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Miracle on 24th Street
Penn South Cooperators Vote to Remain
Not-for-Profit Until 2022
By Gloria Sukenick
In the last several years, a number of moderate-income co-ops have decided to cash in and go private, hoping to make big bucks on a hot real estate market. Of course, this depletes the dwindling supply of affordable housing even further. But the results of the Penn South referendum show there is a ray of hope on the horizon.
On April 4 Penn South, just about the last bastion of such housing in Manhattan, voted to remain a limited-equity, not-for-profit co-op, and by a big majority: 75% of the cooperators voted in this referendum, and 70% of those who voted supported staying limited-equity.
This is the second time in its 39-year history Penn South has faced this choice. The first occurred in 1987, when a 25-year contract with the city offered a tax abatement and provided for a phase-in to full taxation by 2012. Cooperators rejected going private then.
Penn South, a complex of ten 21-story buildings between 23rd and 29th streets and Eighth and Ninth avenues, was built by the International Ladies Garment Workers Union in 1962, as affordable housing for its members. It was later opened to the general public, and has a long waiting list.
Current carrying charges for a one-bedroom apartment are about $450-$500, and people who exceed middle-income limits pay a surcharge.
But now, as we know, gentrification is changing the Chelsea landscape. Everywhere one looks there is the looming presence of cranes heralding the approach of yet another luxury building. Many existing older buildings are in various stages of rehabilitation, and rents are escalating. Some Chelsea condos are selling for $1 million or more, and rentals are going for as much as $2,000 to $3,000 a month for a one-bedroom apartment.
All this new development has caused real-estate taxes to hit the stratosphere. If we kept our current contract through 2012, it would mean huge monthly increases as we phased-in full taxation.
These were the choices we were to vote on. Option #1, to accept the citys tax-relief proposal, which would freeze taxes at the current level for at least 12-14 years if Penn South remained-limited equity through 2022.
Or, Option #2, which would allow the possibility, and only a possibility, of going market-rate in 2012. The catch: Taxes would begin rising steeply starting this June, and would continue to rise through 2012. Many cooperators would be priced out of their homes. Most Penn South cooperators are elderly, and most have incomes well under $40,000, certainly not enough to replace their housing in this city.
Not unexpectedly, there were those who saw Option #2 as the opportunity to privatizea real get-rich-quick scheme (many of them the same people who wanted to privatize in 87). Of course, in order to get rich, one would have to move. But whereand how much would replacement housing cost in this city? Greed played a big role for Option #2 advocates, though there were a few who saw this as a chance to relocate to a warmer climate or to leave their apartment to a family member. However succession rights are under review and may be expanded in the future. But many Option #2 voters were reflecting the current ethic, if it makes me money, its goodafter all, I gotta look out for number one and only number one.
As the vote neared, a veritable snowstorm of leaflets ensued. From Option #2 supporters, Flip taxes will bring in millions. A flip tax is a portion of the sales proceeds a co-op requires each person who sells their apartment to pay the co-op. Those funds serve as a reserve to pay for tax increases caused by the co-op converting to the private market, for repairs and capital improvements. But its often a one-shot deal and, therefore, not a reliable funding stream. Other told of the riches to come from new construction on under-utilized parts of our property, the excess open space at the northern border of our property, income-generating development and agreement with a professional real estate developer.
Other flyers clearly identified Option #1 as both the smart economic choice and the ethical choice. The 8,000 people on the waiting list deserve the same opportunity weve had for decent, affordable housing right in the middle of Manhattan said one, a list that would be meaningless if Penn South privatized. Many of us pointed out that Penn South was housing built with union money for working and moderate-income people and supported with tax dollars. We felt it was inappropriate for the buildings to be used as an opportunity for venture capitalists. If people were looking for a moneymaking investment, they should have bought a market rate co-op.
And so it went. The group I am active with, the Assembly of Concerned Cooperators, who have a 25-year history at Penn South and a strong commitment to keeping it the best-run nonprofit housing development, now and for the future, went to work. We leafleted, we talked to neighbors we worked hard to convince our fellow cooperators that Option #1, the citys tax-relief proposal was the right choice. We arranged to have house parties in many of the 10 buildings. Cooperators were invited to come with questions. A few days before the vote, we had a rally replete with balloons and music and winding up with a march through the Penn South grounds accompanied by a drum, a tambourine and chants for Option 1.
The outcome was gratifying not only to cooperators here, but to a large number
of others who have been concerned by recent privatization trends at other not-for-profit
co-ops. Its a victory for us and offers a bit of hope to others. We intend
to remain a visible presence here, holding educational forums, encouraging participation
by our neighbors and working to develop a strong and active community.