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The Law As I See It. Westbeth Must Be the Center of Affordable Housing

The story of Westbeth could fill up a volume. The Landmarks Preservation Commission’s designation of Westbeth as a landmark in 2011 is twenty-four single spaced pages long. It is hard to summarize, but its history and restrictions put the current controversy into context.

Westbeth was built in stages. The first of its buildings was built in 1860 as Hook’s Steam Powered Factory Building, and is one of the few waterfront industrial buildings of its era left. In 1903 Western Electric built an office and factory building, which was renamed as Bell Telephone Laboratories in 1925. Western abandoned the property in 1966.

Roger Stevens, the first Chairman of the National Endowment for the Arts, conceived of the complex as the pilot project of subsidized, affordable housing for artists. His vision was substantially supported by the J.M. Kaplan Fund charity. Between 1968 and 1970, the then-unknown architect Richard Meier designed and shaped 383 residential apartments, as well as a gallery, performance, and commercial spaces.

The JM Kaplan Fund and the National Endowment for the Arts each contributed $1.5 million to the construction. In June 1968, the property was transferred from Bell Labs to the Westbeth Housing Corp. In the arrangement that followed an $11.5% mortgage from Bankers Trust was established, at 3% a year, guaranteed by the Federal Housing Administration (FHA), which was the first use of FHA’s moderate income housing program for artist’s housing. The Housing Corp also got a 70% tax status which was increased to 100% in 1982.

In 1972 the Certificate of Incorporation of Westbeth Housing Corp was amended to state that “[t]his company has been organized exclusively to develop on a non-profit basis a housing project for artists of low and moderate income where no adequate housing exists for such persons… [T]he selection of artists to be provided with housing in the project will be made only with the recommendation of an appropriate outside group of leading citizens established to pass on applications for such housing.”

As planned, The Kaplan Fund withdrew its involvement after Westbeth’s completion, turning over control to a Board of Directors in 1973. Shortly thereafter a 17.5% rent increase led to a rent strike. The mortgage was assumed by the US Department of Housing and Urban Development in 1975. This was followed by an unsuccessful (and contentious) effort to co-op the complex. In 2009 the NYC Housing Development Corporation acquired the mortgage and the tax abatement was extended another forty years.

It is generally assumed that Westbeth has only the current Rent Stabilization Law to control its rent increases and the Residents Council has asserted that rents are being raised at an alarming rate—so much so that artists of low and moderate income cannot afford to live there.

But in my view, the June 30, 2009 Regulatory Agreement with HUD, which came along with the 2009 mortgage, seems to provide a vehicle for dealing with the problem. The key paragraph is Paragraph 6, concerning the application of the Rent Stabilization Law. That paragraph reads:

“Sponsor shall not utilize any exemption or exclusion from any requirement of the Rent Stabilization Code to which the Sponsor might otherwise be or become entitled with respect to one or more units, including, but not limited to, any exemption or exclusion from the rent limits, renewed lease requirements, or other provisions of the Rent Stabilization Code due to (i) [rent level], (ii) [tenant income], (iii) the nature of the tenant, or (iv) any other factor. Notwithstanding anything contained herein or in the Code to the contrary, the additional allowance, if any, for leases on vacant apartments shall not exceed the lesser of the allowance permitted under the Code or five (5%) percent.”

I read this as an absolute prohibition on a rent increase of greater than 5%. I believe it also prohibits warehousing of apartments or their use as office/storage space.

The big issue is enforcement—only the City has the right to seek a remedy; and to date they haven’t taken any action

The second big issue is information. As the articles in this issue discuss, the Residents Council is having a heck of a time determining exactly what is going on. But there is no question that Westbeth is supposed to remain a haven for affordable artist housing—and by affordable I don’t mean “affordable by West Village standards.”

Arthur Z. Schwartz is the Male Democratic District Leader for Greenwich Village and the President of Advocates for Justice, a public interest legal foundation which is providing legal advice to Westbeth tenants.

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