The Real Deal New York

Squatters Face Challenges as New Homeowners

New legal residents on Lower East Side contend with renovations, mortgage costs
By Eric Marx | September 01, 2003 11:56AM

In August of last year, when the city signed an agreement with squatters on the Lower East Side to give them legal ownership of 11 buildings for $1 each, it was considered a major victory for the squatter community.

Residents in 146 apartments, many who had helped fix up the scores of abandoned buildings that the city foreclosed on during the 1970s and 1980s while illegally living in them, were now legitimate homeowners.

Joining the ranks of apartment owners in the city has not been without its problems, however. Those who relied on their home repair skills to create their living space in the past, now must focus on the realities of mortgage payments and maintenance costs.

Under the agreement with the city, squatters who, for example, once voluntarily contributed $100 a month in building dues for a 700-square-foot, one-bedroom apartment in the East Village, will pay roughly $650 in combined mortgage and maintenance charges.

To be sure, the squatters are still getting a bargain by open market standards, where a comparable apartment in a co-op in the same increasingly gentrified area in Alphabet City would cost approximately $2,100 a month.

In addition to those payments, the squatters will become limited equity co-op shareholders only upon completing an estimated $5.5 million in renovations to be paid off in mortgage loans secured by the Urban Homesteading Assistance Board (UHAB), the non-profit developer that negotiated the deal between the city and the squatters.

But after living on a shoestring budget for so long, some squatters are concerned that they won t be able to come up with the monthly rents. Most are trying to limit expenses by doing the renovation work themselves and yet there is great concern among the squatters that they ll exceed their budgets or not complete the work within the two-year time frame required under the agreement.

“What s changed is that we now have accountability for what happens here,” said Josh, 28, who lives at 155 Avenue C, one of the younger and less organized squats where the residents are attempting to renovate the five-story, 16-unit building for under $100,000, a sum considerably less that UHAB s $484,000 estimate.

“A lot of people envy us but they wouldn t last a day because we exist with the bare minimum,” said Josh of a building that has one communal shower and toilet and, at the present moment, resembles a dank cave more than it does a home for 16 residents.

At 377 East 10th Street, one of the quieter, more well-established squats, Eric Rossi, 50, found a building that in 1989 was caving in on itself, its structural supports having been removed by vandals.

“We cleaned out the whole building and carted it out to a vacant lot on 11th Street and we demolished the whole inside of the building, installing new plumbing, roofing and air vents,” said Rossi, who s since become an interior renovations contractor.

Rossi, whose building recently suffered fire damage and is undergoing major reconstruction, believes he can bring the project in under UHAB s $423,500 estimated budget, but balks at UHAB s insistence on using its own contractors to fix the roof, which will increase costs.

Rossi also said he believes affordable housing could be made available to more New Yorkers under similar “land trust” agreements like the one reached with the squatters. “If a land trust can renovate a building and come out paying $400 and $500 a month rents, that to me is affordable, not the triple rents they re getting across the street.”

Under the agreement, the squatters can only sell to individuals or families making no more than 80 percent of the median income of New Yorkers: $45,200 for a family of three, for example. And for the next three years, sales are limited to between $7,000 and $9,000, depending on the size of the unit.

One enigma surrounding the deal between the squatters and the city is why it happened in the first place. The deal may set a precedent for other squatters after the city had tried to displace the squatters through three mayoral administrations, at times using tanks, helicopters and riot police to intimidate and remove them. Negotiations with the squatters began in 1999 during the Giuliani administration.

According to Carol Abrams of the Department of Housing, Preservation and Development, it was a pragmatic solution entered into with a partner that could deliver on the deal. “UHAB presented a proposal and the proposal was financially viable,” Abrams said.

“It s a unique situation,” added Abrams. “There are no parallels. I don t have buildings like that in Harlem. The parallel I would make is that local demand is huge.”

Despite the squatters reclaiming scores of apartments, the impact on the real estate market in the area will be negligible, said Andrew Heiberger, president and chairman of Citi Habitats. “Yes, it can impact the 5-story tenement building on Avenue D and 13th Street, but that s just one building on Avenue D and 13th Street,” he said. Heiberger believes neighborhoods like Harlem will become gentrified as soon as construction costs lessen or the economy improves.

There are perhaps hundreds of other squatters around the city, including in the Bronx, Brooklyn and Harlem, says Bertha Lewis, executive director of New York ACORN, a housing advocacy group.

Rossi said some people squat because there is a severe shortage of affordable housing in the city. The city has a $3 billion plan to preserve and create 65,500 units of affordable housing over the next five years for low, moderate and middle income New Yorkers, which may help put a dent in the problem.

Already the vacancy rate is down from 4.01 percent to 3.19 percent, reflecting the city s attempt to rehab all city-owned properties. Yet from 1996 to 1999 the number of doubled-up households increased from 203,000 to 221,000, according to city statistics.

Said Rossi: “There s a housing shortage and people are living out there, squatting. The city just doesn t know it.”

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