New York Tenants Take Over Buildings With Small Downpayments
The familiar story -- a building stays full despite questionable maintenance, a landlord fails to pay taxes, the city takes over -- has a happier ending in the Bushwick, Brooklyn and Morningside Heights, Manhattan, just south of Harlem. A group called the Urban Homesteading Assistance Board (UHAB) has corralled a loan for acquiring tax-delinquent properties and a grant to help long-time tenants become shareholders in a new capital structure for the buildings.
And in one case, the renters only had to come up with $2,500. Here's how it works.
With $2,500 of their own money and a part of a $33,700 grant from the state, tenants at the six-unit 164 Bleecker St., in Brooklyn's Bushwick neighborhood are going through paperwork to become owners in the new limited equity co-op. Most of them have been in the building for years, said UHAB spokesperson Dana Variano, one decided to stay a tenant. At 375 Manhattan Ave., in New York, N.Y., a much larger grant of $537,500 helped convert a 20-unit property to the new ownership structure.
In both buildings, a specialized lender called the National Cooperative Bank and the city provided financing, and the city's pension fund bought the bank loan. This is a well-established method for getting decrepit rental units back on the tax rolls and giving tenants the chance to become (property-tax contributing) homeowners.
The mechanics of creating a limited equity co-op place restrictions on reselling the units, but Variano says the restrictions rarely become an issue. "The deal is very advantageous for tenants," she said, "and most never want to move!"
UHAB has 87 buildings totaling 1,646 units en route to new ownership, Variano said. For tenants in tax-delinquent buildings, that pipeline suggests a route out of trouble.
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