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5. Tenant Responses to the Urban Housing Crisis, 1970-1984

Ronald Lawson with the assistance of Reuben B. Johnson III

New Displacement Targets: Redlining and Gentrification

Many of the trends that had led to the displacement of tenants in New York City during the first half of the 1970s eased sharply around the time of the city's financial crisis in 1975: the bottom fell out of the market for coops, thus removing much of the incentive for conversions for a couple of years; demolition for luxury housing was considerably curtailed by a building slump for most of the succeeding decade; and hospital expansion became unpopular amidst talk of excess beds and the need for cost cutting. However, the problem of displacement had not really gone away.

Redlining

The threat of encroaching abandonment to contiguous neighborhoods inhabited primarily by white ethnics and employed members of minority groups continued apace. In the second half of the 1970s the organizations trying to combat abandonment focused on a new target: the banks and their practice of "redlining," whereby certain geographic areas were singled out as bad risks for demographic reasons, such as racial change, so all applicants were denied loans regardless of their personal credit worthiness. The housing analysts associated with these organizations were well aware that the causes of housing abandonment were complex. However, they held that redlining played a key role by setting up a self-fulfilling prophecy concerning neighborhood decay: by making mortgage financing difficult to obtain, it reduced demand for properties, thus causing their values to fall and encouraging owners to "milk" their buildings by postponing repairs, cutting services, and even not paying taxes in order to earn a profit under the new conditions.[70]

The threat of redlining had already become a national issue, thanks to the efforts of National People's Action, a Chicago-based national federation whose members mostly represented modest homeowners but also included ANHD and NYSTNC. Its lobbying played a key part in the passage of two laws by Congress: the Home Mortgage Disclosure Act of 1975, which obliged banks to release data, by zip code or census tract, concerning the number and value of mortgages made annually, and the Community Reinvestment Act of 1977, which bade federal regulatory agencies weigh the extent to which a bank was reinvesting in areas surrounding its branches before approving the opening of new branches, acquisitions, or mergers.

Following the passage of the first federal law, concern about redlining in New York State increased in 1976. Both the Assembly Banking Committee and the New York City Commission on Human Rights held hearings, the New York Public Interest Research Group issued a study of Brooklyn, where it found little mortgage availability and none at all in the mostly black northern half of the borough; the Brooklyn Reinvestment Coalition, representing twenty-five organizations, became especially vocal; and an ad hoc New York Reinvestment Coalition was formed.[71]

By 1979, using the information available under the disclosure law and the threat of the reinvestment law, local pressure on savings banks was producing results. Most dramatic was the first major test of the reinvestment law, when a Park Slope organization, South Brooklyn against Investment Discrimination (AID), successfully challenged an application before the Federal Deposit Insurance Corporation by the Greater New York Savings Bank to open a branch on Manhattan's East Side. As a result of its research, AID was able to show that although nine of the bank's sixteen branches were m Brooklyn and 80 percent of its deposits were from that borough, only 6.5 percent of its real estate loans were made there. Although such challenges required "a vast amount of research," a total of seven more from within New York City were pending at the time. They were made easier by the networks built within the Coalition against Redlining in New York City (CAR), which was closely linked to NYSTNC.[72]

Meanwhile, the hopes of CAR that such challenges would encourage banks to increase mortgage availability voluntarily were being fulfilled. The first was an agreement signed by the Dime Savings Bank of Williamsburg with the Greenpoint/Williamsburg Committee against Redlining, which promised $1 million annually in real estate loans, low down payments, and the evaluation of applicants individually on their merits. It also agreed to enforce the "good repair clause" in mortgages, under which a bank could threaten foreclosure if a property were allowed to decay, to advertise the availability of mortgages, and to inform community organizations of properties in foreclosure. The following year NWBCCC achieved success in its long campaign with four banks, some of which were among its prominent early funders. These signed a "proclamation of cooperation," promising to finance the moderate rehabilitation of two hundred buildings, both multiple dwellings and one-to-four family houses, to advertise the availability of such loans aggressively, and to enforce the good repair clause. Two years later NWBCCC reported that the use of the latter clause had been successful: three buildings had been foreclosed, which made the threat real and an excellent organizing tool that gave tenants leverage with recalcitrant landlords via their banks.[73]

By the early 1980s, however, interest rates had skyrocketed, which made the availability of loans a moot issue since few could afford to borrow, and reduced many of the savings banks, with their large portfolios of long-term low-interest real estate loans, to the point of collapse. Consequently, CAR, turning its attention to the commercial banks, used the existence of federal regulations as a lever to arrange a meeting with representatives of twelve of them. These had traditionally made few real estate loans -- indeed, half of them had made none the previous year -- and certainly not to low-income borrowers. The result of the meetings was that two of the banks, Chemical and Manufacturers Hanover Trust, agreed to consider the financing of repairs in multiple dwellings on a case-by-case basis.[74]

Gentrification

The upgrading of older neighborhoods and the consequent displacement of the long-term residents had occurred in the early 1970s in such neighborhoods as Greenwich Village and Chelsea, parts of the Upper West Side and the Upper East Side, and the sections surrounding Brooklyn Heights. The chief concern of tenants organizing against displacement at that time was the replacement of existing housing with luxury high-rise buildings. However, when such construction slowed after the mid-1970s, tenant attention shifted to the threat of the transfer of the existing housing stock to a richer clientele who could outbid the older residents. Such gentrification had in fact been fought building by building in Chelsea from 1970 onward by the Chelsea Coalition on Housing (CCOH), which followed the traditional strategies of urging and helping tenants to "hang in there" and getting back at harassing landlords with negative publicity. Occasionally it was especially inventive and, therefore, effective. For example, in 1982 members discovered that a landlord who had been using notably grim harassing tactics to empty buildings needed to apply for an extension of his permit for a sidewalk cafe for his clam house, which he had been able to upgrade from local eatery to fashionable restaurant as a result of the gentrification of the neighborhood. CCOH successfully opposed his application on the grounds that occupying the sidewalk was a local privilege that should not be accorded to such an unneighborly person.[75] In spite of such efforts, however, much of the poor Hispanic population has been displaced from Chelsea over the past fifteen years.

Late in the 1970s considerable national attention began to be paid to gentrification. One result was that the Housing and Community Development Act of 1978 required that HUD report on displacement. It responded in February 1979 that there was no problem of "significant proportions." However, when displacement was listed as the most serious problem by both Legal Services attorneys and their clients, a second study was carried out by the Legal Services Anti-Displacement Project. This examined the same data but arrived at contrary conclusions.[76]

Meanwhile, organizations in New York City had become increasingly concerned and active around the issue, in spite of a 1980 declaration by Housing Commissioner Gleidman that displacement was not a problem.[77] Gentrification developed two forms. The first was the upgrading of older but sound and potentially attractive housing in neighborhoods that, like Chelsea, were "close to the action." The second was the invasion, by speculators, developers, and "urban pioneers," of well-located neighborhoods housing the poor that were, until the recent rehabilitation efforts of neighborhood organizations, unthinkable because of their level of decay. The prospect of losing the people of the neighborhoods they were resuscitating began to haunt ANHD and its member organizations.

The opposing responses to neighborhood upgrading were well illustrated by a clash in Park Slope, Brooklyn, where gentrification had been progressing for a decade. The Fifth Avenue Committee, a member of ANHD, was committed to retaining an integrated community. Focusing on the lower Slope, which was earlier ravaged by decay but had been slowly gentrifying, it sought to protect the poor tenants there, who usually had no defense against eviction because they lived in small buildings exempt from rent laws. One of the strategies it sought to implement was the development of rent-subsidized housing. The Park Slope Improvement Committee, claiming that it would result in an undue concentration of poor tenants and therefore attract crime to the neighborhood, opposed this strategy. It argued that there was no need for rent subsidies where the private market was strong enough to attract upgrading -- they should be reserved for weaker markets. A similar controversy took place in Manhattan Valley, the one neighborhood on the Upper West Side still to be gentrified, where developers went to court to argue that subsidized housing being built there by ANHD affiliates would maintain such a proportion of poor tenants there that it would prevent the upgrading of the neighborhood.[78]

Harlem's decay had deterred gentrification in spite of its excellent transportation and a location adjacent to some of Manhattan's prime real estate. When Mayor Koch announced that the city would sell thirteen vacant brownstone buildings there through a pilot lottery, this aroused considerable local opposition because it was seen as likely to trigger gentrification. Opposition was expressed in spite of the mayor's decision, in an effort to blunt such criticism, to triple the chances of local residents taking part in the lottery. Such is the concern about gentrification that local activists fear their own successful rehabilitation efforts could well trigger the process. However, Margaret McNeil, past president of ANHD and director of West Harlem Community Organization, which helps form low-income co-ops, manages and buys CMP buildings, and develops and manages moderate-income housing, disagrees. She regards such development activities as protecting local tenants and therefore as insurance against gentrification when it takes off.[79]

Gentrification is a much more imminent threat on the Lower East Side, which has housed several generations of the city's poorest, most recent immigrants, but is now, since it abuts the newly chic East Village, attracting speculators and undergoing rising rents and real estate prices. In a recent article, "The Lower East Side: There Goes the Neighborhood" in New York Magazine, an out-of-town speculator was quoted as saying,

Ethnic businesses and services will gradually be forced out. Any one else can be paid to leave. If you can get rid of rent-controlled tenants, renovate the place, and charge $700 a month, it's worth paying them $10,000 just to get them out and raise the rents. They'll be pushed east to the river and given life preservers. It's so clear. I wouldn't have come here if it wasn't.[80]

In 1981 Mayor Koch's proposal to convert city-owned buildings in the neighborhood into artists' housing with the help of substantial subsidies aroused a storm of community opposition coordinated by the Joint Planning Council of the Lower East Side (JPC), a coalition of twenty five neighborhood groups. They had already seen what had happened after artists pioneered the transformation of Soho to a residential community: it became prime real estate, and most of the artists were in due course forced out. A public hearing at which the JPC showed that speculation, profiteering, and displacement were already occurring on the Lower East Side brought bitter, but effective, confrontation. Ultimately most of the members of the Board of Estimate deserted the mayor and voted to quash the plan.[81]

Such victories are rare before the forces of gentrification, and this one did little to slow their progress on the Lower East Side. In 1981 Robert Schur, the architect of neighborhood revitalization, saw that the strong recovery of New York real estate was spilling over into several of the neighborhoods where ANHD members were operating, with the result that it was turning around decay and driving up prices and rents. Arguing that such forces could not be defeated,[82] he suggested instead that they could be regarded positively as long as they did not cause displacement -- the communities needed the infusions of money and the job opportunities that construction and renovation would bring, abandonment had left room for growth, and if integrated communities were created they would revitalize stores and create more effective demand for services. Revitalization without displacement was possible so long as it was planned. Schur suggested leaving all current privately owned housing to the private sector, and thus open to gentrification, and using city-owned and new housing to protect the existing poor population, including the local relocation of tenants displaced by gentrification. Since all city-owned buildings would be needed as a land bank, vacant structures should be sealed and rehabilitation phased as needed.[83]

The section known as Loisaida, the heart of the Lower East Side, has lost 70 percent of its population to the ravages of abandonment and 30 percent of its buildings have gone in rem. The immediate threat of gentrification to this area led JPC to take Schur's vision seriously, with the result that it worked on a detailed plan for over two years. The outcome represented a dramatic leap beyond the local, often building-by-building, struggles of its members against abandonment over the previous fifteen years. At the center of the plan were two components: "Make the Lower East Side a special preservation district where the cost of making millions from luxury housing development is to provide low-cost units as well"; and "make the neighborhood a special enforcement area, where acknowledged landlord practices of harassment and rent gouging can be spotted and rooted out, and where immediate assistance can be provided for both low income development and for those market rate developers willing to provide affordable housing."[84]

Although the city administration, knowing that such a plan was in the works, had bowed to pressure from JPC to delay auctioning Lower East Side properties, officials refused to meet with JPC once the plan was announced. Two months later Mayor Koch and Borough President Stein held an unexpected press conference, from which JPC leaders were excluded, at which they announced the outline of their own plan for the neighborhood. The plan made little provision to increase the number of low-income units beyond those already in programs. Moreover, it included proceeding with auctions of city-owned buildings, which were essential to the Schur/JPC plan as a resource for low-income housing. The impact of the plan, local activists concluded, would be to accelerate gentrification and increase city income through sales and higher tax assessments.[85] The threat of losing the people in the neighborhood they had helped revitalize had increased.

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