’re not there yet,” said Shioban Bermudez, 26, whose factory worker and school aide parent’s raised she and her siblings at 1520 and who is raising her family there in a three bedroom apartment that costs $1,345. Rental assistance for her disabled son and elderly father provides for part of that amount, she said. “Obviously I didn’t have anywhere else to go,” she said, explaining why she was deeply involved in the months-long campaign to keep the building affordable.

Schumer praised HPD’s decision and said real estate speculators should be on notice. “Speculative buyers in New York had better look elsewhere to make a quick buck. This decision means this building can’t be bought for this huge, huge price and then flipped,” he said. “With housing prices rising and the foreclosure crisis gripping countless communities, we need to be doing everything in our power to keep low and middle income New Yorkers in their homes. Blocking this sale is nothing less than a milestone in that effort.”