Mutual Housing Associations: A Potential Solution To Slow Gentrification
It’s easy to assume that there is no way New York City can slow gentrification. The process of gentrification appears to have changed neighborhoods no one would have even imagined could become the expensive areas they are today. Numerous factors have contributed to the exponential rise in rents and property values: low taxes for developers, constant rezoning of low-income neighborhoods and manufacturing districts, and even tenant harassment serve as examples. In essence, most of these factors help either encourage speculation or are motivated by speculation. Rezoning of manufacturing districts to mixed-use districts shoot up property values, giving landlords of such buildings incentive to sell much higher than their purchase price, which will make for high rents of those mixed-use buildings. The potential of new, wealthier residents in a neighborhood may prompt a landlord to harass their low-income tenants to relocate in order to gain a larger profit from the building they own.
What are Mutual Housing Associations?
However, there are models that can be replicated in order to offset the process of gentrification. Mutual Housing Associations are a possible solution to slow gentrification where a restrictive sense of ownership is given to residents in order to prevent speculation and rising property values. Mutual Housing Associations are nonprofit corporations that provide affordable housing to community residents. Corporations usually develop housing with abandoned property, converted buildings like factories, or newly constructed houses. Whereas, MHAs are governed by a board of directors who are either residents of the buildings it owns or those who run the nonprofit also owns the MHA buildings. Residents become members of the MHA and may be given restrictive ownership of the property, with conditions that essentially prevent speculation. They may be able to sell their apartment, but for the same price they bought the unit, for example. MHAs operate and administer housing in different ways across the country, but in New York, there is one successful case of co-op conversion which can serve as a model to slow the process of gentrification.
“The model can still be replicated in neighborhoods like Far Rockaway and parts of South Queens, and parts of the Bronx where gentrification has not fully set in.”
Cooper Square Mutual Housing Association
One example of a successful MHA is the Cooper Square Mutual Housing Association (MHA). The Cooper Square MHA was founded by the Cooper Square Committee (CSC), who was re-tasked with redeveloping the Cooper Square Urban Renewal Area in the mid-1980s. The area, spanning six blocks in the Lower East Side, was to be demolished and replaced with low-income housing along with the relocation of residents by the request of the CSC in 1961. However, the CSC had a change of mind after the negative outcomes of such practices in other parts of the country a couple of decades later. The Revised Plan in 1986 called for the renovation of the to-be-demolished buildings within the six-block area, enlarging units and building full bathrooms for each unit.
The CSC also wanted to create “a multi-building cooperative in order to create an economy of scale to save money on fuel, insurance, supplies, and repairs. As permanently low-income housing, the apartments would be exempt from real estate taxes”. In order to finance the project, New York City Department of Housing Preservation and Development (HPD) both city and federal funds to renovate buildings, and donated them to the Cooper Square MHA, a nonprofit formed by the CSC in 1991 to manage the buildings . Over the course of the 1990s, the buildings designated for the MHA project underwent the City’s Uniform Land Use Review Procedure (ULURP). Eighteen buildings throughout the Lower East Side were approved, renovated, and sold to the MHA. Only one building, 89 East 3rd Street, took a more temporary approach. The building was entered into a Tenant Interim Lease (TIL) program with encouragement from the city, (Directory of NYC Housing Programs, NYU Furman Center).
The TIL program would convert the building to co-ops, meanwhile requiring rent restructuring and building management classes for its residents. When done, the tenants can buy their apartments for $250. However, in TIL buildings, tenants have the potential to be bought out prior to the full conversion which can slow down or even stop the process. They can also sell their units for a profit, which can kill the long-term goal of affordability. The building petitioned HPD to be allowed back into the program, with success. The tenants were relocated to other MHA buildings during renovations and sold by HPD to Cooper Square in 2008 .
By the 2010s, the MHA was finally ready to give its residents the opportunity to purchase their units. In 2012, the Cooper Square MHA “has scheduled about 280 co-op closings in 21 buildings during the first two weeks of December, comprising more than 80 percent of the association’s 327 apartments” (Anderson). Tenants purchased their apartments for $250, and can’t sell their apartments for significant profit. They can be sold for $250 to insider purchasers, and $1,800 for outside purchasers. They must sell the unit to the MHA first before it is transferred to the purchaser. The MHA rents out 24 ground-floor commercial spaces, which is an important source of funds (about 27%). The commercial tenants still pay a significantly reduced rent.
Strength, Weakness, Opportunity and Threat for MHAs in New York City
Overall, the history of the Cooper Square MHA explains a successful approach to non-speculative housing through the regulation of their units post co-op conversion. While this is an amazing method to preserve affordable housing, one must consider the state of New York in 2020 compared to the 20th century. The abandoned housing stock the CSC was able to acquire isn’t really there anymore, especially in a place like lower Manhattan. Luxury developments are usually the newly constructed housing, which is way more profitable to build than transferring ownership to MHAs. Barren land is scarce, expensive, and the cost to build housing on said land is much higher than decades before. New York City’s government, who was the City’s largest landlord in the 1970s and 1980s, sold many of its properties to spur development in the 1990s and 2000s. Regardless, the model can still be replicated in neighborhoods like Far Rockaway and parts of South Queens, and parts of the Bronx where gentrification has not fully set in. This may require a collaborative effort with the city and foundations willing to fund such non-speculative projects.
Born and raised in Brooklyn, New York and now residing in Far Rockaway, Queens, Sola Olosunde is a graduate student studying Urban Planning at Hunter College and is the winner of the Spring, 2020 Black + Urban's Sharing Solutions to Improve Our Spaces Initiative's Pilot Writing Contest. Sola is also a photographer and conducts historical research on New York City neighborhoods.