Top of Form
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Arson for Hire
Tuesday, October 18, 2005 at 4 a.m.
By Joe Conason & Jack Newfield
1
Burned out in the South Bronx, 1978
photo: Sylvia Plachy
June 2, 1980
There are two crimes that are more than just felonies—they are treason. One is the importation, distribution, and sale of heroin. The other is arson for profit.
There are not crimes of passion or desperation. They are crimes of organized greed. They cause the deaths of innocent citizens and brave firefighters. They kill blocks, ruin neighborhoods, and destroy cities. Ultimately, these are crimes that annul hope and diminish humanity.
Arson breaks up families, frightens away investment and jobs, and deprives the poor of housing. Every arsonist is potentially a mass murderer. Those subversives who hire others to torch occupied buildings—like those who move the envelopes of fine white powder—are the first vultures of late capitalism.
It was more than two years ago that we first stumbled upon this city's biggest arson ring of landlords, lawyers, brokers, and insurance adjusters.
In the winter of 1978, the South Bronx was already a moonscape with abandoned, charcoaled shards. The cops who worked in the 41st Precinct no longer called their station "Fort Apache." They called it "The Little House on the Prairie," because there were so few surviving buildings or families in the area.
In the winter of 1978 the burning of the Bronx had moved north into neighborhoods called Morris Heights, Morrisania, Tremont, Highbridge, Kingsbridge, and Fordham. Whenever there was a suspicious fire and the homeless tenants were Hispanic or black, the media would call the area the South Bronx. But it was really other communities, and other police precincts.
For several days that winter we walked around these dying blocks with a cop named Joe Dean, who was then assigned to the Bronx arson task force in the 48th Precinct. We met not only the most recent victims of arson, but those who feared they would become tomorrow's refugees.
We saw tenants and small shopkeepers plead for protection, saying the building next to them had burned the night before, and that their house would be next. But because of budget cuts, neither the police or the fire marshals or the district attorney's office had the manpower to watch a building through the night.
Each day Joe Dean had to explain this to poor people who sensed they would soon be burned out for the second or third time in their lives. And Joe Dean felt powerless to do anything about it.
Within a week we saw the tenants of 201 Marcy Place, 1126 Kelly Street, and 1403 Grand Concourse turned into urban boat people by arson. And soon Dean was so frustrated by the suffering he saw—and could not stop—that he asked to be transferred to more risky plain-clothes work in Times Square.
Eventually, we discovered a pattern to the burning of the Bronx, and later of Brooklyn, Manhattan, and Queens. Over the last five years, 250 buildings, all owned by one ...
Top of FormBottom of FormTop of FormArson for HireTuesday, O.docx
1. Top of Form
Bottom of FormTop of Form
Arson for Hire
Tuesday, October 18, 2005 at 4 a.m.
By Joe Conason & Jack Newfield
1
Burned out in the South Bronx, 1978
photo: Sylvia Plachy
June 2, 1980
There are two crimes that are more than just felonies—they are
treason. One is the importation, distribution, and sale of heroin.
The other is arson for profit.
There are not crimes of passion or desperation. They are crimes
of organized greed. They cause the deaths of innocent citizens
and brave firefighters. They kill blocks, ruin neighborhoods,
and destroy cities. Ultimately, these are crimes that annul hope
and diminish humanity.
Arson breaks up families, frightens away investment and jobs,
and deprives the poor of housing. Every arsonist is potentially a
mass murderer. Those subversives who hire others to torch
occupied buildings—like those who move the envelopes of fine
white powder—are the first vultures of late capitalism.
It was more than two years ago that we first stumbled upon this
city's biggest arson ring of landlords, lawyers, brokers, and
insurance adjusters.
In the winter of 1978, the South Bronx was already a moonscape
with abandoned, charcoaled shards. The cops who worked in the
41st Precinct no longer called their station "Fort Apache." They
called it "The Little House on the Prairie," because there were
so few surviving buildings or families in the area.
In the winter of 1978 the burning of the Bronx had moved north
into neighborhoods called Morris Heights, Morrisania, Tremont,
2. Highbridge, Kingsbridge, and Fordham. Whenever there was a
suspicious fire and the homeless tenants were Hispanic or black,
the media would call the area the South Bronx. But it was really
other communities, and other police precincts.
For several days that winter we walked around these dying
blocks with a cop named Joe Dean, who was then assigned to
the Bronx arson task force in the 48th Precinct. We met not only
the most recent victims of arson, but those who feared they
would become tomorrow's refugees.
We saw tenants and small shopkeepers plead for protection,
saying the building next to them had burned the night before,
and that their house would be next. But because of budget cuts,
neither the police or the fire marshals or the district attorney's
office had the manpower to watch a building through the night.
Each day Joe Dean had to explain this to poor people who
sensed they would soon be burned out for the second or third
time in their lives. And Joe Dean felt powerless to do anything
about it.
Within a week we saw the tenants of 201 Marcy Place, 1126
Kelly Street, and 1403 Grand Concourse turned into urban boat
people by arson. And soon Dean was so frustrated by the
suffering he saw—and could not stop—that he asked to be
transferred to more risky plain-clothes work in Times Square.
Eventually, we discovered a pattern to the burning of the Bronx,
and later of Brooklyn, Manhattan, and Queens. Over the last
five years, 250 buildings, all owned by one interlocking
network of landlords—and all insured for large amounts—have
had fires.
The maypole of this circle of landlords appears to be 50-year-
old Joe Bald, a convicted felon with ties to the mafia. In 1978
we named Bald as one of the 10 worst landlords in New York.
Now he is about to go on trial in Queens for burning one rent-
controlled building that he did not own. Other landlords
affiliated with Bald in carious realty companies, mortgages,
transactions, deeds, partnerships, or fire insurance policies
include Harry Rosen, Henry Katkin, Kenneth Passifiume,
3. Marvin Siegel, Abe Sloan, Kenneth Aska, James Blackwell and
Benjamin Tabak.
Sometimes Bald's own name appears on the deed to a property.
Sometimes the property is registered in the name of a front,
frequently a superintendent or managing agent. Sometimes Bald
only buys an interest in the mortgage. Sometimes the property is
in the name of another landlord who has shared a dummy
company with Bald in the past. Sometimes the property is never
registered at all with the city.
Sometimes the building is in the name of one of 50 different
shell companies that Bald uses with names like Kajo Realty,
820 Suburban Realty Company, 952 Rehab Corporation, 748 St.
Marks Development Corporation, or M.B. Management.
Sometimes Bald's interest in a property is completely hidden
and is not on paper anywhere.
According to law enforcement agents, Bald even acts as a "fire
broker" for other landlords. He will supply a torch for a
building gin which he has no financial interest—for a free or a
future consideration.
But there is always the extraordinary coincidence of fire and
money, or arson and insurance. There is the pattern of the
building bought, the swift withdrawal of heat and hot water
from the tenants, and then the fire set in the middle of the night
in a top rear apartment.
Over the last five years, Bald and a variety of his associates
have collected an estimated $5 million in fire insurance claims.
Bald's properties have been insured by Lloyds of London, by the
FAIR plan, and by other private companies.
Despite Bald's indictment for arson last September in Queens,
he seems to be as active as ever. Three buildings purchased by
Bald this year around the Grand Concourse have already had a
series of fires, and are now abandoned. One of these buildings
is 55 East 175 th Street—a six-floor, brick apartment house
acquired in January of 1980 by 446 Management Corporation, in
which Bald holds a financial interest. This large, decent
building had two suspicious fires on March 3, another on March
4. 4, another one April 27, and a fifth fire on May 11. It now
stands empty, the roof gone, the windows broken, mounds of
burnt garbage in the courtyard.
We have spent 30 months trying to piece this story together, not
merely to name these urban traitors but also to explore and
explain why whole neighborhoods of this city have been put to
the torch. The idea that tenants set most of the fires themselves
in order to quality for public housing—or that vandals or street
gangs set them—is a myth. The fact is that landlords set the
fires in order to collect insurance money.
And, for years, the insurance industry has not cared. The fire
insurance underwriters have simply passed the costs of arson
along to the public in the form of higher and higher rates.
Joe Bald's operations span the city, from Harlem to the Grand
Concourse, from Bed-Stuy to Far Rockaway, but his chief place
of business is Room 703, 16 Court Street, Brooklyn. His name
is on the door, beneath the heading Real Estate, along with the
names of two other companies and three individuals.
Inside Bald's suite is a tiny waiting area, shut off by a locked
door from the actual offices. A secretary peers out from behind
a window, making the operation look more like a ghetto check-
chasing service than a real-estate firm. But Bald hasn't been
spending much time in the office lately; believing, perhaps, that
his phone is tapped, Joe Bald has been making a lot of calls
from the pay phones downstairs on Court Street.
Bald's career is somewhat opaque. Over the past 10 years he has
been identified as a rabbi, a furniture dealer, an interior
decorator, a landlord and a management agent. What's known
for certain is that arson for profit was not his first criminal
business.
According to Michael Hellerman's autobiographical Wall Street
Swindler, Bald was instrumental in several Hellerman-
masterminded stock fraud schemes involving top organized
crime figures. Bald is portrayed as a mere tool in these
5. transactions, most of which took place in 1970 and 1971.
When Hellerman decided to handle a stock swindle involving a
mob-connected New Jersey car-leasing firm, he used Bald as a
front and go-between. Among the "investors" in this ripoff were
mobsters Vinnie Aloi, John "Dio" Dioguardi, and Vincent
Lombardo, son-in-law of crime genius Meyer Lansky.
Some time later, when Hellerman needed a place to cash checks
he was collecting in a bigger stock manipulation, he went to
Bald again. "Bald was a man of many contacts," wrote
Hellerman, "and the check cahiers he came up with were a
couple of rabbis who worked in the New York Jewelry
Exchange. Bald assured me that the rabbis were reliable men,
willing to cash the checks for us, no questions asked . . . "
Hellerman decided to swindle the rabbis too, but Bald
apparently betrayed him out of fear. The rabbis retaliated by
kidnapping one of Hellerman's associates and holding him
prisoner for three days, until Bald produced enough second
mortgages and cash to secure his release.
None of this made the papers, and it's entirely possible that
Bald's Queens neighbors thought of him simply as a good
family man with mysterious business activities. But in
November 1970 Bald was implicated in the Imperial Investment
Corporation fraud case along with Hellerman, New York mob
boss Carmine Tramunti, Aloi, Dioguardi, and Lombardo.
Shortly before the indictments came down, Bald, his brother-in-
law Harold Blond, a Democratic fund-raiser named Edward
Adams, and an aide to Republican senator Hiram Fong of
Hawaii began seeking ways to fix the Imperial case. But neither
Bald nor his associates realized that Hellerman had long since
become an FBI informant. Before an undercover agent blew it
open, the bribery attempt had been carried to the point where
Fong aide Robert Carson offered $100,000 to Deputy Attorney
General Richard Kleindienst. Bald pleaded not guilty when the
bribery arrests were first made. But by November 1971, when
the case when to trial, he had changed his plea to guilty.
Though he never directly fingered the organized crime
6. investors, Bald testified that "we offered a million dollars if the
Imperial Investment Corporation matter could be taken care of."
Thanks to his somewhat cooperative testimony, Bald got only a
few months in jail. Not counting a brief furlough to attend his
son's bar mitzvah, Bald spent three months in Danbury federal
prison and entered the world of real estate upon his release in
May 1972.
Joe Bald is at the center of a group of fire-prone landlords,
some of whom have been h is partners in front corporations,
others who have merely sold Bald buildings to dispose of as
best he could.
Kenneth Passafiume, Bald's partner in Nony Realty and Kajo
Realty, was perhaps his closest associate. Kajo-owned buildings
had at least 21 fires deemed suspicious, incendiary, or
unknown, between April 1976 and August 1977. The modus
operandi was simple. In the case of a 28-unit building at 161
Clarkson Avenue in Flatbush, bought by Bald and Passafiume in
April 1976, they cut off services to the tenants, repairs went
undone, and homes went unheated until, in late summer, the
suspicious fires began. Finally, over a two-week period in
December, two larger fires broke out. Bald and Passafiume
collected $15,200 from the FAIR plan, a state-run insurance
pool, and a few months later the building was sealed. By March
1977, Bald and Passafiume were applying for a low-cast city
loan to "rehabilitate" 161 Clarkson.
Passafiume, who lived in New Jersey while his Brooklyn
properties burned, ignored at least one court order directing him
to make repairs at 161 Clarkson. His previous record shows two
arrests: one in 1975 for possession of a gun and "menacing,"
and another in 1977 for drunk driving.
A second Bald associate, more respectable at first glance, is
Henry Katkin, a Brooklyn landlord whose city tax arrears once
reached $170,00. Katkin and Bald own at least two buildings
together, one recorded under the bizarre name of Terrain
Renewal. Located at 280 East 91st Street in Brooklyn, the
7. building had two fires of unknown origin a month earlier. The
insurable loss on both buildings totaled $37,000.
One of the most active of Bald's associates is Marvin Siegel,
with whom he has done business under the corporate name of
Sagamore Realty. Over a period of eight months in 1977, Siegel
bought up at least a dozen properties in the South Bronx for
nominal cash. Then, on February 22, 1978, he turned them over
to Bald, again for a nominal consideration. On paper, these
properties were worth about $350,000 in all. Each one has since
had a serious fire of suspicious origin, and three—at 1173 West
Farms Road, 1126 Kelly Street, and 559 Southern Boulevard—
were burned to the ground. According to law enforcement
authorities, all of these buildings were insured for amounts far
in excess of their assessed valuation or the amount Bald's
companies paid for them. Nearly all were in tax arrears.
Landlords don't burn buildings themselves in most cases,
although sometimes the "torch" will also be used as a front man
to disguise a building's ownership.
Joe Bald's favorite torches appear to be Kenneth Aska, Richard
Payne, James Blackwell, and Ralph Turane. These four men, all
considerably younger than Bald, will soon go on trial with him
for the incendiary fires at 750 Empire Avenue in Queens.
Aska, who has also gone under the aliases of Kenneth Brooks
and Alvin Donelly, was born in New York 31 years ago and now
lives in the pleasant suburb of Central Islip. He drives a while
1978 Lincoln Mark V, and reportedly owns three other cars. He
lists his occupation as "investment consultant" and his business
address as "820 Realty, 1727 Townsend Avenue, Bronx."
Seventeen twenty-seven Townsend is owned by one Joseph
Benedicke, who shares Bald's business address at 16 Court
Street, and shares a business phone with Joseph Mayer, Bald's
partner in a front office called M.B. Management Corporation.
The building at nearby 820 Suburban Place, which was taken by
the city for nonpayment of taxes in 1978 (and to which the name
820 Realty refers), was owned by M.B. management.
Aska's offices were raided by the police on September 20, 1979,
8. the same day he was arrested for arson and conspiracy in the
burning of 750 Empire Avenue. Among the papers taken from
his office was a long list of buildings located in the Bronx,
Brooklyn, and Manhattan, some of which have suffered serious
fires. Also collated from materials found at the office was a list
of property owners or managers who have done business with
820 Realty, and whose properties have been investigated by the
Fire Department for suspected arson.
Among these landlords are Benjamin Tabak and Harry Rosen,
who have been sued many times for violations of tenant rights
and humane behavior. Tabak, who owns properties in
Williamsburg, was almost arrested in 1977 for failing to appear
in court to answer tenant charges against him. He was also one
of the Voice's "10 worst landlords" of 1978. Those tenants told
the Voice that, along with no heat or hot water and no effort to
correct 200 violations of the building code, there were four
suspicious fires during Tabak's effort to drive them out of their
homes at 184 Grand Street. (While collecting rents from these
tenants, Tabak didn't bother to pay any property taxes to the
city.) The religious organization used by Tabak as a front for
his ownership of 184 Grand Street also appears in the group of
names found at Aska's office.
Harry Rosen is an old-timer; we have been told that one of the
first court cases ever filed by the city for housing code
violations was against Rosen. But such efforts by the city don't
seem to have affected him much: in November 1978, after a
two-year court battle with city authorities over hazardous
conditions in two of his Brooklyn buildings, Rosen and his
partner Sam Biller were fined $4000 for contempt by a civil
court judge.
Law enforcement sources believe Aska and his associates were
running a sort of arson service business out of their offices at
1727 Townsend. Aska himself has been arrested on two
previous occasions. In 1971 he and his brother-in-law Richard
Payne were charged with grand larceny and coercion, or causing
fear of injury to a person/property. The following year he was
9. arrested on a misdemeanor charge of "obstructing governmental
administration." Both of these cases arose out of Aska's
involvement with Black Economic Survival, a group of black
Bronx construction workers whose leader, James Sims, was
convicted of extortion in 1975. The charges against Aska and
Payne were ultimately dropped.
Aska—a touch guy who tried to kick a Voice photographer last
week and later threatened violence against him—appears to be
the most senior of Bald's helpers. He knew enough about arson
mythology to accuse an elderly Jewish tenant leader of setting
the fires at 750 Empire Avenue when he was arrested for that
crime last September.
Last week in Queens Supreme Court we saw the defendants in
the 750 Empire case for the first time. They were brought to
Judge John Leahy's courtroom in handcuffs, having spent the
previous evening in jail. Though the five of them were
originally released on $50,000 bail each, they'd spend the night
behind bars because of an incident in the courthouse hallway
the day before. After a pretrial hearing, Bald, the attorney
representing him, and the other defendants were waiting for an
elevator. Standing next to them was Queens assistant district
attorney Joseph Maddalone, who says that Bald began making
"smart remarks" in his direction about "letters being sent to the
judge.' Maddalone says he asked Bald's Attorney, Arnold,
Weiss—who happens to be a former Democratic from leader
from Manhattan—to "control his client." Weiss' response was:
"Tell it to the judge."
That's what Maddalone did, and the five defendants' bail was
temporarily revoked. We watched them apologize humbly to
Maddalone and the judge in the courtroom the next day. The
judge reinstated their bail, and they left.
The tension in that courtroom reflects just how "hot" this
particular arson case has become. The building which burned
was a site of community controversy for more than a year
before it was set on fire with flammable liquids and a road flare.
Far Rockaway is undergoing convulsions much feared by its
10. middle-class residents, who focused on 750 Empire Avenue as a
symbol of local deterioration. According to documents in
possession of the former tenants, a nonprofit corporation was
formed by members of a local temple, Kneseth Israel, to buy the
building and demolish it so that one and two family homes
could be built on the site.
The dummy corporation which took over the building in
November 1978 was called Golem—Yiddish for "monster"—
Realty Corporation. According to law enforcement sources, the
real owner was Dorn Management, whose president Mordechai
Sohn is also the president of Temple Kneseth Israel. Because
the new owners refused to provide heat or services, the 20
tenants remaining in the 48-unit structure often withheld their
rent. Between January and March of 1979, the complex suffered
four incendiary blazes, the firs for which Bald and company
were indicted on courts of arson and conspiracy.
Bald's relationship to this particular set of fires is exceptional,
and in a way it's ironic that he is finally being prosecuted for
this case. From the doorway of 739 Elvira Avenue in Far
Rockaway, where Bald has lived for many years with his wife
and children, he could see 750 Empire Avenue. The irony of the
case is that Bald and his cronies are about to be tried for a
crime that may have been a favor to friends in the
neighborhood, friends who have accomplished their goal
without being caught. Bald may find time to ponder this in
prison.
It is also possible that he may not go to prison again. Few
arsonists are convicted, particularly when they have lawyers as
skilled as those representing Bald and Aska.
Aside from Bald's deep involvement with mob-linked stock
swindles 10 years ago, the clearest signals of organized-crime
involvement in the arson plague are Bald and Aska's lawyers.
Thought ex-reformer Arnold Weiss appeared for Bald in court
last week, he did it only as a favor to Bald's busy attorney of
record, Jay Goldberg.
Goldberg is a Harvard Law graduate, who once worked for
11. Attorney General Robert Kennedy on racketeering cases in
Indiana. He is now a prosperous mob lawyer. For a brief period
in the mid '60s, Goldberg used his gangbuster reputation to seek
reform Democratic support for assembly and district attorney
races in the Bronx. Now, having represented several top mob
figures as a criminal defender since those days, Goldberg is
defending a landlord who has helped to destroy the Bronx.
Among Goldberg's organized crime clients are Vinnie Aloi,
Johnny Dio, Carmine Galante, Matty "the Horse" Ianiello, the
brothers Anthony "Tony Pro" and Salvatore Provenzano, the late
porn boss Michael Zaffarno, and porno lawyer Seymour Detsky.
Aska's attorney is Herbert Lyons, another high-priced criminal
lawyer. Lyons's most celebrated client was former Brooklyn
congressman Frank Brasco, who despite Lyons's talents, was
convicted of taking a bribe from a mobster.
People who study arson disagree about motive. Some believe
most arsons are motivated by revenge, insanity, or thrill
seeking. Another popular notion is that poor people burn their
own homes so that welfare agencies will help them move to
better housing. But we've never heard a professional fire
investigator say that less than 25 per cent of all arsons were set
for profit.
Our knowledge of arson is limited in substantial part, because
the biggest insurance companies have done so little about the
problem. Though arsonists make millions by defrauding
insurance companies, the corporate response has been less than
overwhelming. They are naturally concerned with covering their
own asses first, which means worrying more about lawsuits for
disclosure of insurance data to law enforcement agencies or for
withholding fire claims in suspicious circumstances, than about
the social problem of arson. The insurance industry is very big
on recommendations, advisory committees, generalized
research, and conference discussions; it's short on action. The
industry's lethargy may have something to do with its ability to
redline threatened neighborhoods and, when too many losses
threaten profits, to raise fire insurance rates on all residential
12. buildings. This approach leaves much to be desired, since the
solutions penalize honest homeowners and tenants much more
than they hamper crooks.
The exceptions to this rule have been among the state-chartered
FAIR plans, for one excellent reason: FAIR plan insurance is
mandated for poor neighborhoods, and profit is not its goal.
FAIR plans are supported by funds from all insurance
companies, as a sort of high-risk pool; they nearly always lose
money. As a result, they have become a prime target of
arsonists for profit. Even so, the FAIR plans didn't fight back
until fairly recently. The most encouraging sign of change has
been in Massachusetts, where Boston-area arson ring of 33
people were indicted by the state attorney general. According to
Mark Zanger, an investigative reporter who uncovered much of
the information leading to those arrests, the Massachusetts
FAIR plan spent between $700,000 and $2 million to finance
that probe.
One problem is that most insurance companies do little
investigations of properties on their won before insuring them.
Lloyd's of London, which has reportedly been victimized by
arson fraud in New York and elsewhere, has just begun to probe
some of its fire claims but only after enormous losses.
And there seems to be clear evidence that at least some
insurance claims adjusters are in league with the arsonists.
Others may simply turn a blind eye to suspicious evidence. The
Village Voice has learned, for example, that Bald's insurance
adjuster has continued to settle claims on his properties long
after he was indicted for arson.
Without some cooperation or willful ignorance on the part of
insurers, how could landlords insure properties for hundreds of
thousands of dollars more than the purchase price or assessed
value? One law enforcement agent told us privately that he
believes insurance agents are actually running the Bronx and
Brooklyn arson rackets. But because it is so difficult to convict
a torch, let alone a landlord, it's hard to "flip" a witness who
14. malfeasance by profiteers in the stratospheric SF real estate
market. A full 67 percent of the comments on SFist's breaking
news article about that fire were devoted to debating the
conspiracy theory that landlords might be burning their own
buildings to vacate rent-controlled tenants or to try and sell the
properties for, say, a cool $20 million.
“It’s a question that I get asked repeatedly,” Mission District
supervisor David Campos (D-D9) told SFist. “Given what’s
happening in the neighborhood, given the fact that there is a
history of arson in the Mission going back to the 70's where
there was actually evidence of arson, I think that we have to do
a better job of providing information to the public because this
question keeps coming up.”
So we decided the chart out the San Francisco fires of recent
years to see if there are patterns in certain neighborhoods
related to those neighborhoods’ real estate value. This article
has no inside information or new evidence on any specific fire.
Instead, we take a broader approach and analyze data on the
frequency of San Francisco fires, their locations, and any
possible correlations between property value increases and fire
incidence.
Does The Mission Have More Fires Than Other SF
Neighborhoods? No
Image: SF Public Safety and Neighborhood Services Committee
Here we see SFFD call distribution by supervisor district from
2012-14. (Clarification added: This chart includes all SFFD
calls, including those for fires, heart attacks, drug overdoses,
kittens in a tree, etc. For 'fire only' data, see the chart below
"Working Fires and Greater Alarm Fires".) That big spike in the
middle is not the Mission District!
That big spike in the middle is District 6 — SoMa, the
Tenderloin and Mission Bay. The Mission is District 9, third
one from the right, with far fewer SFFD calls than District 3
(Financial District, North Beach, Chinatown) and District 5
(Hayes Valley and the Haight).
There is significant statistical noise in that chart, since as
15. previously noted not all calls to SFPD are for fires. But the
statistical noise would apply equally to all districts, so the
overall trends appear valid.
And the Mission does have old buildings. “The Mission District
is comprised in large part of older, wood-framed buildings,”
Fire Department spokeswoman Lt. Mindy Talmadge told SFist.
“Many have not had the electrical work updated, let alone any
structural updating.”
Conspiracy theorists can still point out that SoMa and Mission
Bay are also seeing a lot of luxury condo development, hence
District 6’s frequency of fires, and that the fire locations do
loosely correlate with the sub-areas seeing the steepest rent
increases. They can also note correctly that a higher percentage
of San Francisco’s fires are occurring in the Mission these days,
as you’ll notice below.
Have Fires Become More Frequent in the Mission During This
Boom? Yes
Image: SF Public Safety and Neighborhood Services Committee
Since the start of this current tech and property-value boom, the
Mission has seen a larger percentage of San Francisco’s fires
than before the boom. Above we see fires by district by year,
going back to 2004 (the data only goes up to March 2015).
Notice how the uptick in the percentage fires in District 9
coincides with the beginning of the tech boom in 2011.
Sure, that percentage is a return to 2006-era levels. And maybe
3 or 4 percentage points is just standard deviation. But certainly
SFFD trucks are leaving fire stations for Mission District fires
at a higher rate than they were back in 2009 when
unemployment was at 9%.
But Do Fires Increase When SF Property Values Rise? No
Again referencing the above Arson Task Force chart, notice how
the grand total of all San Francisco fires has decreased most
years since 2004. That period covers a crash (2008) and a boom
(2011-2015). San Francisco fires have decreased consistently
over the last ten-plus years, regardless of property values or
economic conditions.
16. Arson is serious and scary business. What these charts do not
show you is the 70 people who died in those fires between 2004
and 2014, plus however many we will end up losing this year.
These numbers could still either support or debunk the landlord
arson conspiracy theory, depending on your perspective.
Debunkers can note that fires have historically decreased and
that Mission District fires are less common than SoMa/Mission
Bay fires or Financial District/North Beach fires. Conspiracy
theorists can point out that Mission District fires are indeed on
the rise in the current real estate environment. So both sides
have legitimate points to argue over our Thanksgiving get-
togethers. But when having these arguments, please don’t leave
stove burners unattended or allow grease to drip on open
flames.
How Rent Control Subsidizes San Francisco's Super-Rich
A law meant to help the poor and working class will benefit the
latest tech boom's new millionaires
by Scott James — February 16, 2012, 6:01 p.m.222
Thousands of people are expected to become rich in the latest
Bay Area tech boom, and in San Francisco these newly minted
millionaires will receive a benefit originally meant to help the
poor and working class: rent control.
Not that they have a choice. The law applies to rental
apartments built before June 1979, regardless of the tenant’s
income. Rent increases are limited to less than inflation — last
year the increase was 0.1 percent, an all-time low.
But with an estimated 30 percent of the city’s rental properties
owned by mom-and-pop investors with four units or less, an
unintended consequence of rent control is becoming more
prevalent: people of relatively modest means subsidizing the
housing of the extraordinarily wealthy.
Critics say it is just the latest failure of the city’s housing
policies.
17. Noni Richen, a former school cafeteria cook, and her husband,
who once worked on the Alaskan pipeline, put their life savings
into buying a four-unit Western Addition apartment building in
the 1980s. “We had $20,000,” Richen said. “That was a lot of
money to us, and we put that down.”
The rents the Richens collect have changed little since then
because of rent control: $1,000 for each two-bedroom
apartment. “It’s a deal,” she said, noting that her tenants aren’t
wealthy but that her expenses (insurance, repairs, utilities) have
risen faster than the rents. “I don’t begrudge them. I’d do the
same thing if I was them.”
But what Richen sees as a basic question of fairness has
prompted her to become an outspoken critic of rent control,
serving on the board of the Small Property Owners of San
Francisco Institute, a volunteer organization that advocates for
small-time landlords.
Henry Karnilowicz, the group’s president, said rent control
should be abolished, or at least reformed so that the wealthy do
not receive subsidized rent. “There should be means testing,” he
said.
Karnilowicz estimated that 5 percent of the city’s 212,000
rental units (about 10,600) are kept vacant by landlords who
would rather not deal with rent control (others estimate the
number is higher, about 25,000 units). He said that many
owners would rent those homes if there were reforms, like
requiring the rich to pay full market value.
Such a move is highly unlikely, however. In a city where 64
percent of residents rent, tenants have enormous political clout
and it is unpopular to even discuss reforming rent control.
The cone of silence was evident Monday when a parade of
economists and housing experts testified at a board of
supervisors committee meeting about the city’s housing
situation. Each presentation showed that housing had become
increasingly unaffordable in recent years, pricing out people at
every income level — except the wealthy.
Yet not one expert mentioned rent control’s impact on the
18. market.
Voters approved rent control in 1979 to help preserve
communities by limiting rent increases, a threat to working
class and lower-income tenants. However, a new city analysis
shows that for the first time upper-income households (annual
incomes over $107,000) outnumber the poor (incomes under
$35,000), 29 percent to 27 percent. And rents for vacancies
average $2,600 a month, a record high.
According to Ted Gullicksen, executive director of the San
Francisco Tenants Union, the market is much like it was during
the 1990s dot-com boom that pushed rents and displacements to
extremes.
Additionally, the number of existing rent-controlled apartments
has been reduced by demolition or conversion to sale as private
homes, like condominiums. “There’s a serious and steady
depletion of housing rental stock,” Gullicksen said, perhaps
1,000 or more units annually.
Protecting that dwindling supply from further erosion has
become a “ferocious” battle, said Sara Shortt, executive director
of the Housing Rights Committee of San Francisco, a tenants’
advocacy group.
But just trying to determine the exact number of rent-controlled
units — and their tenants’ finances — is difficult. The city’s
last comprehensive research, undertaken in 2000, found that
one-fourth of households in rent-controlled apartments earned
more than $100,000 a year — a revelation that prompted I-told-
you-so rhetoric from some landlords.
Since then, similar comprehensive research has been blocked, in
part by tenants’ advocates who believe the findings would be
“politicized” and become a referendum on rent control, Shortt
said.
Both she and Gullicksen oppose means testing to exclude the
rich from rent control. There are privacy concerns, they said,
and it would create a situation in which landlords would then
rent only to the wealthy.
And with so many tech nouveau riche around, that could make
19. matters even worse for those of ordinary means.
This article also appears in the Bay Area edition of The New
York Times.
From https://www.baycitizen.org/columns/scott-james/how-
rent-control-subsidizes-super-rich/
as accessed on 9/8/2014
March/April 1995
25 years ago tenants organized, formed coalitions, took to the
streets, and won rent control in Massachusetts.
But, after two and half decades of constant battles against
powerful and wealthy opponents, the tenants lost the war to
save rent control.
How did it happen?
By Patricia Cantor
In late December 1971, tenants in Cambridge, Massachusetts,
demonstrated in freezing sleet on City Hall steps to demand rent
control. They succeeded, and rent control became the
centerpiece of the city's affordable housing policy. In November
1994, Cambridge landlords accomplished what hundreds of
lawsuits, years of lobbying, and nearly twenty-five years of lost
bi-annual local elections had failed to accomplish – they
abolished rent control. Under the guise of democracy – the
state-wide ballot process – they achieved the undemocratic
result of dumping the policy long endorsed by the majority of
those effected by it.
Beginnings in Organizing
Cambridge, like many other cities in the 1960s, saw rising rents
displace long-term lower income residents. Pressures from
university expansion, urban "renewal" land clearance, and
manufacturing job loss eroded Cambridge's traditional industrial
base and generated a severe housing crisis. Radicals, both those
from the student movement and those from the "grassroots,"
began organizing. They identified rent control as a way to
20. increase stability and counter the "master plan" to transform
working class Cambridge into "the brain center of the military-
industrial complex." In 1969, a referendum campaign began for
a local rent control law, and although the effort failed because
city officials ruled it unlawful, rent control was on the agenda.
By 1970, statewide tenant power passed a law authorizing cities
and towns with populations over 50,000 to enact rent control.
Boston, Lynn, Somerville, and Brookline, in addition to
Cambridge, quickly adopted it. Lynn repealed it in 1974, as did
Somerville in 1979. Boston approved vacancy decontrol in
1974, and Brookline decontrolled most of its units in 1991.
Only Cambridge retained a strong system.
Throughout the 1970s, Cambridge Tenants Organizing
Committee (CTOC), which grew out of the 1969 referendum
campaign and several successful eviction blockings, ensured
that rent control worked in Cambridge. For nearly a decade,
CTOC was a model class-conscious local organization.
Militantly self-reliant, CTOC raised revenue from members'
contributions, from tenants who participated in its activities,
and from other independent sources. The organization published
a tabloid-style monthly newspaper and numerous informational
guides. A tenant union committee organized tenants. A legal
committee provided legal support. CTOC led rallies to protest
city-wide rent increases approved by the rent board and held at
least one semi-successful, city-wide rent strike.
In 1975 the state-wide enabling law was due to expire.
Responding to heavy real estate industry lobbying, the
legislature refused to extend it. But CTOC led the Cambridge
fight to enact a home-rule version that was passed by the City
Council and approved by the State Legislature and then-
Governor Michael Dukakis.
By the late 1970s, however, CTOC began to unravel. Internal
issues, as well as the changing political climate, contributed to
the organization's formal dissolution in 1978. When CTOC
disbanded, it left a strong rent control system and history of
tenant advocacy and activism.
21. Loss of Units Brings Stricter Regulation
During the 1970s, landlords sought ways to remove units from
control. Since owner-occupied condominium units were not
rent-controlled, widespread condo conversion began in older
buildings. Masterminded by Cambridge anti-rent control
attorney William Walsh, this strategy resulted in the removal of
thousands of units from the rental market.
In response, tenants demanded that removals be restricted and
elected David Sullivan, an activist tenant lawyer, to the City
Council in 1978. By the summer of 1979, Sullivan and other
pro-rent control councilors passed the Removal Permit
Ordinance, which strictly regulated removals of controlled units
by requiring proof that a removal would not aggravate the
housing shortage and would benefit "the persons sought to be
protected" by the rent control statute.
By the early 1980s, although the mass movement had faded to a
few dedicated individuals called the Cambridge Tenants Union
(CTU), the institutional structure that years of tenant activity
had produced protected thousands of people. Every two years,
Cambridge voters (80% tenants) returned a five-to-four pro-rent
control majority to the nine-member city council. At each
election, rent control was the hottest issue, and reasonable
effort and positive inertia kept it intact.
Landlord Backlash
Although the remaining activists continued to press for pro-
tenant positions, real organizing ceased. Into this vacuum
stepped the Small Property Owners Association (SPOA).
Responding to what they claimed was the rent board's pro-
tenant bias and vowing to do away with Cambridge's "inherently
onerous and unfair" rent control laws, a group of property
owners, mostly owner-occupants of small buildings, formed
SPOA in 1987.
SPOA began picketing city council meetings, regularly speaking
up at rent board hearings, and organizing other property owners.
SPOA representatives visited radio talk shows and interested
reporters and columnists in publicizing their personal tales of
22. the "horrors" of Cambridge rent control. They displayed signs at
university graduations, wrote letters to local and national
newspapers, and were able to portray themselves as a grassroots
organization fighting for justice and the American way against
the "People's Republic of Cambridge."
SPOA also presented a more diverse and superficially appealing
picture than the corresponding tenant activists. They included
young and old, black and white, and women and men in their
leadership. Although larger landlords jumped on the bandwagon
and over the years contributed large sums to finance the
organization, SPOA only showcased people who looked
sympathetic.
Its first big test came in the 1989 local elections. Sullivan and
two other long-time pro-rent control councilors declined to run,
and landlords succeeded in getting a local ballot question,
Proposition 1-2-3, before the voters. Proposition 1-2-3 would
have allowed landlords to sell condo units to tenants who had
lived in their units for two years, thereby converting the units
from rental to owner-occupancy and doing away with a large
piece of the removal ordinance. Proposition 1-2-3's supporters
declared that it gave tenants a "choice" whether to own or rent.
But tenants were not fooled, and Proposition 1-2-3 was defeated
two-to-one. Also, for the first time, voters elected a six-to-three
pro-rent control City Council.
SPOA then turned to a legal challenge, filing a many count
constitutional attack on Cambridge's rent control laws. In March
1993, when most of their claims were dismissed, they began to
look for other alternatives.
Meanwhile, from 1989 to 1994, SPOA's media blitz continued.
Condo owners lamented that they were not allowed to live in
their units. Reports on local news programs featured crying
elderly widows and immigrant families contrasted with a few
high profile "undeserving tenants," such as a state supreme
court judge and a state legislator with a Cambridge pied-a-terre.
SPOA targeted Cambridge's mayor, a lawyer who stayed on in
his rent controlled apartment after his mother died. Articles in
23. legal and business trade journals told SPOA's version of cases.
By 1994, many people outside of Cambridge believed that rent
control didn't work and that it unfairly harmed landlords.
Few, if any, stories reported that rent control allowed thousands
of people to live in Cambridge by keeping rents at reasonable
levels, or that the rent board's rent adjustment formulas strongly
favored landlords, or that, because the removal permit
ordinance eliminated the speculative drive from the rental
market, Cambridge was saved from the 1980s real estate boom
and subsequent bust. No one read about how many SPOA
landlords were able to buy their buildings because rent control
kept property prices down. Although the mayor was portrayed
as getting a free ride, the fact that he was not a wealthy man and
had lived in his apartment for years with his elderly mother was
ignored.
The Beginning of the End
In the summer of 1993, SPOA came up with what would turn
out to be its trump: a state-wide initiative campaign to ban rent
control. The first step was to get the state attorney general to
certify the ballot question. Over the objection that the question
was unconstitutional under state law because it only applied to
"particular localities" (i.e. those with rent control), the attorney
general approved the question in September 1993. This paved
the way for SPOA – now operating under the name of the
Massachusetts Homeowners Coalition (MHC) for campaign
finance purposes – to obtain sufficient signatures to place the
matter on the November 1994 state-wide ballot. Using local
Realtors, paid canvassers, and themselves, MHC barely
mustered the necessary signatures.
The way to a statewide vote, however, was not yet clear. After
receiving permission from the state campaign finance agency,
Cambridge and several individuals filed suit, contending that
since the ban only effected localities that had rent control, the
localities exclusion barred it from the initiative process. The
state supreme court (SJC) heard the case in May 1994 and
rejected the argument in July.
24. "Question 9" would thus appear on the ballot in over three
hundred cities and towns in Massachusetts, although it would
affect only Boston, Brookline, and Cambridge.
The 1994 Campaign
To combat MHC, tenants formed a political action group called
the Save Our Communities Coalition (SOCC). After conducting
focus group research, SOCC chose a strategy that emphasized
how the loss of rent control would impact the elderly,
particularly in Boston. The slogan "Bad for Elderly – Bad for
You" appeared on SOCC's bumper stickers and posters. SOCC
also organized several demonstrations and meetings, mostly in
Cambridge and Boston, but received little media coverage. A
letter signed by over 60 Cambridge property owners
(homeowners and some owners of rent controlled buildings)
supporting rent control ran as an ad in over 50 newspapers
throughout the state.
The American Association of Retired Persons, unions, and a
large array of progressive groups endorsed the "Vote No on 9"
campaign. The Boston Globe editorialized against Question 9,
because it would unfairly interfere with home rule – the rights
of cities and towns to fashion local solutions to local problems
– and because it was fundamentally undemocratic to allow the
rest of the state to decide policy for Boston, Brookline and
Cambridge.
These efforts, however, lost the contest for monetary support
and visibility to MHC. In an election year where government
regulation was portrayed as the enemy, what better strategy than
to use rent control as the prime example of governmental
excess? MHC's logo showed a house with the words "Get Gov't
Out" emblazoned across it. Radio and TV ads focused on a few
of SPOA's prime examples of the "unfairness" of rent control,
particularly in Cambridge. Through its far greater financial
resources, its access to radio talk shows, and its ready-made
network of Realtors, MHC was far more able than SOCC to
communicate its message to voters.
On a long election night, the results in eight other ballot
25. questions came in by midnight, but Question 9 was still too
close to call. By dawn, the news became painfully clear.
Although Question 9 failed in Boston, Brookline, and
Cambridge, it won the state by 51 percent, mostly from the
wealthier suburbs and those communities within reach of the
Boston media. As of January 1, 1995, rent control would be
banned in Massachusetts.
The Endgame
Perhaps realizing the seriousness of the situation for the first
time, Cambridge tenants stormed the next few City Council
meetings and demanded that a new home rule petition be sent to
the state legislature. Tenants packed City Hall in numbers and
diversity unseen since the days of CTOC. Led by activists still
around from then, the relatively new low-income neighborhood
group Eviction Free Zone (EFZ), and the few CTU regulars,
tenants testified to the hardships that the loss of rent control
would bring. Nurses and fire-fighters, parents and children,
elders who had lived in their apartments for over fifty years –
all told moving and compelling stories. And finally, the print
and broadcast media began reporting them.
SPOA responded by saying that "the voters had spoken," that
SPOA had won, and that the tenants should accept the results
and give up.
Pleased that the vote was so close, reacting to tenant outcries,
and relying on the majority no votes in their communities,
officials from Cambridge, Boston, and Brookline quickly
readied home rule petitions. But these officials also assessed the
chances of strong legislation passing and being signed by
Republican Governor William Weld, fresh from a 70 percent
election victory. Although the legislative leadership was
supportive, Weld declared he would veto any new rent control
laws.
Given Question 9's January 1, 1995, implementation date and
the need to move a bill through the lame-duck legislature before
the session's end on January 3, the Cambridge City Council met
almost daily to craft a plan that would meet the concerns of
26. tenants, landlords, the legislature, and the governor. The word
from the State House was that if at least six of the nine council
members, including those traditionally opposed to rent control,
could agree on a compromise, it might be approved.
The debate was emotional and intense. The City Council passed
a compromise bill at the eleventh hour before petition needed to
be filed at the legislature the next day. One pro-rent control
councilor voted against it and one voted "present;" three pro-
rent control and three anti-rent control councilors voted for it;
and one member, William Walsh, the staunchest anti-rent
control councilor, was not there. On November 15, he had been
sentenced for federal bank fraud, and under state law, deprived
of his council seat. The pro-rent control councilors who
supported the compromise agreed that it was a terrible bill, but
the only choice, given that Question 9 would ban rent control
altogether on January 1. As Frank Duehay, the sole remaining
councilor who had voted for rent control in 1970, said in
justifying his vote: "This is one of the saddest days of my life...
I have to ask, is it better to have something or is it better to
have absolutely nothing?"
The new law would have provided for decontrol of most units
by July 31, 1995, and would have eliminated restrictions on
owner-occupancy of condominiums. It would have kept rent
control for five years in buildings with seven units or more for
tenants who were 62 or over, physically handicapped, or whose
incomes were less than 90 percent of the median for Boston.
The petition passed the Massachusetts House of Representatives
by enough votes to override a veto. It passed the state Senate by
two votes. SPOA continued to lobby against it. Governor Weld
repeated his intention to veto it.
Meanwhile another challenge, to the legality of the election
itself, was brewing. The nine questions on the 1994 ballot had
been the most in Massachusetts in a long time. Although law
requires a summary of each question to be printed on the ballot,
the secretary of state had ruled that the ballots did not have
enough room and that separate summaries could be distributed
27. at the polls. On election day, except in a handful of towns that
still used paper ballots, voters found ballots listing only
question numbers with a choice of "yes" or "no." No title or
description of the subject matter, much less the actual summary,
appeared. Confusion was compounded because on some ballots
a "yes" vote was a vote to change the current law (such as
Question 9), while on others it was a vote to keep the status
quo.
Disturbed by a seemingly flagrant legal violation and
responding to widespread reports of voters not receiving any
summaries, supporters of rent control and another ballot
question sued to invalidate the election. On November 29, 1994,
in the first positive legal development for rent-control
supporters in over a year since the ballot question fight began, a
Superior Court judge enjoined the election results from
becoming law.
The fate of all the questions was in doubt. Since this obviously
had widespread consequences, the SJC pushed for a full court
hearing as soon as possible. This occurred on December 22.
While the ballot question scenario was unfolding, the home rule
petitions were stalled at the governor's office. Tenant advocates
knew they didn't have enough votes to override a veto. Even if
the court ruled that the summaries did not have to be on the
ballot, it could be too late to prevent rent control from being
repealed. Rent control supporters would then have to start over
with a new legislature and a hostile governor.
On December 27, the SJC issued an order approving the
omission of the summaries from the ballot. The injunction
against Question 9 remained in force through the end of the
legislative session.
The action shifted back to the State House. The governor
repeated that he would not sign any law that kept rent control.
SPOA, along with the Greater Boston Real Estate Board, kept
lobbying against anything other than the outright ban contained
in Question 9. On the afternoon of January 3, Weld announced
that he and the real estate industry had reached an agreement on
28. a transitional law, which, in the words of one legislator, would
allow rent control "to die with dignity." The law technically
would apply throughout the state, because it was not a home
rule petition and would not need local approval; it would also
supersede Question 9.
The law immediately decontrolled all units not occupied on
November 8, 1994 (election day), by a tenant with an income of
60% or less than the median for Boston ($21,500 for a single
person). For tenants who were 62 or over or disabled, the limit
was 80% of the median income ($ 27,950). The incomes of all
persons residing in a unit were counted, and full-time students
were not protected. Rent control for "protected tenants" in
buildings with up to twelve units would end on December 31,
1995; those in buildings of over twelve units had until
December 31, 1996. The rent board lost jurisdiction over
evictions, and removal regulation was eliminated.
Just before midnight on January 3, the legislature enacted the
real estate industry law that killed rent control in Cambridge,
Boston, and Brookline. Governor Weld signed it the next
morning.
What Went Wrong?
Some believe that rent control advocates were too rigid, that
Cambridge's failure to "reform" rent control by responding to
legitimate landlord complaints brought the whole system down,
that if some provisions had been relaxed, for example, letting
owners live in condos, SPOA would not have been pushed to the
extreme. Others pointed to the inequity of a system that allowed
the mayor and an SJC judge to live in rent controlled apartments
while failing to assure that low-rent units went to those who
needed them most.
Of course, mistakes were made. CTU and SOCC had failed to
recognize and adequately respond to the highly visible examples
of wealthy/well-placed tenants living in rent controlled units.
This serious underestimation of public perception deprived
tenants of a counter to landlord propaganda. Additionally, by
focusing on the effect of rent control's loss on the elderly,
29. instead of also making the home rule and basic democracy
arguments, SOCC may have miscalculated. Finally, although
CTU purported to speak for Cambridge tenants, their activists
were not organizers, and Cambridge tenants did not through the
years maintain the type of organization that could have
countered SPOA. Even accounting for obvious differences in
money and power, Cambridge tenants lost the initiative before
they lost the '94 election.
But it also seems clear that SPOA would not have been satisfied
with reforms that made rent control more favorable to landlords.
From the outset, the group's aim was to defeat rent control in
Cambridge, which was evident from its repeated statements that
rent control was both fundamentally unfair and illegal. Easing
various provisions would have only encouraged SPOA to push
for more until the goal was achieved: a free market economy in
Cambridge's rent controlled housing – the same system that laid
the groundwork in the late '60s for tenant organizing that led to
rent control.
Renewal
The seeds for rebuilding are now being sown. EFZ has
mobilized activists, including veterans from CTOC, labor
struggles and neighborhood issues, to begin organizing tenant
unions. EFZ is training tenants, providing written materials,
offering access to legal advice – in short, re-building a tenants'
movement. It has announced an ambitious "Housing Justice
Program" that seeks to negotiate leases with rent increases tied
to tenant incomes and just cause eviction protection. The
Housing Justice Program also calls for tax abatements for
landlords who keep rents at reasonable levels and a real estate
transfer tax to capture some of the profit that will be made from
sales of newly decontrolled properties.
It is too soon to assess the impact of EFZ's efforts, but its
leadership is comprised of respected and experienced tenant
advocates. If Cambridge tenants are to reclaim some of the
power they lost when they lost rent control, only well-organized
and broad-based organizations like EFZ can make that happen.
30. In the end, Cambridge held off the tide of deregulation longer
than anywhere else, until finally the "get gov't out" fever swept
over the city as well as the rest of the country. But Cambridge
activists who fought to protect tenants for years can be proud
that so many people were protected for so long. And they know
from experience that "the struggle continues."
Copyright 1995
Patricia Cantor, who served as counsel to the Cambridge rent
board and was an active member of the Cambridge Tenants
Organizing Committee, is now an attorney in private practice.
For updates on what happened to affordable housing in
Cambridge and the work of EFZ, see Shelterforce#117 and #94.
Arson, Urban Economy, and Organized Crime: The Case of
Boston
Author(s): James Brady
Source: Social Problems, Vol. 31, No. 1 (Oct., 1983), pp. 1-27
Published by: Oxford University Press on behalf of the Society
for the Study of Social
Problems
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SOCIAL PROBLEMS, Vol. 31, No. 1, October 1983
ARSON, URBAN ECONOMY, AND ORGANIZED CRIME:
THE CASE OF BOSTON*
JAMES BRADY
Director, City of Boston Arson Strike Force;
University of Massachusetts, Boston
The deadly crime of arson is spreading at an alarming rate in
the United States, leav-
ing whole city neighborhoods devastated in its wake.
Traditional methods of dealing
with the problem are based on a view of arsonists as
pyromaniacs or vandals. This
32. paper shows a clear link between the policies of banks and
insurance companies,
on the one hand, and the arson-for-profit schemes of organized
crime, professional
arsonists, shady landlords, and corrupt public officials. I
develop a sociology of
arson, in the process analyzing several kinds of arson and
describing specific bank
investment practices and insurance industry underwriting
policies which directly
contribute to the problem. I conclude by assessing proposed
new remedies for arson
in the light of the conflicting interests of corporate institutions,
on the one hand, and
tenants and homeowners on the other.
We are accustomed to think of fires, like automobile crashes,
as tragic accidents caused by
carelessness or bad luck. While it is recognized that some
blazes are deliberately set, the public
has long been assured by fire officials, psychiatrists, and
criminologists that such fires are the
isolated acts of pathological "pyromaniacs" or juvenile
"vandals" and pose no serious threat to
cities guarded by modern fire-fighting companies.
Unfortunately, the dramatic upsurge of arson
fires in the United States since 1960 has made a shambles of
these assurances. Arson now out-
strips all other "index" crimes in terms of injuries, deaths, and
property losses, forcing us to re-
think both our current control measures and our notions about
the causes of this menace.
INTRODUCTION: THEMES AND METHODS
33. This study breaks new ground in developing a sociology of
arson, using demography and
urban economics. It demonstrates that arson is essentially a
consequence of economic decisions
undertaken by the banking, real estate, and insurance
industries, as well as the racketeering op-
erations of organized crime syndicates. This is not to say that
"pyromaniacs" and especially "van-
dals" do not set a substantial number of fires in addition to
those set by more sophisticated pro-
fessional "torches"- the preferred employees in arson-for-profit
schemes. Nor do I mean to
imply that bankers, realtors, and insurance agents are
necessarily joined in conscious conspiracy
with gangster syndicates, though this is clearly the case in
some instances.1
I argue that routine profit-making practices of banks, realtors,
and insurance companies lead
to the processes of abandonment, gentrification, and
neighborhood decline which destabilize
urban communities and provide the context and motivation for
several varieties of arson. Or-
ganized crime syndicates, professional firesetters, and corrupt
officials all figure prominently in
arson-for-profit schemes, but the urban economic context also
lies behind the fires of vandals
and small property owners desperate to escape losing
investments by means of convenient fires.
* An earlier version of this paper was presented at the national
meetings of the American Society of Crimi-
34. nology, Toronto, November, 1982. The author thanks his police
and civilian colleagues of the Boston Arson
Strike Force, particularly Michael N. Moore. Correspondence
to: Department of Sociology, University of
Massachusetts, Boston, MA 02125.
1. The symbiotic and sometimes consciously conspiratorial ties
between legitimate corporations and
gangster syndicates is hardly peculiar to arson. Scholars
probing such criminal activities as narcotics traffick-
ing, gambling, labor union corruption, loan sharking, and
selling stolen goods have discovered the same
kinds of links between racketeering, official corruption, and
corporate profiteering. See Block and Cham-
bliss (1981), Chambliss (1978), and Grutzner (1973).
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2 BRADY
In advancing this social economy of arson I rely mainly on
original materials drawn from my
study of arson, neighborhood development, and organized
crime in the city of Boston.2
The Boston data is drawn from several years of personal
experience as a researcher and activist
with anti-arson community organizations in the fire-ravaged
Dorchester ghetto where I live and
work. I am also director of the City of Boston Arson Strike
Force, a special team of civilian
experts and police detectives appointed by the mayor and
charged with the investigation of local
35. arson-for-profit syndicates. Our collected evidence was
presented to the Suffolk County Grand
Jury in April, 1983, preliminary to indictments and prosecution
by the District Attorney. For
obvious reasons, neither the targets of the Strike Force nor any
of the confidential evidence col-
lected in our work will be disclosed in this article.
The materials presented in this paper are derived entirely from
publicly available sources, in-
cluding the local press, television documentaries, and
especially the scattered records of property
transactions. These transactions include sales and resales of
buildings and land, insurance pol-
icies and brokerage arrangements, mortgage lending, papers of
incorporation for trusts and
holding companies, taxes, housing and land court decisions,
housing inspections, fire code in-
spections, and fire histories of individual buildings and
landlords. These records are drawn espe-
cially from the Suffolk County Registry of Deeds, the Boston
Rent Control Administration, the
Boston Buildings Department, the Boston Housing Authority,
the Boston Office of Community
Development, the Metropolitan Area Planning Commission, the
Boston and Lowell, Mass., Fire
Departments, the Massachusetts State Commissions for
Banking and Insurance, and the Massa-
chusetts Secretary of State. I share with my police and civilian
Strike Force colleagues the hope
that we shall soon obtain criminal convictions of at least one
major organized crime arson ring
operating in Boston. Afterwards, it will perhaps be appropriate
to divulge some of the investiga-
tive methods and findings of this effort, which combines police
36. work and sociological research.
It might be helpful to define several terms here. Arson refers to
the intentional destruction
of property by fire. Redlining refers to the mortgage-lending
practices of banks, and particularly
to the illegal practice of denying mortgage loans for properties
located in districts inhabited by
poor and minority populations. Gentrification refers to the
migration of more affluent profes-
sionals and middle-class families from the suburbs back to
selected districts in the central city.
Both of these phenomena are characteristic of Boston's
contemporary social dynamic and central
to an understanding of arson.
Jurisdiction over arson investigation has been traditionally the
almost exclusive domain of
local fire departments and their semi-specialized arson squads
(though the latter often include
a few local police detectives, since firefighters do not usually
have the power to arrest). However,
since 1972 the Federal Bureau of Alcohol, Tobacco, and
Firearms (ATF) has been authorized
to investigate fires in commercial buildings if an "explosive
device" is suspected as the cause of
the fire; since 1982 the ATF's jurisdiction has been broadened
to include any commercial build-
ing destroyed "by explosion or by fire" (Murphy, 1983). The
ATF has established teams of arson
investigators in major cities across the United States who are
supported by sophisticated, mobile,
37. arson-detection laboratories; nevertheless, the organization still
responds only to a small percent-
age of the total arson incidents in commercial buildings.
The United States Fire Administration (USFA) supports some
limited research on fire scene
investigation, insurance fraud techniques, and related arson
topics, and provides standards for
the modernization of local fire departments. The National Fire
Protection Association (NFPA),
largely supported by the insurance industry, also engages in
periodic evaluations of the local fire
departments, publishes some of the more important arson
statistics and research findings, and
2. A parallel view of arson-for-profit racketeering in Tampa,
Minneapolis, and Rochester, New York, is
provided in U.S. Congress: Senate (1979).
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Arson in Boston 3
is largely responsible for the drafting of fire codes used in
building construction throughout the
United States.
The discussion which follows is divided into four main
sections. First, I survey the growth and
impact of arson in the United States, the failure of law
enforcement, and the contribution of
38. deviance theory to our misunderstanding of the problem.
Second, I develop a case study of arson
patterns in Boston and link this to a discussion of urban
speculation, bank mortgage lending pol-
icies, insurance industry underwriting practices, and
demographic shifts as predictors and moti-
vators for arson. Third, I discuss major varieties of arson for
profit in Boston and present the
property transactions of several arson-prone speculators and
one local bank whose "problem
properties" have a tendency to burn. Fourth, I describe
contemporary arson control reforms and
assess their prospects for success against the competing
interests of the banking, real estate, and
insurance industries. I also describe emerging movements of
tenants and homeowners in threat-
ened neighborhoods.
OVERVIEW: ARSON IN U.S. CITIES
From 1951 to 1977 the number of arson incidents reported by
local fire departments across
the United States to the National Fire Protection Association
(NFPA) increased by over 3,100
percent, from 5,600 cases to over 177,000 cases (Carter,
1980:41). In 1964 arson was reported
to have caused less than 3 percent of all fire losses (Carter,
1980:40); by 1981 it had risen to 30
percent (Karter, 1982:68). The federal Law Enforcement
Assistance Administration (LEAA) esti-
mated arson losses at closer to 40 percent of total fire damages
in 1977 (Boudreau et al., 1977:5;
Economist, 1977:11); this higher estimate is corroborated by
39. the Aerospace Corporation report
to the Senate (U.S. Congress: Senate, 1979). In 1981 local fire
departments estimated that "large
loss" arson fires (those causing over a million dollars in
damages each) resulted in over $1.5
billion in structural damage (LeBlanc and Redding, 1982:32).
The National Insurance Service
estimated that the industry paid approximately $5 billion in
claims submitted in 1979-80 for
arson-related fire losses (Karter, 1982; Lima, 1977b).
In 1981, 6,700 civilians died in burning buildings in the United
States (Karter, 1982:68), three
times more than the number killed by handguns (LeBlanc and
Redding, 1982:50). Arson ac-
counts for an increasing proportion of these fire deaths. During
each year between 1977 and
1980, about one thousand civilians and another 120 firefighters
were killed in deliberately set
fires; an additional 30,000 civilians and 4,000 firefighters were
injured (Carter, 1982; Fire and
Arson Investigator, 1981:14).
These statistics understate the seriousness of the situation.
Local fire departments count as
"arson9" only those fires whose origins are initially regarded as
suspicious by firefighters on the
scene and which are subsequently `--vestigated by the local
arson squad and judged to be "in-
cendiary" or "suspicious." The standards of evidence required
for these classifications are high,
and a number of questionable fires are simply classified as
"undetermined."3 Still others are
wrongly described as accidents. There is wide agreement
among independent investigators that
most of these fires are also arson.4 Studies prepared by the
40. LEAA count half of all "undeter-
mined" fires as arson (Boudreau et al., 1977:1). Such prominent
pyrotechnic experts as former
chief James Scollins of the Lynn Fire Department, Harvey
Schmidt of First Security Investiga-
tors, Inc., Robert Carter of the National Fire Protection
Association, and William Murphy of
3. Based on an interview (Nov. 17, 1982) with Robert Carter,
former Chief Arson Investigator, Common-
wealth of Virginia and presently Research Analyst at the
National Fire Protection Association, Quincy,
Massachusetts. His assessment is corroborated by my own
professional experience in the field, and by that
of every other investigator I have encountered.
4. My views on this are shared by John White, Fire Marshall
and commander of the Boston Fire Depart-
ment's arson squad. White is the liaison between the Strike
Force and the fire department.
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4 BRADY
the ATF arson team all concur that an enormous number of
deliberately set fires are wrongly
classified as "electrical," "children playing with matches," or
"careless disposal" (as in trash set
afire). They also concur that damages are greatly under-
reported even when arson is acknowl-
edged as the cause, since fire departments only consider fire
41. damage to structures and do not
consider either smoke and water damages, or the destruction of
building contents. Actual insur-
ance payments (usually based on replacement costs for all
damaged items) typically amount to
between three and five times the loss estimates reported by fire
departments, as attested to by
the above experts and substantiated in my own investigative
experience.'
The under-reporting of arson and fire damages is partly due to
the shortages of staff and
equipment which plague many arson squads and make it
impossible to seriously investigate more
than a fraction of the fires which are initially called to their
attention (U.S. General Accounting
Office, 1978). Fire chiefs are under pressure from mayors to
show that fire protection has not
declined despite cut-backs in city fire department budgets, as
exemplified by department claims
during the recent "proposition 2V2" fiscal crisis in Boston
(Harvey, 1981:6; Radin, 1981:3). The
reputation of a city's fire protection services and the local
department's evaluation by the NFPA
affects both insurance premium rates and the bond ratings from
municipal securities, which must
be sold to balance mounting budget deficits (National Fire
Prevention Administration, 1976).
Like other social problems, the cost of arson is not shared
evenly. While national statistics
are not available, the common impression of investigators and
journalists alike is that most of
those killed are poor people and minorities living in slum
districts of urban centers (Lima, 1977b;
Schall, 1977). The victims are often children or elderly people
42. who are not quick enough to
escape the flames. Typically, they die choking in their beds or
trapped on staircases, the latter
a favorite spot for arsonists to do their work because they
provide an easy escape route and good
updrafts for spreading the flames (ABC, 1978; Fraker, 1977).
Declining urban neighborhoods, particularly in the older cities
of the Northeast and Midwest,
are the most common arson sites (Karter, 1982). New York
City recorded more than 40,000
arson fires resulting in over 180 civilian deaths from 1975 to
1978 (Catalina, 1979). The city's
fires have been concentrated in the heavily black and Hispanic
South Bronx district, which was
gutted by more than 30,000 arson fires from 1970 to 1979
(Hanson, 1980). In New Jersey, arson
caused 168 deaths and over $96 million in damages in 1978,
mainly in the ghettoes of Hoboken
and Patterson (U.S. Congress: Senate, 1979). Denver's central
district was scarred by more than
3,000 arson fires in 1971-76, which destroyed 544 buildings
and caused over a million dollars
in structural damages (MacDonald, 1977).
The response of law enforcement agencies to the arson problem
does not inspire confidence.
Throughout the mounting arson wave of the 1970s, the Federal
Bureau of Investigation (FBI)
continued to list arson as a low priority offense, along with
drunk driving and gambling; it final-
ly added arson to the list of "index crimes" in 1981 on a
provisional basis (Campbell, 1981). Local
police departments reported in 1977 that less than 9 percent of
all reported arson incidents re-
sulted in an arrest, while less than 2 percent ended with a
43. conviction (Boudreau, 1977:30). Fed-
eral budget allocations show that in 1977, only $1.7 million of
the Law Enforcement Assistance
Administration's budget of $2 billion was set aside for anti-
arson programs, or less than 0.1 per-
cent (ABC, 1978; U.S. Congress: Senate, 1979). This was
increased to $17 million by 1980, but
was cut back to $5 million by President Ronald Reagan's
administration in 1982 (Gest, 1983).
5. Based on presentations made by Scollins, Murphy, and
Schmidt at the Massachusetts Attorney General's
Conference on Arson held at Worcester, Massachusetts,
February 23, 1983. In addition I interviewed three
of these experts during January and February, 1983, in the
course of liaison responsibilities for the Boston
Arson Strike Force. I interviewed Carter extensively at the
National Fire Protection Association at Quincy,
Massachusetts, on November 17, 1982.
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Arson in Boston 5
MISUNDERSTANDING ARSON: THE LEGACY OF
DEVIANCE THEORY
Solving arson, like any other crime, requires both sufficient
resources and a logical theory
which can link the available evidence and point to a particular
suspect or a correct enforcement
44. policy. It is not enough for investigators to uncover the right
clues; they must also set aside the
wrong ones. A "cold trail" can be particularly deceptive when it
is well worn by long investigative
tradition and well marked by orthodox criminological theory.
Unfortunately, the trail followed
in most analysis and investigation of arson is both "cold" and
circular.
In the United States, arson has long been the almost exclusive
concern of local fire depart-
ments; and arson squads in those departments have typically
served as a sort of bureaucratic
"pasture" for older firefighters and those no longer fit for
active fire duty. Training for these
squads has been limited and largely confined to forensics and
pyrotechnics. In essence, arson
squad investigators are taught to approach each fire as an
individual technical problem whose
solution lies in identifying the means and method of "ignition"
found in the rubble the morning
after. Once this evidence has been collected and any available
eyewitnesses have been questioned,
the arson squads consider their job done. If they suspect a
particular person set the fire, squad
members may later spend long hours in clandestine surveillance
of that individual (Associated
Press, 1981).
But there is a great deal of difference between locating the
origin or even the "torch" for a
particular fire and understanding the source of the arson
problem. Fire department officials have
45. little grasp of organized crime and even less appreciation of the
complex socio-economic pro-
cesses which lead to abandoned property, dramatic
demographic changes, and ultimately arson.
None of these larger issues seem relevant so long as arson is
viewed as a crime without rational
motive. Criminal investigation aims simply at linking physical
evidence to particular arsonists
whose impulsive, disturbed behavior makes them all the more
elusive and unpredictable.
The dominant popular image of the arsonist is the classic
"pyromaniac" who masturbates
while watching the soaring flames from the shadows. While
this portrayal has been slightly ex-
panded to include the "juvenile vandal," arson is still widely
regarded as a crime of rage, jeal-
ousy, mental disorder, and especially sexual perversity (Battle
and Weston, 1975:91; Witkin,
1979). This image owes a great deal to the rather dubious
contributions of Sigmund Freud.
Though Freud actually examined few pyromaniacs, he wrote
extensively on the subject, describ-
ing them as sexually immature or homosexually inclined
psychotics or adolescents. His conclu-
sions, based largely on speculation and a reading of mythology
(Freud, 1932:405), formed the
basis of most later psychiatric and criminological work on
pyromania (Macht and Mack, 1968;
Yarnell, 1940).
Contemporary clinical research, invariably based on
examinations of only a few maladjusted
adolescents or adult psychotics, continues to reinforce the
46. Freudian image. Hurley (1969:4)
claims "arson is often a manifestation of mental abnormality ...
the result of unconscious sexual
conflict or as obsessive-compulsive or passive-aggressive
behavior." Scott (1974) discusses arson
as a crime of revenge or perversion committed by psychotics,
alcoholics, homosexuals, and mal-
adjusted children, though he concedes that "arson for profit"
might be the motive for a few of-
fenders. Inciardi (1970) concludes that most of the 138
imprisoned arsonists he studied were pri-
marily motivated by sexual excitement or the desire for
revenge, while only 7 percent burned
buildings for profit. The latter he regards as an anachronism
harking back to the 1930s "when
arson was associated with organized crime" (1970:145).
MacDonald (1977) also depicts arsonists
as compulsive pyromaniacs, sexually excited by fire, but
otherwise impotent, prone to bedwet-
ting, transvestite behavior, and collecting obscene magazines.
The violent subculture theory is essentially an extension of the
traditional explanations of
arson as the product of individual deviance. However, the
subculture theories regard whole com-
munities - particularly urban ghetto dwellers - as prone to a
variety of deviant behavior, includ-
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47. 6 BRADY
ing arson (Banfield, 1970; Miller, 1968; Moynihan, 1970).
Both sorts of deviance theory regard
arson as an irrational act, undertaken by pathological actors,
for a variety of perverse individual
or collective impulses. Both explanations find wide acceptance
among officials responsible for
combatting arson and are clearly reflected in unsuccessful anti-
arson programs (Battle and
Weston, 1975; Witkin, 1979).
There is a disturbing circularity in the deviance theories and
the anti-arson programs which
are based upon them. Researchers draw an image of the arsonist
from the composite characteris-
tics of those few wh6 were captured and imprisoned.
Enforcement agencies aim their investiga-
tions at the "sort of people" identified by researchers as arson
prone (Fire and Arson Investiga-
tor, 1981). Orthodox assumptions about the motives and actors
involved with arson remain
largely unquestioned.
THE DEMOGRAPHY OF ARSON IN BOSTON
Boston burns almost nightly in deliberately set fires. From
1978 until the end of 1982 the city
was scarred by more than 3,000 "incendiary" and "suspicious"
fires. In 1981 and 1982 alone they
caused more than $4.5 million in property losses and killed
about 60 people (Gest, 1983; Schar-
fenberg, 1980; Slade, 1978; Vennochi, 1982). Local fire
officials view these incidents as the work
48. of "bored juveniles" and "firebugs" (Jahnke, 1982). They rely
on expanded forensic laboratories,
neighborhood arson watch programs, and rewards to control the
mounting fire problem (Ma-
honey, 1982; Osgood, 1982). Not surprisingly, this approach
has utterly failed. George Paul, the
Boston Fire Commissioner, said, "There's no rhyme or reason
to this, no pattern. We've plotted
space, time patterns, nothing shows up" (McMillan, 1982:23).
There is, nevertheless, a pattern in Boston's fire history. Maps
1 and 2 show that arson is
tightly concentrated within certain poor Boston neighborhoods,
particularly Roxbury, North
Dorchester, East Boston, and Jamaica Plain. These districts are
largely populated by blacks,
Hispanics, and poor Irish and Italians. If pyromaniacs or
juvenile vandals set these blazes in
random irrational acts, as local officials insist, why do the
arsonists so carefully respect neigh-
borhood boundaries? If "bored youths idled by school vacation"
(Dillon, 1982:4) were respon-
sible for the wave of 300 arson fires in the summer of 1982,
then must we assume that juveniles
are bored only in certain districts?
Arson is more common in buildings owned by absentee
landlords than in owner-occupied tene-
ments in the same neighborhoods (National Urban League,
1971). Arson is rare in public hous-
ing projects, which are located in the heart of Boston's fire-
ravaged districts and which house
the poorest, most disproportionately non-white, single-parent
49. families. These are, presumably,
the angriest, most potentially "socio-pathic" people in the city.
Rates of street crime in the hous-
ing projects are the highest in the city, so serious indeed that
the buildings were placed in re-
ceivership by the federal courts during 1982-83 while security
arrangements for tenants were im-
proved.6 Yet the Boston Housing Authority does not have a
significant arson problem, with only
four arson fires reported for 1981 in buildings which housed
over 13,000 people (Fox, 1983).
Finally, incendiary techniques employed by arsonists have
become increasingly sophisticated
(Horn, 1976). Pyrotechnic experts draw particular attention to
the 1982-83 blazes set in Rox-
bury's Highland Park, along the South Boston waterfront, and
those straddling the new South-
west Corridor mass transit construction zone.7 Robert Carter8
of the NFPA described these fires
as follows:
6. Based on an interview with Jonathan Fox, Fire Safety
Coordinator, Department of Public Safety, Boston
Housing Authority, October 26, 1982. Fox also provided
extensive notes on these matters.
7. Based on an interview with William Murphy, Federal Bureau
of Alcohol, Tobacco and Firearms,
November 11, 1982, and an interview with Robert Carter,
November 17, 1982.
8. Based on an interview with Robert Carter, November 17,
1982.
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Arson in Boston 7
MAP 1
Arson and Abandonment in Boston
Legend
Each dot represents the location
of one suspicious fire in 1979.
Shadings represent the total
number of buildings razed or
boarded up by city authority from
1975 to 1982.
0-49 buildings abandoned
50-99 buildings abandoned
100-199 buildings abandoned
200-550 buildings abandoned
Eac do rereens heoato
of:;-:?. one suspiciousfren199
Shadngs eprsentthe ota
number of bildnsrzdo
borddupb ct atort fo
51. 975 to192
0-49 bulig bnoe
50-9 bulinsaanoe
100?:-?-.:-199 bu::: i ldng ba do e
200-550ii: bu::~ ild i ngs abandoned:
Sources
City divided according to ward boundaries used by the city's
buildings department.
Arson fire locations plotted by Michael Moore, Boston Arson
Strike Force.
Abandonment data from monthly and annual reports of the
city's buildings and community development depart-
ments, available from Boston City Hall.
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8 BRADY
MAP 2
Arson and Redlining in Boston
East Boston
Charlestown .......
52. Boston Proper
Aliston/BrightonASort Back BaySouth Boston
Jamaica Plain
R n eNorth Dorchester
l ee.f.i i v s t et.n.o v n
West Roxbury --tional mortgages per dollar
.. M . L eg en
Hyde Park deposited, of the 10 largest banks
reporting to the state's Commis-
sioner of Banks from 1975 to
1978.
$0.20-0.35
$0.15-0.19
$0.10-0.14
$0.05-0.09
....... J. .........
...... ....; ??::: ~?:??:. ???:x.:::??::::
Roxbury: ~~~~ ~
...... ............... W ,1 ~?
............... .. .....?~i?: Jamaica Plain~,~
~.i~ :j ~ :~,?.?. .............;;
53. sinro aksfo 95t
:r-::: : : : :::::: II--1978.-
$0.0-.3
-$0.15-0.19
- r ~-~ S$0.10-0.14te
$00-00
Sources
City neighborhood divisions from the Boston Redevelopment
Authority.
Arson fire locations plotted by Michael Moore, Boston Arson
Strike Force.
Bank reinvestment patterns from Greenwald (1978).
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Arson in Boston 9
These have been some of the most professional jobs we've seen
in the city. Extensive quantities of hard-to-
detect accelerants, such as paint thinner, have been used,
typically placed in several waxed-paper con-
tainers positioned at key structural members of the buildings
and linked together with trailers (streams)
of accelerant, leading to a single ignition point, sometimes
54. using photographic paper as a fuse device which
leaves little residue.
Are we to believe that psychotic "pyromaniacs" or malicious
juvenile vandals would employ such
systematic and complex means of setting fires?
The answer, of course, is that arson is not primarily a result of
deviant perversion, juvenile
rage, or boredom. More complex economic motives are
involved, which have to do with where
buildings are situated and who owns them. I have discovered
several discernable varieties of
arson in Boston, all of these directly or indirectly linked to
patterns of real estate speculation
and to decisions aimed at profit-making in what are essentially
business transactions.
THE ROLE OF BANKS: ARSON AND ABANDONMENT
Arson is both a barometer of changing values and a mechanism
for accelerating changes in
property values and in the social economy of the city. More
than half of Boston's 3,000 arson
fires from 1978 to 1982 occurred in abandoned buildings.9 The
relative frequency of abandon-
ment in the city's neighborhoods can be ascertained by
analyzing the monthly reports of city de-
partments charged with boarding up or razing derelict
buildings. The abandonment pattern cor-
responds closely to the arson distribution pattern as represented
in Map 1. Across the city's 22
wards, an average of 41 buildings per ward were razed or
55. boarded up from 1975 to 1982; in the
depressed North Dorchester and Roxbury districts, there were
between 220 and 540 buildings
razed per ward.10
Abandoned buildings have long been recognized as a problem
in urban neighborhoods, where
the phenomenon is closely associated with declining local
opportunities and mounting crime. An
earlier generation of urban planners at the Federal Housing
Administration (FHA) described
abandonment as part of the "natural" process of "neighborhood
evolution" wherein "high-rent
neighborhoods move slowly but predictably across the urban
landscape, creating a gravitational
pull on the middle class, leaving behind the structure by which
slums are made" (Hoyt, 1939:26).
More recently, U.S. Housing and Urban Development analysts
have attributed abandonment to
the problem of "urban blight" brought on by the "influx of
minority populations" (Real Estate
Research Corp., 1975:22). Such prominent urban planners as
Sternleib et al. (1974:33) also em-
phasize that "abandonment is a contagion problem" which is
"most frequent in structures inhab-
ited by blacks and Puerto Ricans."
These attempts to explain abandonment clearly echo the
deviant subculture theory and, in
their persistent use of language borrowed from physics or
biology, give the impression that
neighborhood decline is somehow natural or inevitable, or that
poor and ethnic people are in-
fected with the problem and are therefore responsible for it.
56. The simple correlation of abandon-
ment rates and minority census figures in fact proves nothing
about why housing deteriorates;
but such "explanations" again draw strength from implicit
racist sentiments. Any further analysis
of the problem is precluded by this orthodoxy, which is little
more than a tautology.
There is a great deal more to be said about abandonment.
National studies show that it is not
minority landlords who most frequently abandon their
buildings, but rather white landlords - in
9. Joseph O'Keefe, Massachusetts State Fire Marshall, on
"People are Talking," WNEV-TV, Boston,
November 11, 1982.
10. Statistics on razed and boarded-up properties drawn from
tabulated monthly reports filed by Boston
Buildings Department and Boston Office of Community
Development at Boston City Hall. Note that these
statistics are compiled by ward divisions, while the bank
reinvestment statistics computed by Greenwald
(1978) and presented in Map 2 are compiled with
"neighborhood" districts drawn by the Boston Redevelop-
ment Authority.
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10 BRADY
57. particular absentee landlords with high incomes who own a
number of buildings and who hold
property titles indirectly through holding companies and real
estate trusts (Sternleib et al., 1974).
Studies of abandonment in New York City, Cleveland, Chicago,
Detroit, and Los Angeles con-
sistently demonstrate that abandonment patterns follow closely
the discriminatory mortgage-
lending policies of banks which deny credit to certain districts
of the inner city in order to invest
in more profitable suburban real estate (Linton et al., 1971;
Loyola Law Journal, 1975; National
Urban League, 1971). This disinvestment process is known as
redlining. Devine (1973) docu-
mented the scale of this destructive redlining pattern in New
York's South Bronx district, where
the largest local banks systematically drained the district of
capital by exporting local deposits
and assets to investments in the suburbs. Berwyn (1974)
showed that for every dollar deposited
in major banks located in Chicago's predominantly black
districts, less than eight cents was rein-
vested by those same banks in conventional mortgages loaned
in those areas-though 31 cents
was used by those banks to provide mortgage supports for the
suburbs.
In Boston, the same pattern is evident. The State Commissioner
of Banking, Carol Greenwald
(1978:7), using statistics provided by the banks, found that for
every dollar deposited in the city
branches of the 10 largest banks from 1975 to 1978, the banks
reinvested only 10 to 17 cents
58. in conventional mortgages within the city. Some urban districts
fared far worse than others: East
Boston received between three and 11 cents, North Dorchester
between five and 11 cents, Rox-
bury between four and 11 cents.
Redlining is a clear violation of both a bank's obligations,
contained in state and federal chart-
ers, and the provisions of the Community Reinvestment Act
adopted by the U.S. Congress in
1978 (Taggert, 1977). Yet no bank officers to my knowledge
have ever been prosecuted for viola-
tion of the law or their local charters (Greenwald, 1980). Not
all banks are equally involved with
redlining. Greenwald (1978) found that the largest banks were
the ones most systematically en-
gaged in redlining. It should be noted that banks use redlining
not so much to avoid losses as
to maximize profits. In Boston the banks have consistently
made profits from their investments
in every section of the city, but suburban investments are more
profitable (Metropolitan Area
Planning Council, 1980).
Redlining is devastating to a neighborhood. Many small
businesses are forced to close when
they are unable to get bank loans (Bradford and Rubinowitz,
1975). As property values decline,
landlords stop repairing their buildings and eventually abandon
them when they become unin-
habitable (Newfield and DuBrul, 1977; Stone, 1978). A severe
housing shortage develops. In
Boston, where housing for low- and moderate-income tenants is
extremely scarce, the city
authorities estimate that there were approximately 3,000
59. abandoned buildings in 1974 and nearly
5,000 in 1982 (Boston Redevelopment Authority, 1974; Flynn,
1982).
Arson has been concentrated in those Boston neighborhoods
which have been most drained
of capital and mortgage loans. The Boston Fire Department
reports that there were an average
of 12 arsons per ward across the city in 1980; but wards 14 and
15 in North Dorchester and Rox-
bury had a combined total of 82 arson fires, while ward 1 in
East Boston had 21 arson fires.
Two sorts of arson fires can be seen as a direct result of
redlining, and these might be described
as escape fires and vandal fires. Escape fires are arranged by
landlords and small business owners
to collect insurance premiums on unprofitable properties and
real estate investments. Vandal
fires occur after owners abandon their properties and take a tax
write-off on their losses. Their
buildings become a hangout for juvenile gangs and, ultimately,
a target for vandalism. Of
course, redlining is not the only reason for neighborhood
decline, which leads to vandal and
escape fires; but redlining accelerates the downward spiral and
makes recovery almost impossible
(Duncan, 1975; Greenwald, 1980; Public Interest Research
Group-District of Columbia, 1975).
While redlining has been found to be a common practice among
the larger banks and an indi-
rect contributor to arson, some individual banks and bank
officers play a direct role in arson
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Arson in Boston 11
through their involvement with organized crime's arson-for-
profit syndicates. Before discussing
specific examples of collaboration between bankers and
gangsters, I consider the general model
that links criminal syndicates to redlining and abandonment.
BANKERS, GANGSTERS, AND PROBLEM PROPERTIES
Foreclosures on unpaid mortgages are one of the side effects of
redlining. Many property own-
ers in redlined areas cease making mortgage payments on
losing investments. By the time foreclo-
sure procedures have been completed and the bank seizes the
buildings, the property has fre-
quently been neglected and even abandoned for months or
years. Such derelict buildings, hardly
an attractive item on the real estate market, represent a
potential loss for the banks.
Enter the organized crime racketeers. They offer to buy the
"problem buildings," often at a
price far greater than true market value, on condition that the
bank write out a new mortgage
for close to the full purchase price, and sometimes more, to
cover the cost of "renovation." Thus,