One of the outstanding cooperative housing developments is that of the Amalgamated Clothing Workers of New York City.
The first project of this organization was completed in 1927 and an extension begun the next year. The two projects provide 511 apartments which are from two to seven rooms in size. The rent for the first project was $11 per room per month, that of the second, $12.50. The following paragraphs from the Monthly Labor Review1 describe the development. A description of the methods of financing of the first project are as follows:
The idea of the actual provision of dwellings for its members by the Amalgamated Clothing Workers was first broached at the 1924 convention. In 1925 a group of union members imbued with the cooperative idea formed the Amalgamated Clothing Workers Corporation for the purpose of purchasing ice and coal for the members of the Amalgamated Credit Union. The purchase of coal was in due time begun and is still being conducted.
This corporation which had been formed for the purchase of ice and coal was utilized in the housing project. Through it, purchase was made in April, 1925, of a plot of gound costing $315,000, and this organization has directed the entire housing project. Ground was broken on Thanksgiving Day, 1926; the first two buildings were ready for occupancy November 1, 1927, the third December 1, and the fourth December 15, 1927. A celebration of the first five buildings was held December 25. The sixth building was ready for occupancy some time in March, 1928, and work on a seventh is about to begin.
The union in undertaking this project was actuated by the desire to show that low-rental housing was possible if undertaken by a group. Care was taken to secure a site which would give the advantages of the suburbs while at the same time being easily accessible to the downtown district.
As one of the predominant ideas was the provision of plenty of light and air, as well as play space for the children where they would be safe, the buildings are, roughly, in the form of a hollow rectangle. Only 47 per cent of the ground is occupied by the buildings; the remainder is in lawns and playground space in an inner court 556 feet long which extends the full length of the property and varies in width from 51 to 100 feet.
They are five-story, walk-up apartments, the elevator being the only modern feature not installed. This was omitted in order to keep down maintenance and operating charges and to make low rentals possible.
1 "Housing Activities of Labor Groups," op. cit., August, 1928.
The financing of the building project was a problem of considerable proportions. The union emphasizes that although no union funds were used, more than $1,400,000 was spent on land and construction before any attempt was made to secure money from outside sources, Of this amount $479,000 was paid in by the tenant owners, $250,000 was obtained from the Forward Association, and $172,-000 from the Amalgamated Bank on first mortgages. The remainder of the $1,400,000 was obtained from the following Amalgamated subsidiaries: The Chicago and New York banks of the union, the Amalgamated Center (Inc.), the Amalgamated Clothing Workers' Credit Union, the Russian-American Industrial Corporation, and the Paramount Holding Corporation. In each case the Union acted as guarantor of the loan.
On the security of the buildings a 20-year loan of $1,200,000 was obtained from the Metropolitan Life Insurance Co., the company taking a first mortgage.
It is estimated that the six-building group will cost about $1,825,000 - $315,000 for land and $1,510,000 for construction - or about $1,500 a room and approximately 40 cents per cubic foot. This average includes the rooms built for communal purposes. Of this amount $1,200,000 is covered by the loan from the Metropolitan Life Insurance Co., leaving $625,000 to be supplied by the tenant owners. When all of the 1,185 dwelling rooms have been paid for at the rate of $500 per room, $592,500 will have been so paid in. The balance will.be raised by the issue of 6 per cent preferred stock, which, it is said, will constitute "a sort of junior mortgage." This stock will be sold to the tenants, the union, and to "other friendly organizations."
Savings were possible in various ways. In the first place, the land was purchased at about $2 per square foot.
Lower rates were obtained on the actual building operations because of the fact that the contractors, knowing that the work was a cash job, did not add the usual amount for financing. Competition between builders, because of this cash feature and the size of the project, also was a factor in reducing costs. The magnitude of the contracts is shown by the fact that the excavation and foundation contract totaled $180,000, masonry $279,000, plastering $167,000, and plumbing $134,000.
The loan from the Metropolitan Life Insurance Co. was obtained at a rate of 5 instead of the 5 1/2 per cent customary for loans of this sort. This saving is estimated at $97,865 for the whole period of the loan (at $5,000 per year). All of the usual recording fees, revenue stamps, etc., were waived by the authorities and by the insurance company.
But the most considerable of all sources of saving was the exemption of the buildings (not the land) from taxes, under the State housing law. The actual saving to the corporation due to this exemption amounts to approximately $30,000 a year, or $2.11 per room per month.
How the $11 room was possible. - It is estimated that the yearly cost will amount to some $150,000, divided as follows:
Operating cost (labor, light, heat, insurance, repairs, administration, etc.)...................................
Amortization of first mortgage (begins February, 1929)... .
Taxes (land only).....................................
Dividends, at 3 per cent, on common stock...............
This will average about $10.50 per month per room. As the rent is set at $11, it is seen that "the margin of safety is admittedly low and makes no allowance for vacancies." It is stated, however, that the 3 per cent dividend on common stock may be withheld for a few years; also that since the amortization of the first mortgage did not begin until 1929, the 1928 allotment for that purpose will create a revolving fund of some $20,000 for the redemption of the stock of those who may wish to withdraw.
The union states: "Financing this project was no paltry job. It brought vexing and difficult problems. Having met them successfully we have gained the knowledge and experience which will make it easier for us to extend our housing program here as well as in other cities."
The purchase of dwellings in these cooperative apartment houses is not confined to members of the Amalgamated Clothing Workers, but is open to any trade-unionist in New York City. Amalgamated members are, however, given preference over workers in other trades.
Each prospective tenant must pay $500 per room, of which one-half must be paid at time of purchase. For this he receives stock in the Amalgamated Clothing Workers Corporation equal to the amount of his purchase. Thus if he buys a three-room apartment he receives stock to the amount of $1,500, if a four-room apartment, stock to the amount of $2,000, etc.; and a perpetual lease to the apartment of his choice.
In addition to this he pays "rent" of $11 per room per month. From the amount paid in rents each month, a certain sum will be put away to pay off the mortgages, other amounts to cover expenditures for repairs, renovations, etc. As the mortgages are paid off, in the course of time, the rents will be reduced.
In many cases the prospective purchaser was unable to gather together the $250 per room required as a down payment. In such cases, assistance was extended in the way of loans through the Amalgamated Bank, or the Amalgamated Clothing Workers Credit Union. The Jewish daily, Forward, also assisted materially by advancing an amount of $100,000 from which loans were extended to would-be purchasers.
In order to prevent speculation, a tenant who wishes to withdraw from membership in the corporation must sell his stock back to the corporation, which will allow him its book value at the time of withdrawal. Subleasing of apartments is prohibited.
Prospective tenants must be accepted by the stockholders' membership committee before being admitted to ownership in the apartments.
The affairs of the Amalgamated Clothing Workers Corporation are administered by a board of directors representing the tenant owners and including a representative of the State Housing Board.
The various activities within the buildings are managed by committees of five, elected by the tenants. There are three of these committees: The house committee, which looks after the operation and maintenance of the buildings; the business committee, whose duty it is to see to the buying of ice and milk, the running of the stores, the maintenance of the bus, etc.; and the social and educational committee, which arranges the social affairs, has supervision over the library, play rooms, etc. In order to coordinate the activities of these committees, the building committee has representatives on the other two.
The rent and the down payment of the second project as stated below varies somewhat from that of the first.
Two members of the State housing board purchased the land on which the buildings will stand. This plot has been transferred to the Amalgamated Clothing Workers, which, through a subsidiary organization, the Amalgamated Dwellings (Inc.), will supervise the construction of modern apartment buildings for the occupancy of persons of moderate means.
It is stated that the buildings will be equipped with electric refrigerators, incinerators, elevators, and "every other modern improvement." The buildings will occupy only 59 per cent of the ground space.
These buildings being erected on the cooperative plan, each tenant will be required to make an investment of $500 per room, of which $150 per room must be forthcoming as a down payment. The other 70 per cent of the investment can be borrowed from the Amalgamated Bank of New York, the sum so borrowed to be repayable in 10 years. At the end of that time the tenant will own his apartment, and will have to pay only the expenses of operation and upkeep.
The monthly rental will be $12.50 per room. This is more than was charged for the Amalgamated apartments in the Bronx, where the average rental per month was $11, but the union explains that this was necessary because of the higher cost of the land on which the new buildings will stand.
It is reported that in connection with the apartment houses there will be a cooperative service corporation, through which the tenants will buy their supplies, similar to the one in operation in the Bronx apartments.1
1 Ibid., April, 1930.