By James Fergusson
In the battle to preserve affordable housing in New York City, few buildings have attracted as much attention as 1520 Sedgwick Ave.
The 18-story high rise, located in the Morris Heights section of the Bronx about seven miles from midtown Manhattan, was purchased in 2008 by a group of private equity investors. Any hopes the new landlord may have had of turning a profit, however, were dashed by the financial meltdown and strong rent regulation laws. Tenants soon began to notice a drop-off in services. Housing violations crept up. Mortgage payments were missed. The building, tenants claimed, was being neglected.
It is, in many ways, a familiar story. Scores of apartment buildings in the Bronx and other low-income areas of the city previously ignored by real-estate investors have recently suffered similar fates. (See Dina Levy’s Fighting Predatory Equity.)
But 1520 stood apart—and continues to stand apart—because of what took place in its first-floor recreation room nearly 40 years ago.
DJ Kool Herc and the Birth of Hip-Hop
On weekends, tour buses stop outside 1520 Sedgwick Ave. Tourists, cameras in hand, emerge to snap photos of a tall red-brick building next to the Major Deegan Expressway.
This is because it was here, on August 11, 1973, that a Jamaican-born teenage DJ by the name of Clive Campbell began experimenting with a new type of music at a back-to-school party organized by his sister Cindy. Using two turntables, DJ Kool Herc, as he called himself, repeated and isolated the “breaks” in funk records, giving shout-outs—an early form of rapping—over the music. The crowd responded, and in time he graduated to performing in local parks and nightclubs. In this way, 1520 became known as a birthplace—the birthplace, to some—of hip-hop music.
“If you can think back to the ‘70s, New York City was practically bankrupt,” said Cindy Campbell by phone recently. “The Bronx is burning, what good could come out of the Bronx? [The city] wasn’t really focusing on families there. There was a void and my brother and I filled that void.”
The Campbells eventually moved to Long Island, but they stayed in touch with their former neighbors, some of whom still call the building home. And so, when a tenant, fearful of rising rents, reached out to Cindy Campbell in 2007, she was eager to help.
“My parents were able to raise a family in that building and were able to move on and purchase a house because they lived in an affordable housing complex,” she said. “That’s the whole idea.”
Tenants had received letters in the mail hinting at big changes to come. The then-landlord, BSR Management, wanted to pull the property from the state’s Mitchell-Lama program—under which tax incentives, low-interest loans, and government subsidies are given to landlords in return for keeping rents low—and then sell it.
Landlords can typically leave the program after 20 years, providing they pay off the mortgage. “Of the nearly 200 Mitchell-Lama rental properties ever developed in New York City, about half are no longer in the program,” says Vincent Reina of the Furman Center for Real Estate and Urban Policy. “The majority of those opt-outs happened between 2002 and 2007, due to a mixture of factors, including the expiration of affordability restrictions, the belief that there was a considerable potential to mark up rents, and the availability of capital.”
The Urban Homesteading Assistance Board (UHAB), a nonprofit organization and advocacy group that helps renters in New York City become homeowners through limited-equity cooperatives, and Tenants and Neighbors, a tenants’ rights organization, began advising 1520’s residents. The building was the subject of a New York Times article headlined: Will Gentrification Spoil the Birthplace of Hip-Hop?
There were concerns, too, about who was eyeing the property. A group of real-estate investors, including the well-known Mark Karasick, were willing to pay a hefty price. Dina Levy, UHAB’s director of organizing and policy, was perplexed by their interest. “Mathematically, it didn’t pencil out,” she said. On leaving Mitchell-Lama, the building would fall under rent stabilization laws, and to make a profit, the investors would have to somehow skirt these laws, she said. Even then, what difference would it make? UHAB had conducted an analysis of other buildings in the area. They found the price difference between rent-regulated apartments and market-rate ones negligible. “Even if you could theoretically get it out of rent regulation, the market was not really bearing a much higher rent in that neighborhood,” Levy said.
That July, housing advocates and tenants held a press conference in the building’s recreation room, where Campbell had played all those years before, to draw attention to their efforts to stop the buy-out and subsequent sale. Campbell and his sister showed up, as did several other early hip-hop pioneers, including Afrika Bambaataa. Rep. Jose Serrano, whose district includes Morris Heights, and New York Sen. Charles Schumer were also present to show their support. The room was abuzz with excitement.
“Elvis has Graceland; we have here,” Clive Campbell told the crowd, to whoops of “1520, 1520.”
The state had recently determined that 1520 was eligible for the state and national registers of historic places, despite the building being less than 50 years old (the usual requirement). Landmark status protects the building, but tenant advocates hoped it could also stall the buy-out and protect its occupants. None of this was possible, however, without the owner’s consent, which wasn’t forthcoming.
The tenants and their supporters refocused their energy. With funding from the city, they and UHAB looked at buying the building themselves and turning it into an affordable cooperative. BSR Management, the original owners, already had a contract with Karasick, who had previously made headlines for buying and then selling the famed Bank of America Center in San Francisco, and so UHAB had to negotiate with him directly. Levy said Karasick was willing to step aside, but only if they paid an astronomical price for the building, earning him millions of dollars in the process. “It was too hard a pill for everyone to swallow,” she said.
In 2008, in what was described as a highly unusual move, the city’s Department of Housing Preservation and Development (HPD) tried to block the sale. The agency was concerned about Karasick’s financing and the building’s future. But their plan failed. That fall BSR Management was able to exit the Mitchell-Lama program and sell the building to Karasick and his fellow investors. They paid approximately $9 million, taking a $7 million-plus mortgage with Sovereign Bank.
Building Conditions Deteriorate
Geraldine Davis moved into 1520 Sedgwick in the ‘70s, soon after it was built. “This place was like a hotel. It was beautiful,” she said. But pride has given way to anger in recent times. When Karasick took over, the floors in the building’s lobby and corridors were rarely cleaned, Davis says, and heat and hot water outages became more common. The two elevators—troublesome for years—began to break down more regularly and stay broken for weeks at a time. The management company and its staff were slow to make repairs, Davis added, and the lock on the front door was often broken, allowing strangers in. “There have been people sleeping in the stairwells,” she said.
Sitting in her living room one recent evening, the hum of the Major Deegan Expressway audible below, Gloria Robinson, the building’s tenants association president, echoed many of Davis’s complaints. Contacting management about a problem in your apartment was like “talking to the wind,” she said.
Several tenants, sick of the neglect, moved out, but Robinson stayed put.
“I like it right here in the Bronx,” she said. “And I like this building and my apartment, I really do. ... If you like where you live, you’re not going to go anywhere. You just hope there’s some improvement, and you keep fighting for it.”
In a Times article published in January 2010, the director of the company that controls the management firm brushed off tenants’ concerns, insisting that the building was “immaculate at all times.” But in a little over a year, the number of housing code violations at 1520 Sedgwick recorded by HPD shot up from 82 to 598, according to the article.
“It’s sort of amazing how quickly this all panned out exactly as we feared,” Levy said. “We met Karasick before . . . and begged him not to do this deal. We said ‘We don’t understand your financing, we don’t understand your numbers,’ and he said, ‘I know what I’m doing.’ He’s a billionaire and we’re just these organizers from UHAB, and you start to think maybe he does know what he’s doing. But he didn’t.”
Hope for a Brighter Future?
Last fall, with Karasick missing mortgage payments, a new group, Workforce Housing Advisors and its Boston-based partner, Winn-Residential, bought the building’s mortgage for $6.2 million, using a $5.6 million loan from the city. The loan was financed by a new $750 million city program designed to maintain physically and financially strained buildings and help stabilize neighborhoods.
“We are putting our financial power to work with owners and lenders to restructure buildings’ financing to a sustainable level and in doing so preserving and keeping affordable our city’s housing stock,” said then-HPD Commissioner Rafael E. Cestero in a statement at the time. The New York City Council, meanwhile, committed $3 million to help with improvements inside 1520.
Workforce, whose staff have close ties to HPD and the city’s Housing Development Corporation (HDC), immediately foreclosed on the building, and a receiver has taken over the day-to-day operations. John A. Crotty, a Workforce founding member and former HDC employee, said the organization is committed to affordable housing.
“When you work with the people who represent these buildings, who live in these buildings, and come from these buildings . . . you understand that these are people and homes,” Crotty said. “When you’re a private equity person, these are financial assets that float around, and do well or don’t do well, and whatever happens, happens. It totally ignores the human consequence of the action.”
A foreclosure auction will likely be held this year. If there’s no bid higher than what Workforce is owed, Workforce could soon own the building.
In a statement, Schumer said the news was a “huge victory for Sedgwick residents that will serve as a model for preserving affordable housing throughout New York City.” He added: “The message here is clear: residents should not be used as pawns for predatory equity investors to make quick profits.” (The building wasn’t Karasick’s only Bronx acquisition; in 2007 his group purchased Robert Fulton Terrace and Fordham Towers for $44 million. Both had just lost their Mitchell-Lama status and both have now been foreclosed on.)
The tenants themselves, disappointed so many times before, remain cautious. “Everything is just a bit up in the air,” Robinson said, noting that the management office downstairs is still empty. “I’m just hoping there will be some improvements soon, real soon.”
Davis was blunter; “We really don’t know what’s happening with the building. Ain’t nobody telling us right now.”
Tenants say they’ve already had discussions with Workforce about the possibility of turning 1520 into an affordable cooperative down the road, with UHAB’s help and guidance.
Serrano says that he’ll support whatever decision they make, and stressed how important it was that they stay organized. But he’s hopeful for a positive outcome: “Historically, the building played an important role in hip-hop and now it may have [also] played a role in the preservation of good buildings.”
