Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 86, no. 2219: September 24, 1910

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Ell^f^^E CONSTRUCTION E]i=r^=dE 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