Re-inventing the image of SRO projects.

Single Room Occupancy hotels (SRO's) are quickly re-emerging in the minds of policy-makers as a viable solution to homelessness for single people in New York. Indeed, a recent New York Times editorial called such service-oriented SRO's "the most effective way to care for much of the homeless population," and the City recently committed itself long-term to several large SRO projects.

This extraordinary shift in attitude towards a form of housing that was widely considered the scourge of New York just a few years ago is due largely to Claire Haaga, president of Housing and Services, Inc. (HSI), a non-profit housing developer. For more than a decade, Haaga and HSI have argued - and indeed proved - that well-run SRO's that include social services are the most intelligent, humane, and cost-effective way to shelter homeless individuals and poor New Yorkers with special needs.

Because SRO hotels have been viewed by many in recent years as eyesores, Haaga's task of convincing people of their value has not been easy. She has had to battle the widespread image of SRO's as poorly managed, drug-infested buildings which neighborhoods fight to get rid of.

But Haaga always saw their inherent worth, even as dozens disappeared during the 1980's when developers rushed to build co-ops and public sentiment was decidedly against preserving this type of housing. She recognized that, properly managed, SRO's could house thousands of indigent New Yorkers affordably.

"Because drug dealing and prostitution were rampant in several high-visibility SRO's, many officials threw up their hands and said SRO's just don't work," says Haaga, a Manhattan resident. "What people forgot is that alternative affordable housing simply doesn't exist in New York City. We have to recognize that SRO's are the best available resource to meet the homeless crisis and reclaim those buildings that are poorly managed."

HSI's first SRO project was the Cecil Hotel on West 118th Street - the landmarked Harlem hotel which had been vacant for 10 years. HSI renovated the Cecil and reopened it in 1988 for 115 formerly homeless single adults. To ensure residents get the help they need, HSI operates on-site Alcoholics and Narcotics Anonymous groups, a food pantry, a clothing exchange, reading and exercise classes, and linkages to health and mental health services. The cost of housing a person at the Cecil for a year: approximately $6,000, including operating costs. That's just one-third of the $18,000 it costs the City to keep someone in the homeless shelter system for a year. (The Cecil is financed largely with low interest public loans, hence there are no mortgage payments. In another SRO developed and operated by HSI, which is commercially financed, the cost per tenant rises to $12,000 per year to cover annual debt service costs - still 30 percent below the comparable public shelter cost.)

After six years, only 25 original Cecil tenants remain. Most have moved into apartments of their own. But perhaps what's most telling about the success and stability of the Cecil is that plans are taking shape to re-open "Minton's Playhouse," the legendary jazz venue on the first floor of the Cecil that once featured stars such as Dizzy Gillespie, Charlie Parker, Thelonious Monk, and Dr. Billy Taylor.

HSI also purchased and renovated the Narragansett on Manhattan's Upper West Side, where HSI provides housing, security, and services for more 100 individuals, 60 of whom are HIV-positive.

At the Narragansett, Haaga and HSI again have shown that good, stable SRO housing can be less expensive than a cot in the shelter system. Factoring in debt service on a 21-year mortgage, housing at the Narragansett costs $43 per day per person - $20 for debt service and $23 for all other expenses.

The New York City Human Resources Administration (HRA) budgeted $152 million in 1996 to pay for city shelters. That comes to between $$6-$68 per person per day for communal sleeping quarters for the 6,000 to 7,400 adults who sleep in the shelter system on any given night. Moreover, that money goes only towards providing emergency relief. None of the $152 million is being invested in long-term solutions.

Manhattan's Kenmore Hotel, which HSI recently purchased, is perhaps the most dramatic example of how the most deteriorated SRO housing can be restored. Crime and drugs were so rampant at the Kenmore considered one of the worst SRO's in the country - that Federal Marshals seized it in the largest asset forfeiture of its kind in U.S. history. It stood as the prototypical failure of SRO housing - a place without hope and beyond redemption. The Kenmore is now being completely renovated by HSI. Rooms will double in size and include private bathrooms, kitchenettes and security, with counseling services available on site.

According to Haaga, there are two financial keys to turning SRO's into decent affordable housing for poor single people. The first is low interest public loans or long-term government commitment so that mortgage debt can be financed. The second is the federal Low Income Housing Tax Credit program, which provides equity. Without these two things, it is impossible to attract the private financing needed to purchase and renovate decaying SRO's, Haaga says.

At the Narragansett, for example, Chase financed construction costs. The New York City Pension Fund then purchased that debt from Chase as an investment. Cash flow to repay the debt wag assured by the City contract to pay $43 per unit over a 21-year period. The State of New York Mortgage Agency (SONYMA) insured the mortgage, allowing the City to negotiate a fixed-rate mortgage with the Pension Fund. Without the City's long-term commitment this deal could not have been struck.

Haaga believes that by using this model (which has produced 1,500 units), well-run SRO's can put a substantial dent in the homeless problem in New York.

"For years, SRO housing was the safety net that kept the poorest New Yorkers and those with special needs off the streets. But they were poorly run and many of them frightened people. But when New York City lost over 100,000 SRO units between 1972 and 1982 to co-op conversion and abandonment, people began to appear on our street corners, and that was worse," Haaga said. "Now we've learned how to make SRO's work and be good neighbors. Indeed, our projects have won support from community boards and neighborhood groups, as well as from the people who live in them. They provide an economical answer to a long-term problem."