Why Renters Fought NYC’s Push for Ownership

From The Long Crisis by Benjamin Holtzman. Copyright © 2021 by Benjamin Holtzman and published by Oxford University Press. All rights reserved.

 
Shortly before Christmas in 1969, an anonymous tenant of 360 East 72nd Street wrote to Mayor John Lindsay in a fury.¹ For him and the rent-protected tenants in his building, the security and stability of home had been upended by a surprising proposal they had recently received from their landlord: he wanted to convert the building to a cooperative by selling each tenant their apartment. These middle-class New Yorkers, however, wanted no part in owning their home.

The conversion plan, the letter writer claimed, was merely a way for the landlord to “nullify” government-enforced rent protections, while making an “extravagant and unconscionable” profit. Especially alarming was that tenants who did not buy risked eviction. The author believed that these kinds of landlord-initiated cooperative conversions would result in the end of New York’s middle class. Not wanting to be burdened by ownership, losing the security of rent protections, and facing eviction in a tight housing market, these residents would be forced to flee the city. “IT IS IMMORAL,” the author wrote, “for landlords of the city to drive the middle class out of New York and leave it a haven for the very rich and a jungle for the very poor.”

New York’s landlords and real estate boosters saw the matter of converting middle-income rental buildings into cooperatives quite differently. To Rexford E. Tompkins, for instance—president of the Real Estate Board of New York (REBNY), the industry’s most important trade organization, and head of a leading real estate firm, Brown Harris Stevens—cooperative conversions would address several of the most important problems facing the city. It was true that conversions would allow landlords to escape the rent regulation system. But in seeking to convert their buildings they would underwrite improvements throughout the city to induce tenants into assuming ownership, enhancing the city’s dilapidating housing stock.

Tompkins also believed cooperative conversions would in fact help retain the middle class. Nearly 900,000 white residents left the city during the 1960s, mostly for its surrounding suburbs. Without homeownership opportunities, men like Tompkins believed, the middle class would continue to abandon New York.

But the tenants of 360 East 72nd Street were not alone in their opposition to conversions. “Doesn’t every New Yorker really want to own a co-op?” Louis Smadbeck, president of the realty concern Wm. A. White & Sons, asked a crowd of tenants at a 1972 hearing on conversions. His question provoked only “a chorus of noes.”²

For over a decade beginning in the late 1960s, conversions became fraught terrain with the stakes involving nothing less than people’s homes. The contest over conversions involved two competing ideas of how best to secure the city’s future.

On one side were landlords and real estate leaders who saw conversions as an opportunity to dismantle the rent regulation system. Joining them were politicians, heads of civic associations, and business leaders who viewed increased homeownership as the means to improve the housing stock and expand the middle class.

On the other stood tenants who organized within and across buildings to assert the opposite: conversions would lead to the eradication of the middle class, in no small measure by decimating the rent regulations that kept housing costs within its reach.

“Tenant power!” Helmsley jeered. “If they want tenant power, let them own the building.”

These battles over the potential conversion of rent-regulated buildings would play out across the city in the 1970s. One of the fiercest occurred in Parkchester, the largest rental apartment complex in the nation, with 12,270 rent-controlled units on over 125 acres in the Bronx.

The complex had been developed by the mammoth Metropolitan Life Insurance Company (MetLife), which opened Parkchester in 1942 for “the middle class who longed for the affordability and community life of a small town, but couldn’t bring themselves to abandon the convenience of urban life,” as historian Samuel Zipp described.³

In 1968, however, MetLife sold Parkchester to Harry Helmsley, who saw in the complex the potential for profit but also a very different vision of how it could promote public good. Achieving both, Helmsley believed, would come only through converting Parkchester into owner-occupied units. Believing both in the importance of homeownership and that the economic incentives for landlords to maintain their buildings had diminished, Helmsley proclaimed that “the exodus from the city will be stanched” only through conversions. “I would hope,” Helmsley continued, “that in 20 years landlords would be a rarity in New York, that everyone would own his own home.”⁴

Helmsley’s tenants by and large wanted no part in owning their apartments and fought the conversion with an unprecedented fervor. Residents formed the Parkchester Defense Fund, which strategized with other tenant coalitions, protested outside of Helmsley’s home, conducted their own surveys of apartments and buildings, and hired lawyers to file suit against Helmsley, all “at tremendous financial sacrifice to our beleaguered neighbors.”⁵ They believed that Helmsley was selling them an “inferior product”: a thirty-two year-old building with faulty elevators, lax security, and no wiring for air conditioning. That Helmsley pledged not to evict any tenants was of little comfort. “If Helmsley succeeds with this and I have to call him to fix a broken pipe,” one tenant believed, “I’ll be at the mercy of a man who knows the sooner he can get me the hell out, the sooner he can sell my apartment.”⁶

Helmsley likely underestimated how great a foe he had in lifetime Parkchester resident John Dearie. “Tall, articulate, and movie-star handsome,” Dearie capitalized on his overwhelming support in Parkchester by running for a seat in the State Assembly in 1973, making conversions and tenant protections central issues in his campaign.⁷ Once elected, he worked quickly to forge contacts and support and used his position to broadcast tenants’ opposition in the press. Dearie worked to elevate tenants’ collective political strength by formulating legislation to give them more leverage in a proposed conversion.

The real estate industry vehemently opposed Dearie’s bill. Many argued that it interfered with property rights and due process requirements, making it unconstitutional. “I believe the right to own property and invest in it,” one owner wrote to Governor Malcolm Wilson, “presupposes the right to dispose of it.”⁸ The bill essentially transferred “the powers of basic property ownership rights” to the tenant. “Why should the economic future of an owner’s investment be controlled by people who do not have an equity position in the project?” another flummoxed landlord asked. Owners claimed that by giving tenants too great of a hand in the negotiating process, the bill removed any economic inventive for landlords to convert their buildings.

Still, the bill passed, enacting Dearie’s law for a two-year period. Attorney General Louis Lefkowitz blocked the conversion plans for Parkchester, determining that Helmsley’s plan to offer vacated apartments for sale violated the new law, as he had not yet secured the newly required approval of 35 percent of existing tenants. The law also caused Helmsley to delay his conversion plans for his other recently purchased complexes.⁹ “Tenant power!” Helmsley jeered. “If they want tenant power, let them own the building.”¹⁰

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Despite how vehemently middle-income tenants opposed conversion, it was Helmsley’s vision that would triumph over the 1980s and 1990s. Tenant opposition facilitated legal changes and softer landlord tactics like noneviction plans and insider pricing that ameliorated some of the most objectionable aspects of conversions. Ambitious early converters rose to proclaim that conversions had benefited them and produced significant profit. And a rising real estate market—fueled in part by conversions—increasingly made purchasing one’s home look like an economic opportunity worth pursuing, even within a city that had only recently been in financial crisis.

Indeed, by the 1980s, middle-class tenants still organized in great numbers in response to the proposed conversions of their buildings. Increasingly, however, they did so not to block the conversion, but to win as lucrative a deal for themselves as possible. As renters became owners and neighbors became investors, refrains common among those who ferociously battled conversions in the 1970s—such as the importance of preserving rent regulations for retaining moderate and middle-income residents—diminished.

New York would remain largely a city of renters. But the growth of homeownership contributed to a restructuring of the built environment and economic composition of the city. It also helped facilitate what had for decades been a politically untenable goal of the real estate industry: diminishing the rent-regulated status of much of rental housing. In so doing, homeownership compounded the shift away from an era of state intervention and regulation, and toward one of “free” markets and privatization.

Indeed, the changing attitude toward apartment ownership, a new mayor willing to privilege real estate development, and the reinvestment of capital by the real estate industry would finally lead to the “revolution in real estate” observers sensed when Helmsley made his initial Parkchester offering in the early 1970s. It was a transformation in which real estate emerged from crisis and regained its place as the leading edge of the economy, with a growing presence of affluent apartment owners able—and eager—to shape city life.