The Little Co-op That Could (Remain Affordable)

It doesn’t look like much from the outside. Just another six-story tenement walkup on the Lower East Side of Manhattan. But this modest building on Rivington Street is home to 26 shareholders who have remained stubbornly – almost unfashionably – faithful to the cardinal tenets of affordable housing.

The five-member board continues to impose strict income limits on potential shareholders; it rigorously screens applicants in an effort to preserve the building’s working-class roots; it discourages subletting; and while there is no cap on resale prices, there is a 30 percent flip tax, which has both deterred speculators and allowed the board to improve the building’s physical condition while avoiding assessments and big maintenance increases.

“I think everyone in the building is on board with keeping this place affordable,” says Peter Ciaramella, a real estate agent who moved in five years ago and was elected board vice president in 2014. “There have been maybe two or three shareholders who wanted to get rid of HDFC. They’d been here a long time, they paid their dues, and they wanted to cash out. They’re gone.”

He’s referring to the Housing Development Fund Corporation, which helped convert the Rivington Street building into a limited-income co-op in 1990. Back then, no one was talking about cashing in: the neighborhood was peppered with drug dealers, abandoned buildings, and other emblems of urban blight. But as New York real estate values have soared, oversight of these “affordable” co-ops – including the crucial cap on resale prices – has slackened to the point where some HDFC co-ops have recently sold for more than $1 million. In response to the resulting disappearance of affordable housing units, the City Council is now considering ways to tighten the running of HDFCs, including the enforcement of strict income limits and resale price caps.

While that debate rages, the Rivington Street co-op quietly soldiers on. “It’s important that this building is self-managed,” says Ray Sage, an electrician who has served on the board since he arrived in 2000. Self-management is just one of the strategies that cuts costs and helps keep the building affordable, he adds.

Another key to affordability is the 30-percent flip tax. “The flip tax built up something this building never had before – a reserve fund,” says Sage. The reserves, along with a low-interest $650,000 city loan and a J-51 tax abatement that roughly matched the loan, were added boosts to the co-op’s success. The money has allowed the board to tackle some major capital projects.

Despite all these admirable achievements, there’s still an elephant in the room: the lack of a cap on resale prices for apartments. Some units, purchased for $250 in the bad old days, are now selling in the $400,000 range.

Ciaramella, for one, fears that today’s insane prices could spell doom for affordable housing. “I think the HDFCs are going to melt away,” he says. “A lot of people just want to cash in.”

But this co-op board’s president, who spoke on condition of anonymity, is a bit more sanguine about the future of HDFCs. “These buildings are like a gift,” he says. “If an HDFC co-op is run properly, it makes it possible for people of limited means to live in New York City. But it’s a fragile ecosystem that needs to be respected, not plundered. I think we have an obligation to try to maintain that. Affordable housing can be done. We’re proving it.”