Rebuilding the South Bronx

The Times‘ Michael Kimmelman takes a walking tour of the Melrose section with Amanda Burden, director of New York City’s Department of City Planning, and a video of their interview highlights some striking examples of new development that is ongoing in the South Bronx.  Some of these blocks are the same ones that were infamously devastated by arson, property abandonment, and street crime in the 1970s and ’80s.  Among my earliest memories of New York City, I remember riding through parts of the city that looked like scenes from a war zone: shells of buildings, flame-scorched, hollow, scattered among vacant lots, and defaced with neon-colored graffiti.  And, of course, people on the streets reflected a human version of the same desolation.  Fortunately, most of that Dante-esque nightmare is now gone, but the vacant parcels have persisted for a long time.  Notably, the Bloomberg administration’s strategic focus, according to Ms. Burden, is centered on the construction of high-density affordable housing, and on rebuilding the area’s traditional fabric of standard blocks and mid-rise, mixed-use buildings.

Limited Equity: An Idea That Still Matters

Amalgamated Co-op, Bronx, NY.

If the single-family house has become a dog of an investment, what should communities do?  I’d say this trend makes the case for developing a new generation of limited-equity (LE) neighborhoods, where the commitment benefits of ownership are separated from the mad lottery of house prices.  Neighborhoods need stakeholders, not just tenants.  (Hold your fire: I still rent.)  Healthy communities require a critical mass of residents who have made temporal, legal, and financial commitments to remain.  They require the political landscape that comes with the presence of enough people for whom it would be more trouble to move than it would be to notice and address local problems.

LE offers this: Cooperators buy shares in a stock company, and the company holds title to the real estate.  Typically, starting prices for units are scaled to the pro rata costs of sinking the initial investment: basically, land and construction loans.  When a cooperator moves out, he sells his unit to a new cooperator for roughly the same amount that he initially paid.  And so, you have a cycle where cooperators who move out will recover their limited equity, and new residents will purchase housing at an affordable price.  At the same time, ongoing maintenance costs are used to cover, well, maintenance costs.  And taxes.  Construction on cheap farmland or (clean) former industrial sites can significantly reduce property costs, making an LE venture an affordable possibility for cooperators with modest incomes.  And so, you have a community of stakeholders that overlaps with a community of affordable housing.

The essence of the LE model can be traced back to the Principles of the Rochdale Weavers.  In 1898, Ebenezer Howard proposed an LE model for his Garden Cities as a viable solution to the crowding and poverty that characterized the East End industrial slums of Victorian London.  In 1902, Theodor Herzl advocated a similar financial model to pay for the founding of Israel.  In the United States, labor-sponsored co-ops in New York City became the most ambitious examples of the limited-equity arrangement.  But over the last generation, LE has faded out.  In the only American locality where the ownership structure had ever gained a foothold, the build-out of affordable land in New York City, combined with the infamous dysfunction of Co-op City, effectively killed the prospect of further LE developments by the mid-1970s.  (The 1971 death of Abraham Kazan simultaneously cost the concept its greatest advocate.)  Presumably, most of the rest of the US was either too conservative, or too affordable during the post-war period, for such an idea to catch fire without a good sales pitch.

But limited equity housing remains a decent and practical idea, and the present flight of capital from urban land could open a new window for its economic viability.  Politically, although LE is unquestionably a creature of the labor-left, it inherently dovetails with a number of fundamental conservative priorities, making it potentially palatable in non-left political landscapes.  For example:

1. LE facilitates a broader base of private property ownership.

2. LE does not require any direct involvement by the State.

3. The LE entity is typically entirely local; by-laws can reflect local customs.

This is because LE was envisioned to work within the conservative, common-law legal system of the British Empire in the latter half of the 19th century.  Rather than being a plank of a political program, it was and is a simple legal strategy.  And because of its origin as a private law device, the LE model remains perfectly compatible with even the most conservative visions of the role of the State, as  relates to property and economics.  At the same time, the LE model can effectively advance the interests of those who require a degree of shelter from the vagaries of capital, by allowing individuals to enjoy a stable ownership stake in their homes and neighborhoods while maintaining a perpetual stock of affordable units in a fixed location.  That is to say, in addition to its direct benefits as a business model, LE offers an approach that can avoid some of the triggers of political hostility while delivering a reliably equitable, even progressive social result.  This quality would make LE a promising strategy for these uncertain political and economic times.

Limited Equity: Why It Matters

Penn South, NYC.

The Times has a two-page piece on the financial challenges facing Penn South, the last of the big limited-equity (LE) co-ops remaining in Manhattan.  The LE developments– championed by local labor unions and left-wing organizers– filled a crucial gap in the New York City land economy, providing decent housing at a price-point between the public housing projects for the poor and the market-rate units whose price tags predictably soared with every boom-time economy.  The LE co-ops sold their units to middle-income buyers at reliably low prices, with two major caveats: (1) Buyers were required to meet the co-op’s household income guidelines (which tended toward union wages), and (2) co-operators who moved out were only permitted to sell their stake back to the co-op board for a comparable price to what they had paid; there were no opportunities for boom-time windfalls.

In the mid-20th century, the LE co-op model was big in NYC.  Men like Abraham Kazan, Sidney Hillman, and Herman Jessor championed the cause and built prolifically throughout the city.  In Manhattan, the LE model included Penn South, in Hell’s Kitchen, with nearly 3,000 units; a couple of large developments known together as Co-op Village, on Grand Street; and the smaller, adjacent Amalgamated Co-op.   In the boroughs, even larger LE co-ops would come to dominate the skylines of far-flung neighborhoods like Coney Island, Jamaica, and Baychester by the early 1970s.  The LE’s created large, stable, affordable communities of middle-income stakeholders in a city whose vacillating real estate landscape was anything but friendly toward middle-income workers.  In context, the LE co-ops were the vanguard of the NYC labor movement that took off in the heady years after the Triangle Shirtwaist fire, and lasted until the NYC financial crisis and the US-left meltdown of the 1970s.

Twin Pines, symbol of co-operative principles, can be found at many NYC LE complexes.

Today, with Manhattan housing having become a costlier proposition than ever, an experiment like Penn South seems almost preposterous.  And yet, it has survived for more than 40 years, representing a viable private-sector alternative to the disastrous public housing projects of the same period.  Its units– when they become available– remain priced at the unbelievable value of just $12k per room.  Much credit is due the Penn South co-operators, who (mostly in their 70s, according to the NYT article) are still refusing to convert their priceless Chelsea complex into a market-rate windfall.

Penn South and the other remaining LE co-ops of Greater New York are the legal remnants of a fading past, when middle-income Americans were able to leverage their collective clout into a meaningful economic stake.  They stand as massive, brick-and-mortar testaments to what once was possible, even in the mad real estate marketplace of 20th century New York; and to the occasionally realized ideal of the inclusive American city.  Their dwindling numbers stand as a counterpoint; a sad illustration of the economic trajectory of the US middle classes over the last two generations.

The Last Detached Victorians of New York Proper?

Houses on Woodycrest Avenue, New York City. Source: Bing Maps.

I suspect they are.  They’re a collection of about a dozen houses along Woodycrest Avenue, where it’s crossed by 164th Street, in the South Bronx.

Some NYC history: before 1898, Brooklyn was a separate city, and Queens was a collection of separate municipalities.  Staten Island was (and remains) a separate universe.  But the Bronx was the organic extension of New York City’s development beyond Manhattan: along with Manhattan, it comprised the City of New York before the greater, five-borough city was legally formed.  Evidence of the close relationship between Manhattan and the Bronx is still visible in the continuity of street and house numbering from one to the other; the continuities of Broadway, Park Avenue, and Third Avenue between the boroughs; and the fact that no ZIP code in the Bronx ends in the same two digits as any in Manhattan, due to the borough’s historic coverage by the “New York, New York” post office.

1896 Map Showing NYC lands beyond Manhattan.

So, onto detached Victorian houses.  There was probably a time when New York City proper had a large stock of detached Victorians, like those that remain in San Francisco or Boston, or the ones in the above picture.  (Brooklyn, Queens, and Staten Island, of course, all have their fair shares of such houses.)  But Manhattan and the Bronx grew faster in the late 19th and early 20th centuries than any of those places, and most of their formerly low-density sections were completely built up with tenements and apartment buildings by the 1920s– long before historic preservation was an urban planning concept.  As a result, the stock of detached Victorians in New York City proper is almost totally erased.

Manhattan– the heart of the city proper– has barely any detached houses remaining, at all.  (There are literally three or four on Park Terrace West and a couple on Seaman Avenue, in Inwood, and a few in Marble Hill.)  The Bronx, on the other hand, has probably tens of thousands of detached houses, but most of them are simple wood-frames, Tudors, colonials, or brick duplexes that post-date the Victorian period.  In light of the historical context, this bunch of spacious homes with turrets, gables, and wraparound porches on Woodycrest Avenue is unique.  And it may actually be the last remnant of an architectural period in the city’s history that has all but disappeared.

Will research more, and update.

Update: there is a handful of smaller detached (possible) Victorians, much less elaborate, in Marble Hill.