Nonprofit buys Independence House

Some tenants of Independence House have been there since the final brick was laid on the West 94th Street development. The building has provided affordable housing for middle-class earners since 1967. Tenants have experienced many changes in that time, including, recently, three ownership and management changes within a few years. Many now fear they may no longer be able to live there.

Independence House, a 120-unit building on the corner of Amsterdam Avenue, has been bought by a nonprofit, the West Side Federation for Seniors and Supportive Housing, with the help of a grant from the city's Housing Preservation and Development Department.

WSFSSH, which owns 26 affordable-housing developments in the city, most of them on the Upper West Side, recently received approval from the city's Department of Housing Preservation and Development to raise rents 221 percent, which city officials said was necessary to, paradoxically, keep rents at a minimum by allowing the nonprofit's owners to maximize payments and other benefits from state and federal sources, including through the Section 8 subsidy program, and keep tenants' rents at the maximum of 30 percent of their income.

WSFSSH's executive director, Paul Freitag, said the nonprofit was committed to keeping rents affordable and said tenants should be more at ease in the coming months. “We're going to have tenants see their rents go down by a couple hundred dollars,” he said.

Tenants, though, are skeptical and are fighting the increase in court. “As a senior, we don't want to be forced to sign a lease we can't afford,” said Genovia Wheeler, an Independence House tenant since it opened. Wheeler detailed how four leases came to her door, one slightly different than the other. She said the way the rent hikes are being presented has made tenants nervous.

Jack Lester, the attorney representing the Independence House Tenants' Association, called the rent hike “illegal” because it did not follow statutory obligations stipulated by the state's Mitchell-Lama affordable-housing program. Accordingly, he said, rents are supposed to be based on cost and projected profits of the management company, with increases determined by subsidies received, costs incurred and some financial return to ownership. Lester said the planned rent increase “is not supported by any legitimate rationale.”

Freitag dismissed those allegations, saying WSFSSH had submitted a budget-based rent increase to city officials, who in turn facilitated an increase in Section 8-eligible apartments. WSFSSH closed on the property two weeks ago. Freitag said contractors have begun doing exploratory work on about $10 million in needed infrastructure renovations, including the building's roof apartment interiors.

The previous owners, an LLC with ties to a Maine concern, were said to be exploring how to take the building out of affordable housing. A deal was subsequently brokered to allow WSFSSH to buy the development. A confidentiality agreement precludes WSFSSH from disclosing its purchase price, but Freitag said it amounted to 80 percent of market value.

City officials said that although the building was eligible to come out of the Mitchell-Lama housing program, which helps keep rents below market-rate by providing building owners tax breaks and other benefits, Independence House will remain in the program for 40 years, although Freitag said the building would remain affordable for much longer.

“Independence House will be acquired by a reputable non-profit developer and will receive much-needed rehabilitation of all of the development's major systems,” a spokesman for the city's Department of Housing Preservation and Development said in an email before WSFSSH closed on the building. “Notwithstanding the officially stated increase, because of subsidies, no tenant will have more than a 2.5% increase in rent, while some tenants will actually experience a rent reduction. Additionally, the terms include a guarantee that for the next 20 years, no tenant will pay more than 30% of their income towards rent.”

According to a transcript of her deposition in the court action by tenants fighting the rent increases, Gale Brewer, the Manhattan Borough president, said rents at Independence House needed to be “restructured” to insure that all of the building's tenants, and not just its Section 8-eligible renters, would be spared increases they could not afford.

“In this way, WSFSSH could provide rental assistance to the non-Section 8 tenants, keeping their rent at no more than thirty percent of their income,” Brewer said.

WSFSSH bought the 12-story building with the help of a $25 million city grant that had initially been earmarked for new construction. The grant came from a $50 million payment from the Collegiate School to the city. The school made the payment in exchange for city approval for a new complex at Riverside South. It had initially proposed building affordable nearby but that plan and another fizzled.

Lester said he was highly skeptical of that arrangement. “This is the smoking gun,” he said. “This is just money lining pockets.”

Told of Lester's contention, Freitag reiterated that tenants would not pay more than 30 percent of their income on rent. He said that tenants that don't qualify for Section 8, WSFSSH would offer what he called a Landlord Assistance Program, a 20-year legal agreement that has the added benefits of Section 8 without the government subsidies.

Contrary to what was previously reported here, the rent increases are in effect despite the tenants' court action.