On Friday, March 4, about a dozen tenants and advocates stood in front of a 21-unit apartment building in the South Bronx, chanting slogans, taking turns speaking into a megaphone and celebrating an affordable housing victory. After years of battling a landlord who wanted to deregulate their rent-stabilized building and hike rents by up to $500, the tenants did something rare: They bought the building — near the blaring horns of the Bruckner Expressway — from their landlord.

Claudia Waterton, a longtime tenant who will soon be a co-owner, thanked advocates for the win. “You have no idea how much this means to us,” Waterton said. “This means I don’t have to look for a new place, period.”

On February 7, the five-story building at 700 East 134th Street was sold to the nonprofit Urban Homesteading Assistance Board (UHAB). The nonprofit will help tenants convert the building to an HDFC co-op, a type of cooperatively owned housing designed to keep units permanently affordable. UHAB will help the tenants form a corporation that will take ownership of the building, with each tenant owning a share corresponding to the unit they occupy.

As an HDFC — which stands for Housing Development Finance Corporation — the building will be less vulnerable to real estate speculation. If a resident wishes to leave, they’ll sell their share in the corporation; the corresponding units will be appraised by a third party but their resale value will be restricted by a formula set by the building’s co-op board. The model allows housing stock to remain stable and affordable and allows tenants to build equity. There are over 1,100 such buildings across NYC, according to the Department of Housing Preservation and Development (HPD).

But tenants’ purchase of the building on East 134th was hardly a foregone conclusion. They began organizing in 2017 after their new landlord posted flyers on the door of different apartment units stating he wanted to hike the rent by $500 per unit. It would have left some low- and moderate-income tenants with no choice but to move.

Tenants became proactive, requesting the building’s rental history from the state’s Division of Homes and Community Renewal (DHCR) and learning it was rent-regulated. James Giddings, the landlord at that time, disagreed: He cited a 2005 application that the previous owner sent to DHCR requesting deregulation following a renovation. That application was never approved. In 2017, Giddings reapplied for deregulation, on the basis of the 2005 renovations. Tenants appealed, and DHCR went years without settling the case. Meanwhile, rents remained frozen. With the rent regulation status in limbo, the landlord had trouble finding outside buyers. This provided leverage for tenants to bargain with him.

In 2018, residents who had by then formed a tenant association and were put in touch with UHAB to discuss the option of purchasing the building. They discussed different models, including a community land trust, but ultimately settled on an HDFC co-op. When they brought this offer to the landlord, his response was an emphatic no. But tenants were persistent in their advocacy.

When COVID hit, the landlord’s tone began to soften, residents say, likely a result of rents decreasing in the early months of the pandemic.

“He was just put in a really difficult spot,” says Joshua Flores, 40, a registered nurse who has lived in the building since 2011. “He was adamant in the beginning, this was not going to be sold to anybody.” After time, more advocacy from tenants and crucial financing secured by UHAB, the landlord agreed to sell the building and negotiations began. After a few rounds of back and forth, UHAB eventually purchased the property for $2.6 million on February 7, far below the landlord’s purchase price of a little over $4 million in 2017.

“I cannot stress enough the significance of the tenants’ legal case against the deregulation of their building, and their determination to buy the building,” says Arielle Hersh, a project associate with UHAB who worked with the tenants. While the organization has helped thousands of tenants convert their buildings into co-ops, it is rare that tenants are able to leverage a legal case over their landlord to do so.

“That’s something that we do not often see in our work,” says Michael Leonard, an attorney with TakeRoot Justice.

Key to the success was presenting an unwavering, undivided front, tenants and advocates say.

“We stayed organized, we stayed unified and we fought him, he did not expect that,” says Courtland Hankins, 51, who rents a studio and has lived in the building since 2010. The landlord offered concessions to individual tenants in order to break their alliance. “He definitely used some things to try to divide us,” Hankins says. By way of advice for others in the same situation, Hankins says, “It takes fighting through disagreements, through personality conflicts, through waning of your belief, all of that.”

Despite disagreements, the fight to purchase their building has changed the residents’ dynamic for the better, they say.

“It just redefines what neighbors are, because now we’ve sat down in each other’s apartments and organized meetings,” Flores says. “Having disagreements and figuring out how to come to some consensus, that kind of thing just created a different kind of community.”

They were also fortunate to have private financing: UHAB says it was able to acquire the building through funds from a private family foundation that wishes to remain anonymous. Over the next year, UHAB will enter into a low-interest, federally backed mortgage for the co-op. The private foundation’s funding will go toward acquisition as well as limited repairs. While a 2017 New York Times article reported the building had crumbling plaster and paint and faulty electrical wires, UHAB says the building is currently in good condition and will not need significant improvement.

“The building is overall in good shape, but could use a new boiler, as well as some roof repair,” Hersh says.

The purchase is also unique because tenants did not rely on any city programs to acquire the development, UHAB says. One of the challenges of co-op conversions is that while units are restricted to low-income New Yorkers, the same people rarely have the capital to purchase building shares. It is rare that a private foundation will swoop in with private funding as it did for the building in the South Bronx, which is why residents are advocating for the statewide Tenant Opportunity to Purchase Act (TOPA). The bill would grant tenants the right of first refusal when buildings go up for sale — buying them time to access funding before big real estate investors outbid them. San Francisco implemented a similar measure offering right of first refusal to community nonprofits in 2019.

State Senator Zellnor Myrie and Assemblymember Marcela Mitaynes wrote an op-ed for the NY Daily News advocating for TOPA and citing the tenants of 700 East 134th Street as examples of the bill’s potential. Tenants, including Claudia Waterton, also appeared at a virtual town hall hosted by Housing Justice for All and New York City Community Land Initiative in support of TOPA on March 2.

While the residents have much to celebrate, they acknowledged the challenges ahead. HDFC co-ops have their share of problems, among them waves of foreclosures stemming in part from a broken tax subsidy system and lax oversight. Many of the city’s HDFCs are in debt or have high maintenance needs, causing shareholders to remove covenants that restrict their resale value. (When a unit’s shares are sold, a portion of that sale reverts to the co-op.) In this way, many of the city’s HDFC co-ops are reverting to market rate co-ops in all but name.

Residents on East 134th Street will be required to set up a co-op board and will determine their own maintenance fees, building rules and resale formulas. The residents and UHAB have selected SoBro, a local economic development corporation, as a property manager. When the building is turned over to tenants in a year or so, UHAB will provide training to help them adapt to these new realities.

“Everything is going to be on us, heat, hot water, the boiler issues,” says Hankins. “It’s just a switch in dynamic of responsibility, so that’s going to take some getting used to.” But he’s optimistic. “We’ve come this far, and we’ll train ourselves to be the best self-landlords.”

EDITOR’S NOTE: This story has been updated to reflect the two groups that hosted the March 2 virtual town hall.