MANHATTAN — Christine Baronak’s co-op, built on the Upper West Side in 1972 as affordable housing, is at a crossroads.
The residents of Turin House, as the 188-unit building on Columbus Avenue near West 90th Street is called, are debating whether to keep their duplex apartments affordable or let market forces prevail.
The fight over the co-op's future is a bellwether for the 32,000 co-op apartments that are part of the city's Housing Development Fund Corporation (HDFC), a program designed to give low-income tenants an opportunity for home ownership.
Many HDFCs date to the 1970s, when the city took over derelict buildings and then allowed tenants to buy them for a nominal fee and run them as co-ops. To keep them affordable, there were income restrictions on buyers and high flip taxes on sales. But shareholders also got tax breaks to help keep maintenance low.
There were no price caps on sale prices, however, and many housing advocates have been concerned about the high prices some of these co-ops have recently been fetching.
With the program's tax break set to expire in thirteen years, advocates and residents want a program that replaces it to help keep these apartments affordable.
Baronak, a 54-year-old crafter whose family was one of Turin House’s first residents, is worried that if her building exited the HDFC program and no longer received tax breaks, many residents, like herself, would not be able to afford to stay.
“I could sell my apartment and make money and move somewhere else, but where am I going to go?” she said. “[Turin House] was built so the lower-income families in the neighborhood could have something to own, and I want to preserve that.”
HDFCs are still one of the city's few remaining paths for affordable home ownership, housing advocates say. Of 900 HDFC co-op sales between 2011-2015, the median price (adjusted for inflation) was $270,200, with nearly 84 percent of these homes selling for $500,000 or less, according to a recent analysis from the Independent Budget Office.
But there have been some outliers, like a $2.025 million sale in 2014 for a three-bedroom/three-bath unit at the Washington Heights’ Grinnell House, on 800 Riverside Drive, and another unit there that went for $1.6 million in August.
Those prices are swaying some residents at Baronak’s building to go private, thinking their units could fetch much more than that in the fair market.
But Turin House’s situation is a little different from other HDFCs in that its tax exemptions expired in 2009. The building has been in limbo ever since — and has yet to pay its back taxes of $4.5 million — as its board discusses whether to attempt to exit the program and face legal action from the city.
“People want to make money and sell and leave,” she said.
The city is considering a host of reforms as it devises a new tax break program to replace HDFCs when they expire in 2029, advocates said.
A Task Force on City Owned Property, a coalition of community organizations that support and advocate for HDFC co-ops, is working on recommendations that would include eliminating the property tax entirely for HDFCs as part of new 40-year agreement — but with strings attached.
The opt-in program — estimated to cost the city about $19 million a year in tax breaks — would not only include income restrictions on buyers, it would also include increased third-party oversight of these buildings, many of which have been plagued by problems with their boards' governance.
The biggest change proposed, however, would be caps on sale prices.
The task force hopes to get price caps set so the units, with maintenance, would be affordable to families making below 80 percent of the Area Median Income (which is $62,160 for a family of three), according to Andy Reicher, of the Urban Homesteading Assistance Board (UHAB), which develops, trains and assists residents in HDFCs.
READ MORE: WHAT IS AREA MEDIAN INCOME?
Time is of the essence, advocates believe, as more HDFCs have hit the market.
The number of HDFC sales more than doubled over the five-year period analyzed by the IBO, the report noted.
Plus, many of these buildings can only accept cash offers on sales since banks have been reluctant to give buyers mortgages for them. Because of this, new buyers of the pricier HDFCs often are retirees or trust fund kids, advocates said.
“They’re cash-rich but income-poor,” said task force member Moses Gates.
“We’re at a tipping point,” he believes. “The market where a lot of these were developed — Central Brooklyn, Lower East Side, Upper Manhattan, Williamsburg — are gentrified or gentrifying. HDFCs are the only affordable option in many of these places.”
The city’s Department of Housing Preservation and Development (HPD) is hoping to create a “better system” for HDFC residents, officials said.
"It is just as important to preserve existing affordable housing as it is to create new affordable housing,” HPD spokeswoman Juliet Pierre-Antoine said. "A few of HPD’s main recommendations are to update policy and regulatory requirements to ensure adequate supervision, fair and equitable sales among other reforms."
Not all HDFC residents, however, welcome the task force’s plan.
James Peebles, a construction cost consultant who has lived at 1 W. 126th St. for 27 years, worries that giving HDFCs like his a full tax break only makes it seem like these buildings are not contributing their fair share.
Instead, the mathematician has an alternative plan where HDFCs would get a special tax rate of $1 per foot, which would allow the city to collect about about $30 million in taxes annually. Half of that would go into city coffers, while the rest would be divided into a group fund to help HDFCs with debt and another fund available to HDFC shareholders, who often can’t get loans from banks, he said.
“The point is to set up something that’s self-sustaining,” said Peebles, who thinks the task force plan takes too much control away from homeowners and that price caps could hurt buildings’ abilities to pay for needed work. “We should be the ones who develop our buildings and stop looking at the city to subsidize us."
Editor’s note: An earlier version incorrectly stated the tax breaks for HDFCs would expire in 2019. They actually are set to expire in 2029.
