After the residents in a Bronx apartment joined forces in 2017 to resist the building’s deregulation, the effort grew to a scale that few of them believed possible.
Earlier this month, the landlord sold the building to a nonprofit helping the group convert it into a co-op — the first step on the path for the residents of 700 East 134th St. in Port Morris to home ownership.
But the road to this landmark moment for the group of South Bronx tenants was paved with uncertainty and struggle. A year ago, the tenants were still stuck in a legal battle with their landlord over whether or not the building was rent stabilized without a clear end in sight.
After real estate investor Jim Giddings bought the building for over $4 million in 2017 with the goal of turning it into market-rate housing and substantially increasing the rents, the tenants came together to contest his attempt to formally overturn the building’s rent stabilized status.
The process of proving their case to the state agency that oversees rent-stabilized properties dragged on for years. But instead of getting discouraged, the tenants decided on a new, more ambitious tactic: to put together financing for a bid to purchase the building themselves. In 2019, Urban Homesteading Assistance Board (UHAB), a nonprofit that specializes in supporting resident-controlled housing, joined the group’s efforts to turn the building into cooperatively owned housing.
The tenants’ effort represents a remarkably strong example of renter organization, which was buoyed in some ways by the pressures of the pandemic.
In the grand scheme of New York City real estate, the purchase of a 21-unit building is a small-scale tenant victory, but it comes at a pertinent time in the world of New York state housing law. As part of a suite of bills under the Housing Justice for All platform, progressive lawmakers are hoping to pass legislation this year that would give tenants priority to buy their landlord’s building in the case that the property goes up for sale.
“I think everybody’s very happy to have the opportunity to be more in control of their life,” said one of the building’s lead organizers Courtland Hankins.
Fight to stay rent stabilized
When Hankins moved into the building in 2010, he had no idea it was rent stabilized. It was owned by a real estate company called First Bronx LLC, which renovated the property shortly after buying it in 2005. The last state records on file show, however, that the building was rent regulated at the time that First Bronx bought it, and don’t indicate that status has since changed.
Hankins noticed that First Bronx did not update the leases when they expired, which he thought was fishy, but he didn’t raise any concerns because the landlord never increased the rent during that period. It wasn’t until shortly before First Bronx sold the building that the tenants realized it was rent stabilized after a tenant received paperwork that indicated its status in the process of acquiring housing vouchers.
A rent-stabilized property can be deregulated if the landlord is able to prove that he or she invested in a substantial rehabilitation that meets certain requirements as determined by state regulators. When Giddings bought the building in 2017, he sought to do just that based on improvements that the previous landlord had made to the property.
A month after Giddings formalized his deed for the building in March, the tenants received a packet from the Division of Housing and Community Renewal (DHCR), the state agency overseeing rent stabilization, saying that he had begun the deregulation process.
Giddings told some residents who were paying in the range of $1,000 to $1,150 a month that he intended to increase their rent by as much as $500, and charged anyone who moved into the building significantly higher than the rent stabilized rate, said Hankins, even though the DHCR had not approved Giddings’ request to regulate the property.
In response, the residents connected with legal counsel from advocacy group TakeRoot Justice to challenge the landlord’s claim.
That counterclaim initiated a paperwork battle, with both tenants and landlord arguing appealing to the state regulator, which lasted through the pandemic. To this day, the DHCR still has not yielded a ruling.
In 2018, tenants began working on a second tactic to avoid future rent increases: they wanted to buy the building. At the behest of some of the legal advocates they had been working with, they contacted UHAB and began to explore the possibility of converting the building to a co-op, a legal structure of ownership that gives tenants the power to run and manage the building.
At first, the idea was met with disbelief both among tenants who thought it was far-fetched and the landlord who said it was a non-starter. Hankins recalled first bringing up the prospect casually with Giddings: “He was definitely like, ‘No, that’s not gonna happen.”
But time wore on both tenants and the landlord built their respective cases on the issue of the building’s rent stabilization status. Giddings submitted documentation to the state regulator showing that the building had been substantially rehabilitated under the previous landlord. The tenants’ lawyers argued against that.
The process continued for years, and pressures mounted on the landlord. COVID-19 hit, followed by the eviction moratorium and a drop in the real estate market. Several tenants lost their jobs and stopped being able to pay rent.
Hankins said that Giddings reached out to tenants individually with offers to preserve their rents if they dropped the DHCR case, but they refused. Through the turmoil, the tenants kept working with UHAB to come up with a bid to purchase the building.
“I don’t think [Giddings] expected us to really put up the fight that we did, you know? It became troublesome — he would voice that to me — ‘This is too much trouble than it’s worth,’” Hankins said.
Opportunity Arises
In addition to ratcheting up tensions with Giddings, the pandemic impacted the tenant’s plan to purchase the building by making local government funding more scarce. In a statement to amNY, Giddings wrote that the tenants’ level of organization “wore him down” to the point where he quietly put the building on the market in 2020, but at that point the tenants did not have the financing in place, said Arielle Hersh, a UHAB project associate who worked on the case.
Finally, a breakthrough came after UHAB tracked down a loan from a private family foundation to cover the acquisition of the building and came to Giddings with an offer last March.
In June 2021, the landlord signed a sale agreement. After waiting to get the government approvals, UHAB formally took over the deed for $2.6 million Feb. 7. The nonprofit will act as an interim owner while the residents prepare to take cooperative ownership over the next year.
“They are an interesting group of individuals and I wish them the best,” wrote Giddings.
Tenants expect to pay on average about $1,300 in monthly co-op fees, under an arrangement they will establish for themselves. While that’s a bump in what Hankins has been paying, he said he sees the long-term benefit of a stable rent and ownership shares in his apartment as a level of security that he previously didn’t think was possible for him.
“No one from the outside can come in and upset our apple cart,” he said.
Beyond the level of financial security ownership brings, fellow tenant Joshua Flores talked about how the experience of organizing produced a newfound sense of community with the neighbors he found himself engaging within meetings and lengthy email threads.
“There’s a family connection to other people that aren’t family. That’s how a lot of this stuff has impacted me — to that degree,” said Flores.
