Tuesday, March 4, 2008

Hip Hop Landmark Building Gets a Reprieve

City Rejects Sale of Building Known as Hip-Hop’s Birthplace based on story reported here 2 months ago.

Government officials said that the building at 1520 Sedgwick Avenue in the west Bronx will not be bought and “flipped.” (Photo: Ozier Muhammad/The New York Times)

The birthplace of hip-hop may be saved from gentrification, for the time being.
In an unusual move, the city’s Department of Housing Preservation and Development has rejected the sale of 1520 Sedgwick Avenue, a culturally iconic west Bronx apartment building, to a high-profile real estate developing group, saying that the financing for the estimated $9 million purchase price is not viable under the current rent restrictions, according to an announcement made by government officials on Monday afternoon.

The letter represents the first time that the department has rejected the sale of a building under the Mitchell-Lama affordable housing program for financial reasons.
“This is a precedent-setting move,” Senator Charles E. Schumer said at a news conference on Monday afternoon in the community room of 1520 Sedgwick, the same room where D.J. Kool Herc presided during the summer of 1973, with a musical sound that eventually helped give birth to the hip-hop genre (though some believe that hip-hop had its origins in other parts of New York, like, for example, farther north in the Bronx on West Tremont Avenue, or point to its cultural beginnings in Kingston, Jamaica).

Mr. Schumer added about 1520 Sedgwick, “That means this building can’t be bought for this huge amount and be flipped.”

Housing advocates hope that this rejection will tamper the speculative sales of other Mitchell-Lama buildings that have drawn concern over the last few years as the buildings have sunseted out of their legal obligations to maintain affordable rents. Housing advocates say they have observed a pattern of Mitchell-Lama buildings being sold to investors who then hold on to the building for a few years before selling it again at a substantial markup to other investors.

“We don’t know where the deals will end, but there is no way it could end in a way that is in the best interest of the tenants,” said Maggie Russell-Ciardi, the executive director of Tenants and Neighbors, a housing advocacy group that has been involved with the effort to create a tenant buyout of 1520 Sedgwick.

In a letter dated Feb. 28, the Department of Housing Preservation and Development informed the landlord that “Because the proposed purchase price is inconsistent with the use of property as a Mitchell-Lama affordable housing development,” the department could not approve the transfer from Frank Phelan to 1520 Sedgwick G.P. L.L.C., an investment group.

The tenants hailed the decision as having repercussions far beyond the immediate building, which had drawn considerable attention in large part because of its role in hip-hop.

“It’s not just about 1520, it’s about all affordable housing,” said D.J. Kool Herc, whose family lived in the building after they immigrated from Jamaica. “Every family needs a piece of the American dream.”

The rejection reopens potential discussion for a tenant-led purchase of the building. The tenants had originally been informed in February 2007 that the building was being sold to an investment group that involved Mark Karasick, who was involved in the flipping of San Francisco’s Bank of America tower. Mr. Karasick offered to sell the 100-unit building for $14 million, which the tenant groups say is far in excess of its $7.5 million appraised value.

Now the groups hope that the landlord would be more receptive to negotiation. “I don’t want to give people the impression that we are home free,” Mr. Schumer said.

Mr. Phelan’s lawyer did not return call for comment.

Source [NY Times]

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