Market raters bash deal, ask for insider priority on affordable apts.,
Blackstone says students have been top complaint of residents
By Sabina Mollot
Following the news about a change in ownership just a few days earlier, over 500 Stuy Town residents showed up at a meeting on Saturday where a representative for the new landlord, Blackstone, answered questions.
Mayor Bill de Blasio popped by for a bit and spoke, as did U.S. Senator Charles Schumer, but the real star of the show wound up being Nadeem Meghji, senior managing director for Blackstone. Meghji started off by telling tenants at Baruch College’s auditorium that their various concerns, brought up in the days following the sale, were being taken “very seriously.” He indicated CompassRock would not continue to manage the complex, but then later said there isn’t a timeline for any change in management teams. Meghji, who was in charge of the Stuy Town deal, frequently elicited applause when responding to tenants’ questions although he admitted he didn’t yet have enough information to answer them all. He told tenants, in response to questions about student apartments, that Blackstone had been hearing about this issue more than any other.
He added that Blackstone would be seeking further tenant feedback via focus groups and a hotline.
“We know that we are going to need to earn your trust,” he said.
Meghji later spoke briefly about himself, saying he’s been a New Yorker for eight years, much of that time as a resident of the Union Square neighborhood.
“I still have many fond memories of running through Stuyvesant Town on the way to the East River for my morning jogs,” he said. He then added, “I’m honored and humbled to stand before you in this capacity.”
On Blackstone, he noted that the company, an asset manager, works in part to manage pension funds for middle class people like teachers
and firefighters. He stressed that the Stuy Town investment is considered “patient capital,” meaning investors are expecting lower returns over a longer period of time, unlike after the Tishman Speyer purchase. The company also has significantly less debt than Tishman did.
“We intend to own the property for decades,” said Meghji. “We only wanted to be part of this if the solution was going to be embraced by tenants. For us to be successful, you have to be happy.”
But not everyone was. One tenant, Tim Joyce, expressed his disgust with the fact that Blackstone’s CEO and chair Steve Schwarzman had once made a statement comparing President Obama to Adolf Hitler over tax hikes. Meghji responded that Schwarzman has “publicly apologized” for that comment. Joyce also wanted to know why it was just the Tenants Association and not others who got to be informed of the terms of the deal, which preserves affordability for 5,000 units for 20 years, before it was signed.
“So you’ll do in 20 years what Tishman Speyer did in 10,” Joyce fumed.
In response to this, Tenants Association President Susan Steinberg told tenants, “CW never talked to us. They never had a public process.”
Earlier in the meeting, Steinberg spoke to address the concerns of tenants paying market rent, specifically about the Tenants Association’s longtime hope of going condo with partner Brookfield Asset Management. Steinberg told residents this would have only been possible if tenants were given the opportunity to offer a bid in an auction. However, “this did not happen,” she said. Instead, there was a relatively quick deal made with Blackstone and partner Ivanhoe Cambridge. “This was absolutely a whirlwind,” said Steinberg. She added that she regretted that market rate level tenants weren’t provided with affordability, but said an alternative to the current deal would have in all likelihood been ownership by an entity that would “buy and flip,” leading to “worries for all. Now there are 5,000 units for the middle class… We believe our years of effort brought about these results.” She added that tenants’ fight for strengthened rent regulations is now “as important as ever, if not more so.”
Council Member Dan Garodnick agreed, saying that while Blackstone was making commitments like making the property enticing to families “as opposed to student dormitory housing,” another possible outcome could have been a foreign investor swooping in and using “any tool to get rent regulations down to zero. It would have been Tishman Speyer part two but perhaps even worse. Everyone in this room needs to understand how real of a possibility this was.”
Still, another resident who pays market rate demanded to know why, in order to acquire an affordable apartment, “strangers are being given priority.” The resident, Mark Grayson, was referring to the floated idea of a lottery system to determine who gets to rent an available, rent-restricted unit.
He added that he thought people like himself, whose names were on Met Life’s waiting list for an apartment, which was eventually tossed, should be given some seniority in the new deal over non-residents.
Grayson later said he thought the affordable units should also have a waiting list rather than a lottery.
“Roberts case tenants should get top priority,” he said.
In response, Steinberg insisted the Tenants Association shares Grayson’s concerns about people in his situation. “If we didn’t care, we wouldn’t be here… to pursue some protection for Roberts tenants.”
Because of the deal, Roberts tenants, after the rent regulations expire in 2020, will see their rent increases capped for the next five years at five percent a year.
Department of Housing Preservation and Development Commissioner Vicki Been, who was fielding questions along with local elected officials, also weighed in. “We will do what we can,” she said. “We’re constrained by the law, but we’re trying to figure out what we can do.”
Garodnick later said insider preference was something he was pushing for.
“I think it would be both appropriate and beneficial to people who are right on the border of being able to afford what they are paying,” he said. As for the legality of such a plan, “we are exploring that now.”
Another resident, Sonali Das, asked how the affordable units could be considered affordable for middle-income people. Of the 5,000 affordable units, 4,500 will be rented to households earning no more than $128,210 for a family of three, and the remaining 500 apartments must be rented to families earning no more than $62,150 for a family of three. For a family earning $128,210 (165 percent of the area median income), this would amount to a rent of slightly above $3,200 for a two-bedroom, which Das said is more than her family can afford.
The mayor’s office has said no tenant will pay more than 30 percent of their income in rent. Later, Wiley Norvell, a spokesperson for the mayor’s office clarified that while the income thresholds will determine who qualifies, the city will find tenants who make close enough to the maximum so that no tenant winds up being rent-burdened.
While the math wasn’t discussed at the meeting, Meghji noted that tenants wouldn’t be evicted if their salaries go up above the thresholds later.
When a resident asked if Blackstone would raise tenants’ rents via MCIs, Meghji didn’t say Blackstone wouldn’t. However, he promised that the MCI system would not be abused as a tool to inflate rents.
“We assure you that we will stick with the spirit of the regulations and not take advantage of them,” he said.
MCIs (major capital improvements) were further discussed by Steinberg, who mentioned tenants in some buildings have recently begun to get notices about a new MCI application.
“CWCapital has given us a goodbye present,” quipped Steinberg, adding that notices were received at three buildings. Later in the week, she said notices had been sent to a total of (so far) eight buildings, but could be sent to dozens of others. The requested MCI is for exterior restoration work on buildings. Costs vary slightly depending on the building but at one address, 315 Avenue C, residents would have to pay $1.15 per room per month as well as a retroactive charge that goes back to 2013 if the MCI is approved. At the meeting, Steinberg asked recipients of said notice to file for a 60-day extension so the Tenants Association has time to challenge it with the state housing agency.
When another resident asked if the owner would continue to be “favorable to NYU,” Meghji didn’t say the owner wouldn’t continue to lease apartments to students. However, he did say, “We do not have any intention of turning this into a dorm.” He added that Blackstone wanted to create an environment that was “conducive to families.”
Another tenant question addressed was about which apartments would be the affordable ones. The deal arranges for the affordable apartments currently occupied to be made available as people move out. Garodnick answered that the owner would have an obligation to make sure the units are spread out around the property and around buildings (so not just lower floor units with no view would be preserved) and they’d have to have a variety of square footage. However, the owner can still select which ones, as they become vacant, will remain affordable or get renovated.
One resident asked about air rights, and if the owner using Stuy Town’s air rights would mean Blackstone, who’s committed not to redevelop anywhere on the property, could build whatever it wanted elsewhere. Been responded to say no, that the owner would have to go through “the usual community process,” with a ULURP and consulting tenant associations, community boards and elected officials. “It could not be done as of right,” said Been.
Another topic, brought up many times in the past by Congress Member Carolyn Maloney, was that of the Stuyvesant Town plaque, which had proclaimed the community for people of moderate means. It was removed from the grounds before the end of the Met Life era, and Maloney said she still wanted to see it brought back to the property. In response, Meghji told her, “This wasn’t on the list,” but that now he also wanted to “find that plaque.”
During his time at the podium, de Blasio cheered last week’s deal and praised tenants for fighting for affordability over the years.
“History will smile on you,” the mayor told the audience. “I think it is in the DNA of New Yorkers to make sure everyone lives side by side. Look what together you have achieved. Five thousand apartments will now be kept affordable.”
At one point, Garodnick tried to tempt de Blasio to move to Stuy Town. “We’re much closer to Brooklyn than the place you already have and we have Ess-a-Bagel,” said Garodnick. “And for those mid-morning workouts, we have the 14th Street Y.”
Other elected officials at the meeting were Manhattan Borough President Gale Brewer, Assembly Member Brian Kavanagh and State Senator Brad Hoylman.