That’s the fear facing tenants in some of the 52 Harlem buildings owned by a private investment group called Tahl-Propp Equities. Tahl-Propp—named after managing partners Joseph A. Tahl and Rodney Propp—has shelled out more than $150 million over the past decade to take control of 3,000 apartments in East and West Harlem. Seventy-five percent of the units they now own are federally subsidized. Most of the remaining 25 percent are rent-regulated by the city and state. No matter what kind of program the units are in, advocates say, the prices Tahl-Propp paid puts tenants at risk.
For instance, Tahl-Propp acknowledges paying $8 million (although city land records indicate the higher price of $9.3 million) for 1900 Lexington Avenue, a 19-story, full-block building at East 118th Street. This bland and decaying 33-year-old tower, known as UPACA 7 (the acronym comes from the name of its original sponsor, the Upper Park Avenue Community Association) hardly seems like a cash cow. It’s highly subsidized housing for low-income people, and has received tens of millions of dollars in state and federal subsidies over the past three decades to keep it afloat.
“No,” Tahl declared decisively when asked if the $230 per room per month (or $1.8 million a year) he collects in subsidized rents can cover the debt and maintenance costs on UPACA 7. He says the building defaulted in the mid-1990s, before he owned it, and was only salvaged because the government added new subsidies. “One reason it failed then is because the rents were too low,” he said. “And they’re still too low now.”
UPACA 7 was built and maintained through a mixture of government programs—including a tax abatement and low-interest mortgage under the state Mitchell-Lama program, an additional annual subsidy of almost $350,000 a year through the federal Department of Housing and Urban Development, and financing through the federal low income housing tax credit program. These programs guarantee that the apartments will remain affordable to low-income people until 2027.
Still, Tahl has a plan to make a profit. He has told the state that he intends to pay off the subsidized mortgage on the property, ending the low interest loan and tax abatement. Ordinarily, this would mean greater expenses for the owner – except that the move would also allow the tenants to apply for what are called enhanced Section 8 vouchers. Under the Section 8 program, tenants pay one-third of their income toward rent and the government pays the rest. With enhanced vouchers, the government promises to pay an unspecified but potentially higher market-rate rent to the landlord. According to Tahl, enhanced vouchers could double his income – raising average rents from $1,200 a month to $2,400 – without increasing costs to the tenants. “Every one of our deals has to work without burdening the tenants with a rent increase,” he says.
