Sunday, May 3, 2009

Bronx-based service cleans out hoarders' cluttered homes

Sunday, May 3rd 2009, 4:00 AM

Catharine harvests rainwater for bathing and uses a litter box as her toilet. She has had no plumbing for seven years. The Georgetown University alumna sleeps on massive rubbish piles next to her 10 cats.

Cleaning out her cluttered three-bedroom house in New Jersey was not an easy task, even for professional declutterer Don Tagatac. Five tons of paper, rotten food, mattresses and clothing took five days to remove.

Catherine, a 55-year-old former psychiatric nurse, suffers from a little-understood mental illness: compulsive hoarding.

She is not alone. There are 300,000 hoarders in the metro area, according to Randy Frost, a hoarding expert at Smith College. Catherine's putrid residence is not even the messiest that Tagatac's Bronx-based Trauma Scene Cleaning Management Inc. has tidied.

Tagatac serves as a mediator between the victims of the psychological disorder and the landlords, bureaucrats, social workers, psychologists and family members who struggle to contain the problem.

Compulsive hoarding is defined as the acquisition of, and failure to use or discard, a large number of seemingly useless items. The storage of these items often precludes activities for which spaces were designed. This renders homes unlivable if the condition goes untreated.

Tagatac's 20 hoarding cleanups of the past year have confirmed his entrepreneurial instincts.

"I'm in a strange line of work. It's a specialty job," admits Tagatac, who manages 11 employees.

Tagatac betrays a caretaker's concern that runs in his family. His mother is an emergency room nurse, and his stepfather is a physician.

Tagatac took over management of the cleanup enterprise two years ago. While the company initially did only biohazard and crime-scene cleanups, an October 2007 trauma case involving a decomposed body at a hoarding scene gave Tagatac a bold idea - to concentrate on hoarder sites.

The business is now about three-quarters hoarding cases and one-quarter trauma scenes, said Tagatac.

"Hoarding is a misunderstood issue," said Patricia Petersen, a geriatric social worker at Hartley House in Hell's Kitchen. Petersen, who has worked with Tagatac, added, "Most people think that all hoarders are pigs, but it's an illness. It's about control, and every item represents their attachment to things."

All of Tagatac's hoarding clients live alone, and 90% are female. Most are elderly.

"Ultimately, you can't go to sleep in a comfortable bed after you've just seen 10 potential hoarder clients," said Tagatac, who hopes that city government will subsidize hoarder cleanups in the future.

During one cleaning job in the Bronx in September, Tagatac's six-man crew struggled for two hours just to enter a junkaholic's residence.

After wiggling the door open, they thought they were in the clear. But after each bag of junk was removed, more stuff would fall down toward the door, and the team resumed their task.

"It may be a blurry line between the Collyer brothers [the infamous siblings who died in 1947 with more than 100 tons of junk packed into their Harlem brownstone] and people who just keep taking stuff in and get overwhelmed," said Ann Schongalla, an upper East Side psychiatrist.

"Tagatac should have a lot of business," she added, "if only he can get in the door."

Friday, May 1, 2009

Condo Tax Rebates — Divvying Up Money, Stepping into a Minefield

Habitat Magazine
By Frank Lovece

Good news! Your condo association is getting a real estate tax rebate following a successful "tax certiorari" appeal, which many condo boards routinely file on behalf of unit-owners. It's a rite of spring, when co-ops and condos alike challenge the often too-high assessments that the New York City Department of Finance (DOF) places on buildings in order to calculate how much real estate tax each building or condominium unit must pay.

Now what? With co-ops, each shareholder pays his or her share of the tax as part of the monthly maintenance charge. Rebates go to the corporation, benefiting each shareholder proportionally. But condo associations are different and more difficult — hitting legal and ethical issues of which even many professionals have been unaware.

More at:

Sunday, April 5, 2009

Tax increases spark rise in co-op fees

April 5, 2009
Co-op Fees Go Through the Roof

CO-OPS across the city have raised their maintenance charges by as much as 15 percent in recent months, and one of the main causes is rising property taxes.

Board members and building managers say that while maintenance increases averaged only about 5 percent last year, many co-op buildings are now dealing with double-digit increases.

“Operating costs have gone up, but property taxes have skyrocketed,” said John Janangelo, the president of Bellmarc Property Management, which manages about 50 apartment buildings in Manhattan. He said that taxes for some of his buildings had risen by as much as 35 percent in 2009. “It comes at the worst time,” he added, “because financially everyone is suffering. You don’t want to pass through these huge increases because people can’t afford them, but you have no choice.”

Property taxes went up at the start of the year when the city eliminated a 7 percent homeowner tax cut initiated in 2007, when the city was on better financial footing. But there is another reason for the increase. Buildings whose property values soared in recent years are experiencing even bigger tax increases because the assessed values of their buildings have gone up.

Co-op boards routinely challenge their assessments and if the city’s Tax Commission does not reduce the assessments, boards can appeal in court. Because the process is lengthy, a building that has received a series of big assessment increases may not get relief for years.

“Assessments have gone up based on last year’s market,” said David Kuperberg, the president of Cooper Square Realty, which manages about 200 co-ops and condominiums. “And that’s like kicking homeowners while they’re down,” he added, noting that assessments often take a while to catch up to the market.

Marty Hoffman, the board treasurer of a 106-unit co-op on West 89th Street, said that the assessed valuation of the building had gone up every year in the last five years for a total increase of 107 percent. The property tax bill has gone up 55 percent, from $369,000 in 2004 to $574,000 in 2009. Taxes this year alone went up by $83,000, or roughly $783 more annually for each tenant shareholder.

Because each year’s higher assessment is phased in over a five-year period, Mr. Hoffman’s building faces at least four more years of hefty assessment increases as the increases that were issued when the market was booming continue to kick in. Mr. Hoffman said that even though the tentative assessment increase for 2009-10 was only 1 percent, the building may have another tax increase of about $83,000 next year because of the phase-in of previous assessment increases. “Aside from the run-up in oil prices,” he said, “nothing has gone up as fast as real estate taxes.”

Mr. Hoffman said cheaper fuel was the only reason his building had been able to limit its annual maintenance fee increase to 7.2 percent. “If oil prices hadn’t dropped, we would have been faced with a 15 percent increase.”

Some operating costs have risen, however. Richard Montanye, a partner with the accounting firm of Marin & Montanye in Uniondale on Long Island, which works with hundreds of buildings in the city, said that water and sewerage charges went up 14.5 percent last year. “Housing costs in the city in the past four to five years have far outpaced inflation,” he said.

At the same time, some revenue sources have been drying up for many buildings. Those with commercial tenants, especially retail outlets, have been hit hard by the recession, with many tenants asking for rent reductions because their sales volume has dropped off significantly.

“Retail tenants are all hurting,” said Richard Siegler, a lawyer who represents about 150 co-ops, “and they’re all coming to boards and asking for relief. If the economy improves, then a lot of this will go by the by, but if not, then boards will have to contemplate losing tenants, even though they’d rather not have a vacancy.”

Buildings that in a stronger market relied on income from flip taxes — a sort of transfer fee for each sales transaction — may also struggle now that sales volume throughout the city has been reduced to a trickle.

Robert Berliner’s 277-unit building on Sutton Place has a 2 percent flip tax for outside buyers, which he said “was a pretty significant source of revenue in 2006 and 2007.” The building had used that income to meet operating costs, but because there are now so few apartments changing hands in the building, the board has shifted its flip tax revenue into its reserve fund. “We’re trying to be more realistic and more conservative in dealing with our budget,” he said.

Mr. Berliner said that because real estate taxes are so high for the building, the board may consider raising the flip tax to 3 percent. Property taxes were just under $3 million last year and represented the single largest expense in the building’s $7 million budget.

Mr. Berliner, who is the co-op’s board treasurer, said that the city raised the building’s assessment by 25 percent in 2008, but the building challenged the increase and got it reduced to 10 percent.

“But when you consider the state of the economy and what’s happening in real estate values,” he said, “how the city could have come up with any increase in assessed valuation is beyond me.”

This article has been revised to reflect the following correction:

Correction: April 12, 2009
An article last Sunday about a sharp rise in maintenance charges in many New York City co-ops gave an outdated location for Marin & Montanye, an accounting firm on Long Island that serves hundreds of buildings in the city. The firm is in Uniondale, not Port Washington.

Monday, March 30, 2009

More property owners filing tax appeals

New York Post
March 30, 2009 --

The city's Tax Commission has been swamped with appeals this year from major property owners hoping to lower their tax bills, The Post has learned.

Officials said 44,488 appeals were filed by owners of apartment, co-op, condo and office buildings, up 5.6 percent from the 42,106 filed last year.

"It's a substantial increase," said Tax Commission President Glenn Newman.

Typically, only the largest property owners have the resources -- and the financial incentive -- to file appeals.

Last year, for example, only 1,389 of 699,809 small-home owners challenged the assessments by the Finance Department, which form the basis for tax bills on the city's 1,015,968 properties. Comparable figures for small-home owners this year weren't available last week.

The odds of winning are long.

In Manhattan last year, just 2,500 of 18,830 challenges were successful. So the appeals numbers tend to stay flat from year-to-year.

The Finance Department's tentative assessment roll, issued in January, lags behind the market by a year, which explains why it increased the value of office buildings by an average of 7 percent even as prices were falling.

In an appeal, owners can present updated income and expense data through the end of the year.

"When the market is rising, most real-estate operators would not complain about that," said one official. "This year, it's a different story. If your tenant was Lehman Brothers, you probably have a good chance of getting a reduction."

One lawyer who handles appeals said owners of hotels and department stores, which have easy-to-document records of being caught in the economic downturn, have strong cases for reductions in their assessments.

Sunday, March 29, 2009

Seniors fined for talking in the lobby of their Staten Island condo are given a room to chat in

Staten Island condo moves chirping seniors to yap of luxury
BY Christina Boyle
Sunday, March 29th 2009, 4:00 AM

A group of Staten Island seniors really have something to talk about now - they won the right to kibitz after a condo tried to ban their evening chats.

The five retirees - who range in age from 66 to 90 and have two Purple Hearts among them - were slapped with $25 fines for shooting the breeze in their complex lobby.

They refused to back down, threatening legal action to protect their right to free schmooze.

"We didn't smoke and we didn't drink and all that jazz but they didn't want us in their lobby," said Leroy Tepper, 81, a member of the "Fined Five Seniors."

"We weren't going to stand for it."

The group argued they rarely gathered later than 8:30 p.m., were not raucous and mostly sat around reminiscing about friends, children and, sometimes, politics.

The condo said neighbors complained they were too loud.

"It clearly states in the rules, no loitering," Cheryl Ruiz, who manages the Elmwood Park II condominium, told the Staten Island Advance.

But after the men consulted a lawyer about the fines, managers at the upscale condominium building relented.

They agreed to give the guys a vacant studio to use as a meeting spot from 7 p.m. to 9 p.m. nightly

"We're satisfied. We would prefer to stay in the lobby but life isn't that way," Tepper said.

"We have a facility that is warm, we have a facility that is comfortable."

Their new after-dinner chat spot has a bathroom, kitchenette, a table and foldup chairs.

The men had their first rendezvous there Friday and said they had no complaints.

"We enjoyed ourselves," Tepper said.

"We talked about when we played Johnny on a Pony when we were kids. We can't do it now because of our age and handicaps."

Some of the residents were happy to see the Fined Five have a room of their own.

"This is pure hogwash," Maureen Hernandez, 30, said of the ban on loose lips in the lobby.

"They're a lovely bunch of gentlemen," she told the paper. "There is no bad language. There are no boomboxes or beer. These are men who fought our wars for us, I don't know why they have to go through this."

Tuesday, March 24, 2009

Landlords firing doormen to cut costs

White Gloves Off?
By Oliver Haydock
March 24, 2009 | 2:54 p.m
The New York Observer

Manhattan doormen, ably trained as they are in the art of regulating traffic in and out of the city’s abodes, might want to start battening down the hatches: The economy … is … coming. In these troubled economic times, some residential building workers, who are members of the union 32BJ, are finding their services superfluous to requirements in the city, with some union members already losing jobs.

So add doormen, especially those working in rental buildings, to the list of luxury amenities that New Yorkers are no longer eager to pay for, along with rooftop decks, in-house recreational facilities, haute design fixtures and indoor swimming pools.

“Tenants are sacrificing living conditions,” Marc Lewis, the president of Century 21 NY Metro, said. “They are leaving doorman buildings and going into elevator buildings.”

Formerly the white-gloved vestige of an antiquated Upper East Side lifestyle, uniformed doormen spread during the boom to every corner of Manhattan, their most familiar habitat being the new-development building in Manhattan. But because of falling rents and increasing vacancies, landlords are looking at tighter balance sheets, and that just might mean a thinning of the ranks in the doorman brigade.

So far in 2009, 32BJ, which also represents cleaners, porters, supers and security guards, has implemented approximately 70 workforce reductions, which is roughly the same amount as in all of last year.

Troubles in the market for doormen rental buildings were evident as early as last February, when this very column noted that “Manhattanites are ditching doorman buildings.” A year and several economic crises later, and you can only imagine how things have worsened. From September 2007, around the time the rental market peaked, to February 2009, mean rents for apartments in doorman buildings plummeted faster than anything this side of Citi stock.

In the span of 17 months, rents on doorman-building studios fell by 15 percent; rent for doorman-building one-bedrooms dropped 13 percent; and rents for doorman-building two-bedrooms slipped 9 percent, according to statistics from the Real Estate Group New York.

According to that firm’s COO, Daniel Baum, landlords of doorman buildings are more vulnerable to a slumping real estate market. “At luxury buildings or doorman buildings, they have to take aggressive action,” Mr. Baum said. “Because of their added costs, they have more exposure to vacancy rates.”

It’s no surprise, then, that landlords and management companies might be looking for ways to cut costs, especially since the crashing rents are accompanied by a major reduction in demand and a startling rise in vacancy rates. (Or is it the other way around?)

If less people are paying rent at reduced prices, something has to give. According to Phil Whalen, a principal at Key Real Estate, a real estate firm specializing in property management, landlords are starting to negotiate staff reductions with 32BJ. One landlord, who wished to remain anonymous, has indicated that the union is more willing to negotiate staff levels than in the past.

Unlike non-union workers, the union salary is set in stone—at least until the next round of contract negotiations—so payroll cuts invariably mean job cuts. Members of 32BJ make $18.94 an hour, which translates into $757.60 for a 40-hour work week and a little less than $40,000 in annual salary; employers are also on the hook for about $1,080 in quarterly benefit payments, which include health care, pension payments and other expenses. And it’s getting harder to cover those expenses, according to Mr. Whalen, who is especially concerned about underwriting health care costs.

According to Matt Nerzig, the director of communications for 32BJ, the union is paying close attention to the situation. Unlike, say, the UAW, layoffs and staff reductions haven’t been a fact of life for 32BJ.

“We’ve been unaffected by layoffs for a long time, but they really seem to have started in recent months,” Mr. Nerzig said. So far, most of the staff reductions have been concentrated in Brooklyn and Queens, and whether they jump the river and start becoming prevalent in Manhattan remains to be seen.

Sunday, March 22, 2009

Bonuses are a liability for building boards

There’s a Problem With Your Application
A fat bonus used to help with the co-op board. Now it’s a liability.

* By S.Jhoanna Robledo
* Published Mar 22, 2009

For years, Halstead Property’s Richard Grossman has run a boot camp, teaching agents how to get buyers approved by co-op boards. In it, he presents four hypothetical applicant profiles. The first is a professional—a teacher, perhaps—with an average income but an outsize down payment. The second is a bonus-dependent candidate like a banker, who makes $80,000 and is putting down the minimum, but has a bonus three times his salary. The third, a non–Wall Streeter, earns somewhere in the low six figures and has a small bonus and a standard down payment, and the fourth, a first-time buyer with a good job, relies on relatives to cobble together a decent down payment.

In the past, says Grossman, agents invariably picked the financier as the most board-worthy, thanks to his bonus. At last month’s seminar, however, the answers were unanimous: “Go with the teacher.” And that is a big change. “If you were bidding against someone from Wall Street who had this kind of bonus history, you couldn’t compete. First of all, they were willing to outbid you, and second of all, the sellers were willing to take them over somebody else,” says Gumley Haft Kleier president Michele Kleier. “Bonus used to be the favorite word in everybody’s vocabulary. Now salary is a much more attractive word.” Admits one Upper West Side board member: “We’re definitely cautious across the board now, especially when someone’s touting their bonus.”

In the pre-Lehman days, many boards grew to regard bonuses as standard parts of compensation, as reliable as anything else in the financial package. “If your stream of bonuses was steady for several years, you could anticipate that your bonus was going to be equal to or exceed what you got the last two years,” she says. “The boards would look at that and basically count it.”

“We’ve always advised people to be cautious and to look at assets and salary, not just bonuses,” says Mary Ann Rothman of the Council of New York Cooperatives & Condominiums. But well-funded portfolios alone aren’t enough, says Grossman, who has sat on two different boards. Investments should be diverse, too. “Stocks in conservative [companies], not in financial institutions,” he says. “They want to see diversity, especially after the Madoff thing.” Some boards are actually asking prospective buyers still awaiting interviews for updated financials, in case their situation has changed since the stock market fell.

The intense scrutiny can be frustrating for both buyers and sellers needing to unload properties fast, but lawyer Stuart Saft says “boards generally feel they have a fiduciary duty to the existing shareholders to make sure they’re not taking any risks.” If that means nixing someone with an acceptable bid who can’t pass beefed-up standards, so be it. Fair Housing laws prohibit discriminating against entire employment classes, but experts say boards aren’t stereotyping; they’re being financially prudent. “No one’s being given a hard time because they’re in finance,” says Saft. “They’re given a hard time because they don’t have adequate liquid assets with which to pay for the apartment.”

Boards struggle with environmental issues

Co-op and condo board politics have become even more fraught as environmental issues have entered the equation. Energy and green committee members have started lobbying their neighbors to approve environmental projects like solar power for their buildings. At the 244-unit River Arts co-op in Washington Heights, some residents are advocating the building's investment in solar power, while other residents are worried that the co-op won't get back its initial investment in the green initiative.

The New York Times: It’s Not Easy Turning Co-op Boards Green

Saturday, February 28, 2009

Co-ops create new conundrums

By Candace Taylor
February, 28, 2009

After a few years in the shadow of the glitzy condos that have been transforming the Manhattan skyline, co-ops may be emerging as a more financially stable and attractive option, but they are still facing a unique set of challenges.

Manhattan co-op boards — already known for their demanding requirements — have in many cases reacted to the economic crisis by becoming stricter than ever before. As a result, some real estate observers say board members are lowering the value of their own homes.

Brokers and market analysts say in an effort to preserve their property values, many co-op boards are rejecting buyers because the prices that they're offering on their target apartments are too low. However, these rejections, combined with a smaller pool of qualified buyers, are ironically putting additional downward pressure on co-op prices. In response, experts are encouraging boards to loosen up some of their restrictions, for their own sake.

"I'm finding co-op boards to be even further behind the market than sellers," said Jonathan Miller, president of appraisal firm Miller Samuel. "That's going to be a continuing problem during this period."

The most recent crackdown by co-op boards comes at a time when co-ops could actually be luring buyers who, while wary of the market in general, might be more comfortable with the secure financial footing that co-ops offer. Co-ops are not only cheaper than condos; experts say they're also holding their value better as the economic downturn grips Manhattan.

In the fourth quarter of 2008, the median price of a Manhattan co-op was $675,000, down 2 percent from the previous quarter, according to Prudential Douglas Elliman's quarterly market report, prepared by Miller. By contrast, the median sale price of a condo in the fourth quarter was $1.12 million, down 8.2 percent from the previous quarter.

"For the past 10 years, people thought 'why would anyone want a co-op?" said Kathy Braddock, co-founder of Charles Rutenberg Realty. Now, "co-ops are being looked at in a healthy way again."

Saving grace

Co-ops, which first began popping up in New York City in the 1920s, account for some 75 percent of the housing stock in Manhattan, according to Miller.

Their more restrictive policies mean they generally sell for 20 to 30 percent less than condos, said Aaron Shmulewitz, a partner at the real estate law firm Belkin Burden Wenig & Goldman. That's one of the primary reasons why nearly all new residential developments are condos, he said.

Yet the high percentage of co-ops in Manhattan is being viewed as a saving grace, and one of the key reasons the borough has largely avoided the same kind of fallout from the subprime mortgage crisis that many other places have seen.

For one thing, co-op owners are often required to put more money down and are thus less vulnerable to default. Moreover, when the owner of a co-op goes into foreclosure, the bank must step in and pay the maintenance charges, Shmulewitz said.

Finally, many banks now require 50 to 70 percent of units in a building to be sold in order for buyers in the building to obtain mortgages, making new condo developments — which once sold like hotcakes — a hard sell.

As a result, while co-ops risk devaluing their buildings, they will see fewer foreclosures and hold their value better than condos as the city heads into a downturn, Miller said.

"You're going to see less volatility with co-ops," he said. "They did a much better job of vetting the qualifications of buyers."

Amelia Gewirtz, an executive vice president at Halstead Property, agreed. "It's easier to get a deal going in resale than new development. That's totally flip-flopped," she said.

Threatening value

While co-ops may be holding up better than condos, the danger they face is real, experts say.

The practice of rejecting buyers because of their proposed low purchase prices occurred frequently in the recession of the early 1990s and continued sporadically as home prices in New York skyrocketed. Now, it's becoming more common as prices begin to dip again, Miller said. "Boards are turning down deals that are selling too low," he said.

The idea behind the practice is simple. "Co-op boards want to protect the value of each shareholder's investment in the building by keeping prices as high as possible," said Shmulewitz.

In better times, that practice often worked in shareholders' favor, with boards acting as a safety net to ensure properties were selling for fair market value.

Richard Hamilton, a senior vice president at Halstead Property, said he recently saw a board reject the sale of an apartment, part of an estate sale, because it was "ridiculously underpriced." The board felt it hadn't been marketed correctly, since it was sold to a colleague of the listing broker who planned to flip it.

"They knew the person who was buying the apartment was already showing it to other buyers before it was sold," Hamilton recalled, adding that the board did the seller "a favor."

However, now that the real estate prices are declining, the tactic ultimately hurts resale values by making it harder for shareholders to sell their homes.

"For them to kill a transaction because it's priced too low is counterproductive for them," Miller said. "It has the effect of damaging the collateral they're trying to protect. By constraining the market, they hurt the values in their building."

Agents avoid buildings with overly strict boards, Hamilton said. "There are buildings that agents don't want to show because they reject buyers for ridiculous reasons," he said.

While most co-ops are reasonable, "the ones that aren't are the ones that are going to be sorry" if they continue strict practices in the current down market.

Luckily, some boards already seem to be getting the message, said Gewirtz.

In a recent sale at Lincoln Towers on West End Avenue, she warned the buyer that the co-op board might think the sale price was too low.

"We said to her, 'If you take this price we can't promise you will pass the board," Gewirtz recalled. "They may reject you because it's just a drop in value from the last sale."

Surprisingly, the buyer was approved. "I was pleasantly surprised," she said, concluding: "Co-op boards are aware of what's going on in the world."

Rejections rising

Price isn't the only reason boards are rejecting buyers. As The Real Deal and other publications have reported, many are now stricter when it comes to financial requirements, and look askance at buyers who work on Wall Street.

Shmulewitz said he's seeing more rejections now than he did before the slowdown. He also said the number of conditional acceptances — where buyers are accepted only if they set aside a year or two years of maintenance fees in escrow — has now grown from 5 percent to 10 to 15 percent.

Since there are fewer buyers in the first place and financing is difficult to come by, co-ops should think twice before rejecting potential purchasers, brokers say.

"Boards need to get real," Halstead's Hamilton said. "They need to realize that this market is different and they need to be flexible."

Some co-ops "are being overly conservative," said Louise Phillips Forbes, an executive vice president at Halstead Property, who sometimes advises boards to resist the temptation to reject qualified buyers because they feel prices are too low.

"I caution boards that their role is to quantify if an individual is able to afford the maintenance," she said. "It isn't about trying to manipulate the market."

And of course, many boards have additional rules about pets, subleasing or certain renovations. Now that the market is declining and buyers are scarce, these rules, too, can depress the value of apartments.

Deanna Kory, a senior vice president at the Corcoran Group, said she recently sold an apartment to a buyer who planned to combine it with another apartment in the building. The board, which has strict rules about such changes, turned the buyer down. "We got a great price and the board turned the people down," she said. "Now it's on the market at a much lower price."

Sensing the change in the air, some boards are beginning to relax their rules, particularly when it comes to renting. "Managing agents are advising boards that their rental policies are going to have to loosen up," Forbes said.

Sunday, February 22, 2009

Soaring charges hit condo, co-op owners

Article can be found at
Soaring charges hit condo, co-op owners
By Amanda Fung
Published: February 22, 2009 - 5:59 am

Residents of a 54-unit Upper East Side co-op got the bad news last month—despite the board's intense efforts to trim expenses, maintenance fees are rising 15%, nearly double last year's hike. “People are furious,” says Steven Sladkus, president of the co-op board and a partner at law firm Wolf Haldenstein Adler Freeman & Herz. “Some of them have lost their jobs.”

It's an increasingly common problem. Even as the city's economy sinks, maintenance fees and common charges for co-ops and condos, respectively, are rising at the highest rates in years. Co-op managers blame soaring expenses, primarily property taxes.

And things could get much worse. Income derived from renting retail space and levying charges on unit sales is plummeting, and the number of owners defaulting is starting to rise.

Monthly fees at co-ops are going up at more than double the rate of recent years. Though steeply falling fuel costs have given buildings some relief, most boards cite drastic hikes in real estate taxes. Condo common charges are rising less dramatically, because such taxes are not included.

Fees have spiked 7% to 12% at the 300 Manhattan co-ops and condos managed by Cooper Square Realty, according to Chief Executive David Kuperberg. That compares with traditional average increases of 3% to 5%. Similarly, Halstead Property Management says the co-ops it operates are getting hikes of 8% to 14%, double historical rates.

At Lincoln Towers, an eight-building complex on the Upper West Side, owners are writing maintenance checks that are 4% to 13% higher than in 2008.

“This is by far the largest general increase we've had since 1987, when we became a co-op,” says Andrew Cooper, president of Residence Resource, which manages Lincoln Towers. “This is happening citywide.”

The squeeze has just begun at co-ops and condos where rental income from retail and office space is important. Ground-floor retail leases are major sources of revenue for many residential properties. For instance, such space in a building on Madison Avenue in the East 80s can fetch at least $300 a square foot. Retail rents can bring in millions of dollars, according to Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail leasing and sales division.

The retail vacancy rate in Manhattan residential buildings is running at nearly 18%—triple that of 2008, Ms. Consolo says. “There is a lot of competitive space out there,” she adds. “Retailers have been victims of the recession.”

With declines in sales prices and transactions, co-ops that still look for income from flip taxes are feeling the pinch. Deal volume was down 23% in the fourth quarter from a year earlier, according to appraisal firm Miller Samuel. The building typically makes 3% to 5% of the unit sales price.

At the market's mercy

“Co-ops are at the mercy of the market,” says Eric Goidel, senior partner at law firm Borah Goldstein Altschuler Nahins & Goidel.

Condo buildings, which have less stringent financial requirements for initial purchase than co-ops do, face another threat. As owners lose their jobs or their bonuses, they quit paying common charges. And in the deteriorating real estate market, developers are increasingly left paying common charges for unsold units—a burden that could push some of them into bankruptcy.

“If developers default, everyone else will eventually have to pick up the balance,” says Jeff Reich, a partner at Wolf Haldenstein.

Meanwhile, operating costs—including water, sewage and labor—continue escalating. Many co-op managers point to real estate taxes for the hefty maintenance fee spikes. To help fill the city's $4 billion budget gap, Mayor Michael Bloomberg and the City Council recently boosted property taxes 7%.

“The city hit owners at a very bad time,” Mr. Kuperberg says. “Values of homes are decreasing, and people are struggling to pay their mortgage.”

Some condo owners claim that developers misrepresent operating expenses to attract buyers. Other estimates may be made in good faith but are outdated in a short time. One new Madison Avenue condo was forced to raise common charges 25% this year, according to Mr. Reich.

“It's a perfect storm,” he says. “Expenses are increasing, and people who [relied on financing] for an obscene amount of the price of their condos are seeing values decline.”

Sunday, February 8, 2009

The Downside for Condos in a Downturn

February 8, 2009
The Downside for Condos in a Downturn

DURING the recent boom, buyers who coveted condos for their sex appeal could also make the case that condos were a smarter choice than co-ops.

In theory, you didn’t have to prostrate yourself, financially and otherwise, before a board for approval, and you could sell or rent pretty much to whomever you chose, should the need, or whim, arise. You could also put down a lot less money than the 20, 25, or even 50 percent of the purchase price customarily demanded by co-ops.

But as the city’s fortunes buckle and heave, these very differences have potentially rendered some of the city’s condo buildings dangerously exposed to the downturn. Then there is a distinction many condo buyers probably dismissed as a boring legality: If a condo unit is the subject of a foreclosure, the bank gets first dibs on the equity. With real estate prices way off their peak, that means some condo buildings will collect nothing but dust from residents who have also failed to pay their common charges, leaving the remaining owners to shoulder the burden of higher costs or reduced services.

Defaults on common charges began to spike last fall, according to lawyers hired by increasingly jittery boards to file liens (the first step toward foreclosure) against owners in arrears.

“We had maybe four or five before October,” said Adam Leitman Bailey, a Manhattan real estate lawyer, referring to the number of liens his firm filed last year against condo owners in Manhattan and Brooklyn. “It really got going this fall. We had 28 filings here and 17 in Brooklyn. These aren’t in the wealthiest or the poorest buildings. It’s the buildings with the younger 30- or 35-year-old professionals buying a $1 million to $2.5 million apartment, who haven’t been working for 20 or 30 years and are relying on their job to pay for it.” Other lien-filing lawyers said the pace had picked up by at least 10 to 25 percent.

“We’re seeing more, especially in the higher-end buildings where you never heard of foreclosures,” said Adam D. Finkelstein, a real estate lawyer with Kagan Lubic Lepper Lewis Gold & Colbert in Manhattan. Starting last quarter, his firm began filing two or three liens a month, up from two or three per year.

According to figures provided by the online research company, condo lien filings more than doubled in Brooklyn during the second half of 2008, and the number of filings in Manhattan zigzagged, with 156 in the first quarter, 186 in the second, 154 in the third and 203 in the fourth.

While the aggregate number of liens is still small (47 in Brooklyn and 67 in Manhattan in December, for example), they may be the first sign of trouble: Liens typically lag months behind defaults in common charge payments, and the bottom didn’t truly fall out of the city’s economy until last fall.

Moreover, barring a swift economic renaissance, lawyers, managing agents and condo boards are bracing for things to worsen significantly this year as job losses mount, severances and savings evaporate, and the new reality sets in.

“The world as we’ve been living in it for the last several years has changed seemingly overnight,” Mr. Finkelstein said. “We’re at the very beginning of this.”

While lawyers are reporting a similar rash of defaults among co-op owners, the risk to the building (and by extension to the defaulter’s neighbors) is slight by comparison. That’s because a co-op building is entitled to its share before the bank can claim anything in the event of foreclosure (the ultimate consequence of nonpayment of maintenance charges).

But in condo foreclosures, the debt priorities are reversed. After a foreclosure process that these days can take two years — during which unpaid common charges proliferate — the building gets its due only after the bank is paid in full. And many condo owners have little equity in their apartments.

“I think it’s safe to say that the value of any apartment purchased in the last two years is less than its purchase price,” said David Kuperberg, the president of Cooper Square Realty, a Manhattan property management company. “The simple calculation is that if you bought an apartment a year ago and financed 90 percent of the purchase price, as many did, and now it’s worth 20 percent less, you’re upside-down as an owner.”

Even worse from the perspective of the condo building, if an apartment owner defaults on common charges but keeps up with mortgage payments, it falls to the building rather than the bank to pursue the foreclosure action.

In that situation, the building must pay the bank the entire balance owed under the mortgage. This prospect is so onerous in a down market that a vast majority of liens for unpaid common charges never advance to the foreclosure stage, said Aaron Shmulewitz, a real estate lawyer at Belkin Burden Wenig & Goldman in Manhattan.

Instead, buildings often sue the owners personally — looking for other assets and garnishing wages, if there are any. But they are effectively powerless to force the expulsion of a deadbeat owner who has no equity. So far, there hasn’t been an uptick in condo foreclosure filings in Manhattan and Brooklyn, according to Instead, owners in financial distress seem more willing to play chicken with the condo board than with the bank, and they appear to have some wiggle room when pressed.

Mr. Bailey said that to date, a majority of defaulting owners had paid up once his firm had filed a lien.

“The owners are hoping we won’t file, and then they find a way to pay, whether they’re borrowing it from relatives or using their last dime,” said Mr. Bailey, who observed that the days of refinancing one’s way out of debt were long gone. “Usually they will pay for their home first, before credit cards and health insurance, because keeping a roof over their heads is their family’s biggest priority.”

But the biggest priority for condo buildings is preserving cash flow. With smaller reserves dictating a more hand-to-mouth lifestyle than that of most co-ops, many have little choice but to assess owners if defaults grow large enough. Never welcome, increased assessments can push additional owners over the brink and into arrears. That is one reason many managing agents and lawyers have begun encouraging condo boards to forsake neighborly empathy and play hardball.

“It used to be three months and then you’d file a lien, and now at the most it’s two months and in many case it’s just one month,” Mr. Shmulewitz said.

Just how long to wait depends on a building’s exposure. “If two people are defaulting in a 200-unit building,” Mr. Finkelstein said, “you can probably exercise some leniency. But it’s more problematic in a 40-unit building, even though it probably won’t kill you. You’ve got to evaluate your risk. If you know someone has a very low mortgage and there’s a lot of equity, you can cut them a little slack, because you can collect if there’s a foreclosure.”

While all condo buildings share vulnerabilities putting them at greater risk than co-ops to defaulting owners, condos of recent vintage appear to be in the greatest peril. For starters, these buildings often have less-experienced boards to navigate a crisis.

“The fear is much more acute in newer buildings than in established condominiums,” said Mr. Kuperberg, the managing agent, whose company has helped about 40 buildings open in the past three years. “There’s a greater likelihood that many apartments were sold for more than they’re worth today. And newer buildings have many people who bought with no-income-verification loans and very relaxed criteria. They also have younger owners who may be less established.”

What’s more, many of these overleveraged, less well established owners are among the several hundred thousand who bought under the 421-a tax abatement program. As the 10-year abatements phase out in steps every two years, the recipients experience increasingly drastic tax increases — which many had been counting on income gains to offset.

Consider the following hypothetical situation, provided by Paul J. Korngold, a real estate lawyer in Manhattan, which he said was consistent with many Manhattan units selling in the $1 million to $2 million range under the 421-a program. What starts out as a $1,214 annual tax bill climbs to $4,613 in the third year, $8,012 in the fifth year, $11,411 in the seventh year and $18,209 when the abatement expires.

But those numbers assume that the city doesn’t raise assessed values or tax rates. Factoring in what Mr. Korngold called a historically conservative 3 percent combined average increase, the unit owner who begins with a $1,214 annual tax bill owes $10,046 in the fifth year and a staggering $32,887 when the abatement expires.

Nearly 300,000 condo units were constructed under the program in the five boroughs from 2002 through 2007, according to the Department of Finance. That figure includes 132,431 units in Manhattan, where about 22,000 owners are in their fourth year of the program, 31,000 are in their fifth or sixth, and 12,000 are in their seventh. Because 421-a purchases were concentrated in a limited number of buildings, they are potentially destabilizing to these buildings in a down economy.

Mr. Kuperberg sketched out a second chain of events, this one pertaining to new buildings with many unsold units. It unfolds like this: Unable to sell half the units in a building, a struggling developer stops paying common charges and defaults on obligations to the lender. Foreclosure by the lender may take years, while individual unit owners effectively wind up paying double their normal common charges. This pushes some owners, themselves struggling, into default. Meanwhile, they are trapped — unable to sell, even at a steep loss, because most mortgage lenders won’t lend to potential buyers in a building where half the units are in default.

“That is a death spiral that could push a building into bankruptcy,” Mr. Kuperberg said. “You basically have a building unable to meet its operating expenses.”

Once the lender succeeds in foreclosing on the developer, there may not be enough money to cover the lender costs and unpaid common charges, forcing the unit owners to permanently swallow the loss. And while the lender must pay carrying costs going forward, it may decide not to throw good money after bad and instead dump the units at auction. The investors who buy them may act against the building’s best interests — renting them out cheaply (introducing a transient population that, among other things, inflicts more wear and tear) and electing boards who defer maintenance and refuse to make improvements.

“We work with a building that’s about 50 percent sold and the developer is gone — they lost all their money and they weren’t able to sell,” said one managing agent who asked to remain anonymous out of concern for the impact on property values in the building. “The lender took over and pays the common charges but doesn’t talk to us and won’t return our calls. If you’re running a building and 50 percent of the ownership doesn’t give you direction, that’s a problem. But I’m really nervous about what happens if the lender sells into the vulture market.”

Even condo boards in fully sold buildings have begun to contemplate the once unthinkable: slashing the very amenities that defined the recent boom.

“The boards are starting to talk about cutting things that might be considered a little excessive,” said Leslie Bogen Winkler, the vice president and director of management at Penmark Realty, a property management firm that has opened 50 condo buildings in the last three and a half years. “They may reduce health-club hours and maybe scale back breakfast. The biggest amenities that are costly are the health club with a swimming pool. It can run up to $200,000 to $400,000, depending on the size, hours open and operator.”

Staff cuts may also be in the offing at some buildings, though union contracts present significant hurdles. Moreover, said J. Brian Peters, the senior managing director of property management for Rose Associates, which owns or manages about 20,000 apartments in New York, “you can cut positions, but at a certain level that’s devaluing the product. And it’s the best product that’s going to survive the easiest in this downturn. We’re really more focused on increasing revenue.”

To that end, condo boards are considering adopting flip taxes, increasing alteration fees and bumping up sublet fees. They are also easing restrictions on the length of sublets so that strapped owners unable to sell their units can more easily rent them out.

Then again, other condos have the luxury of spare cash and might actually come out ahead in the downturn, Mr. Kuperberg said. “The recession can be a good opportunity to buy capital improvements and do upgrades,” he explained, “because contractors don’t have a lot of work and material costs are way down. It’s an opportunity to invest not only in cosmetic things like the lobby but in infrastructure that could reduce operating costs.”

Sunday, January 4, 2009

Making lobbies more attractive

January 4, 2009
The Come-Hither Lobby

ENTER the lobby of the Platinum — a sparkling glass-and-steel popsicle of a condominium that rises 43 stories above the circus lights of Eighth Avenue — and you may think you’ve stumbled into the lair of James Bond’s latest big-screen foe.

Twenty-six feet of roaring flames run along one wall, a deconstructed fireplace whose orange embers dance behind a blue-hued sheet of glass. Enormous plasma television screens stare down from stark white walls. Geometric furniture sits surrounded by a bubbling moat that circumnavigates the space.

The Web site for the building, where one-bedrooms start at $920,000, describes this scene as “a rarefied world etched in water and fire, stone and glass ... and power.” A woman leaving the lobby on a recent evening offered a less charitable opinion: she called it “a den of hell.” (The woman, who had been visiting a friend, declined to give her name for fear of offending the hostess.)

In an increasingly tough market that has left some high-rises sitting half-empty, the lobby has become a site of innovation for developers who find it more urgent than ever to make their buildings stand out from the crowd.

Forget the still life over the sofa: ho-hum accouterments have given way to ambitious design schemes that are equal parts amenity and advertisement. Owners are using their ground-floor spaces as an important marketing tool that can entice buyers with the promise of a certain lifestyle.

Some lobbies, once meant to capture the feel of a gallery, have become active commercial spaces where art is bought and sold. Other buildings try for a twist on familiar themes like Zen gardens, waterfalls and the traditional fireplace.

But the lobby is also a space that greets residents each morning and welcomes them home at a tough day’s end. It is a first impression for guests and a tantalizing glimpse for passers-by. Not quite public, but not quite private either, the lobby occupies a liminal state in one’s home life, and with that ambiguity comes a set of priorities that can shift and, oftentimes, conflict.

“There’s a desire to make a statement about the particular personality and status of the building,” said Mayer Rus, a longtime observer of the Manhattan design scene and a former design editor of House & Garden magazine. “But you also have the desire to appease as many of the tenants as you can.”

Developers, he added, “are not going to roll the dice that someone is going to be turned off from buying in the building.”

Mr. Rus noted that this can be a tricky path to tread. “There needs to be some sort of attempt at consensus,” he said. “Of course, consensus is the quickest road to mediocrity.”

Art arrives in lobbies via a variety of channels, from the personal collections of building owners to commercial arrangements between galleries and developers. The decision can be personal: architects who turn to friends for inspiration. Or it can be made by committee, as a team of in-house designers sifting through catalogs and gallery books.

With so many factors at play, judging the success of a building’s lobby art is a subjective game. Developers and sales agents, predictably, are often agog; according to its owners, to enter the Platinum is to “realize that you have arrived at a cutting-edge building that is unlike any other you have seen before.”

Hard facts like occupancy rates and closing prices (at the moment, 63 percent of the apartments at the Platinum have closed) do not necessarily speak to the lobby. Residents can be indifferent, and many artists are unaware their work is being displayed at all.

“This is the first time I’ve heard of it,” Dale Chihuly said when informed that three of his paintings were hanging in the lobby of Tribeca Park, a rental building designed by Robert A. M. Stern at the far west end of Chambers Street. Studios there start at $3,000 a month.

Mr. Chihuly said he had no idea which of his works were on display. “They usually look pretty good when they’re in a lobby,” he said, then paused. “Or hopefully they look good. Depends on the lobby.”

At Tribeca Park, Mr. Chihuly’s works hang behind a simple arrangement of sofa and chairs, a traditional approach in keeping with the conservative aesthetic of Mr. Stern, whose postmodern architecture often celebrates styles of the past. Vaguely figurative, the works feature pink, red, and teal swirls against brightly colored backgrounds, a polychromatic contrast to the polished brown wall behind.

The paintings are intended to “celebrate going in and out of the lobby, to add to the experience, to make it more experiential,” said David J. Wine, the vice chairman of the Related Companies, which developed the building. “Art is something we all live with and love to live with.”

It is also something to buy: each work is accompanied by a small silver placard that offers the telephone number for Millenia Fine Art Partners, which sells Mr. Chihuly’s work and arranged the showcase at Tribeca Park.

“It’s a win-win situation,” said Josh Garrick, a spokesman for Millenia. “Not only does a developer end up with great art, but it also introduces potential buyers to the art.”

Referring to another residence where Millenia features its wares, he said, “Let’s face it: if you live in the Time Warner Center, you can afford a pretty decent price point of fine art.”

The Atelier, a soaring glass high-rise that stands on a windswept stretch of 42nd Street near 12th Avenue, takes this concept even further: its expansive lobby is used as actual gallery space, with a rotating exhibition calendar that features three to four shows a year.

“Why commit to one artist?” asked Elad Dror, a director at the Moinian Group, which developed the building. “You commission a new artist and the lobby looks refreshed every time. You have beautiful art. It’s an amenity.”

The lobby’s white walls and double-height ceiling give it the look of a gallery, complemented by the European house music pumped in through the speaker system. “We’re trying to give it the feeling of a boutique luxury hip hotel,” Mr. Dror said of the building, where one-bedrooms start at $770,000.

Currently on display is a collection of colorful prints by the graphic designer Milton Glaser, best known for creating the ubiquitous I Love New York logo in the 1970s. (Over the holidays, Mr. Glaser’s show shared the space with an imposing metal menorah.)

The works are explicitly for sale: Mr. Glaser’s series of 17-by-22-inch caricatures of cultural icons like George Harrison and Toulouse Lautrec go for $350 apiece, a price noted on an accompanying placard. A mischievous-looking Shakespeare, 36 by 48 inches, framed, is $3,300. At least five works have sold so far; previous shows took in as much as $40,000 in sales.

This is the first time that Mr. Glaser has displayed his work in an apartment building’s lobby. “The works seem to fit in the spaces O.K.,” he said. “It’s not exactly what one would call a site-specific exhibition. It takes a very nice available space and generous proportions and puts in a bunch of stuff so it looks good.”

He said the lobby “looks like a kind of gallery, if one can imagine a very fancy southern French gallery catering to rich people.”

Alexander Alberro, an associate professor of art history at Barnard who has studied the commoditization of contemporary art, said the concept of a lobby used for sales was “rather vulgar.”

“Even in galleries, the price is kept somewhat discreet,” he said in an interview. “To turn the lobby into a site of commerce and expect that people aren’t going to really be bothered by that really does imply a certain type of dweller: somebody for whom a life of being perpetually sold to at all times is not a problem.”

Residents of the Atelier did not appear to take much note of Mr. Glaser’s works on a recent evening, and some seemed indifferent. “Some of the exhibits I like better than others,” said Danny Newman, a 24-year-old teacher who bought an apartment there last summer. He said he liked the lobby — “the bright white is very relaxing” — but it was the building’s 47th-floor outdoor garden, with its views of the Hudson River, that sealed the deal.

One building that is not putting its art up for sale is the Caledonia, on West 17th Street at 11th Avenue by the High Line. The sound of a burbling stream greets visitors as they enter the blocklong lobby, where a stone waterfall and bamboo trees compete for attention with more than two dozen objets d’art.

The installations range from brooding Rothko-like abstract canvases by the dimly lighted elevator banks to a hanging garden of orange light bulbs, an ersatz Dan Flavin ceiling fixture. Stalagmitelike sculptures stand by gray metallic grates on a wall, suggesting a trio of wind turbines.

“We didn’t want to be too slick,” said Mr. Wine of Related, also a developer of the Caledonia. “That’s not what we were after. We were trying to create an oasis within a very cool, happening neighborhood.”

Mr. Wine said the lobby’s more industrial elements nodded to the commercial past of the area. “It’s a celebration of a historic neighborhood in New York City,” he said.

Professor Alberro saw the lobby as more of a link to the present.

“The Caledonia is contributing to the local industry of galleries by lubricating the dwellers’ desire to acquire art objects,” he said. “One could say they’re contributing to the neighborhood in a way that’s rather odd.”

The professor, who examined photographs of the building from its Web site, reflected a moment. “Well, not odd — it makes total sense! It’s a little bit crass, perhaps.”

For the most part, residents said they were happy with the space, which they considered unique to Manhattan buildings. “I love it. It’s very polished,” said Clay Erwin, a 32-year-old banker who bought in July. “You can feel it immediately when you walk in the building. It’s something different.”

Still, they said it had not been a deciding factor in their decision to live in the building, where the average one-bedroom rents for $4,800 a month and studios start at $600,000. And some features struck them as superlative, like a library-cum-lounge complete with African sculpture, high-end design books, and a window emblazoned with famous quotations (“The true mystery of the world is the visible, not the invisible” — Oscar Wilde). The room, described by Mr. Wine as “a sanctuary in the building,” was mostly empty on a recent evening. Its fireplace, residents said, is never lighted.

“The library is cool, but I’ve never used it, ever,” said one renter, a 29-year-old Web developer who asked not to be identified for fear of offending her landlord. “The whole waterfall and river, I don’t think it’s necessary.”

One complaint came from Terence Main, who was irked to find his sculpture, “Urban Guerrillas,” a pair of blocky human figures bowing on all fours, displayed in front of a heater vent.

“There are little subtle tweaks that could have really made the installation better,” said Mr. Main, who was not consulted about the placement of his work. “There were other places inside the lobby where they could have been placed. I don’t know what the logic of that was.”

The apartment lobby is a new exhibition space for Mr. Main, who said he would consider adjusting his contract next time. “I used to think other people had a better sense, but I now realize they don’t.”

In the end, the vast variety of artwork found in the city’s lobbies belies a unifying trait: inoffensiveness. “It’s fairly banal art that’s not going to bother anybody,” Professor Alberro said. “One can’t have anything that would have any element of critique, or anything that would push anyone to really actually focus on the object.”

Mr. Rus, the design editor, was of the same opinion: “They don’t want trouble.”

Pepe Karmel, the chairman of the art history department at New York University, does not necessarily consider this a bad thing.

“The ideal Manhattan lobby dates from 1927 or 1928,” he wrote in an e-mail message. “Between its marble floors and its elegant moldings, it is decorated with Chippendale furniture and English hunting prints.”

The outrĂ© designs of the Platinum and Caledonia “seem shockingly un-homelike” in comparison, he wrote, “but they function symbolically in very much the same way.”

Professor Karmel, who looked at online photographs of the buildings, compared the Caledonia to “the nature preserves of Costa Rica” and said the fireplace of the Platinum “may induce the illusion that you are camping on an Icelandic glacier.”

Either way, he wrote, the lobbies offer a contemporary take on the 1920s “fantasy of life in an English country house, far from the pressures of urban existences.”

“What’s missing is the fantasy of social exclusivity,” Professor Karmel wrote. “Sitting in them, you don’t feel like a member of the English gentry. That seems to me an improvement.”

Windmills on NYC rooftops

January 4, 2009
A Cleaner Way to Keep the City Running

FOR centuries, grist-grinders and sailors have exploited the wind. Now, New York developers, homeowners and city leaders might be coming around.

A handful of buildings are already drawing electricity from wind turbines, which typically resemble table fans, or mounted airplane propellers.

Unlike some of the skyscraping versions that dot rural hillsides, small turbines supply power directly to homes without first sending it through a utility company’s lines.

One major sticking point in the city is that densely packed buildings tend to scatter breezes, making it tough to capture steady gusts. Although this and other kinks need to be addressed before the widespread rollout of small turbines is possible, there are signs of gains.

“We’re always excited to try new things in the area of green building,” says Les Bluestone, a partner in the Blue Sea Development Company, which is building a five-story brick apartment building in the Melrose section of the South Bronx that will be partly powered by wind.

Its 10 one-kilowatt turbines, from AeroVironment of Monrovia, Calif., will generate electricity for lights in the building’s hallways, elevators and other common areas.

But because wind speeds in the Bronx, as in other parts of New York, aren’t consistent, the turbines must be supplemented with a separate basement power plant, Mr. Bluestone said.

Residents of the 63 one- to three-bedroom rental units, meanwhile, will plug in the conventional way, through Con Edison.

The turbines, which collectively cost $100,000, could halve the annual utility bill for the common spaces, to $9,000 from $18,000, Mr. Bluestone said.

And that saving was critical to the budget for the project, which is designated as affordable housing. Indeed, units will be priced below the market, with monthly rents of $750 to $1,089, when leasing starts this month, he said.

Winds in New York City clock in, on average, at six miles an hour. On low-lying Long Island, though, they hover at around 11 miles per hour, meaning a turbine can pick up more of a building’s tab, says Michael Urban, a resident of Brookhaven.

In September, Mr. Urban installed a 1.8-kilowatt turbine from Southwest Windpower of Flagstaff, Ariz., in the yard of his four-bedroom home. It provides a third of his home’s energy, he said.

Though many towns might prohibit a 60-foot tower like the one his turbine sits on, Brookhaven has allowed it. Mr. Urban also received a green light from the 26 other residents of his subdivision, allowing him to overcome some common obstacles to turbines.

“It cost me about $15,000, and I can save about $1,200 a year,” he said. “That adds value to my real estate.”

Mayor Michael R. Bloomberg stoked excitement among wind-power advocates in August when he announced that he supported putting turbines atop city skyscrapers.

Of the 60 proposals that were later submitted to the city under a request for renewable-energy projects, the majority were wind related, including technologies for apartment-mounted machines, said Jen Becker, a vice president of the New York City Economic Development Corporation. “It’s definitely something we are looking at seriously,” she said.

The state is also offering encouragement through its Energy Research and Development Authority, which will cover half the homeowner’s initial cost of turbines, though so far there have been no takers south of Dutchess County.

Nationally, too, the wind industry received a boost in October when a provision in the Troubled Assets Relief Program bailout bill created a one-time 30 percent tax credit for the installation costs for homeowners. No credit had existed since 1985.

But the new credit is capped at $4,000, which does little to defray the cost of equipment that can total $70,000, says Mike Bergey, president of Bergey WindPower, a manufacturer in Norman, Okla.

Mr. Bergey also worries that roof-mounted turbines, which can be heavy and produce steady vibrations, might perform poorly on rickety buildings.

“It’s not like it’s impossible,” he said, “but we’re just not really bullish on the New York market.”