A PROPOSAL FOR HOME OWNERSHIP At present the residents at Midtown Park are considering purchasing the development from the City for conversion to condominium housing. The resident organization, Committee for an Integrated Community, has completed initial surveys of residents to ascertain support for a program of home ownership. After an analysis of a fifty percent sample there appears to be sufficient interest and financial ability for such a conversion. This move, if carried through to a successful conclusion, would fulfill the original purpose of Midtown Park as established some ten years ago. It would also encourage the City to arrange other financial programs to rescue housing developments in default and assist local housing objectives such as expanding housing resources for low and moderate income families. Condominiums have certain advantages over cooperative housing. A cooperative must depend upon the continual ability of all its members to meet fixed costs. If some of the cooperators default, the remaining members must pick up the tab to maintain monthly mortgage payments. Thus, a major deterrent to cooperative housing and investment has been the blanketing of a single mortgage over all the units in a development. In a condominium arrangement each cooperator has title to his own unit and the default of one or more units would not affect his separate investment. FHA Section 234 insures cooperative housing ventures for a period of forty years and would be one method by which the Midtown Park tenants might purchase the housing development from the City. CONCLUSION Midtown Park was an early experiment in FHA insured cooperative housing for moderate income families which failed to attract sufficient cooperators in the initial rent up period. Whether it was a poor reading of the market or a lackluster sales campaign, the developer did not pursue the cooperative venture but sought early relief with FHA permission to convert the project from cooperative to rental housing. Conversion to rental housing did not relieve a continuing high turnover and vacancy rate. The developer tried various and numerous management operations to reverse a mounting financial deficit but the concomitant problems of poor management, vandalism and the departure of many of the original co-op subscription holders proved overwhelming. Failure of the developer to meet mortgage payments led to foreclosure by FHA and the placement of Midtown Park in receivership. FHA, in order to recoup a portion of the loss, placed the development on the auction block. But no bidders came forward and FHA retained ownership of the property. With the acquisition of Midtown Park by the City and County of San Francisco, the mounting financial indebtedness and the trend toward physical deterioration have been reversed. Municipal ownership and subsequent leasing to a corporation of residents have provided the necessary positive cooperative effort to attain financial solvency and reinstate a vital housing resource for moderate income families to the City's inventory. This arrangement has proved to be a successful planning partnership between the City and the Midtown Park residents. Municipal acquisition of Midtown Park is a temporary arrangement. The City assumes the responsibility of the possessory interest tax and establishes reasonable rents for moderate income families. This is a modest public subsidy to redeem 140 units of family housing. Since public acquisition in 1969 the Midtown Park Corporation has secured the property against theft and vandalism and completed or programmed those necessary improvements which have upgraded the development. These improvements plus a pride in tenant management have brought the residents together into a tightly-knit and cohesive community organization providing Midtown Park with a strong measure of stability and cooperation. The resident organization, the Committee for an Integrated Community, has played a central role in the rescue mission. The organization includes cross-section of professional skills as well as some of the original co-op subscription holders who have elected to remain at Midtown Park. It is this combination of professional skills and proprietary concern that has placed the development on a sound financial footing. This resurgence will continue. The Committee is currently weighing the feasibility of converting Midtown Park into condominium housing, and surveys have indicated that sufficient support and financial capability exists among present tenants. Such action would return Midtown Park to the private sector and encourage other public efforts to rescue housing developments in default, and in so doing, expand housing resources in the City. MEMORANDUM OFFICE OF THE MAYOR To: From: SAN FRANCISCO JOHN H. TOLAN, JR. Deputy for Development WILLIAM S. KENNEDY Financial and Management Specialist Subject: Midtown Park Corporation, dba In accordance with your instructions, I have prepared (shown below) a Balance Sheet as of June 30, 1973 and an accompanyi Statement of Profit and Loss for the six months ended on tha date for the subject entity. The figures were supplied unaudited by the bank, and as I di not have access to the accounting records, I am in no positi to vouch for their accuracy. I did, however, compare them w those on the December 31, 1972 statements, and they appear reasonable with one or two exceptions. Therefore, adjustme have been made for these. It seems, for example, that no a cruals were set up covering audit fees, fire insurance, or depreciation; consequently, I have done so. In addition, t conservative, I wrote off a suspense item of $4,384.15. Following are the details of the changes to the bank's Prof and Loss figure: |