The following is a letter from the ST-PCV Tenants Association, commenting on a letter developer Gerald Guterman sent to tenants earlier this month regarding the TA’s decision to team up with Brookfield on another attempt to bid on the complex.
This has been an exciting week for all of us as we begin to put together a bid to CW Capital to protect the long term stability and affordability of Stuyvesant Town and Peter Cooper Village. We feel confident that our partnership with Brookfield will give us the ability to deliver a plan that is both commercially viable and also satisfies our goals.
You may have received a letter recently from Guterman-Westwood Partners LLC describing an alternative partnership with tenants to bid for Stuyvesant Town and Peter Cooper Village. It is important that our community have the facts, and that is why I am sending this follow-up letter.
During this extensive process, we met with the representatives of Guterman-Westwood, as well as with dozens of other potential partners. After consulting with our advisors from Paul Weiss and Moelis & Company, we decided to select Brookfield Asset Management over all the others because they have both the credibility in the real estate market and the commitment and ability to live up to the principles and goals of the Tenants Association. Those goals are clear: to allow residents the choice to either purchase their apartment at an affordable price or to stay on as rent-stabilized tenants; to improve the maintenance and upkeep of our community; to prevent new development on open space, and to ensure that the middle-class character of Stuyvesant Town and Peter Cooper Village continues for the next generation.
There are some important facts about the Guterman-Westwood proposal that the T.A. and our Advisors find worrisome and that our community needs to consider.
1) Financial Commitment – Guterman-Westwood has outlined a “pricing plan” for tenants to purchase their apartments. We are concerned with the plan’s ability to raise the amount of capital needed to purchase the property from CW Capital. It is critical that any bid put forward by Tenants have the capability to engage CW Capital.
2) Short-Term Partner – When we began this process, the TA committed to finding a long-term partner to help our community buy the property – and then to stick around to help us improve it. Guterman-Westwood has made it clear that they would convert the property and have no continuing involvement
3) Converting to a co-op, instead of a condominium. Guterman-Westwood’s proposal calls for converting Stuyvesant Town-Peter Cooper Village into a cooperative. After careful review of this issue, we believe, along with our professional advisors, that a co-op conversion could present problems. For example, a co-op would mean a common tax lot and a master mortgage, increasing the chance of systemic financial distress that could impact every resident in the community. The risk of such financial headaches could make it difficult for residents to find lenders willing to help them buy their apartments during the conversion process. In addition, the costs of repaying a property-wide “master” mortgage would mean higher monthly maintenance charges for residents. A condominium conversion would avoid all of these challenges, allow for more flexibility when we choose our community’s governance structure, and allow us to target property tax abatements directly to rental or “affordable” apartments on a unit-by-unit basis.
We are now at the beginning of what will be a long process of listening to our neighbors, gathering feedback and input, and preparing to put forward a tenant-led bid that will put us in charge of the future of our community. I want to thank the volunteers of the Tenants Association whose work has been critical to our effort, and the thousands of Stuyvesant Town and Peter Cooper residents who have offered their support and ideas throughout this process.
Alvin Doyle, president of the ST-PCV Tenants Association
The following is the letter from Guterman to tenants of ST-PCV:
To the Residents of Stuyvesant Town/ Peter Cooper Village:
“Are you concerned about your home at Stuyvesant Town/Peter Cooper Village, as well as your own financial future?
“On November 30, 2011, to much fanfare, the Stuyvesant Town-Peter Cooper Village Tenants Association (the Association”) announced that it had entered into a “partnership” with Brookfield Asset Management (“Brookfield”) to acquire, and convey Stuyvesant Town/Peter Cooper Village to tenant ownership. Gutterman-Westwood Partners, LLC (“GWP”) and its affiliates, learned about the partnership from the Association’s announcemnents to the press, despite the fact that we have long offered the Association the opportunity to enter into a more tenant-beneficial partnership with us.
“We wish to remind you that we have previously provided the Association with, and announced publicly, the details of our proposed acquisition of the community and subsequent resale to tenants and outside purchasers. At a number of different meetings with your representatives, the law firm of Paul Weiss Rifkind Wharton and Garrison (‘Paul Weiss’) and Moelis & Company (‘Moelis’) as as our separate meetings with your New York City Councilman, Daniel Garodnick (‘Garodnick’), we detailed a specific arrangement that would result in a very favorable transaction for those tenants seeking to purchase their apartments, as well as long term affordable rental for those units that are not acquired.
“During every one of these meetings, GWP explained why it was a poor choice for the tenants to consider a condominium for the residential apartments and provided very specific details concerning the reality and expense of recording 11,232 separate tax lots, as well as the fact that the rules and regulations of a cooperative did not have to be restrictive and shares could be freely transferable. Furthermore, we regard cooperative conversion as the best method for assuring that the character of the community is maintained (or, more accurately, the character of the community as it existed prior to its acquisition by Tishman Speyer, and the subsequent financial catastrophe that has befallen your community).”
The letter went on to say:
“The Association, via both Paul Weiss and Moelis, specifically directed GWP (Guterman Westwood Partners) not to communicate directly with you, the residents of Stuyvesant Town/Peter Cooper Village about our written proposal and assured us that they and the Association would be responsive to our very firm and serious written plan – for which we have secured financing and which we are willing and able to execute.
“We note that our firm’s experience in cooperative apartment conversion in the City of New York is more extensive than that of any other firm, including Brookfield.”