The Q at Parkside

(for those for whom the Parkside Q is their hometrain)

News and Nonsense from the Brooklyn neighborhood of Lefferts and environs, or more specifically a neighborhood once known as Melrose Park. Sometimes called Lefferts Gardens. Or Prospect-Lefferts Gardens. Or PLG. Or North Flatbush. Or Caledonia (west of Ocean). Or West Pigtown. Across From Park Slope. Under Crown Heights. Near Drummer's Grove. The Side of the Park With the McDonalds. Jackie Robinson Town. Home of Lefferts Manor. West Wingate. Near Kings County Hospital. Or if you're coming from the airport in taxi, maybe just Flatbush is best.

Thursday, July 24, 2014

Trouble, and Opportunity, at 265 Hawthorne

From the 71st:

July 21, 2014 at approximately 730 PM in front of 265 Hawthorne Street two males were involved in a verbal altercation that turned violent when on male pulled out a firearm and shot the other male 4 times. The victim was taken to Kings County Hospital and is expected to make a full recovery.

July 22, 2014 one male was shot in the lower abdomen at the corner of Washington Ave and Montgomery Street for unknown reasons. At this time it is early in the investigation but we believe the victim knows the perpetrator and was the intended target. Victim was taken to  Kings County Hospital and is expected to make a full recovery.

Anyone with information on these two crimes or any crime please call the 71 Precinct Detective Unit at 718-735-0501.

265 Hawthorne is between Rogers and Nostrand, FYI. The building itself has not been implicated, ironically it's a building I've been planning a post about for some time. Just gathering the info. It's an example of a building where the City took over the property due to landlord negligence and arrears. Then, using Pratt Area Community Council as sponsor, the tenants association is working to make it Limited Equity Coop (HDFC is shorthand around here). The tenants could buy their apartments for $2,000 a piece, and their monthly rents would go up slightly, but it would then be considered "maintenance." Loans get made to do repairs. It's a pretty sweet deal, actually, though you must sell at below market rates preset by the agreement.

29 comments:

no_slappz said...

The tenants could buy their apartments for $2,000 a piece, and their monthly rents would go up slightly, but it would then be considered "maintenance." Loans get made to do repairs. It's a pretty sweet deal, actually, though you must sell at below market rates preset by the agreement.

No. It's not a sweet deal. It's no deal at all unless the rent is low enough to make a bargain.

The "owner" isn't an owner because he doesn't take legal possession of any property and he has no right to sell his apartment to a buyer at a price the two of them agree on. His $2,000 is a security payment that will be returned to him when he leaves.

Nevertheless, this "limited equity" misrepresentation has charmed tenants for a long time. Why? Who knows?

Bob Marvin said...

Not on in a co-op take possession of any property . So what?

babs said...

No co-op owners own real property, they own shares of stock in the corporation that owns the building, and in return they are given what's known as a proprietary lease, which allows them to occupy the apartment associated with those shares.

Why wouldn't you want to pay $2000 to have a voice in the day to day management of your building and to be rid of a neglectful slumlord? Even if you can only get back that original $2000 investment when you sell (which is not the case for all HDFC co-ops; most allow the seller to make some profit, albeit not an enormous one) it's worth it.

no_slappz said...

Bob writes:

Not on in a co-op take possession of any property.

What does the preceding mean?

Clarkson FlatBed said...

Maybe Bob's on a cellular telephone? I read it as "no one in a coop takes possession of any property. So what?"

Here here. When I buy stock in a company, I own something. My shares. And I can sell them too! Do I ever actually own anything? I always feel like I do...especially when I make a profit. If I can sell it, I own it. And you can sell your limited equity coop. Just not at top dollar. But in this temporal thing called life, I'm with Bob. Who cares? Some of the most sought-after properties in NYC are coops. An Egyptian dude just spent $70 million greenbacks on one. And I'll bet his accountant considers it property. even if he can't dig up the dirt below it and build a bomb shelter.

And to get philosophical for a minute...do we really own land at all? It's pretty much a construct, and it assumes, like so much of what we do, that the sovereign government is going to stay interested in letting us "own" it. So in a way, we're owning "shares" of the land that is currently controlled by the U.S. government, in which we also hold an interest. Ask the Palestinians if the land they used to own stayed theirs. So easy to forget just how a powerful a State is, and how easily it can crumble or be taken over. And no, I'm not fighting with Israel here, just making a point. I love Israeli Hummus! And that Soda Stream saved my life!!!!

As to the folks in HDFC, they've typically been screwing the pooch with their old landlord for years. Maybe they can do better? Or not. Either way, they're like the early Americans. They just want to control their own destiny. And nearly 250 years later, we still are. Sort of. Controlling our own destiny.

But ask a rock. It's all temporary.



Bob Marvin said...

Thank you Tim; your reading of my gibberish is correct. I'm using "Swiftkey" on my Android tablet which does silly stuff if I don't watch it.

Alex said...

It's absurd to say that it's not a good deal for the tenants. It's a great deal, and potentially one of the greatest financial gains for many longtime renters. They WILL be able to sell one day, limited equity rules will not prevent them from making a significant profit. As a coop, the residents can eventually hire an independent management company to help create a plan for dealing with deferred maintenance, and under the circumstances they might even be able to get money from HDFC to do so.

Over time and under good guidance, the tenants/owners can create a very stable building, and sometimes "limited equity" only refers to the income of the buyer. Theoretically, you can sell a limited equity coop for $1M, but the buyer can't earn more than a certain amount per year - takes a special case of a buyer with a modest salary but a HUGE amount of cash in the bank.

Additionally, their maintenance payments will go toward paying down an underlying mortgage on the building and property taxes, which makes it an deductible expense. In times when renters are getting tossed on the street for being old, rent stabilized, and for being the wrong race at the wrong time, HFDC conversion is a great solution. It would be great to see this happen in more buildings in the area.

no_slappz said...

Clarkson, based on an earlier post it looked as though your knowledge of finance had taken a big leap in the right direction. But then you gave back some ground with your most recent comment here.

Ownership -- true ownership -- confers buying and selling rights on the parties on both sides of the transaction. Those who become tenants of a "limited equity co-op" are not given those rights. They do not "own" shares of the co-op, as Babs correctly stated.

Their purchase price and their selling price is fixed, as it is with cemetery plots. There is no "market" in "limited-equity co-ops" or cemetery plots.

However, there's a huge and vibrant market in standard co-ops. Yes, they have boards that are empowered to reject buyers, and they unquestionably discriminate in ways that would be illegal if co-ops weren't private entities. But the boards don't limit prices. If they tried, they'd land in the street.

When it comes to owning stock -- the equity in a corporation -- you own the company's "residual value" -- what's left after all the creditors are paid off and the inventory is sold. That pile of dough is what you have a claim to. So, if Apple decided to shut down, to liquidate itself, by the time all the obligations were met, there would be probably $100 billion for stockholders to split. Maybe more. But the residual cash would amount to less than you would receive if you sold your stock before the announcement of the liquidation was made.

Meanwhile, you're way off when it comes to the so-called Palestinians. Very few had any legal ownership of the land that became Israel.

Moreover, it's remarkable how often people use the example of the so-called Palestinians when they want to express some kind of distress about land issues. Why that example?

Why not Castro's Cuba? Everybody who had been a landholder before Castro's revolution lost his property. It was "given" to the "people". But not to individuals, because no one in Cuba "owns" real estate, except Fidel and his brother and a few cronies.

The entire island is somewhat like a "limited-equity co-op" in that no one owns it, but everyone is stuck with the maintenance, of which very little gets done.

Today, in Israel, a so-called Palestinian can buy land and it's truly his. Across the way in the Gaza Strip, things are different.



As for getting philosophical -- well, the law is a human construct. And yes, within the framework of a democratic, capitalistic society, we own property. Some property is physical. Some is intellectual. In either form, private property and the right to transfer it are crucial for prosperity.

There's North Korea and Cuba, where private property doesn't exist. It's not likely anyone in the US wants to try their model.

babs said...

That is NOT what I said. This is what I said:

"No co-op owners own real property, they own shares of stock in the corporation that owns the building."

Owners in HDFC co-ops own those shares as much as owners in standard co-ops; the circumstances under which they can sell them are just more restricted (involving income limitations on the buyer and at times a maximum profit that can be taken).

Other co-ops may not be able to set a maximum selling price, but they are able to impose a flip tax, which is an amount that must be paid to the co-op by the seller. This is usually around 3% or so, but I've seen higher (and lower) ones, as well as those based on a certain $ per share. Sometimes it's calculated on the total selling price, sometimes only on the profit.

The intent is the same, however - to improve the reserve position of the co-op corporation.

And they sure do set minimum price thresholds - by rejecting any buyers whose accepted offers are deemed too low by the board, anxious to protect the value of their shares.

I know of some very successful HDFC co-ops both here in Brooklyn (Williamsburg) and in Manhattan (East Village and Washington Heights) with no maintenance issues and in very sound financial condition. The apartments sell fast, although, as Alex said, it takes a special person (usually these days a rich kid, unfortunately) who can get in under the income ceiling and still have the cash required for the down payment (some even require all-cash purchases).

Bob Marvin said...

When you define your terms narrowly enough slapz you get to choose what fits, but at the danger of becoming irrelevant. My late in-laws my not have "owned" their Mitchell LMA co-op, by your definition, but they certainly went through the last 30+ years of their lives FEELING like owners. I'm glad you weren't around to set them straight.

Bob Marvin said...

make that Mitchell LAMA

no_slappz said...

Limited Equity Co-ops are fine, but they come with significant limitations that make them unattractive to many

http://housingforall.org/Coop_paper_FV.pdf

This review of research indicates that LECs can provide a less costly, high quality housing alternative to homeownership, especially for the populations least likely to become homeowners, for those, such as the elderly and the disabled, who can be burdened by the demands of home ownership, and for others who are financially and socially less suited to the constraints and demands of single-family home ownership.

LECs promote residential stability and increase resident control of housing.

While asset accumulation potential is limited, low purchase prices and monthly charges presumably give LEC shareholders a greater ability to accumulate savings than cost-burdened renters and owners.


Some of the happiest people in NY City were the renters in Lincoln Towers who took advantage of its conversion to full co-operative ownership.

Residents were offered their units for half the minimum price that non-residents were required to pay.

Mitchell Lama worked out well, and then, as planned, it came to an end.

Bob Marvin said...

So slappz, living in a Mitchell LAMA co-op ISN'T the same as living in Cuba or North Korea? what changed your mind? Next you'll be telling us we don't live in an Ayn(rymes with swine) Rand novel :-)

no_slappz said...

Bob Marvin,

Limited-equity co-ops, Mitchell Lama buildings, rent stabilization, section-8 housing subsidies, housing projects -- each program is an example of government intrusion into markets that work quite well when the artificial barriers are removed.

Each is politically motivated without regard for the future problems these intrusions cause.

Of all the programs, Mitchell Lama was probably the most benign. Rent stabilization is probably the most damaging. Its continuation with seemingly limitless ways that leaseholders can assign their apartments to others, is the chief reason every non-stabilized apartment usually rents for an astronomical sum.

If it weren't for rent stabilization there would be many more rental units in NY City, available at far lower average rents and it would be far easier to arrive at mutually agreeable neighborhood policies for building sizes.

Nevertheless, waterfront property and property bordering on parks would command a premium and would likely be the sites for tall buildings with expensive units.

It's amusing that people are frequently put off by Ayn Rand when the Randian philosophy is based on freedom.

Her novels may be boring, but the philosophy is pretty sound. Frankly, it's too "liberal" -- in terms of the classic definition of "liberal" -- for many people, in part because it includes the legalization of prostitution, legalization of all recreational drugs, and it's anti-war.

Atlas Shrugged is a Back To The Future tale -- a story tied to building high-speed rail -- which has happened in may countries, but not here, though maybe we'll see some action in California in the next decade or two.

That aside, whenever government creates an artificial shortage of something essential, pricing distortions always follow.

Bob Marvin said...

You REALLY believe that nonsense, don't you slappz? I'm so sorry for you.

Clarkson FlatBed said...

I believe Slappz might just be Steve Forbes, though why he's slumming with the lot of us I'll never know.

I've always enjoyed the logic in the do-away-with-rent-regulation argument. The problem is that it's just a rhetorical discussion, and it's always convenient to claim that it's gonna work in a giant city like NYC, when we all know there's not a chance in hell that one day we'll wake up and start from scratch. You can be smug and say you've got it all figured out, but in the real world, there are actually precious few examples of true laissez-faire economies, in ANY industry. Everything in this, and almost every other, country is regulated, taxed, propped-up, incentivized etc. six ways from Sunday. To suggest that rents and housing prices are any different is ridiculous. Developers, banks, title companies, construction permits and unions, tariffs on goods...anything you buy or sell, ANYthing, is the net result of tons of laws and rules and taxes and pennies, nickels and dimes along the way. Not to mention racism, sexism, and general mean-spiritedness. Singling out rent regulation is absurd. Why not do away with precedence and laws and the State Apparatus entirely?

It's also easy to construct a utopian vision without pesky real world avarice, theft, deceit and corruption...I've got one for you! How about a world where everyone is benevolent and barters what they have or can do for what they need and then gives away what they don't need to the less fortunate. Wanna come live in MY world? Oh, and there are NO FLYING ROACHES OR BEDBUGS IN MY WORLD EITHER.

I'll simply never understand, though, why rent-stabilization is tied to the apartment, and not the renter. If it's a subsidy, it should be pegged to income, and it should disappear when it's no longer needed. And if it's NOT a subsidy, then it better be fair to ALL, no matter what kind of apartment they live in. That's what we need to tinker with. Ending it outright ain't gonna happen, so let's please stop using that ridiculous "no regulation" nonsense as if it were achievable. For ANYthing.

And yes, redo the property tax equations. But please, let's not pretend that ANY of this is going to matter if a) NYC just keeps getting more desirable for the wealthy or b) we find ourselves under attack again like 9/11. We are currently living in an absurd herd mentality, and I'm convinced we will be writing VERY different pieces and posts and comments in one, maybe five, years.



Clarkson FlatBed said...

Oh, and Slappz, you are much excellent writer-man, always very poised and grammatically correct. So rarely do you mistype. It's eerie...like a computer program. Tap into the light side of "The Force" and we could use a guy like you.

Seriously, what do you do for a living? Where do you live? Do you own or rent? I know you're hiding behind a cloak of anonymity, but for god's sake throw us some crumbs man! If you're going to take up this much space, you owe it to the readers to provide some details.

Alex said...

I think NS is a well educated, zitty teenager. And, CB, totally agree that it makes no sense for rent lowering regs to apply to the apartment and not the person.

Bob Marvin said...

You're very like right Alex; in any case I'll try to resist responding to his comments in the future. It's not worth the bother.

Bob Marvin said...

BTW Tim and Alex; If rent regulations applied to the individual, rather that the apartment, wouldn't it become virtually impossible for a person so elegible to rent an apartment?

Clarkson FlatBed said...

Well, Bob, that depends on how it's structured. Certainly the rent laws as written make assumptions about who is getting the market subsidy and who is paying. The idea makes a certain sense if everyone in a particular apartment has the same means over time. But unless you're in, say, a City job for life, you're probably going to have ups and downs in your income. Shouldn't your "subsidy" follow suit?

These laws were meant, I'm thinking, to help the working people of the City who were not very mobile economically. How else does it make sense? If a rental is meant to be "for life," and the renter finds themselves in a different income bracket, it seems to the rest of us unfair that he is getting a windfall, or "subsidy," in the realm of rent. Or, for that matter, get kicked out due to a temporary loss of income.

That's why I say the subsidy should follow the individual. Not that I have the slightest idea how to make that work - and yet that's exactly what we've tried to do with Section 8.

We have not formally, in my mind, determined what it is "to rent." Is that a home? When does it stop being a temporary stopover on the way to ownership, and when is it an essential means to self-sufficiency? What of "artists" and other highly educated low-earners? Or on-purpose transients, immigrants, interns...

The point of Section 8 was to pick up the difference between what a person can pay and what the market will bear. So if the market rate is to be meaningful at all, what you'd find is that a majority of New Yorkers cannot afford market rate, because NYC is very much in demand (right now anyway). In fact, were NYC more affordable, I'll bet tons more folks would live here. So...

Essentially you have a warp in the market, because we've decided (ostensibly democratically) that it is not okay to have a City with just wealthy people. That's really what this is about. The great experiment called NYC is a constantly changing crucible for a particularly American version of humanity. And its far from perfect, constantly being adjusted and rejiggered.

Up in Scarsdale, you've got a great deal of demand and almost no supply. No one is going to be able to build huge apartment buildings near its quaint downtown, and no one seems to be suggesting we must. And yet, it's become mantra of late to hear that NYC must accommodate every comer, by building taller and denser in the outer boroughs. There is no absolute that says this is required of the NYC experiment. But somehow we've determined, again somewhat democratically, that this is what is good and right.

I'm arguing nothing here, except that the current situation is both unfair AND fair at the same time. How can this be? Again, the great experiment is being tested, and it's up to us to, again somewhat democratically, figure out the best solution in the 2000s. To which I say...Godspeed!



Clarkson FlatBed said...

Oh, and lest you think I'm riding some moral high ground, let me add that I've been the recipient of some enormous "subsidies" myself. First, a loose mortgage market in 2003 that allowed me to buy my house. Two, a mortgage interest deduction that continues to astound me. Three, property taxes less than half what they are in Jersey or what they are for coop owners; and the least savory of all, the racism discount, wherein I was able to purchase a house at all because it was in an area that was severely less expensive than others because it was predominantly made up of people of color.

To that last point, I can't tell you how many people have told me what foresight I had to see the upside financial potential of the neighborhood, which I always read as "the good sense to see that the white people and/or people with money would eventually move here."

And THIS is what they call the vagaries of the "market?" Hogwash, and God save us all.

no_slappz said...

New York City Falls Short as a Landlord, Report Says

Serious Problems Reported by Public-Housing Tenants on Rise
By Laura Kusisto

July 27, 2014 9:20 p.m. ET


The de Blasio administration says it intends to preserve and improve the city's sprawling public-housing system, home to some 400,000 people. A new report suggests how daunting that challenge might be.

The report says that if the New York City Housing Authority were a private owner, it might have qualified as the city's worst landlord—at least in 2011, the report's most recent set of data.

The report, "Strengthening New York City's Public Housing: Directions for Change," was scheduled to be released Monday by the Community Service Society, a nonprofit advocacy group for low-income New Yorkers.

More than a third of public-housing residents said heating, leaks or major repairs were a serious problem for them, compared with 17% of low-income tenants in private residences, the report states.

The report found that conditions in the city's public housing worsened rapidly over the course of a decade as NYCHA's buildings aged and financial support diminished from city, state and federal governments.

From 2002 to 2008, the percentage of low-income households in both public and private rentals that reported four or more deficiencies—such as rodents, broken toilets or inadequate heat—hovered at 10% to 12%.

But from 2008 to 2011, the number of reports of multiple deficiencies in NYCHA units nearly doubled—to 19% from 11%, while that number climbed to around 13% in private buildings.

"There's a difference between managing the decline of public housing and preserving public housing. Right now NYCHA is managing its decline," said Bronx City Councilman Ritchie Torres, chairman of the committee on public housing. He added that he is seeing a change in attitude under the administration of Mayor Bill de Blasio.


NYCHA officials said they were looking to be a better landlord by emulating some private-sector practices and standards for quality of life. "We need to think about our portfolio in the very modern ways that most landlords do," said Shola Olatoye, NYCHA's chairwoman and chief executive.

One measure recommended in the report is to hold NYCHA accountable through the same systems as private landlords, under which tenants can call 311 to report repair problems. The city's Department of Housing Preservation and Development also keeps a database of building-code violations that is used to keep private landlords accountable.

NYCHA is exempt from both systems, but the Community Service Society says they shouldn't be.

no_slappz said...

Regarding rent stabilization, the notion of tying it to the person is a good one. That's the manner in which most subsidies and benefits are apportioned.

I've known many people in NY City who earn pretty good money yet remain in their run-down rent-stabilized apartments because they're dirt cheap. My rent-stabilized place in Manhattan was $350 a month. A sixth-floor walk-up that was great until my pregnant wife said it was time to move.

Moving apartments off rent stabilization is tied to income -- in some cases. Once your rent hits $2,500 AND you earn over $175,000 (this figure may now be higher), your apartment is deregulated.

That aside, my position on rent stabilization is based on tapering. Succession rights need a major modification.

Why should Mia Farrow pay very little to live in a luxurious Manhattan building, a place where the free-market tenants pay huge sums?

http://therealdeal.com/blog/2008/07/15/decoding-new-york-city-s-rent-stabilized-mysteries/

If tenants weren't allowed to hand down their rent-stabilized leases to kids and other family members, the turnover would pick up enough to minimize the bad behavior of landlords. The way things are today, it's possible the highest return on investment for the buyer of a building full of rent-stabilized units is to let it fall apart. Let the forces of dilapidation drive tenants out. Maybe the landlord pays some fines along the way as he waits for the building to empty out. No matter what, the land gains value, even if the building itself isn't much of a cash generator.

Floyd Bennett City would be a great addition to Brooklyn. One enormous residential/commercial development out there could release a lot of pressure from the overheated city real estate market.

disco princess said...

Re: Floyd Bennett Field - You might as well give that pipe dream up and focus on something else that's within the realm of reality. It's managed by the Feds; it's very unlikely that it will be handed over for private development.

no_slappz said...

disco princess, you're absolutely right about the possibilities, rather the lack of them, for developing Floyd Bennett Field/City. But if it were possible, the resulting community would answer a lot of prayers.

With respect to more likely successes, the pattern is well established -- Build as tall as possible near subway lines and build as luxuriously as possible on premium property, waterfront, parkside.

Next big phase may well be the result of widespread re-zoning. The Garment District is ripe for conversion into residential space. Maybe the Brooklyn Army Terminal/Industry City will go for some residential conversions of its space?

When you start looking, it's easy to spot a lot of unused or under-utilized real estate.

disco princess said...

no slappz, I doubt that building taller willy nilly throughout the city will still be enough to meet the demand.

disco princess said...

Hey, no_slappz, this may be up your alley...some developers bought up some land by a subway station...Sheepshead Bay on the Q.

Link: http://nyrej.com/73494

no_slappz said...

disco princess, you see, that's how simple it is. Buy some land near the subway station and put up bigger buildings. The same old story repeats and repeats all over the city.