The Sun and the New York herald., 1920-07-11
DEFENDS REPUTABLE
COOPERATIVE DEALS
D. L. Gilman Describes Fea-
lures Which Characterize
Safe and Sane Plans.

In u statement given out yesterday
Douglas l.. Gilman OF Douglas L. Eli
man & Co, Inc declared that Alderman
Quinn in some respects was right when
he recently called attention to the dan
gerous features of some of the coopera-
tive apartment house buying PROPOSE
tions Mr.. Gilman said Alderman Quinn
had stated the case correctly when lie
said there was certain element OF dan
ger in purchasing r share in an inflated
equity over an unduly large short term
mortgage. Mr.. Gilman, however, says
that the Alderman made mistake when
he failed TO point out the fact that
there are many safe and sound COOP
erative buying propositions. Here Is his
statement regarding the controversy;
while | concur most heartily in any
sincere criticism or effort made with the
intention to warn the public against III
conceived. unscrupu:ous ard dishonest
cooperative housing projects, never
thelesS believe it incumbent upon m'.
as managing agent for numbtr OF sue
ceGsful cooperative houses. 20 express
the opinion that Alderman Quinn in his
recent attack on cooperative housing
made the mistake of not differentiaunT
between the sound and unsound invest
ments OF this character.
should Have a Ten Year Mortgage.
while it is doubtless true. hs Alder
man Quinn stated, that some OF the more
have hnan
inaugurated with the intent to coerce
the tenants into purchasing the property
involved, at an inflated valuation, II Is
quite as true that millions of dollars
have been voluntarily invested In free
and clear properties of this character
by some OF the city's most prominent
bankers, attorneys, accountants and
other prominent professional and busi-
ness men, not one Of whom would have
invested single dollar in any sort of
cooperative project unless he had first
assured himself Of the absolute safety
of the capital so invested and of the ad-
vantage of purchasing on the cOopera-
tive pan as compared with renting.
Alderman Quinn stated the case cor
rectly when he said there was certain
element Of danger In purchasing q share
in an inflated equity over an unduly
large short term mortgage. It Is of
course preferable, but not always pos
sible, to erect comparatively owned
buildings without the aid OF a mort
gage loan. This Is the practice that has
been followed In the case Of a number
of the more prominent houses Of this
character In the Park avenue and Fifth
avenue district. This same policy has
been adopted In the construction OF the
new thirty-one story comparatively
owned Park-Madison group of Office
buildings. which will be erected north
OF the Grand Central Terminal, and
without the aid of mortgage loan.
Features to BE Observed.
This new building exemplifles the
greater economy Of cooperative owner
ship and the wisdom Of purchasing an
actual interest In a building rather
than accommodating a bundle of worth
less rent receipts.
THE mere fact that a property to be
sold on a cooperative basis carries
fair amount or Its honest value on first
bond and mortgage. is not a good rea-
son for placing that property in the
Of those founded on dishonest
and INSCRIPTIONS practices. Neverthe-
less. all such mortgages should run for
a term of not less than ten years, and
contain a clause providing for the
gradual amortization Of the loan.
'It is also advisable, in working out
the details of a cooperative project. to
place conservative valuation upon the
space, sufficient percentage of which
must be retained and rented to tenants,
IN order TO cover al the 60 ts OF opera
tion. taxes. sc. The remaining portion
Of the rentablc area can then be sold
for an amount sufficient to cover the
coc. OF building
"The tenant owners In order to de-
eide for themselves the exact amount OF
rent their purchase represents. should
charge themselves with per cent. in
terest OH the money invested, and set
aside each year additional percentage
OF that amount to amortize the invest
ment BY this method the premises
purchased represent, eventually, not one
cent Of vested capital"