The Private Way

One of the saddest blocks in Manhattan's East Harlem ghetto is East 102nd Street between First and Second avenues. It is populated by some heroin users, too many broken families, and a lot of ordinary low-income folk who have all but given up the fight for a better life. Rats roam urine-reeking hallways amid the litter of wine bottles, fallen plaster and broken wiring, and there are bitter memories of politicians' promises to clean up the mess.

If that seems a strange place for a major corporation to risk some of its reputation and $1,250,000 of its cash in an effort to provide good housing, it is. Yet U.S. Gypsum Co., the world's largest manufacturer of building materials (1965 sales: $304 million), is taking the gamble.

Less Airmail. The company has bought, stripped to its brick walls and wholly refurbished a 62-year-old, 24-unit tenement, then rented three-fourths of the resulting modern apartments to tenants who had lived there before. Workmen are giving the same treatment to another six-story shambles next door, and four more tenements in the block are in line for similar rescue. Rents, of course, have risen. The rent-controlled apartments once brought $20 to $40 a month. After renovation, U.S. Gypsum collects $65 a month for efficiency apartments, $78 for one-bedroom and $85 for two-bedroom units.

That is high rent for a squalid neighborhood, but most of the tenants somehow scrape up the cash. They also take pride in keeping their new oasis tidy: the eight cans a day of "airmail"--garbage hurled out the window--have now shrunk to only one. To earn rapport with tenants accustomed to being disregarded, U.S. Gypsum assigned Salesman Warren Obey as fulltime project manager. "When Warren came here," says longtime tenant Zion R. Paige, "he had three strikes against him. He was white, he was with a big company, and he was telling a story. Everybody around here has heard a story. This neighborhood has been politically exploited. But Warren delivered. Gypsum is now accepted and respected."

As for Paige, 41, he supplies a hard-to-find essential of slum rehabilitation: responsible home-grown leadership. Working by night as a boiler fireman for the city's Sanitation Department to support his wife and two teen-age sons, he customarily cuts his sleep to five or six hours to spend more of his day struggling to get people on his block to "participate." Says Gypsum's Obey: "If Paige can keep these people together, we'll be all right."

Measured against New York City's vast slums and near slums--337,949 tenement apartments built before 1901 and another 825,536 almost that obsolete--the East 102nd Street project looks tiny. U.S. Gypsum views it as a wedge into a $30 billion market in rehabilitating slums across the nation. "We saw possibilities of opening up a market that is completely dormant," says Gypsum's market-programs manager, Jerry Pintoff. "Somebody had to step in and hope to create what wasn't there." ^ With Profits. Whether or not U.S. Gypsum's initiative will inspire more big companies to take similar steps, the arithmetic of the project is persuasive. Gypsum's purchase and remodeling of the first building cost only $9,100 per apartment as against $22,500 for a typical new public-housing unit in New York City. When the whole project is completed, the company will sell it to a group of nonprofit organizations led by Chicago's Maremont Foundation, which has arranged for a 90% FHA loan at 3% interest. U.S. Gypsum expects to sell $50,000 of its products into the buildings--and reap an 8% return on its investment.

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