From the Brink to the Best

On the verge of bankruptcy, a Bronx co-op’s residents take over. We’re talking miracle time.

When Radames Revilla needed a place to live after his divorce, he wasn’t looking for fancy – he was looking for cheap. When he looked at Cloverleaf Towers in the Soundview section of the Bronx, he liked the rent and the way the building was managed and he moved in.

That was 21 years ago.

Today, Revilla’s one-bedroom apartment is now a co-op, worth about $82,000, and Revilla is president of the board. Not bad for a unit for which he paid less than $2,000 in 2007. He has another reason to feel satisfied, however: the 20-story building, located at 920 Metcalf Avenue, is considered the star in the firmament of the city’s affordable cooperatives by the nonprofit Urban Homesteading Assistance Board (UHAB) – which named Cloverleaf Towers the “Co-op of the Year” this past November after working with building tenants to help them transform their financially strapped rental into a first-rate cooperative.

So why does Cloverleaf stand out? First, for its size. While most of the 1,000 co-ops UHAB works with are 20 to 30 units, Cloverleaf weighs in at an impressive 239 units. Then it’s the way the building is managed by a five-member board that is “very organized, very committed, very democratic,” according to Fernando Alarcon, associate director of Co-op Preservation for UHAB. “They have an annual election, financial audit, produce a budget forecasting expenses and repairs,” all things that co-ops are supposed to have, but are not necessarily a given in an affordable-income building. The board is “very professional,” says Alarcon.

That is high praise when you consider that the building started life as a Mitchell-Lama rental in the 1960s and went into foreclosure in 1981 when the owners defaulted. The building was taken over by the city under the auspices of the Department of Housing Preservation and Development (HPD), which managed it in tandem with the tenant association. It was about to be sold in 2000 when a group of tenants contacted the UHAB and asked for help – they wanted to buy the building themselves.

“When the building was put up for sale,” recalls Robert Bennett, currently the vice president. “We had to make a choice whether or not we wanted a landlord coming and raising the rents and doing what they wanted us to do, versus us being able to have a say so in what is done. And the choice was easy to make.”

As the UHAB worked with the Cloverleaf Tenants’ Association, the building became a Housing Development Fund Corporation (HDFC), one of several types of affordable-income cooperatives either self-managed with the help of UHAB or with aid from other nonprofits dedicated to keeping affordable housing available in the city.

While there are different rules regarding purchasing a unit in a UHAB property, usually a potential purchaser can earn no more than 50 percent of the area’s median income. In the case of Cloverleaf, a single purchaser could be earning no more than $42,000 in order to qualify as a buyer, unless he or she was already living in the building. When Cloverleaf’s units were finally sold, the prices ranged from $2,000 to $3,000.

UHAB worked with the building intensively on two fronts – first to educate all the tenants about the responsibilities of being a homeowner and, second, to negotiate with the city over the price. With a $3 million loan from the National Cooperative Bank, the tenant association paid $2 million for the building in 2004, and put another $1 million into upgrading the building.

There was a lot to upgrade, recalls Josh Koppel, president of HSC Management, which runs the building. There were nuts and bolts issues: the valves on the boiler had never been maintained, so the entire boiler had to be replaced. Then there were the more difficult issues, such as cracking down on unnecessary overtime and building supply expenses. Koppel introduced new tracking software that allows residents to file a work order online and find out its progress and, at the same time, controls purchases by accounting for all spending on the building’s maintenance. To improve collections, Koppel updated his management company’s software to allow residents to pay online through direct deposit, which has dramatically increased the timeliness of payments.

While it all runs “like a charm” now, Koppel says the transition from rental to co-op was hardly seamless. Standing in the way was a super who had overseen the building for 43 years and was resistant to the improvements that the board wanted to instigate.

“This was a person who came to work in a suit and sat at his desk and read the paper all day. He thought he was the Godfather,” notes Koppel. “He was bringing in vendors we didn’t need,” and failing to do basic maintenance. In one instance, that cost the building $100,000. The super had failed to do rudimentary maintenance on the boiler, and it had to be replaced. “We had to replace valves at $5,000 to $6,000 a pop – all you had to do was open and close them once a year.” The super “never did those things, so we ended up having to replace them all.”

After a protracted fight with the union, Local 32BJ, the building offered the super a settlement, he left, and he was replaced by Victor Perez. Morale among the remaining staff has improved considerably, according to Koppel, in large part because the porters and maintenance men are no longer fighting over who got the plum overtime assignments.

“The first six months to a year were really, really tough,” recalls Revilla, the board president. After the tenant association filed the paperwork for the building to become a co-op, and tenants began purchasing the apartments, “there were a ton of issues,” he adds. There was Local Law 11 work (roof and façade repointing that needed to be done, rehab on the interior of the building), as well as other money matters (employees milking the payroll, exorbitant fees being paid for supplies).

Working hand in hand with the new management company, HSC, the new co-op board started to swing the ship of state around. But it took lots of work – meetings among the board members and the tenants, constant tracking of work orders, discussions with UHAB and with HPD. HPD had, in fact, promised to help rehabilitate the building but was dragging its feet on paying for the improvements.

Just as important was changing the renter mentality among the tenants. That took a lot of time. Says Alarcon: “Usually the transition from tenant to owner focuses on what you pay, what is rent, what is maintenance, why if we are an owner we pay a different amount.” It was harder to explain to people what it meant to “be an owner and a participant in a co-op. It took time for the culture of the building to change.”

“The change was to convey the understanding and the message that it’s all on us,” explains Revilla. “The first six months to a year was really, really tough, changing the thinking of the residents. We were meeting [with tenants] maybe twice a month, saying, ‘Listen, there’s no more city [to help], no more rent-stabilized [apartments]. We have to turn this around.” And at the November 22 awards ceremony hosted by UHAB – during its own 35th anniversary as a nonprofit helping people buy affordable housing – Revilla and his board members and the new minted cooperators were recognized for their hard work and endurance in turning Cloverleaf into a model of affordable-housing in the city.

Housing 239 families as “diverse as the city’s population,” Cloverleaf Tower HDFC “is a true snapshot of New York City,” UHAB’s president Andrew Reicher said in the organization’s winter 2010 newsletter. With its two parking lots, modern laundry room, upgraded playroom, and soon-to be updated community room, Cloverleaf Tower offers amenities that can be found in any of the city’s nicest co-ops, all while remaining a “truly affordable housing cooperative.”

**HABITAT SIDEBAR**

Success Route: the Cloverleaf Path

• Crack down on unnecessary overtime and building supply expenses. Cloverleaf introduced new tracking software that allowed residents to file a work order online and find out its progress. The system also controls purchases by accounting for all spending on the building’s maintenance. Each month, the board president and treasurer are given a copy of the bank reconciliation statements, a copy of the general ledger, and all invoices paid out that month.

• Improve collections. You should look into software that allows residents to pay online through direct deposit, which, at Cloverleaf, has dramatically increased the timeliness of payments.

• Don’t tolerate incompetence. If your superintendent resists necessary change, create a paper trail so you can go to the union and get him dismissed. After Cloverleaf did that, morale among the staff improved considerably.

• Change the mentality among the residents/owners. The transition from tenant to owner focuses on basic concepts alien to renters: what is maintenance? Why, for instance, if you are an owner do you pay a different amount than a renter? It can also be difficult to translate the concept of shares and how they work. At Cloverleaf, it took hundreds of meetings, with large and small groups, explaining to people what it meant to be an owner and a participant in a co-op. It took time for the culture of the building to change. The mentality is, “What is the board going to do for us?” The change should convey the understanding and the message that there is no us and them. It’s now all “us.” – RF