|ABOUT US : NOT JUST BRICKS & MORTAR|
Penn South -- Not Just Bricks & Mortar The Penn South cooperative community is part of a rich legacy that dates back 150 years to a little town named Rochdale, located near Manchester, England. There, in 1844, 28 workers formed the Rochdale Equitable Pioneers Society, the first cooperative store. Today, there are over 110 million cooperative members in the United States alone.
In the 1950s, there was an urgent need for moderate-income housing in New York City. The United Housing Foundation (UHF) began working with unions, local and state government officials to garner the support necessary to build new cooperative housing. The International Ladies Garment Workers Union (ILGWU) was drawn to the notion of housing based on the cooperative model of self-help and mutual aid that the UHF presented to them in 1957.
In fact, the ILGWU (now merged with the Amalgamated Clothing and Textile Workers Union to form UNITE) went on to provide much of the moral and financial support needed to undertake the project. They sponsored the construction of 2,820 apartment units in Chelsea that would ultimately become Mutual Redevelopment Houses, Inc. (commonly known as Penn South).
From its very inception, Penn South has operated as a limited-equity cooperative. It is owned and operated exclusively for the benefit of the member-shareholders, who are the occupants of the apartments. Each member has an equity investment in proportion to the size of the unit he/she occupies. Each apartment constitutes one unit with one vote, irrespective of the size of the apartment or number of shareholders who reside there. The principle of "one unit-one vote" distinguishes cooperatives from other corporations and safeguards the democratic control of the organization.
The City of New York has helped to keep Penn South affordable from the very beginning. In 1961, the City granted our development a twenty-year abatement of real estate taxes and in 1981 extended that abatement an additional five years through 1986.
In 1986, when the abatement of real estate taxes was to expire, Penn South took a historic vote to decide its future. Seventy-six percent of cooperators came out to vote, with 68 percent of those who voted choosing a 25-year phase-in of real estate taxes; 27 percent voted for a 10-year phase-in of taxes; only 5 percent voted to do away with the tax abatement altogether and allow the development to go private.
The New York City Board of Estimate approved the 25-year option within 60 days.This historic decision allowed us to keep our carrying charges well below market rates and preserve the limited-equity character of the cooperative for the future generation.
In 2001, the cooperative was faced with another serious challenge. Between 1987 and 2000, our original assessed value increased from $59.3 million to $95.6 million, an increase of nearly 60 percent. This sharp increase, which was not anticipated in our agreement with the City in 1986, was based on the real estate boom in Chelsea. If we were to preserve the moderate-income character of the cooperative, and protect the 55 percent of residents with gross annual incomes under $40,000, something would have to be done.
Therefore, the Penn South Board, anticipating the upcoming problem, approached the City of New York in mid-1999 to seek tax relief once again. The solution worked out with the City called for changing Penn South's real estate taxes from an assessed value basis to "shelter rent," which is the tax system applicable to Mitchell Lama housing. This system isolates the development from rising neighborhood values and instead ties taxes to the co-op's income. The Contract Amendment with the City also extends the period during which Penn South must remain a limited-equity co-op for ten additional years, until 2022.
Penn South's cooperators strongly supported the change in their contract with the City. On April 4, 2001, 75 percent of all cooperators came out to vote in an advisory referendum on the issue. Some 70 percent of those voting supported the change in our tax basis as well as the extension of our limited-equity status until 2022.
The initial purpose of Penn South was to provide good housing at a moderate cost, and we have far surpassed that goal. Sixty-five percent of the development is open space -- gardens, walks, grass, trees, play space for children, and sitting areas for adults.
As a result of active member participation in groups and clubs, we have proven that we are not just a place to live, but also a community. By working together, the members of this community continue to demonstrate that people have the opportunity, the resources, and the ability to help themselves and their neighbors attain a better way of life. Penn South is truly a village within a city.
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