Touch and Concern:

Laboring Surfaces and Profitable Losses
Critic: Ife Vanable

2021

Seminar Essay

Just as the impact of the state’s subsidy of single family homeownership on cities was becoming apparent, the very same instruments were being legalized for apartment purchasers creating a new legal form of ownership: the condominium. This article indexes the ascent of this form with a telling of the development and maintenance of the first condominium tower in New York City: the St. Tropez.

Kratter Kicked the Can

            In 1963 real estate investor Marvin Kratter was “near disaster.[1]” In the previous six months his eponymous corporation’s share price had plummeted from a high of $28.50 to $9.00 a share. Kratter Corporation was hemorrhaging cash into various construction schemes and acquisitions, leaving them without the liquidity to pay out any of that year’s $7 million profit margin ($71 million today) as dividends to shareholders.[2] Kratter Corporation itself was only three years old in 1963, and over the next three years the stock price would continue to dive until the board and shareholders took decisive action. The board split off all high-risk assets—including Marvin Kratter himself—and salvaged the remaining stable assets into a new corporation: Countrywide Realty.

            In 1961, just two years earlier, Marvin Kratter had been touted as a pioneer by the New York press.[3] He was on the Ivy League lecture circuit, explaining the novel structure of his syndicated real estate corporation to eager law students at Harvard and Yale.[4],[5]His model focused on buildings, but its currency was in constructing tax shelters. Investors would pool money that a syndicator (or promoter) would use to purchase an office or residential building. In return they would receive rental income from the building as tax-free returns on capital for the first years of ownership, recouping the “depreciation” of the asset. Kratter was the first to scale this venture into a corporation, refining the tax shelter model so well that he would publicly profess to the profitability of losses.[6]

            Cash flowed in as industry hype lured investors towards lucrative opportunities to lose tax liability. Ventures at Kratter Corporation near doubled annually. Beginning with $20 million at the time of incorporation in 1959 and $50 million in 1960, profits reached a high of $100 million[7]in 1961. But these oft quoted figures speak deceptively to private investor interest since $33 million had come from the state of New York in the form of subsidized mortgages through the Mitchell-Lama program.[8]These subsidies were intended to stimulate the construction of housing for “persons of low-income.”[9] The $33 million that the Kratter Corporation received represented more than half the $51 million Mitchell-Lama had initially released.[10]Kratter burned the cash and kicked up dirt all over Manhattan.

Speculative Shelters

            This paper will trace two built outfalls of Kratter Corporation’s development boom: (1) Bridge Apartments, an air-rights[11]development that absorbed nearly two fifths of the $33 million Kratter received from the Mitchell-Lama Program and (2) the St. Tropez, built with investor funds and christened New York’s first condominium.[12]These two high density residential projects were speculations on a changing city. The legalization of condominium ownership in 1963 was a direct answer to the growth of suburban home ownership which threatened to leave cities “the [rotting] remains of former thriving middle-class neighborhoods.” [13]So too did the Mitchell-Lama Program propose the provision of housing as an answer to “over-crowding” and the “substandard and insanitary” condition of the city.[14]Both drafted speculative shelters that might bring forth an (apparently) absent middle class. The Condominium Act and the Mitchell-Lama program, established by the 1955 Limited-Profit Housing Act—were able to leverage sheltering the middle class as an actionable[15]moral enterprise, towards a clearance consensus with a much longer history. Frederic Jameson, reviewing Robert Fitch’s Assignation of New York in 1998, pulled the following out the mouth of a prominent New York businessman in the 1920s:


            In promoting the Mitchell-Lama act, mayor Robert Wagner used similar, if less candid language: “Our city must be made a healthy and pleasant place in which to live as well as which to work. We must never become a city solely of factories, offices, and workshops. The movement of people to the suburbs which has been so evident in the past, must be reversed if our city is to prosper.”[17]One must note that the initiators of development in Kratter’s milieu seem to only see opportunities to reorganize and bring attractive bargains to market. There is no sense of the work the buildings would do on the city; how the things themselves would make and remake the city. I propose to consider the interests, capital and cares that carried these massive material accumulations into the present and continue to force them into the future.

The Things Themselves
[340 E 64th St] “New York’s First 35 Story Condominium Residence”[18]

            The St. Tropez Condominium is in Lenox Hill between 63rd and 64th street on the west side of First Avenue. It is an almost non-visual 35-story residential brick building that rises high on the block. Once alone in its locale, affording views up and down the eastern side of the island, the St. Tropez is now neighbored, but not yet tightly. Previously derided for an office-like dark coloration,[19]the exterior brick has bleached to an ashy orange. The façade is plain and repetitive; its lone distinguishing feature is a doubled line of white grout which runs the top line of bricks, between each window in a continuous band around the building. This grout mending, testament to repairs on a settling structure, reminds us that the brick is merely a curtain enclosing a scaffold. Punctuating the exterior are three paned windows—center fixed, operable to either side—marked by a small vent two bricks wide, one brick high, and centered below the fixed pane. At grade, along 1st Ave, are tinny aluminum features – storefronts—which have become the site of intra-apartment disputes.[20] There are three entrances to the residences, all leading to a lobby at the center of the building; a good seven column bays recessed from the street and sun. The primary entrance is mid-block, centered on the axis of the main lobby and garage opposite. Adjacent is a service entrance. The third entrance tunnels out to 64th St and is attended by a doorman.

[1365 St. Nicholas Ave] “At the Manhattan approach to the George Washington Bridge”[21]

            The long line of Interstate 95 is crowned with four faceted aluminum towers which rise up the moment after the highway breaks upon Manhattan Island, rushing through Washington Heights following the George Washington Bridge. These apartments were early—and genre defining—air-rights buildings constructed on a massive concrete platform over the I-95 Manhattan Expressway. We’ll read into the mechanics of air rights ahead, but for now just know that they involve selling property disconnected from the earth’s surface. In the case of the Bridge Apartments the space above the then under construction Manhattan Expressway was offered at auction. In effect, since the buildings open to the street, I-95 blasts through the basements of the four towers that make up the complex. The avenues cross the expressway and front of the towers at grade, but the block between and beyond the towers exposes the traffic lanes of the subterranean expressway. This exposure is not without controversy. As David Gissen details in Manhattan Atmospheres, the design team was conscious that leaving the expressway open beneath the towers would pose health problems for the apartment dwellers above.[22]In fact, an ambitious technical fix —that would mechanically suck fumes up through the core and out into the sky above—was planned and abandoned.[23]The ‘cost engineered’—an industry way of saying cheapened—version leaves the geometry of the building to effectively siphon carbon-monoxide into the rooms above. Without central air, tenants must rent window units to filter pollutants and noise coming from below.[24]

Laboring Surfaces

First the Flowers:

            In 2011, following a change in management at the St. Tropez Condominium on the Upper East Side, an acute paranoia fomented among owners. Signs for concern were manifold: regular maintenance staff was let go, security was cut down to one man, residents went without heat on a winter night, and insidiously, some of the cut fresh flowers in the lobby were replaced with those cut of cloth and plastic. An anonymous blogger and resident who spoke on behalf of 111 units[25] called out the changes:

          The owners’ rising fear of mismanagement, reflected in the circling paranoia over plastic flowers, suggests weak confidence in the hard value of their unit. Though most of the blog addresses this implicitly—hinting at depreciation by association[27]—the underlying fear is called out once directly:

They fear their unit will not sell or, worse, will sell below value. The anxious blogger equates maintenance with the assurance of appreciation and is shook by any interruption in service. The webpage, titled “St. Tropez in Crisis,” names several different job titles and responsibilities responsible for the tasks deemed essential to fighting depreciation. Though depreciation itself is not without value, as Kratter briefly demonstrated, for owners to keep the units’ valuable surfaces must be worked. The ratcheted nature of appreciation motivates everyone on the inside to collude in maintenance, or at least its appearance. As critics of gentrification have informed us, this collusion has tangible effects on public life through the grooming of surfaces and the projection of class identity, resulting in increasingly prohibitive costs and aesthetic homogenization. The owners, paying for fresh flowers from common maintenance funds, demonstrate to themselves—and any potential buyers—the care that goes into the building. That care, all parties assume, is indicative of a high level of maintenance. High maintenance is seen to be indicative of an appreciating asset—a thought that keeps owners at peace. Though questions of ‘safety’ are often raised, concern for the body’s exposure is felt only once in the two years the blog documents:

Follow the Yellow Brick:

            Marking the lobby of each of the four towers at the Bridge Apartments are ten yellow-glazed brick columns, five to either side of the avenue-side entrances. There is only eight inches of space between them and, if they were at all structural, would descend and cut off the flow of traffic below. The columns interrupt street-facing ground floor retail to either side. The retail spaces are housed in brick platforms that fill the full lot with two exceptions: (1) the mid-block sub grade highway reveal and (2) the portico formed by the recessed yellow columns. Each tower sits on its own brick platform, recessed from the lot-line.

            Walk the avenues today and you will see residents behind the yellow columns, motorcycles and boxes piling to either side awaiting transit. In daylight the columns reflect a beautifully mottled yellow, at night the fluorescent lights in the lobby cast a dull green. The yellow brick appears again in a common space not quite realized. Advertisements released to capture market interest ahead of the Bridge Apartment’s opening offered “a block-long park, playground facilities, and restful sitting areas, all safely protected from street traffic”[30]appended to the east side of 1363 St. Nicolas Ave. Today a floor above grade—that is atop the brick retail platform—a blank concrete surface sprawls out past the piloti. The street side access ramps are closed with an unmarked 14’ chain-link fence. The intended park, though elevated from street traffic, suffered from a block long exposure to exhaust and noise rising from the expressway below. Public attention on the negative health effects of such exposure—including an EPA study[31]on carbon monoxide and indoor air quality and a sour visit from Robert F. Kennedy[32]—made the park impossible to realize.[33]The wide swathes of yellow glazed brick, still visible from above by the neighboring apartments, are the only remaining sign of the would-be leisure spaces.

            The project architects Brown & Guenther spoke to the press once regarding their use of color regarding a major addition to Riker’s Island which was also accented with yellow brick and a ‘brightly painted interior.’ An article headlined “City’s New Prison gets Bright Décor: Higher Morale expected in Rikers Island Center” helps explain the predilection towards this hue:


            The point here is not to equate affordable housing with prison life, but rather to draw attention to the affective engineering. The architect’s claims understand yellow as means to placate, not please. It is uncaring care; engineered just as much for taxpayers, as for the residents themselves.

A Necessary Fiction in Deed

            In Marxist thought “the value of land is something like a structurally necessary fiction.”[36]Not backed by commodity transactions, land’s value is always a ‘discounted’ present value of future yields,[37] that is, a claim on future labor. Owned outright or rented, these buildings continue to cost their residents some part of their livelihood. The physical entities themselves—as shown in the lobbies, shells, and surfaces—are worked (or if necessary, neglected) to maintain claims of value. As investments, these projects sell ‘futures’ on the livelihoods of future residents. However, the St. Tropez and Bridge Apartments were not self-starting. They relied on the state’s moral and financial enterprise to shelter the middle class. Similarly, to persist—that is to afford long-term maintenance of the structural and mechanical enclosure— these projects must continue to make claims on more than future livelihood. Those extra costs will, given the opportunity, seek fulfillment through moral claims. Though now pointed towards a ‘green’ future, the rhetoric of the middle is not forgotten. The Bridge Apartments, now in private hands, recently received a subsidized $136 million loan from the Freddie Mac Green Up Plus Program.[38]Walter & Dunlop, packagers of that loan, describe the building as follows: “Located in one of the most high-cost areas of the country, Rachel Bridge Apartments caters primarily to the city’s workforce with its spacious, modern and rent-stabilized apartment units.”[39] In 2014, the St. Tropez renovated its boiler room. On claims of improved efficiency alone, $739,000 of a $932,840 total cost was earned back in incentives from NYSERDA (New York State Energy Research & Development).[40]

            The construction and continuity of ownership in these projects is premised on two technologies: the bound and marked property (i.e., the building itself and its designated units within) along with the corresponding paperwork. In New York State, the condominium act relies explicitly on architectural intent—the floor plans—to be a marker of public record that grants each unit the status of “real property.” [41] The architectural plans then become something like a tax map to— in the case of the St. Tropez—35 transient territories. Pinned to every deed and mortgage for the 308 units in the St. Tropez is a handwritten schedule that links every unit to a ‘lot’ number in the city registrar’s tax map.[42] This model is fundamentally different from the Co-op, where each resident holds shares in the building and land held in common. The condominium nearly dissolves an early fiction of land ownership: Superficies solo cedit, or “All that is on soil goes with the soil.”[43] New grounds are realized in the architecture itself—fabricated in scaffold and surface—and the future of these grounds has already been sold. Marvin Kratter couldn’t quite sell the future at a profit, but nonetheless built a scaffold to hold it. The 308 speculations at the end of the block now so greatly outvalue the land itself that the fiction of a St. Tropez—steel scaffold and brick casing—has become highly durable. Its feasibility lasts as long as someone believes the building will appreciate: a seller finds a new buyer of the necessary fiction. With this in mind, revisit a crisis in 2015 at the building, where a partial façade failure caused hundreds of bricks to fall on 1st Ave, closing the street for months.[44] The board waited to address the issue for two years, prioritizing instead a lobby renovation. Newspapers and many owners responded with incredulity.[45] Two unit owners sued the board.

            The Bridge Apartments have even less land to lean on. The originating mortgage describes, line by line, four rectangles suspended in the air- a bank loan for four floating rectangles – the air right. The deed does not note the concrete platforms and columns running over the expressway that make building out that rectangle possible. The $1 expended by the city to purchase this rectangle from the Port Authority does not reflect the additional costs of preparing the site to take greater structural loads. When the City auctions the four rectangles off in a $1 million ‘windfall’ to one Marvin Kratter; these costs stay hidden.[46]Also obscured is the origin of the $15 million (low estimate) in state subsidized loans that Kratter Corporation’s holding, WashBridge Housing Corporation, used to pay for land and construction on the project. It’s all spectacle; good governance making something out of nothing. So, the air rights are maybe closer to pure fiction, yet they charge less costs to the future. By function of air-rights, without claims on the­ future there is durability inherent. Tear them down there’s nothing there. We’re back to $1 dollar rectangles.

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[1] WALL STREET JOURNAL Staff Reporter, “Kratter Corp. to Retain Most or All ’63 Profit, Chairman Tells Meeting: Property Development Cost Cited: Concern’s Financial Condition Called ‘Extraordinarily Sound,’” Wall Street Journal, May 29, 1963.

[2] Laurence G. O’Donnell, “Realty Optimist: Marvin Kratter Tries to Scale New Heights After Run of Reverses He Waves Aside Tight Money, Lawsuits, Plans a Project To Include New Cathedral Early Rise From Bankruptcy,” Wall Street Journal, (March 29, 1966.

[3]“Realty Group Honors Kratter,” The New York Times, February 2, 1960.

[4] Keith Libbey, “Partnerships Form Land Corporation,” Harvard Law Record 32, no. 7 (March 23, 1961).

[5] Berger, Curtis J., “Real Estate Syndication: Property Promotion and the Need for Protection,” The Yale Law Journal 69, no. 5 (April 1960): 725–93.

[6] BURTON CRANE, “PROFITABLE LOSS IS COMPANY’S AIM: Kratter Concern Combines 7 Real Estate Groups and Eyes Tax Gains,” New York Times, May 31, 1959.

[7]Equivalent $900 in buying power million today.

[8] O’Donnell, “Realty Optimist.”

[9] MacNeil Mitchell and Alfred Lama, “Laws of New York, 1955.,” § Chapter 407 (1955).

[10]“Of the first $51 million of funds the state released, Kratter borrowed $33 million.” From O’Donnell, “Realty Optimist.”

[11]“Air rights, as usually defined, comprise the rights vested in the ownership of all the property at and above a certain horizontal plane as well as caisson and column lots essential to contain the structural supports of the air rights improvement. This means in effect a horizontal division of real property, with the parts under separate ownership and involving an allocation of responsibilities and rights. The utilization of air rights consists of construction "in space", above an existing surface use. Thus, it encompasses more than the usual vertical arrangement of different uses, as may be found in an office building with stores on the ground floor, an apartment hotel having a garage in the basement, or a railway station on top of tracks. These typical building use arrangements include three characteristics that are lacking in most air rights development: single ownership, a functional kinship among the uses, and synchronized planning and construction.” Leopold A. Goldschmidt, “Air Rights” (Chicago, IL: American Society of Planning Officials, May 1964), https://planning-org-uploaded-media.s3.amazonaws.com/legacy_resources/pas/at60/pdf/report186.pdf.

[12]Thomas W. Ennis, “Condominium Up: First in the City,” New York Times, January 24, 1965, https://www.proquest.com/news/docview/116753348/pageviewPDF/B73465F7371C4F9APQ/10?accountid=15172.

[13] Welfeld, Irving H., “Condominium and Middle-Income Housing,” Fordham Law Review 31 (1963): 357–480.

[14]“Over-crowding,” is both a good word to summarize the impetuous of the “Policy and purpose of article,” and also the first word in the list of causes for the denigration of the urban fabric. “Substandard and insanitary” are used in the act’s definition of the word “area” to denote areas appropriate for a Mitchell-Lama project. In the act “substandard and insanitary” is followed by “and available and appropriate for providing housing for persons of low income.”

[15]Here I’m focusing rhetoric that make these ownership forms actionable. The means of the actionability is for the condominium, Congress’s extension of mortgage insurance in 1961. Welfeld, Irving H., “Condominium and Middle-Income Housing.”

[16] Jameson, Fredric, “The Brick and the Balloon: Architecture, Idealism and Land Speculation,” The New Left Review, no. 228 (1998) 30.

[17] Paul Crowell, “Shift to Suburbs Worries Wagner,” New York Times, March 23, 1955.

[18]“Classified Ad 34: This Is the St. Tropez,” New York Times, February 28, 1965, https://www.proquest.com/news/docview/116769986/F655755C7E7341A6PQ/13?accountid=15172.

[19] “A ‘PIONEER’ CONDOMINIUM BUYER IN CITY FIRES PARTING SHOTS,” The New York Times, July 5, 1981.

[20]An activist owner’s blog from 2012 documents residents on the board arguing about the corner lease: “another issue for later consideration: has anyone questioned why we gave the prized corner lease to Falk drugs? with its bedpan filled bizarre like storefront and its duct taped sign over the old and tattered facing, it's seriously degrades the quality of the building.” Source: St.tropez.in.crisis, “St.Tropez.In.Crisis: Are They on the Run?,” St.Tropez.In.Crisis (blog), November 15, 2011, https://sttropezincrisis.blogspot.com/2011/11/invitation-for-informal-meeting-by.html.

[21]“Display Ad 431 -- At the Manhattan Approach to the George Washington Bridge,” New York Times, September 2, 1962, https://www.proquest.com/news/docview/116276014/E1580E6F8543456CPQ/3?accountid=15172.

[22] David Gissen, Manhattan Atmospheres: Architecture, the Interior Environment, and Urban Crisis (University of Minnesota Press, 2014).

[23] David Gissen, “Exhaust and Territorialization at the Washington Bridge Apartments, New York City, 1963-1973,” The Journal of Architecture 12, no. 4 (2007): 449–61.

[24]Robert E. Tomasson, “‘Air Rights’ Building Is 10, and Struggling,” The New York Times, February 24, 1974, http://timesmachine.nytimes.com/timesmachine/1974/02/24/148799992.html.

[25] “Petition St. Tropez in Crisis,” accessed November 23, 2021, https://www.ipetitions.com/petition/st_tropez.

[26] St.tropez.in.crisis, “St.Tropez.In.Crisis.”

[27]“ Another issue for later consideration: has anyone question why we gave our prized corner lease to Falk Drugs? With its bedpan bizarre like storefront and it’s duck tape sign over the old and tattered facing, it’s seriously degrades the quality of the building.” St.tropez.in.crisis, “St.Tropez.In.Crisis: Are They on the Run?,” St.Tropez.In.Crisis (blog), November 15, 2011, https://sttropezincrisis.blogspot.com/2011/11/invitation-for-informal-meeting-by.html.

[28]St.tropez.in.crisis, “St.Tropez.In.Crisis.”

[29]St.tropez.in.crisis, “St.Tropez.In.Crisis.”

[30] “Display Ad 431 -- At the Manhattan Approach to the George Washington Bridge.”

[31] Robert E. Lee, “Indoor - Outdoor: Carbon Monoxide Pollution Study,” Environmental Monitoring Series (Washington, D.C.: EPA; General Electric, December 1972).

[32] David Bird, “Kennedy Warns of Air Pollution ‘Disaster,’” The New York Times, June 20, 1967, http://timesmachine.nytimes.com/timesmachine/1967/06/20/90364282.html.

[33] David Gissen, “Exhaust and Territorialization at the Washington Bridge Apartments, New York City, 1963-1973,” The Journal of Architecture 12, no. 4 (2007): 449–61, https://htcexperiments.files.wordpress.com/2009/01/gissen_exhaust.pdf.

[34]

[35]Property in Land pg 1315

[36]Jameson

[37]Property in Land

[38] Mary Diduch, “Freddie Mac | Clipper Equity | 111 Wadsworth Avenue,” News, The Real Deal New York, January 29, 2019, https://therealdeal.com/2019/01/29/clipper-equity-gets-136m-refi-for-gwb-apartment-complex/.

[39] Walker & Dunlop Inc, “Walker & Dunlop Secures $136 Million in Green Financing for Landmark Manhattan Apartment Complex,” March 29, 2019, https://www.prnewswire.com/news-releases/walker--dunlop-secures-136-million-in-green-financing-for-landmark-manhattan-apartment-complex-300820683.html.

[40] “FirstService Residential Facilitates $739,000 in Incentives for St. Tropez Condo,” FirstService Residential Advantage, 2014, https://az473375.vo.msecnd.net/cmsstorage/fsr/media/content-files/newyork/newsletters/pdf/fsr-advantage-q4-2014.pdf.

[41]The condominium was federally recognized earlier in the Housing Act of 1961, which “extended mortgage insurance to the apartment owner in the condominium on the same terms as are availed to the purchaser of a single-family home.” However, the FHA could not act until any applicable state had passed legislation. Welfeld, Irving H., “Condominium and Middle-Income Housing,” n.d.

[42] “Memorandum of Lease,” May 8, 1996, Office of the City Register, https://a836-acris.nyc.gov/DS/DocumentSearch/DocumentDetail?doc_id=FT_1150005166915.

[43] Superficies solo cedit, “All that is on soil goes with the soil” From discussions in: Welfeld, Irving H., “Condominium and Middle Income Housing.”

[44]David W. Chen and John Surico, “Falling Bricks Cause Concern and Delays on the Upper East Side,” The New York Times, December 12, 2015, sec. New York, https://www.nytimes.com/2015/12/12/nyregion/falling-bricks-cause-concern-and-delays-on-the-upper-east-side.html.

[45] Julia Marsh, “Condo’s Collapsed Facade Still a Mess Two Years Later,” New York Post (blog), January 24, 2018, https://nypost.com/2018/01/23/condos-collapsed-facade-still-a-mess-two-years-later/.

[46]“AIR-RIGHTS SALE NETS CITY MILLION,” The New York Times, August 18, 1960, http://timesmachine.nytimes.com/timesmachine/1960/08/18/99787981.html.