Lilian Fink is not one for public demonstrations. But when the landlord proposed to raise her rent by 52 percent, the 81-year-old grandmother took to the streets. On June 7, Fink and 75 other residents of the federally subsidized apartment building at 510 W. Belmont marched and chanted outside landlord Howard Fink’s near-north-side office. They argue that his proposed rent increase, which must be approved by the U.S. Department of Housing and Urban Development, would force them to move.

“This man, Fink, is no relation to me,” says Lilian Fink. “He is greedy and has done a dishonor to my name. If he gets his increase, he’ll kick a lot of poor senior citizens out in the street. I hope he doesn’t treat his own mother that way.”

For his part, landlord Fink says he must raise rents to keep pace with rising maintenance costs–an assertion the tenants contest.

The showdown represents another side effect of the federal government’s ten-year retreat on subsidizing low-income housing. “When the government cuts the budget for housing, someone winds up paying,” says Lisa Aarli, a community organizer for the Lake View Tenants Organization, the not-for-profit group that helped organize the rally. “At least half of the people who live at 510 Belmont are senior citizens. Many live on fixed income. What’s it say about a society that forces its older people to live in fear of being kicked into the street?”

The 275-unit building on Belmont was built in 1970 as a model of low-income housing. The original owner financed its construction with a federally guaranteed 40-year HUD mortgage at a below-market interest rate of 3 percent. To get that low interest rate, the owner had to agree to several HUD regulations. He couldn’t raise rents without HUD’s approval, and his profit from the building was limited. However, after 20 years he could pay off the rest of his mortgage in one lump sum and raise rents as high as he wanted. Twenty years have passed. “It’s what we call a prepayment building,” says Howard Fink. “The incentive to build it in the first place was the knowledge that after 20 years–or halfway through the mortgage–you could pay off the loan and charge whatever rents the market can bear.”

Indeed, it was the opportunity to prepay that mortgage that induced Fink to buy the building just three years ago. “There were two incentives to buying this kind of building,” he says. “One is the tax law and the other is prepayment. They [the federal government] took away the tax incentives when they changed the tax laws in 1986. OK, that leaves prepayment. Right now we charge $268 for a one bedroom. If my rent increase comes through, we’ll charge $400. But market rent for this neighborhood is about $650. I can’t make money on this building at my current rents, but I can if we go market.”

Twenty years ago few observers would have predicted upscale renters would want to live at 510 W. Belmont. The surrounding neighborhood of Lakeview was struggling then; a one-bedroom at the Belmont building went for $125 a month. It seemed as though few private bankers or developers were willing to take the risk of investing in the area.

But in the next two decades thousands of young professionals moved to Lakeview, transforming the neighborhood and sending real estate prices soaring. Landlord Fink seems to think it’s his turn to get a piece of the north-side real estate bonanza. “Prepayment was an incentive offered to landlords to invest in the area,” he says. “I did my part. I invested. I bought the building.”

There’s only one problem–the tenants. “I’m glad Mr. Fink wants to make money;’ says Lilian Fink. “That’s nice. But what are we supposed to do–become bag ladies?”

The tenants of Belmont have heard many prepayment horror stories. Nearly 80 percent of the tenants were forced to move from a HUD building on West Barry when its landlord prepaid his mortgage and raised rents by 230 percent. Activists say there are 14 buildings in Uptown and Lakeview with mortgages that could be prepaid in the next five years. “Some of the residents kicked out of Barry are now living in other potential prepayment buildings,” says Aarli. “I’d hate to see them displaced again.”

For the last several years north-side low-income-housing activists have organized around the issue. Working with groups throughout the country, they pressured Congress into slapping a moratorium on low-income-mortgage prepayments. But that moratorium expires in September.

The moratorium has also been challenged by developers, and many landlords feel the federal government betrayed them. “First they did away with the tax incentives,” says Fink. “Now they’re doing away with prepayment. As I see it, they have violated their contract with me. They told me I could prepay–now they say I can’t. It’s like confiscation of property. It’s not fair.”

Fink has a point. Few landlords go into the housing business because they want to house the old and poor. Most are in the business to make money. Obviously, they would like to make as much money as they can. Prepayment was part of a scheme devised by the government to get developers involved in something they wouldn’t normally do–build low-income housing. It was, in effect, a bribe that was intended to win at least 20 years of decent, affordable housing. Why blame Howard Fink if Lilian Fink and her neighbors have to scramble for new digs? He didn’t design the prepayment program–the federal government did.

“Guys like Fink spotted an opportunity to buy the building, flip it, and make gazillions of dollars,” says a housing developer who asked to remain anonymous. “They paid a premium for that right, because I’m sure they bought these buildings for more than HUD buildings should go for. Then the law changes, and he can’t do what he wants. But I can’t bleed for him. I’m not going to hold any tag sales for him. That’s the risk he took. If you’re going into a HUD-regulated market, you run the risk that HUD’s going to change the rules. HUD has changed the rules about 15 times on this prepayment program. Most of those rule changes benefited the landlord. I didn’t hear Howie Fink–or any other landlord–crying then.”

Fink does have some options. He can try to offset any increase in maintenance costs by raising rents or by obtaining a HUD-backed maintenance loan. He could also, of course, sell the building. Fink has opted to raise rents. “We haven’t had a rent increase here since 1985,” he says. “We need money to increase security and install storm windows. We need to make structural repairs. The side of the building is in bad shape–we could have falling concrete. Somebody has to pay for that.”

But the tenants think a 52 percent hike is too steep. “The 52 percent hike is abominable,” says Ruby Ann Brill, a tenant in the building. “Would you want to have to pay a sudden increase like that? Most of the people here can’t afford it.”

Over the last few weeks the residents have requested that Fink meet with them. So far Fink has refused. According to tenants, his refusals triggered the June 7 protest. Joined by residents from other north-side HUD potential prepayment buildings, they marched outside the locked front door to Fink’s office, chanting “How ’bout that, Fink’s a rat” and “Hey Fink, you stink.” Then they taped several rubber rats to the front door to symbolize that the landlord’s a “rat fink,” one tenant explained. After about 15 minutes of this, all but two of the protesters left.

Then Fink emerged from his office.

“You should be ashamed of yourself,” Mimi Harris, one of the two remaining protesters, told him. “Would you kick your mother out into the street?”

Fink peeled a few rubber rats from his door and said nothing.

“You are a gonif,” said Harris, which is Yiddish for thief. “You should show some respect for senior citizens.”

“I care for people who care for personal property,” Fink responded.

A few minutes later, in the confines of his office, he consented to be interviewed.

“I’m no gonif,” Fink said. “I’m no rat fink. These things they say about me–they’re not true. They call me names, and march in front of my office, tape these things to my door–and want me to be nice and negotiate with them? Does that make sense? I’ll tell you what’s true. What’s true is that the building needs maintenance work, and that costs money. We’re in a break-even state right now. And if I keep rents low and try to make repairs, I’ll go personally bankrupt.

“I agree–it’s a crime when older people don’t have a place to live. But you can’t expect the landlord to take care of these problems. Where is the federal government? Don’t they have a role? If they’re getting rid of prepayment, shouldn’t they provide subsidies? And where are these people’s children? Before I bought this building, I watched who came and went. On the weekends you should see how many Mercedeses and Cadillacs drive up there. If these children and grandchildren can afford such fancy cars, shouldn’t they also help out their parents? Or is everyone going to dump it on the landlord?”

At the moment the tenants have the upper hand. HUD officials have said that they won’t approve Fink’s rent increase. “That doesn’t mean HUD won’t approve some kind of rent increase,” says Aarli. “They might allow Fink to raise rents by 20 percent instead of 52 percent. It could take months before this matter is decided.”

In the meantime the tenants say they won’t give up. “He’s talking about Mercedeses–no one in this building has a Mercedes,” says Lilian Fink. “People don’t want to have to depend on their kids. We want what’s fair. And 52 percent–that’s not fair.”

Art accompanying story in printed newspaper (not available in this archive): photo/Paul L. Merideth.