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CONSTRUCTION





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PRINCIPLES OF CO-OPERATIVE BUILDING

How to Successfully Carry Out an Operation for a Club Apart¬
ment House Described by an Expert Promoter and Manager





WITHIN the past three years there has been sucb a marked
revival in building apartment houses for home clubs that
there is a strong belief that tliis department of construction will
be much enlarged in the years to come, when building opera¬
tors and architects become more acquainted with the principles
which are now recognized as essential to success.

Private residences, it is firmly beheved, will continue to be
erected in the central sections of the city, if not in the form of
one-family or two-family houses, then as six, eight or ten-
family houses, in which the essentials of privacy wiil be present
as fully as if the suites of rooms were separated by a vertical'
"party wall," as in rows of small liouses, instead of being
separated horizontally, by floors as thiele and substantial and
impenetrable; as the side walls of the old-style dwellings,

A paper read by Mr. P, S, Bancroft at the convention of Build¬
ing jManagers and Owners, at Washington, last week, was
considered a very informing explanation of the new principles
interwoven with a successful operation for a oo-operative house,
Mr. Bancroft, in representing the flrm of Pease & Eliiman, has
been instrumental in bringing about the erection of a number
of co-operative houses.    In the course of bis paper, he said:





INCEPTION   OF   THE   CO-OPERATIVE   HOUSE,

The idea, it appears, had been applied to apartments in Great
Britain before its adoption in this country, for the New York
Record and Guide for ISSl states that in that year the archi¬
tects, Messrs, Pugin & Walter, of Victoria Square, London, and
No. GS Wall street. New Tork, were commissioned by Lord
Portman to establish co-operative apartments in New Tork.
They were to be copied after those then in successful operation
in Glasgow and other cities in the north of Great Britain.

The success or failure of Portman's enterprise is not recorded,
and hence the credit of introducing co-operative apartinents in
this country must be given to Mr. T, G. Hubert, one-time senior
partner of the firm of Hubert, Pirsson & Company, architects.
In ISSO he launched his flrst successful co-operative scheme, in
which he was ably seconded by the Rev, Jared B. Plagg, the
father of Ernest Flagg, architect of the famous Singer Building,

This flrst venture was the "Rembrandt," Nos.' 154-156 West
o7th street, and among iT:s subscribers were the Rev, Mr, Flagg,
R. Swain Gifford, Junius H. Brown, John Elderkin, Mary H.
Rossiter, Eliza S. Malcolm, Mary L, Dickerson and Helen C.
Skidmore. This house _ran successfully until a few years ago,
when the property was purchased by Andrew Carnegie as a
protection for Carnegie Hall, whicli adjoins it. It is still the
"Rembrandt," although no longer run on  the co-operative basis.

The second was promoted by Mr. Ernest Flagg in ISSl, and
continues in successful operation at No. 80 Madison avenue.
During the following six or seven years, many "home clubs,"
as they were then called, were established, and among their
subscribers were many prominent bankers, lawyers and well-
known business and professional men. In one of these were
introduced the first duplex apartments, which were considered a
very attractive feature and were much commented upon at the
time.                                                                                  '            ^"^l

The years 1881 and 18S4 seemed to be especially favorable for
the promotion of "home clubs." In one instance an option was
obtained on the property where the Plaza Hotel now stands,
and subscribers were secured for all the apartments in what
was to be an immense structure, but it was never built, owing
to a flaw in the title. It was at this time that Mr. Jose P,
de Navarro began the erection of the larg.e block of buildings on
59th street facing Central Park, known as the "Navarro Flats."
These were the handsomest apartments thus far attempted, and
were eagerly subscribed to.

This experience, though unsuccessful as originally planned,
was no doubt beneficial, for when co-operative apartments were
revived it was with the feeling that experience had taught its
lesson, that the experimental stage was passed, and that the
road to success lay clear ahead. This has been proved by the
successful co-operative apartments of to-day, and tlie public
has not been slow to avail itself of the advantages which this
mode of living affords.

In the cases where the stockholders erect their own building
it is naturally ii-.it up to conform to the views of the majority as
to design and material used.    This enables them, if they wish.





to use the best material in its construction and the most modern
appliances in the flttings; and no one knows better than the
managers of real estate that in the end the best is always the
most economical. It is especially true in this case, as the in¬
dividual owner has to make all repairs in his own apartment,
except where the damage is caused by outside influences or by
the breakage of the main lines of supply and waste.

Each owner is also able to plan the size and arrangement of
the rooms in his own apartment, this privilege being limited by
the unavoidable demands of architect and builder. The decora¬
tions are done at his own expense, so he can suit his own taste
and be extravagant or economical as he chooses. In cases where
the stockholders purchase a building already constructed, they
often make many changes to meet personal requirements, feel¬
ing, as they do, that it is to be their permanent home and not
one at the suffrance of ah uncertain and perhaps avaricious
landlord or manager.

The management of the building is generally under the con¬
trol of a house committee, appointed by the directors, and as
each stockholder is a director he has an infiuential voice through
this committee in the running of the building. The committee
is also usually empowered by the directors to decide upon the
eligibility of proposed tenants. This scrutiny ia unquestionably
a most decided advantage to the owners, as no one wants a
home among undesirable neighbors.

If, as frequently happens, an owner wishes to give up his
apartment temporarily or permanently, he can either rent to an
eligible tenant and obtain a very good return on his investment,
or flnd a purchaser, who must also pass under the scrutiny of
the directors. In some corporations the would-be seller is re¬
quired to offer his stock to the company before he can otherwise
transfer it.

A final advantage, and one which cannot fail to interest the
homeseeker, is the low annual cost of such an apartment, which,
in a well-located and well-organized scheme, should be merely
the interest on the money invested. The reason for this is one
of the mysteries to the layman, but is easily explained by the
fact that the usual large net return to the owner of the ordinary
apartment house accrues in a co-operative apartment to the
beneflt of the stockholder, being in the one case in the form of
net income, in the other of reduced rent.

The form of ownership is very simple, A corporation is
formed to escape the individual liability which a partnership
agreement would entail, and as it is formed solely for the pur¬
pose of holding the property, it is capitalized at an amount
equal to the equity only. Each subscriber to the stock has the
privilege of a lease of an apartment in the building, its size and
location depending upon the amount of his subscription. These
"proprietary leases," as they are called, run for a term of from
21 years, with renewal privileges to perpetuity and specify that
the tenant is owner of a certain number of shares of the capital
stock of the company.

These leases are cancelled prior to their expiration should the
following contingencies arise: Pirst—In case the tenant shall
cease to be the owner of, and cease to have standing in his
name, at least the number of shares of stock specified. In the
event of the death of the tenant, this provision is suspended, to
give time to arrange for a transfer of the stock, either to the
legatee or a satisfactory purchaser. Second: In case at any time
the company shall decide to sell the property. Such a sale has
to be approved toy an affirmative vote of 75 per cent, of the
stock at a meeting duly called for the purpose.

The rent specifled is generally about 40 per cent, of the rental
value of the apartment, with the additional clause that should
there be a deficiency in the current funds to meet current
expenses, the tenant, whom I have spoken of also as the owner,
may be called upon to pay on the next rent day such propor¬
tion of the deficiency as his stock bears to the capital stock of
the company. Should there be a surplus instead of a deficiency,
this inures in like manner to the beneflt of the stockholder.
Except for these clauses, a proprietary lease is very similar to
an ordinary one.

Tlie methods used up to the present time for financing a co¬
operative apartment are three in number, each of which I will
briefly explain. The simplest, but the most rarely used, is the
one where all the apartments are occupied by the owners. In
this case there is no outside source of income, ajid hence each