#165 Spring 2011 — Fair Housing

Saving the Birthplace of Hip-Hop

A Bronx-based building known as the birthplace of hip-hop has been the subject of a high-profile tug of war between gambling real-estate investors and an eclectic yet powerful group of tenants, housing advocates, city agencies, local politicians, and hip-hop artists. The building’s well-publicized plight has helped shine a light on the threat predatory equity poses to affordable multifamily housing.

DJ Kool Herc, whose back-to-school parties in the 1970s at 1520 Sedgwick are considered by many to be the genesis of hip-hop. Photo courtesy of Raif Heid, Creative Commons BY-NC

DJ Kool Herc, whose back-to-school parties in the 1970s at 1520 Sedgwick are considered by many to be the genesis of hip-hop.

DJ Kool Herc, whose back-to-school parties in the 1970s at 1520 Sedgwick are considered by many to be the genesis of hip-hop. Photo courtesy of Raif Heid, Creative Commons BY-NC

In the battle to preserve affordable housing in New York City, few buildings have attracted as much attention as 1520 Sedgwick Ave.

The 18-story high rise, located in the Morris Heights section of the Bronx about 7 miles from midtown Manhattan, was purchased in 2008 by a group of private equity investors. Any hopes the new landlord may have had of turning a profit, however, were dashed by the financial meltdown and strong rent regulation laws. Tenants soon began to notice a drop-off in services. Housing violations crept up. Mortgage payments were missed. The building, tenants claimed, was being neglected.

It is, in many ways, a familiar story. Scores of apartment buildings in the Bronx and other low-income areas of the city previously ignored by real-estate investors have recently suffered similar fates. (See Dina Levy’s Fighting Predatory Equity.)

But 1520 stood apart—and continues to stand apart—because of what took place in its first-floor recreation room nearly 40 years ago.

DJ Kool Herc and the Birth of Hip-Hop

On weekends, tour buses stop outside 1520 Sedgwick Ave. Tourists, cameras in hand, emerge to snap photos of a tall red-brick building next to the Major Deegan Expressway.

This is because it was here, on Aug. 11, 1973, that a Jamaican-born teenage DJ by the name of Clive Campbell began experimenting with a new type of music at a back-to-school party organized by his sister Cindy. Using two turntables, DJ Kool Herc, as he called himself, repeated and isolated the “breaks” in funk records, giving shout-outs—an early form of rapping—over the music. The crowd responded, and in time he graduated to performing in local parks and nightclubs. In this way, 1520 became known as a birthplace —the birthplace, to some—of hip-hop music.

“If you can think back to the ’70s, New York City was practically bankrupt,” said Cindy Campbell by phone recently. “The Bronx is burning, what good could come out of the Bronx? [The city] wasn’t really focusing on families there. There was a void and my brother and I filled that void.”

The Campbells eventually moved to Long Island, but they stayed in touch with their former neighbors, some of whom still call the building home. And so, when a tenant, fearful of rising rents, reached out to Cindy Campbell in 2007, she was eager to help.

“My parents were able to raise a family in that building and were able to move on and purchase a house because they lived in an affordable housing complex,” she said. “That’s the whole idea.”

Tenants had received letters in the mail hinting at big changes to come. The then-landlord, BSR Management, wanted to pull the property from the state’s Mitchell-Lama program—under which tax incentives, low-interest loans, and government subsidies are given to landlords in return for keeping rents low—and then sell it.

Landlords can typically leave the program after 20 years, providing they pay off the mortgage. “Of the nearly 200 Mitchell-Lama rental properties ever developed in New York City, about half are no longer in the program,” says Vincent Reina of the Furman Center for Real Estate and Urban Policy. “The majority of those opt-outs happened between 2002 and 2007, due to a mixture of factors, including the expiration of affordability restrictions, the belief that there was a considerable potential to mark up rents, and the availability of capital.”

The Urban Homesteading Assistance Board (UHAB), a nonprofit organization and advocacy group that helps renters in New York City become homeowners through limited-equity cooperatives, and Tenants and Neighbors, a tenants’ rights organization, began advising 1520’s residents. The building was the subject of a 2007 New York Times article headlined: Will Gentrification Spoil the Birthplace of Hip-Hop?

There were concerns, too, about who was eyeing the property. A group of real-estate investors, including the well-known Mark Karasick, were willing to pay a hefty price. Dina Levy, UHAB’s director of organizing and policy, was perplexed by their interest. “Mathematically, it didn’t pencil out,” she said. On leaving Mitchell-Lama, the building would fall under rent stabilization laws, and to make a profit, the investors would have to somehow skirt these laws, she said. Even then, what difference would it make? UHAB had conducted an analysis of other buildings in the area. They found the price difference between rent-regulated apartments and market-rate ones negligible. “Even if you could theoretically get it out of rent regulation, the market was not really bearing a much higher rent in that neighborhood,” Levy said.

That July, housing advocates and tenants held a press conference in the building’s recreation room, where Campbell had played all those years before, to draw attention to their efforts to stop the buy-out and subsequent sale. Campbell and his sister showed up, as did several other early hip-hop pioneers, including Afrika Bambaataa. Rep. Jose Serrano, whose district includes Morris Heights, and New York Sen. Charles Schumer were also present to show their support. The room was abuzz with excitement.

“Elvis has Graceland; we have here,” Clive Campbell told the crowd, to whoops of “1520, 1520.”

The state had recently determined that 1520 was eligible for the state and national registers of historic places, despite the building being less than 50 years old (the usual requirement). Landmark status protects the building, but tenant advocates hoped it could also stall the buy-out and protect its occupants. None of this was possible, however, without the owner’s consent, which wasn’t forthcoming.

The tenants and their supporters refocused their energy. With funding from the city, they and UHAB looked at buying the building themselves and turning it into an affordable cooperative. BSR Management, the original owners, already had a contract with Karasick, who had previously made headlines for buying and then selling the famed Bank of America Center in San Francisco, and so UHAB had to negotiate with him directly. Levy said Karasick was willing to step aside, but only if they paid an astronomical price for the building, earning him millions of dollars in the process. “It was too hard a pill for everyone to swallow,” she said.

In 2008, in what was described as a highly unusual move, the city’s Department of Housing Preservation and Development (HPD) tried to block the sale. The agency was concerned about Karasick’s financing and the building’s future. But their plan failed. That fall BSR Management was able to exit the Mitchell-Lama program and sell the building to Karasick and his fellow investors. They paid approximately $9 million, taking a $7 million-plus mortgage with Sovereign Bank.


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