November 19, 2003

Article at The New York Sun

A Troubled Landmark Rescued

After decades of neglect, the once lovely grounds of the renowned 129-acre Parkchester housing development in the northeast Bronx are looking good again. Parkchester's 171 residential brick buildings are being renovated, its 500,000 square feet of retail space upgraded, and its sculptures and fountains restored. Its gorgeous 1939 Art Deco theater, the American, has been reconstructed into a 1,400-seat multiplex.

Parkchester's recent financial rescue is surely the largest and most complex private rescue of a housing development in American urban history - and also the least known.

Most New Yorkers probably think that they have a good idea of when important historic buildings are endangered - and when they're saved. Yet this distinguished development, which is routinely studied in architecture and planning courses the world over, has gone through a cycle of decay, near ruin, and regeneration, with little public attention. This is a shame because Parkchester's saga offers one of the few hopeful models for the rescue of New York's many other fading residential projects.

Parkchester is being rehabilitated through shrewd refinancing, hands-on management, and, miraculously, no tenant displacement. The driving force in the rescue has been the Community Preservation Corp., a bank consortium that constitutes New York's largest nonprofit mortgage lender. Since 1974, it has financed the construction or rehabilitation of more than 83,000 housing units.

CPC's for-profit arm, CPC Resources, brought in two successful commercial developers as partners - Morton Olshan and Jeremiah O'Connor - to set up the Parkchester Preservation Company. PPC, in turn, purchased Parkchester for $4 million in 1998.The CPC president, Michael D. Lappin, said, "We work on the debt side, the mortgage side. But often what we need is someone to buy troubled buildings. You need an owner who can deal with the physical and financial problems, but also with the social problems, such as drugs and crime."

PPC invested $35 million in urgent repairs almost immediately and has since assumed debt of $220 million for development-wide renovations. Parkchester is composed of two separate condominiums, Parkchester South, with 8,286 units, and Parkchester North, with 3,985 units.

PPC owns 6,365 units, all but 1,600 in the south. The rest are individually owned, mainly by owner-occupants. All units are now being restored under a complex refinancing package that will allocate some $176 million to residential upgrades, including plumbing, electrical, windows, and masonry work, according to the CPC senior vice president, Richard Conley.

Most of the systems renovation will be paid for out of common charges and tax abatements. The net effect is that the average unit in the south will pay a small increase of $30 monthly plus the cost of directly metered electricity.

Costs in the north are higher, but still modest: $75 to $80 monthly. Elderly and disabled residents with incomes below $25,000 will be subsidized by PPC with up to $75 monthly for up to 15 years.

Like its better-known sister buildings in Manhattan - Stuyvesant Town,

Peter Cooper Village, and Riverton - Parkchester was conceived in the late 1930s, when little capital was going into new residential construction. The state Legislature temporarily amended the insurance code in 1938 to permit life insurance companies to invest directly in moderate-rental housing projects. Metropolitan Life jumped in to finance the four projects that soon made it famous as the sponsor of successful moderate- and middle-income housing. Parkchester was designed by a team headed by Richmond H. Shreve, celebrated as the architect on the Empire State Building.

Shreve imposed many Art Moderne touches, such as the sweeping terra cotta panels above the commercial spaces and the symbolic sculptures on buildings and in public spaces. The building heights vary from seven to 15 stories, and the lot coverage is only 27.4%, far below the allowable maximum. The generous public spaces give a sense of luxurious serenity - unusual in moderate-income buildings, then or now. So what went wrong?

Some of the seeds of destruction probably were sowed by the flawed planning ideas of the time. In "A History of Housing in New York City" (Columbia University Press), Richard Plunz wrote that "Culturally, as well as geographically, Parkchester was intended to be an independent city, a new middle-class enclave well removed from the uncertainties of old inner city neighborhoods many of its residents left."

This isolation worked for a while, then turned dangerous when the Bronx started to deteriorate and crime began to rise. By the mid-1960s, Parkchester was most definitely in trouble. In 1968, Met Life, which was minimally maintaining the property, sold it to the late Harry B. Helmsley, who pretty much stopped maintaining it, period. Seeking to make Parkchester a condominium, Helmsley sponsored the conversion of the north buildings in 1974 and the south in 1986.

When conversions slowed in the early 1990s, Helmsley began renting and leasing apartments haphazardly. Drug dealers moved in. Many good tenants and even condo owners moved out. The value of condo units nose-dived. Outsiders who had bought one-bedroom apartments for $55,000 in 1985 found that they were lucky to sell at $30,000 by 1995.When PPC took over in 1998, they discovered 1,700 vacant residential units.

"It wasn't easy lining the banks up to refinance, with all those vacant units," recalled Mr. Conley. "Parkchester was viewed as a very distressed, risky situation." Luckily, the commercial space was pretty well rented, according to PPC's chief executive, Charles Tucci, who said that PPC would spend about $15 million on commercial upgrades in addition to renovations by individual stores.

Macy's, which has been a tenant in Parkchester since 1941, is completely renovating its 100,000 square feet. The well-known retailer also yielded another 100,000 square feet for eight smaller stores. With no vacant space available, PPC is able to command good rents - as high as $75 to $80 a square foot. New, unregulated residential rents, however, remain moderate - $900 monthly for a renovated one bedroom, $1,100 for a two bedroom.

As government officials struggle with the immense problems facing other middle-income developments, such as Co-Op City in the Bronx and Mitchell Lamas in all five boroughs, they should ponder Parkchester, where private developers used all the tools of their trade to save a historic development - and the homes of some 50,000 New Yorkers.