CHAPTER II CO-OP CITY: COOPERATIVE HOUSING IN THE NEW YORK REGION (Affordable, Not-for-Profit and Non-Speculative) COOPERATION Cooperation means concert for the diffusion of wealth. It leaves nobody out who helps to produce it. It touches no man's fortune, it seeks no plunder. It causes no disturbance to society. It contemplates no violence. It subverts no order. It accepts no gift nor asks any favor. It keeps no terms with the idle and it will break no faith with the industrious. It means self-help, self-dependence and such share of the common competence as labor shall earn or thought can win. George Jacob Holyoake London, England - 1883 Source: United Housing Foundation, The Story of the IGWLU Co-Op Houses, NY, NY 1963 p34 Co-Op City was the largest in a succession of affordable, not-for-profit and non-speculative cooperative housing communities established in New York City between 1927 and 1965. This cooperative housing "movement" originally grew out of socialism, as one of the "...conscious crystallizations of socialist theory...". [Catherine Bauer, Modern Housing, Richard C. Wade, Advisory Editor Arno Press, New York: 1974 92] The historical link between cooperative communities and socialist theory dates back to the mid-19th century: "Co-operative housing and the eventual establishment of self-sufficient productive communities was part of the original program of the Rochdale Pioneers in 1844, who were still greatly influenced by Owen and Fourier." [Bauer 93] In that year, in the small community of Rochdale, England, "... a group of 28 poor artisans opened the first consumer's cooperative, a little store on Toad Lane that sold flour, butter, sugar and meal." [United Housing Foundation Advertisement "The Phenomenon of non-profit cooperative housing" The United Housing Foundation 1968 p5] The following principles were established by the Rochdale Co-op Society in England and served as a guide for the cooperative housing movement in the United States which produced Co-Op City: (1) Open ownership - no restrictions as to race, color, or creed. (2) One member-one vote. The housing cooperative is owned by its members, the tenant-owners, who elect the board of directors. (3) Neutral in politics and religion. (4) Return of equity (investment) when member leaves with no profit and no right to sell his share on the open market. (5) Constant education and information. Organization must keep members informed so that they may act intelligently in the affairs of the co-op. Project Crossroads, Oral history: An Overview of Non-speculative cooperative housing in New York City unpublished Preliminary manuscript Susan Perlstein, Director, Brookdale Center on Aging NY NY March 1986, 5. In the United States, the cooperative approach to the marketplace had gained favor in the late 19th century among the farming community. By 1907, approximately 25,000 cooperative units had been built, on a comparatively small scale, by different cooperative societies in the United States. [Bauer 93] Some were "self-help" cooperatives, in which the members performed much of the actual construction labor. One of the most successful of this type was the Penn-Craft cooperative in the Pittsburgh, Pennsylvania area, sponsored by the American Friends Service Committee. Under the guidance of "two skilled workers", 50 miners built six-room homes to replace the one-room shacks they had lived in. The cost (in cash) to each was approximately $2,000. [William H. Chartner Cooperative Housing Editorial Research Reports Vol II 1949 #8 9/2 p 571] In the New York metropolitan area, large-scale affordable housing was built cooperatively as "non-speculative" or "not-for-profit" ventures for the first time during the 1920's. This method was an alternative to "commercial" cooperatives, whereby a property owner sells an apartment building to existing tenants for a profit. "Non-speculative or "not for profit co-op housing means collective ownership with each member having a share in the housing development (rather than owning his apartment), as well as the responsibility for its administration through the election of a board of directors." [Project Crossroads 5] An equity investment is made in proportion to the size of the apartment. Each cooperator is provided with a non-propriety term lease for the designated dwelling unit. Members share operating and maintenance costs equally. Any "profit" is rebated to the cooperators. Previous efforts to meet the need for affordable housing in urban areas had relied on private philanthropy (known in New York, for example, as "6 percent philanthropy"). Individual investors, who would be content to reap a modest profit on their investment in order to contribute to the general welfare, would build housing and collect reduced rents. The economic justification for this approach "...was that excessive profits demanded by owners of rental housing were responsible for the high costs." [Roger Starr Hill and Wang, NY 1977 America's Housing Challenge (What It Is and How to Meet It) p23] The concept was that, by eliminating "excessive profit", dwellings could be built and maintained while allowing for affordable rents. However, the cost of new housing kept rising as a result of progressively more stringent health and safety requirements of new municipal housing codes, which had the impact of discouraging private philanthropists from investing in affordable housing. Another market condition unfavorable to philanthropists was the need to fund contingency costs: the 6% profit margin did not allow a budget for the inevitable "contingencies", which often caused these limited-profit projects to run at no profit (the equivalent of a loss). Rents had to be kept relatively low to fulfill the mission of housing the less well off residents of the city; consequently raising rents to pay for unforeseen expenses was not an option to these landlords. Fluctuating mortgage rates, land and construction costs, and real estate taxes created additional difficulties for private, limited-profit philanthropists. New York City answered the latter problem by applying "tax abatement" which reduced or eliminated real-property taxes for a designated term. The tax abatements granted by the City of New York, in the 1920's, have been criticized as "...a handout to builders to make up their profits while keeping their prices competitive...". [Housing in NYC A Chronology Hall Winlou Elsie Woods p. 257] Six percent philanthropy failed to produce sufficient affordable housing for the less well-off urban dwellers. "The profit of the housing owner was not, it turned out, the crucial factor in housing cost; profit was far less important than the cost of the components of a housing unit that was built and maintained in accordance with the legal standards that had gradually been developed." [Roger Starr 26] It had become "...obvious that no matter what the form of ownership might be, the kind of housing that legislators demanded for the cities would require subsidization to bring it within the economic reach of the ordinary working-class family." [Starr Hill 26] Government subsidies became available, in New York State, under legislation passed in 1926, 1927, and 1928. New York State's Governor, Al Smith, supported these laws, which provided for tax advantages for privately capitalized, limited-dividend companies. One effect of granting these subsidies was that non-speculative, not-for-profit cooperative housing ventures became more competitive. A 1939 amendment to the New York State Constitution, which allowed for "public loans and tax concessions" for both low and middle-income housing projects, further expanded the market supports for cooperative housing. [Jean A. Flexner, Cooperative Housing in the United States, Construction Review, June 1958, page 6, U.S. Department of Labor and U.S. Department of Commerce, U.S. Government Printing Office, Washington, D.C.] Additional limited-dividend laws, which included supports for affordable, not-for-profit cooperative ventures, were passed in New York State in 1940, 1948 and 1949. Limited-dividend housing companies utilizing both private capital and state and municipal loans were authorized in 1955. New York State support for housing cooperatives continued through the Rockefeller years, directly assisting the construction of Co-Op City in the late 1960's. The leading advocate of affordable, not-for-profit, cooperative housing in the New York area was Abraham E. Kazan (1889-1971), sometimes referred to as the "George Washington" of the cooperative housing movement in the United States. Co-Op City was his last, and largest, project. Kazan was an immigrant who had come to the United States from Russia as a young boy in 1904. He has been described as "...a quiet gentle man, with a sparkle in his eye, who loves classical music and gardening." [Realty 5/4/65 by Irwin Baron "Kazan Has Promoted Construction of 33,000 Middle Income Apartments."] Kazan was an office staff worker for the International Ladies Garment Workers Union from 1910 to 1920. As an anarchist and advocate of cooperativism, Kazan had helped organize consumer cooperatives for sugar and potatoes during the severe shortages throughout World War I. In the early 1920's he went to work for the Amalgamated Clothing Workers Union where he helped organize a credit union (1923). He became interested in the potential of cooperative communities for workers who lived in very poor housing. In the mid-1920's, he and others "persuaded his union to sponsor the construction of housing for working people on an inexpensive cooperative basis". [Interview with Abe Blustein 2/8/84, United Housing Foundation consultant Project Crossroads p8] The trade union leader who Kazan persuaded was Sidney Hillman (1887-1946), the president of the Amalgamated Clothing Workers union (1925). Hillman was amenable to the idea of a cooperative housing community providing affordable housing for workers from diversified occupations. [Interview with Abe Bluestein 2/8/84 p14] Hillman, born in Lithuania, had "joined the underground revolutionary movement in Russia in 1905. He left Russia because of Tsarist oppressions ..." and immigrated to England and then to the United States in 1907. [Saul, Shura The Right to be Different National Jewish Welfare Board USA 1967 p100] Hillman worked in the garment industry and became a union leader after joining the 1910 clothing workers' strike in Chicago. In 1914, he became the union's president, a position he held until his death. "The labor movement in New York City was probably more responsible than any other group for bringing in middle-income co-op housing." [Interview with Al Smoke, United Housing Foundation consultant Project Crossroads 72] In addition to Kazan and Hillman, other labor union leaders actively involved in providing middle-income, not-for-profit cooperative housing included Jacob Potofsky (future president of the Amalgamated Clothing Workers Union and of the United Housing Foundation), Ralph Lippman (executive manager of Cooperative Village), Al Smoke (secretary and treasurer of the Hat, Cap and Millinery Workers International Union), David Dubinsky (president of the International Ladies Garment Workers Union), Alex Rose (President of Hat, Cap and Millinery Workers International Union and future leader of the Liberal Party in New York State) and Michael Shalam (assistant manager of the Amalgamated Houses). The labor unions, the Workman's Circle (A landsmanschafen or fellowship organization, limited to immigrants from a town in the "old country") and the newspaper, "The Jewish Daily Forward", were all supporters of the "progressive movement" to improve the quality of life of workers in the United States. The newspaper was closely aligned with the unions, which, at the time had a large proportion of Jewish members, especially Jewish immigrants. (Another ethnic group with a large union membership were Italian-Americans.) The Daily Forward advanced necessary funds to the cooperative housing efforts and "...helped out with capital funds before they had a mortgage." [Interview with Al Smoke p 72] These groups helped with temporary construction loans and provided down-payment assistance to some individual cooperators. The parent organization of the Amalgamated Clothing Workers Union supported the local, and temporary loans were floated by "...the Amalgamated Clothing Worker's Credit Union, the Amalgamated banks of New York and Chicago, and the Amalgamated Center." [Chartner 571] The first large (319 apartments, 1,256 rooms), union-sponsored, housing cooperative was built in the upper west Bronx in 1927. In 1990, it remained as the oldest surviving cooperative in the country. Amalgamated rents were $11 per room and residents earned rebates from participation in cooperative purchases (e.g., for milk delivery, gas and electricity, etc.). [Chartner?71] This low-income cooperative was built with economic assistance provided by the State of New York Limited Dividend Housing Law (1926). (This legislation had become law due to the support of New York's governor, Al Smith.) The Amalgamated was the first housing development to be built under this legislation, which provided partial tax abatements to housing projects that limited profits to 6% of the capital investment. Through 1948, there were 5,822 apartments in 11 projects constructed under this program. The majority of the economic savings would result from the full abatement of taxes on new structures and improvements (for up to 50 years, but usually based on the length of time necessary to amortize the original investment). Taxes were paid on the assessed value of the land prior to development, assuring that the community would not lose any pre-existing source of revenue. Largely due to the efforts of the national office of the Amalgamated, a two-thirds mortgage was purchased by a private insurance company, Metropolitan Life, which did not build cooperative housing. Metropolitan Life would go on to build other affordable rental housing in Manhattan (Stuyvesant Town, the first Redevelopment Company under the 1942 New York State Legislation) and in the west Bronx (Parkchester, developed in the 1940's). Known as the "Amalgamated Houses", this was the pioneering effort in building communities through cooperative housing. The "remote" location was not considered problematic, as Kazan postulated that people seeking fresh air and open space would travel to work to live in decent housing they could afford. "The place was pretty much of an isolated community. There wasn't much around it except Van Courtlandt Park, which encroached right up to it." [Interview with Harold Ostroff Project Crossroads 21] The Amalgamated Houses were located at the penultimate stop of the Jerome Avenue subway. The housing development was designed by architect George Springsteen. One of the young architects on his staff was Herman Jessor (who became the architect of Co-Op City some forty years later). The buildings were four story walk ups, encircling a common courtyard with gardens and fountains. According to Harold Ostroff, the reason there were not any elevators was that these would have caused electrical interference for a nearby RCA factory. The buildings would have been six stories high had elevators been practical. [Interview with Harold Ostroff, Project Crossroads 20] All the apartments were along the outside, with views to the street and to the courtyard, each with cross ventilation. The apartment layout were important to the Amalgamated’s organizers: they did not want "railroad flat" style apartments and they wanted eat-in kitchens. The community was conceived as a "workers paradise" where "more than 50% of the land shall be open and free ...". [Interview with Abe Bluestein 2/8/84, United Housing Foundation consultant Project Crossroads. 17] A haven for human values was sought in cooperation: people would live together in an environment conducive to family and community living, pooling resources and efforts, unencumbered by the hectic pace and the dehumanizing orientation of industrial society. Many "cooperators" were immigrants who were "repelled by industrial capitalism with its slums and sweatshops and degradation of the human spirit". [Averich, 115] They desired decent housing at a reasonable price in a community of neighbors. In addition to affordability, those who joined the Amalgamated hoped that living in such a cooperative community would provide a healthy physical and intellectual environment for themselves and their families, safe from the turmoil and filth of the city. "The Amalgamated was the extension of a dream": [Kaminsky, Mildred, Project Crossroads interview with Abe Bluestein February 8, 1984, p.9] "Basically they had nothing except a dream and a commitment to financial responsibility, a desire to improve their life, to improve their living standards, and an understanding that by acting together they could get what they wanted individually but otherwise might not be able to afford." [Interview with Harold Ostroff Project Crossroads 25] As soon as the buildings were occupied, social and cultural activities began to develop: self-management, service and educational committees were formed. Some of the early disputes among members related to the desire of religious Jews to have space for their services. An eyewitness reports, "Now, the majority of people who were here were anti-religious and denied them the right to have space in the cooperative." [Interview with Bluestein Project Crossroads 18] Both Kazan and the "education director" for the cooperative (Herman Liebman) took the position that everyone in the community had equal rights: if community members who were anarchists or socialists could have space, so would community members who were religious Jews. Kazan's "preferred solution" did not prevail, and hence these cooperative ventures accorded equal rights and privileges to all members and groups of members. Kazan's "preferred solution", however, was to " ... end to all partisan and sectarian activities in the cooperative ... " to maintain the cohesiveness of the cooperative. [Interview with Abe Blustein 18] The cooperative dimensions of the community extended to consumer cooperatives, eventually to include a drug store, a supermarket, a nursery and an optical service. Among the residents were labor union leaders, novelists, journalists, editors and Yiddish poets. There were cultural and educational activities, provided through the active Jewish community center and the Workmen's Circle Community house. During 1930-31, the second project sponsored by the Amalgamated Clothing Workers Union was completed on Grand Street (on the Lower East Side of Manhattan, one of the oldest sections in the city). Grand Street "was at one time the Mecca of the department stores and other commercial enterprises." [United Housing Foundation, The Seward Park Story, the United Housing Foundation New York 1958 p2] The slum housing in that area of New York City was described by Kazan "... as a breeding ground of disease and other social problems .... for generations the words 'Lower East Side' have been synonymous with 'miserable slum'." [A. Kazan ILGWU Cooperative Village A Dream Come True, United Housing Foundation NYC 1959 p1] The new cooperative was named the Amalgamated Dwellings, Inc., and included 236 units with 930 rooms. There followed "a succession of cooperative ventures sponsored by labor unions, neighborhood organizations, fraternal societies and other such groups." ["You've Come a Long Way Baby From England to Baychester", City News 1/2/69 page 3] Not-for-Profit Cooperative Housing Projects sponsored by the Amalgamated Clothing Workers of America Name: Location: Yea(s) # of Acres # of Apartments Type Amalgamated Housing Corporation 98 Van Courtlandt Park South, Bronx 1927 1936 1952 10.8 1,380 Limited Dividend Amalgamated Dwellings, Inc. 504 Grand Street, Manhattan 1930 1.5