Issue #125, September/October 2002

East Harlem's Bottom Line

By Matt Pacenza


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Responses:

Ellen Lazar, Neighborhood Reinvestment Corporation

Brad Lander, Fifth Avenue Committee

Mark Alexander has a plan. At 46, he isn’t content with having more than tripled the number of apartments that Hope Community manages in the eight years he’s been its executive director. The community development corporation’s strategic plan calls for more than doubling that inventory – by adding 1,700 new units – by 2004. “In five years time, we’d like to be viewed as one of the more successful CDCs in the country,” Alexander says as he sits in his modest East Harlem office.

In much of its day-to-day work, Hope Community defines success in exactly the way CDCs traditionally have. Like most in New York City, it has rehabilitated and currently manages housing for low-income people with the help of public subsidies, building on opportunities to purchase dilapidated buildings and vacant lots for virtually nothing. Hope has rebuilt its community on a foundation of government housing programs.

But as Alexander sees it, transforming East Harlem – where poverty and inadequate housing remain twin curses – will ultimately require much more than the tides of politics and marshes of bureaucracy can deliver. His vision is now driving Hope Community where CDCs almost by definition never go: into the wilds of the real estate market.

His organization is joining with a Queens developer to build dozens of townhouses and condominiums, with virtually no subsidies, that will be sold to middle-income New Yorkers. Hope’s creating an equity fund so that the agency can buy land on the open market as soon as it’s for sale, without having to wait for a civil servant to process paperwork. In short, Hope wants to be the force that drives an advanced stage of neighborhood progress, one that Alexander says must include new homes and apartments for East Harlem’s middle class.

“There has to be a mix of income to promote vitality in the neighborhood,” says Alexander. “If everyone in the neighborhood is on public assistance or Social Security or some other form of government assistance, you can’t have a healthy and dynamic community. You won’t have enough income to support vibrant shops. You won’t have the necessary life skills to fight for civil rights and city services.”

Alexander got his first job in 1977 with Hope as a building manager, collecting rents and fixing boilers. He has been with the group ever since and took over as executive director from the group’s founder, the Reverend George Calvert, in 1994. An energetic leader, Alexander is capable of impressing not just with passion but with attention to detail.

Hope Community has grown tremendously from its modest roots in a church meeting room 34 years ago. Today, the agency has an annual budget of about $14 million and 85 employees who manage a portfolio of 1,300 East Harlem apartments, valued at more than $125 million. Its properties, housing about 5,000 people, dot the neighborhood’s heart – there are six on East 100th Street, eight on East 104th, seven on East 109th and six on East 115th.

In Hope’s 34 years, innumerable neighborhood groups have crashed and burned, not just in East Harlem, but across the country as well. Why has Hope not only survived but thrived? It’s simple, Alexander says. “We’ve paid attention to our core business. We’re in the real estate business. We may have the best of intentions – we do have a passion for what we do, but at the end of the day we’re running a business.”

That business sense was developed from Hope’s very beginning. Alexander tells of an incident that left a deep impression on the agency’s philosophy. In Hope’s first property, a renovated eight-unit apartment building, one of the members of its Board of Directors rented an apartment for $117 a month, paid his first month’s rent – and never paid another cent to Hope again.

“He figured, ‘I’m a board member of Hope Community, what do I need to pay my rent for?’” Alexander recounts. Two years later, after extended legal action, Hope was able to evict the board member and throw him off the board. “That was a tough but important lesson,” Alexander continues. “We learned that if you want to maintain a building for everybody, sometimes the interests of the individual aren’t going to prevail.”

Nothing But a Landlord

One of Hope’s newest tenants, Armando Hernandez, walks through his three-bedroom apartment at 212 East 117th Street, carefully pointing to what needs fixing: windows that are drafty or don’t open at all; a pipe in the roof above the toilet that leaks; active rat-holes that line the rotting base of the kitchen cabinets; a common patio that’s piled high with assorted trash.

When Hernandez, his wife and three sons first moved into their apartment three years ago, such deficiencies were unsurprising; the building’s previous landlord had effectively abandoned it. After tenants began demanding better service, a housing court judge responded by appointing a 7A administrator, a court-appointed manager who collects rent and makes repairs. The judge chose Hope Community, naming Alexander the 7A in late November 2000.

Hernandez is a striver, a young Mexican immigrant who left his native Mexico City 12 years ago for the promise of better wages and a brighter future for his children. He works as a cook in a midtown restaurant and is sharply focused on supporting his family and making sure they have the tools to improve their circumstances. The family computer sits prominently in their living room.

He’s also committed to making sure that his family has a decent place to live. When the judge told them that their new landlord would improve their housing, tenants were thrilled.

Hope has since repainted and fixed the heat and hot water. But other repairs have never been made. (Hope admits this, adding that it is seeking financing to fix the rest.) What really galls Hernandez is that despite the delay, Hope raised his rent from $550 to $783. “I’ve paid my rent,” he says. “I’ve invested time. I’ve invested materials. Practically every week I’ve been here I’ve bought something to improve this apartment – things Hope should have paid for.”

Hernandez is unusual because even though he doesn’t have legal immigration status, and he speaks limited English, he’s demanding that Hope respect his rights. He’s kept an exhaustive photographic record of his apartment’s flaws, for use in court. He’s sought advice from local City Council members and attorneys. Most audaciously, in February 2001 he helped organize a tenant association meeting, where he was elected president. Hernandez then sent a letter to Mark Alexander seeking recognition of the tenant association and calling for a meeting to discuss outstanding repairs.

Hernandez was rebuffed. Since many of the tenants who voted to join the association, including Hernandez, didn’t have legal leases – thanks mostly to the previous owners’ mismanagement – their vote to establish a tenant association was invalid, Hope pronounced. (Hope won’t comment specifically on the tenant association at 212 East 117th, but does say that “Hope cannot prevent people from free assembly, nor do we seek to do so.”)

Hope’s dismissal made Hernandez sad, he says today, sitting on his couch and touching his wife’s hand. “We did everything correct, right? We went to court, we got a new landlord, we formed a group, but nothing’s changed. Where’d we go wrong?”

Hope Community has been successful in a challenging environment, defined not just by aging properties but also by tenants with limited incomes and often chaotic lives. At the same time, a sharp focus on business practices is one of Hope’s priorities. Alexander says it’s why his group has succeeded where others have failed. That philosophy appears to have led the group to respond to its tenants’ grievances very differently than CDCs traditionally have. Social justice has its role in other Hope endeavors, such as day care and job training for homeless families. But as a landlord, Hope’s actions indicate it is just that: a landlord. Not a social worker, or a community organizer, or even the homeowner upstairs.

Hope is rocketing into the East Harlem of the future, almost too fast for anyone to ask the question: What is a nonprofit housing group for?

Hope’s Beginning

East Harlem’s community development success story began in 1968 when Rev. Calvert, a junior high school teacher and minister, invited a small group of local merchants and residents to see his new apartment on East 104th Street. Rev. Calvert had renovated a dilapidated space above his church, creating several spacious and comfortable apartments. His guests were impressed. Age, landlord abandonment and arson had devastated East Harlem’s tenements over the previous decade. “At that time, if you wanted a new apartment, you went to the projects,” remembers Rev. Calvert, now 73 and living in upstate New York. “The thought of rehabbing tenements wasn’t very popular.”

Inspired by the possibilities and eager to reverse their block’s decay, that small group decided on the spot to form an organization. Each of them – including a pawnshop proprietor, a jewelry shop owner and a factory worker – contributed $50 to pay a lawyer to set up the group. Hope Community was born.

From the very beginning, Hope focused on buying inexpensive buildings and renovating them. In 1969, on that same block of East 104th Street, Hope bought its first property, a crumbling eight-apartment building, for $10,000, with the financial help of a wealthy law student. He had responded to an ad that Hope had placed in The New York Times seeking “gifts and loans” to support “residents banded together to renew our own blocks and make them great.”

For its first decade, Hope remained a volunteer operation that met weekly at Rev. Calvert’s church. It slowly expanded its property portfolio, adding one more building in 1970, three in 1973 and six in 1975. The work was challenging. Hope was inheriting properties that ranged from dilapidated to falling down. “Every building we had was a building that someone else had given up on,” notes Calvert. Hope took a step forward in 1978, when a state grant allowed Hope to hire full-time staff.

Their early success with rehabilitating buildings inspired others in East Harlem, according to former state Assemblymember Francisco Diaz, who worked for Hope during its early days. “They were very critical in showing that blocks could be turned around,” says Diaz. “They paved the way in attracting private landlords to reinvest in their properties.”

By the mid-1980s, Hope had more than 100 units, which qualified the group for participation in the first New York project of the Local Initiatives Support Corporation and the Enterprise Foundation, the financial intermediaries that would soon transform the once-modest world of neighborhood housing development.

The late 1980s were a period of sharp growth for neighborhood housing developers like Hope. Not only were new funding sources available, but government began to see that nonprofits could shoulder the burden of the city’s huge property stock. “The focus shifted from slow growth fueled by private acquisition to a more rapid growth with government-subsidized development,” observes Alexander.

By the time Calvert stepped down in 1994, Hope was managing about 400 apartments. Under Alexander, that number grew to more than 1,300, as Hope took full advantage of the city’s effort to rid itself of thousands of tax-delinquent properties. Officials with the Department of Housing Preservation and Development “have allowed community developers to have a tremendous impact on our community,” says Harry Rodriguez, a Democratic district leader who has worked for HPD.

Property management on any scale is a tough responsibility, particularly with the kinds of apartments Hope manages. Many of its tenants live in properties that were abandoned by their landlords before the city took them over and transferred them to local groups. These tenants, by definition, had combative relationships with deceitful landlords, marked by sporadic services and disputes over rent. It’s the kind of thankless work that receives little praise but invites much criticism. There are never enough apartments available, rents are never low enough and repairs are never fast enough. “No one loves their landlord,” says Calvert. “You don’t make friends managing housing.”

A Business First and Foremost

And Hope certainly hasn’t. Its sharp business sense, praised for the group’s success, is also criticized by many local community boosters for its inflexibility. A range of East Harlem observers, most of whom asked not to be quoted because they fear jeopardizing their jobs or complicating community relations, say that Hope has developed a reputation as an uncompromising landlord. “When they take over management of city-owned buildings,” says David Givens, chair of Community Board 11, who has watched Hope closely for a decade as a board member hearing complaints from tenants and community leaders, “they’re very aggressive in getting the tenants out, almost to the point of harassment.”

With her belongings hastily packed in garbage bags and piled high in front of her apartment, Edna Greenaway was evicted in late January. “This is so lousy,” said Greenaway, a middle-aged Antiguan immigrant, as she stood and watched a city marshal slap a lock on her apartment door, with many of her belongings still inside. “I was only supposed to pay $223 a month.”

For nearly two years, Hope Community and Greenaway, an undocumented immigrant who had worked as a street vendor until suffering a hand injury, battled over how much rent she should pay. In 1999, Hope took over her apartment building at 311 East 111th Street as part of the city’s Neighborhood Redevelopment Program – under NRP, the HPD awards city-owned buildings to nonprofit developers, setting the monthly rent at 30 percent of the tenant’s income. Greenaway lives on a small disability check.

Hope disputed Greenaway’s income estimate and charged her $375 for her one-bedroom apartment. When she fell behind and then exhausted her legal appeals, Hope moved to evict her. The act brought unwanted publicity to the agency, including a demonstration on the front steps of Hope’s headquarters in July.

Hope’s attitude toward Greenaway and the activists who rallied around her case – the agency issued a press release in January accusing its critics of launching a “smear campaign” against Hope – raised eyebrows among tenant activists surprised that a nonprofit was taking such a hard-line approach. “Edna’s a disabled low-income tenant,” says her pro bono attorney, David Hershey-Webb of the tenant law firm Himmelstein, McConnell, Gribben & Donoghue. “They’re a low-income housing program. They have an obligation to go the extra mile to try and keep her in that apartment.”

One tough issue that nonprofits deal with – particularly in a neighborhood like East Harlem, where at least one in four heads of households is foreign born – is tenants who are in the United States illegally. Under federal law, nonprofit housing developers can’t use the housing tax credits that fund much of their work to benefit undocumented immigrants. Because of those restrictions, about two-thirds of Hope’s units cannot be rented by undocumented immigrant families, Alexander says.

Questions about immigration status are important to both Hernandez and Greenaway’s cases. Neither has citizenship or even a green card, although both say they’re moving in that direction. Understandably, the tenants themselves were hesitant to discuss specific immigration issues in detail, but their stories suggest how paperwork ambiguities lurk behind their disputes with Hope over who belongs in their apartments and how much they should pay.

Hope says that Greenaway’s rent should be $375 because she put another occupant’s name and income information on her lease, a common tactic for undocumented immigrants nervous about attaching their names to official paperwork. Similarly, Hernandez put his brother-in-law’s name on his lease to avoid immigration difficulties. In both cases, those improperly filled-out leases have led Hope to question whether these tenants should be in their apartments (Hernandez says that even though he’s paying rent, Hope won’t give him a new lease because his old lease doesn’t have his name on it.)

Another factor that has generated conflict between Hope and its tenants is the lack of clear information that nonprofit housing developers inherit when they acquire city property. HPD’s rent records often contain inaccuracies, and families change quickly. Ultimately, experienced housing managers say, deciding who belongs in an apartment comes down to judgment calls that balance the nonprofit’s practical and fiscal concerns against the needs and privacy of the existing tenants. “You can only question people so much,” says Deb Howard of Brooklyn’s Pratt Area Community Council, which manages more than 500 units of housing for poor tenants. “You can’t be totally inflexible.”

Alexander says that Hope does everything it can to avoid evictions. “We hate it every single time, but we’ll continue to do it because we believe we’re here to protect an asset for the good of the community,” he says. “Just like the Legal Aid attorney that we’re oftentimes up against is there to protect the legal rights of the individual they represent.” Alexander’s argument – that if tenants feel wronged, they can seek representation and challenge Hope in court – is exactly how he defended Hope against criticism of Greenaway’s eviction, arguing that she had “ample opportunities to prove her rent was erroneously calculated.”

Hope’s suggestion that landlord and tenant disputes can be fairly settled is put to a tough test in Housing Court, where more than 90 percent of tenants have no legal representation. Greenaway, for one, was not represented the first time Hope brought her to Housing Court. By the time Hershey-Webb began helping her out, it was too late to reverse the eviction.

It’s impossible to know how representative Hernandez’ and Greenaway’s experiences are. Yet Hope itself admits that its bottom-line approach to property management makes it different from most neighborhood nonprofits. That’s essential, Alexander argues, or Hope could end up in fiscal trouble, jeopardizing hundreds of East Harlem’s most affordable and decent apartments. “There’s a phenomenon of failed efforts, or good ideas, or good intentions that ended up affecting the lives of thousands of tenants in this city,” he says. “The CDCs that failed didn’t pay attention to their business as a business.”

Ramping Up Homeownership

Last April, Hope announced a striking new endeavor: a partnership with a Queens builder, the Briarwood Organization, to construct 16 three-family townhouses and 59 condominiums in a lot along East 118th and East 119th streets. What’s unique about the venture is that while land was donated by the city, plus tax breaks, it’s a market-rate development.

When the Briarwood project is complete, Hope says that the resulting units will be affordable to moderate-income New Yorkers, earning between $40,000 and $75,000 annually. Virtually unprecedented for a nonprofit project, there will be no income cap. In addition, the two-bedroom apartments that will be rented out by the owners of the townhouses are unregulated and will likely fetch up to $1,500 a month, Alexander says.

This new model of partnerships with for-profit developers is necessary, Hope says, because the resource that has fed the growth of neighborhood housing developers – thousands of properties that the city handed over to nonprofits – is rapidly disappearing. In East Harlem, that stock has shrunk from more than 2,000 buildings in 1994 to just 294 in 2001.

To fight that same trend of shrinking supply, Hope is also looking to create and build cash equity. “We’re going to have put together a war chest of money and begin to acquire privately owned land,” says Alexander. A few years down the road, Alexander envisions, nonprofits will have to compete with private developers and speculators on the open market.

Along with Hope’s push toward innovative financing and development approaches has come an increasing focus on supplying homes that can be purchased by middle-income New Yorkers, what Alexander calls a “huge ramp-up” of homeownership in East Harlem. That includes another partnership with Briarwood, this one city-subsidized: the recently completed $16.6 million Fifth Avenue Homes development on East 117th and East 118th streets, with 40 three-family town houses that sold for about $300,000 each. Then there are the 15 buildings that HPD just awarded to Hope through the city’s Neighborhood Homes Program for $1 apiece. Once rehabbed, those homes will also be sold without income restrictions.

Hope’s aggressive push toward homeownership and middle-income development is applauded by East Harlem’s leadership, even those who criticize Hope for other reasons. Voices throughout the neighborhood bemoan what they say is a lack of housing options for middle-class East Harlemites. “Our children that we sent to college and come back, they definitely can’t qualify for public housing,” argues Harry Rodriguez. “They can’t qualify for tax-credit housing. They can’t qualify for housing for drug abusers. They can’t qualify for housing for battered women. Shouldn’t they have homes here too?”

Building homeownership has become the main thrust of the city’s urban renewal plans for years, thanks in large part to the success of the New York City Housing Partnership and Nehemiah Homes. Under Mayor Giuliani, the city enthusiastically backed that effort, spread it to new neighborhoods and loosened the income requirements for homebuyers.

East Harlem does have a relatively low homeownership rate, with fewer than 5,700 homes, co-ops or condos among the neighborhood’s 44,703 housing units, according to data collected by NYU real estate professor Michael Schill. Most of those are in state-subsidized Mitchell-Lamas.

But what those same numbers show is that despite recent gains, there is still a severe shortage of housing for poor people in East Harlem. About 48 percent of households there are paying more than half of their income on rent, according to the Census Bureau – median household income is just $15,327 – and the rate of severe maintenance problems is the second-highest in the city.

Some upper Manhattan housing activists question whether Hope should be putting its energy into development for middle-income residents when the lowest end remains so desperate. “There’s a lot of self-congratulation about looking more to the private sector and lending institutions,” says Nellie Bailey, an activist with the Harlem Tenants Council. “But it’s not clear these new models will allow CDCs to develop low-income housing – the majority need of the people in this community.”

Another concern about building higher-priced housing is its impact on neighboring properties. Last July, Schill published a report showing homeownership developments like those of the Housing Partnership quickly and significantly increase the values of nearby properties, creating wealth not just for the immediate owners, but for their neighbors as well. Yet as the sales prices of adjoining buildings increase, it forces new landlords to seek higher rents. It raises that ugly "G" word: When do higher-priced housing developments begin to tip a neighborhood toward gentrification?

“It’s a very difficult question,” Schill says. “In an economy that is based on the market, it’s very difficult to micromanage housing supply and demand. It’s hard to make a neighborhood livable but not ‘too’ desirable.”

Hope’s leaders don’t think that will happen on their turf. “As long as East Harlem has as much low-income public housing as it does, we will never be a sexy neighborhood for gentrification,” says Calvert. “We’ll never be Greenwich Village with all these scary poor people around.”

Some local leaders are convinced that East Harlem is already becoming unaffordable, although available data doesn’t yet bear that out. “Rents are skyrocketing,” says John Rivera, a school board member and Democratic district leader. “With all of this development going up, it’s squeezing people out, starting with the extremely poor.”

The majority of Hope Community’s work does remain focused on East Harlem’s poor. About two-thirds of its housing stock continues to be rented by low-income residents, and the agency plans to continue to have a majority of its apartments affordable for such families. The group also continues to build apartments through programs like 85/85, which Hope used last year to build 46 units of permanent housing on East 109th Street for formerly homeless families.

But the neighborhood around Hope is changing, and the agency says it must adapt. The once-firm border between the Upper East Side and East Harlem has “crumbled in the last couple years” Alexander says. He points to a new luxury development on East 97th Street that is renting two-bedrooms for $4,300 a month. “The private real estate interests are already at work,” Alexander notes. “It’s vastly important that we meet that challenge head on instead of watching them blow by us like a freight train.”

Hope’s response is to aggressively move to make sure it remains a key player in East Harlem’s renaissance. Alexander’s plan to build unsubsidized housing for middle-income New Yorkers is preferable to the “40-story luxury towers” that are creeping northward, he says. “We want to continue to be relevant. We want to support the development, growth and maturation of a mixed-income community.”

And he says that as it has from the beginning, Hope Community will get there playing by its own rules. “We were landlords from day one,” says Alexander. “We were businesspeople from day one. We were entrepreneurs from day one. We were visionary residents, merchants and clergy from day one. And that’s who we’ll keep on being.”

Copyright 2002

Matt Pacenza is an associate editor for City Limits, where this article originally appeared in April 2002.



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