A new leasing office is under construction in Peter Cooper Village. (Photos by Thomas Rochford)
By Sabina Mollot
Earlier this week, residents noticed that a new leasing office was being advertised in Peter Cooper Village in the corner space previously occupied by the Petite Abeille restaurant. The slick-looking posters show smiling individuals of various ages, and the property’s very new logo for Peter Cooper.
Asked about the advertisements, Stuyvesant Town/Peter Cooper Village general manager Rick Hayduk confirmed there is a new leasing office under construction just for Peter Cooper, but it will be housed in the neighboring 350 First Avenue. This is where another leasing office, primarily a center for brokers’ use, used to be until closing last year. The new leasing office was briefly mentioned in an e-blast to neighbors last week that also mentioned the Stuyvesant Town leasing office would be getting “a refresh,” as would signage and employee uniforms.
“Since our acquisition in late 2015, StuyTown Property Services’ and Beam Living’s focused attention has been on improving a resident’s experience (resident communication, situational response time, exterior aesthetics, quality of life issues, playgrounds, etc.), and we felt it was time to reset the ‘public’ image of the two communities,” Hayduk said in a written statement. Continue reading →
Mayor Bill de Blasio and other elected officials with tenants in October, 2015 announcing the sale of Stuyvesant Town (Photo by Sabina Mollot)
By Sabina Mollot
In October of 2015, a grinning Mayor Bill de Blasio stood alongside other elected officials to declare that the sale of Stuyvesant Town and Peter Cooper Village to The Blackstone Group and partner Ivanhoe Cambridge was the “mother of all preservations deals.”
However, the Independent Budget Office of the City of New York (IBO) is now suggesting, in a report released Friday, that the amount of affordability preserved was inflated.
The IBO estimated that while the deal was supposed to preserve 100,000 “apartment years” (the equivalent of 5,000 apartments for 20 years), 64,000 of those apartment years would have remained affordable anyway through rent stabilization. This would mean the deal really only saved 36,000 apartment years, not 100,000. The report also noted that when the sale took place, just over 5,000 apartments were already renting at below-market rates due to rent stabilization.
While there has been plenty of debate over just how “affordable” the 5,000 apartments that are preserved and leased through a lottery system actually are, according to the IBO, only three percent of those 100,000 apartment years are reserved for low-income households. Twenty-seven percent are intended for middle income households while the remaining six percent of apartment years are units that will remain rent-stabilized longer than they would have without the deal. For its report, the IBO said it considered all of the newly created lottery apartments as well as ones that remain stabilized to be benefits to the city.
Additionally, the report indicated that the city used some misleading numbers at the time of the property sale.
An East Village resident, Joanne Joemelti, argues that tenants shouldn’t be punished because of the ones that use Airbnb. (Photos by Sabina Mollot)
By Sabina Mollot
With just a week to go before the mayor’s Rent Guidelines Board votes on the year’s increases for roughly one million people, the city’s stabilized renters, both tenants and landlords went before the board to argue why they needed a break — in rent rollbacks or rent increases high enough to cover operating costs, respectively. The usual reasons for both were mentioned: desperate tenants citing stagnant wages while rent increases have steadily been granted until last year’s historic freeze, and owners blaming soaring real estate taxes and other factors like water/sewer fees and building maintenance.
But one thing both sides had in common was a mutual loathing for the increasingly common practice of short-term rentals.
Tenants brought up owners who flout the law to rent vacant units to tourists since it’s more lucrative than monthly rent and doubles as a form of harassment to longtime renters who’ve lost a sense of safety and community. Meanwhile, equally frustrated owners lamented how tenants live elsewhere, while paying under market rent and earning a windfall through Airbnb.
The arguments were made at the auditorium of the Cooper Union building on Monday afternoon. Tenants and landlords lined up to speak along with several elected officials at an RGB hearing.
Three months after taking over the property, Blackstone has announced the name of its own recently formed management company that will handle the day-to-day operations at Stuyvesant Town/Peter Cooper Village. This is following CompassRock’s official exit from ST/PCV on April 1.
Unlike CompassRock, the new company, called “StuyTown Property Services,” will — as its name suggests — just be for the management of ST/PCV, according to a Blackstone spokesperson.
In other management changes, along with four recent plumbing hires, StuyTown Property Services has also added three new people to its resident relations division. Those employees will be responsible for cleanliness inspections, maintenance issues and hands-on resident relations, said Blackstone spokesperson Paula Chirhart.
“The termination of the previous management agreement and the formal establishment of StuyTown Property Services marks a major milestone for all residents,” said Nadeem Meghji, senior managing director for Blackstone. “We are pleased to have Rick (Hayduk) and his StuyTown Property Services team in place and ready to serve the community.”
In January, resort and residential industry veteran Rick Hayduk was hired as Stuy Town’s new general manager. He was also the first person in that role to move into the community since the Met Life days, and is the new company’s CEO.
Meanwhile, this is the second apartment complex CompassRock has lost from its portfolio in recent months. CompassRock, CWCapital’s management arm formed in 2012, had been managing the 1,229-unit Riverton Houses in Harlem while CWCapital oversaw the property following an over-leveraged deal. Then last December, Riverton was sold to A&E Real Estate, and according to a spokesperson, Daniel White, A&E prefers to do its own management of the properties it owns.
While the events taking place in Stuyvesant Town ever since the historic sale to Tishman Speyer have hardly lacked for headlines, from the point of view of a former resident, the story that was not being told — at least not nearly enough — was that of how the aggressive attempts to turn over apartments impacted individuals.
Lisa M. Morrison, along with two other people, have since written a book on the subject, called Priced Out: Stuyvesant Town and the Loss of Middle-Class Neighborhoods. The book, published by NYU Press ($28 paperback), was released on March 15 and is available at nyupress.org and on Amazon. Co-authors are Rachael A. Woldoff and Michael R. Glass.
The book includes 50 interviews with residents of all ages and situations (from seniors, some of whom are original residents, to younger people with families to singles, including college students.)
“It has a lot of different angles and kind of looks at the issue from different perspectives,” Morrison said. She also suggested the book is complementary to Charles Bagli’s Other People’s Money, which offered a behind-the-scenes look at the infamous $5.4 billion deal and the real estate feeding frenzy that led to such a speculative and ultimately predatory investment.
“Our book focuses on the community members’ experience, since I don’t think any other book has that,” Morrison said. “And the idea of being priced out of a community. It’s something that’s happening all over. It’s something a lot of people can relate to.”
Mayor de Blasio speaks at the announcement of Stuyvesant Town/Peter Cooper Village’s latest sale in October. (Photo by Sabina Mollot)
By Sabina Mollot
People who’ve been wondering how to get their hands on an affordable apartment in Stuyvesant Town won’t have to wait any longer to get a shot at it.
As of today, Tuesday, March 1, the application for a city-run lottery for the 5,000 units that will eventually be made available, has begun. The way it works, since there’s no telling when each of the units will actually become vacant and available, is that a maximum of 15,000 names of applicants will be put onto a waiting list. Applications will be accepted through March 31 on a website, pcvstlottery.com, and can also be mailed. To request an application by mail, send a self-addressed stamped envelope to Stuyvesant Town/Peter Cooper Village, 243 Fifth Avenue, Box 425, New York, NY, 10016.
The process does not give any preference to existing tenants of Stuyvesant Town-Peter Cooper Village, which is something market rate-paying residents had hoped for. Instead, the only preference given will to be to applicants who currently live in the five boroughs, with their applications being reviewed first.
On the fact that no preference will be given to tenants, a spokesperson for Blackstone, Paula Chirhart, said this was the decision of the city’s HDC (Housing Development Corporation).
“While we appreciate the spirit of inclusiveness, we are disappointed that we were not able to provide a preferred option for residents of Stuyvesant Town-Peter Cooper Village,” said Chirhart.
Rick Hayduk (right), the new general manager of ST/PCV, speaks with tenants at a meet-and-greet event on Saturday. (Photos by Sabina Mollot)
By Sabina Mollot
The new general manager of Stuyvesant Town and Peter Cooper, Rick Hayduk, has promised tenants that Blackstone is focused on improving services and communication and in particular, said the hiring of four new plumbers should end the two to three week wait times tenants have been experiencing for repairs.
Hayduk made the comments on Saturday at a meet and greet event that was held at the tents at Stuyvesant Town’s Playground 11.
Around 150 people, mainly seniors and other longterm tenants, attended the event, as did a couple of elected officials, State Senator Brad Hoylman and Council Member Dan Garodnick.
Rick Hayduk speaks at Saturday’s event.
While at a podium in front of a Stuy Town logo-covered step-and-repeat, Hayduk discussed various tenant concerns, including the recent spike in plumbing repair delays. “Our standard is two to three days and that’s what you should expect,” he said.
Hayduk also said that a hotline for tenants that Blackstone had set up after the company bought the property has been transferred to his office.
“Go through normal channels, but if (a request) needs to escalate, we’re here for that,” Hayduk said. The number is (212) 655-9870.
He also encouraged tenants to slip him notes, gesturing to his pocket while saying that several neighbors had already done so.
On Wednesday, Blackstone announced that it will be forming a new management company to run Stuyvesant Town/Peter Cooper Village and that they’ve chosen a new general manager, Rick Hayduk.
Hayduk, who’ll be moving with his family to the complex, started on January 1. However, the new company won’t take over from CompassRock until a transitional period ends. Blackstone hasn’t yet elaborated on the new management entity.
Hayduk has over 30 years of property management and hospitality experience, Blackstone said, and previously worked at the 350-acre Boca Raton Resort & Club as the property’s president. Prior to that he was regional managing director of South Seas Island Resort and the Inns of Sanibel, where he worked with over 20 home owners associations and residents of the resort village and neighboring condominiums. He’s been working with Blackstone properties for almost a decade.
“We are confident he is the right person for this role,” said Nadeem Meghji, senior managing director at Blackstone. Meghji added that Hayduk is “someone we know well and trust.”
Residents will get a chance to meet Hayduk at a meet-and-greet on Saturday, January 9 at 10 a.m. at the tented basketball court at Playground 11 in Stuyvesant Town. Additional meet-and-greet events will be on Tuesday, January 12 at the community center, 449 East 14th Street at 2 and 3 p.m. (RSVP required for both by calling (212) 598-5297 or emailing email@example.com) and on January 14 at 6:30 p.m. at the tented basketball court.
Hayduk wasn’t available for comment by Town & Village’s press time, but issued a prepared statement saying he was looking forward to living in the community.
“Over the years of serving guests, residents and associates, I have seen time and time again how personally engaging customers and residents directly is the best approach in property management,” Hayduk said. “Management must be a part of the community in order to understand the needs of its residents. “My wife Carol, our two daughters and I are excited to join the PCVST community and we look forward to getting to know our neighbors and fellow tenants as well as enjoying the green spaces the community is so well known for.”
Hayduk will be the first general manager to live on the property since the Met Life era.
Jon Gray, Blackstone global head of real estate (Photo by Sabina Mollot)
By Sabina Mollot
On Friday, Blackstone and Ivanhoé Cambridge announced that they closed on the $5.3 billion deal to purchase Stuyvesant Town and Peter Cooper Village. This means that the companies have assumed ownership and CWCapital, the special servicer since 2010, no longer has any ownership interests in the property.
“We are proud to have entered into long-term partnership with the PCVST community and the City of New York,” said Jon Gray, Global Head of Real Estate for Blackstone, in an official statement. “We look forward to working together with them to preserve what makes this community so special.”
Daniel Fournier, chairman and CEO of Ivanhoé Cambridge said, “We are honored to share with Blackstone the responsibility of the future of PCVST. This investment is a win-win for the community of 30,000 residents, for our investors and for New York.”
The deal, touted as “the mother of all preservation deals,” by Mayor Bill de Blasio, will preserve affordability at 5,000 of the complex’s apartments for the next 20 years. There are also some protections for the 1,400 “Roberts” tenants while for market rate residents, the deal maintains the status quo.
Market raters bash deal, ask for insider priority on affordable apts.,
Blackstone says students have been top complaint of residents
Assembly Member Brian Kavanagh, Blackstone senior managing director Nadeem Meghji, Department of Housing Preservation and Development Commissioner Vicki Been, Congress Member Carolyn Maloney, U.S. Senator Charles Schumer, Council Member Dan Garodnick and ST-PCV Tenants Association President Susan Steinberg listen as Mayor Bill de Blasio speaks. (Photos by Sabina Mollot)
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.
Jonathan Gray listens to tenants. (Photo by Sabina Mollot)
By Sabina Mollot
At the big announcement on Tuesday, residents who’d skipped work that morning as well as a number of retirees made up most of the crowd (along with a gaggle of reporters, photographers and cameramen).
Many seemed shocked by the news, and not all were thrilled.
One man, as he walked home along the First Avenue Loop, stopped Deputy Mayor Alicia Glen to tell her she had done a beautiful job explaining the situation. However, he then added, “It doesn’t impact me because I’m market rate, so I’ll be killing myself this afternoon.”
He then walked away, as Glen responded, “Please don’t do that.”
Residents also gave Blackstone’s Jonathan Gray an earful after the press conference. When one resident asked if CompassRock would continue to maintain the complex, he asked, “What do you think of them?” The tenant then said, “Get rid of them,” before several other tenants also began descending on him with their own complaints.
A resident of 30 years who was standing nearby, Lawrence Scheyer, simply said, “I hope Blackstone will be good stewards of this property.”
Scheyer, a real estate attorney and member of Community Board Six’s Transportation Committee, said he also wondered how the tax breaks offered to the owner in exchange for preserving affordability in 5,000 units would impact funding for the MTA. “They get a fair amount of revenue from (mortgage) recording taxes,” he explained.
Rosemary Newnham, a mom of two in Peter Cooper who does some freelance medical writing, said she didn’t think the new arrangement would help her. Her husband is a doctor and she guessed they probably bring in just over $130,000 a year. But, she added, “What is middle income in Manhattan?” She guessed it was closer to $200,000, due to costs like babysitters and daycare. She added that the last articles she wrote, “I paid for because I had to hire a sitter.”
Newnham added, “My husband does important work, saving people’s lives and we barely have any money after we pay our rent.”
Her two-bedroom in Peter Cooper, where her family’s lived since 2008, rents for close to $6,000. After the “Roberts” settlement, the couple got a check for around $100, if it was even that much.
So that new deal “is not going to change our situation as far as I can see,” Newnham said.
John “Butch” Purcell, a resident of Stuy Town since 1968, seemed more optimistic about the future.
“I think it’s a great move in terms of the 20-year thing,” said Purcell, who’s retired from a career in drug treatment counseling. “I think de Blasio stepping in was a very good move. It’s a good situation. Most people are feeling relaxed although not too relaxed because we don’t know what’s coming after this, anything that’s unsaid. What’s coming down the pike we don’t know but it’s a lot better than it was.”
Marina Metalios, a 25-year resident, was also cautiously enthusiastic. Metalios is a tenant activist who also works for UHAB, an organization that helps tenants convert their buildings to affordable co-ops, among other assistance for tenants.
“I want to see the next generation have an opportunity to live here,” she said. “I have a niece and nephew born in Stuyvesant Town/Peter Cooper and I wonder if they could stick around when they’re adults. It seems the plan for those 5,000 units to be targeted by income might create an opportunity for that. I like that, but what happens in the 20th year? Year 20 is troublesome for me. I want something that is permanently affordable or affordable for a very long time. I don’t see how this plays out after year 20.”
The Tenants Association meanwhile issued an official statement, praising the commitments made by the owner.
“After years of fighting to deliver a more stable and affordable future for our community, today we can celebrate an important success,” said Tenants Association President Susan Steinberg.
“We have eliminated the incentives that have existed for landlords to try to kick rent-stabilized tenants to the curb, and provided security for ‘Roberts’ tenants when the J-51 tax abatement expires in 2020. We welcome Blackstone and Ivanhoé Cambridge’s commitment to protecting our valued open spaces, keeping Stuyvesant Town and Peter Cooper as a unified whole, and endeavoring to create an environment that is most suitable for long term tenants seeking to develop roots here.
“We also strongly support the steps being taken to assist the senior population in our community. This deal is the result of years of advocacy, and we welcome the opportunity to work with Blackstone and Ivanhoé Cambridge to bring stability back to this community.”
Linda Ayache, a longtime resident, said her concern was about the students in the community or specifically frathouse antics she said she recently witnessed.
Last week, Ayache said a bunch of “young people jumped into the fountain and the women were rubbing themselves like it was a wet t-shirt contest.” Security didn’t respond right away, she said. Security itself was another issue Ayache hoped would be a priority for a new owner.
“Last night a gang of boys accosted a female at 9 Oval at 5 p.m.,” she said.
5,000 apts. to remain affordable for 20 years, with income requirements for new tenants looking for lower-priced apartments
Mayor Bill de Blasio speaks at a Tuesday press conference. Pictured with him are State Senator Brad Hoylman, Assembly Member Brian Kavanagh, Blackstone’s global head of real estate Jonathan Gray (partially hidden), Council Member Dan Garodnick, Manhattan Borough President Gale Brewer, ST-PCV Tenants Association President Susan Steinberg and other residents. (Photo by Sabina Mollot)
By Sabina Mollot
The biggest flop of New Yorkʼs real estate boom was on Tuesday hailed as the biggest win for its working class.
Announcing that investment firm Blackstone and Canadian hedge fund Ivanhoe Cambridge will pay $5.3 billion for the 11,241-apartment Stuy Town/Peter Cooper Village apartment complex, Mayor Bill de Blasio crowed, “This is the mother of all preservation deals.
“This is the one we talked about from day one, to unmake the mistake from a decade ago. It’s a very gratifying day.”
Nearly six years after Tishman Speyer walked away from Stuyvesant Town after defaulting on loan payments on a $5.4 billion deal to buy it, de Blasio, along with other elected officials, tenant leaders and Jonathan Gray, global head of real estate for Blackstone, cheered the new sale as a win for tenants and the city at a press conference inside Stuyvesant Town’s First Avenue Loop.
According to the mayor’s office, the deal will prevent the loss of what had been a rate of 300 affordable apartments each year.
Under the deal, tenants at the affordable units will be able to remain in place, but when they move, new tenants moving in will have restricted rents if they meet certain income requirements.
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. None of those tenants will pay more than 30 percent of their income in rent.
Along with ensuring the apartments that are currently affordable remain that way, so-called “Roberts” tenants who are currently in renovated apartments paying higher rents will get five additional years of another kind of rent protection. When the J-51 tax abatement program expires in 2020, their apartments will no longer be rent-stabilized. Under the agreement, rent increases for those 1,400 tenants would be capped at five percent a year for five years.
While there are still many details to be worked out — Gray said he was still learning about a big concern of tenants, which was the property’s population of students — some questions have been addressed by the company already on a website, stuytownpetercooper.com.
One question posted online is how the decision will affect market rate tenants, to which Blackstone said it would “maintain the status quo.” The company also said the transition wouldn’t impact the property’s employees’ jobs or their current pay and benefits.
Blackstone has also promised not to build on top of the property’s open spaces.
As for how new tenants would be eligible for an affordable apartment, Deputy Mayor Alicia Glen said a possibility was a lottery, which, she admitted, typically involves a waiting list.
Despite the price paid — $100 million less than Tishman Speyer’s winning bid — Gray said tenants shouldn’t fear that the switch in ownership will lead to a replay of a desperate landlord trying to oust low-rent-paying tenants.
Jonathan Gray (photo by Sabina Mollot)
“This is a very different situation from back then,” said Gray. “We’re taking a longterm approach to this asset. We have clear rules about affordability. The fact that we signed an agreement with the city of New York with input from the Tenants Association, which obligates us to do certain things, makes us very different from the situation back then.”
Gray said the amount the company is borrowing to finance the deal is only 50 percent of the cost, “which, in context with buying a house, 50 percent is very low leverage,” he said.
He also said he expected that the rental market in Manhattan would remain strong.
“We expect continuity,” Gray told reporters during the press conference. “The market is tight. There is a shortage of apartments in New York City. That puts upward pressure on rents. That’s why we are interested in New York City, but we don’t expect any dramatic changes.”
His company, he added, is interested in “stable, longterm assets. We’re looking to take on lower return, less risk that take less debt (investments) that have a much longer hold period.”
In a prepared statement, he also said, “It is a tremendous honor and responsibility to become co-owners of Stuyvesant Town and Peter Cooper Village. We intend to own Stuyvesant Town and Peter Cooper Village on behalf of our investors for many years to come.”
Tenants will have the opportunity to ask questions about the new ownership at a town hall meeting set to take place on Saturday, October 24 at 1 p.m. at Baruch College, 17 Lexington Avenue at East 23rd Street.
Meanwhile, on Tuesday, ST-PCV Tenants Association President Susan Steinberg said she was happy with the outcome even though it wasn’t the non-eviction condo conversion the association had wanted to see through with partner Brookfield Asset Management. Brookfield, Steinberg explained, had been the TA’s partner as a bidder in the event of a foreclosure auction. However, this deal did not involve an auction.
She also said tenants’ hopes of owning condos seemed to become bleaker as the property climbed in value in recent years, which would make buying less affordable than originally thought.
“As values of the property soared from $1.7 billion to three times that amount, the idea of ownership became tenuous,” said Steinberg, “as the price per square foot went up.”
However, she added, “We didn’t lose sight of the prize,” referring to tenants’ insistence of preservation of ST/PCV “as a single unit and preservation of open space.
“People forget the reality is we don’t own this place,” she added. “I think we got the best possible deal we could.”
Mayor Bill de Blasio and Council Member Dan Garodnick hug at the press conference. (Photo by Sabina Mollot)
Council Member Dan Garodnick, who, along with the Tenants Association and the mayor, was very involved in the negotiations, echoed the sentiment. He also told T&V that while the current plan didn’t include a conversion, Blackstone has said it would be open to the idea.
As for what happens after the 20-year affordability arrangement ends, de Blasio said that would in all likelihood be a matter for the city’s government at that time.
Blackstone Group LP is the world’s biggest alternative-asset manager.
This summer, it gathered $15.8 billion to invest in global real estate.
According to Bloomberg News, the firm collected more than 90 percent of the pool, its eighth fund for global property, from institutions in about four months, a person with knowledge of the matter said in March. The remainder was raised from individual investors.
New York-based Blackstone has already committed 20 percent of the fund to deals including $14 billion for real estate assets being divested by General Electric Co., and nearly $4 billion to buy Strategic Hotels & Resorts Inc.
In July, the firm acquired a 25-parcel package from the Caiola Family. That $700 million grouping holds about 1,000 apartments which are centered near the Upper East Side and Chelsea. It increased its presence in the boroughs, snatching up Sky View Parc for $400 million in Flushing in June.
But even though the company’s seven previous global property funds have doubled their invested capital, the city isn’t taking any more chances with Stuy Town.
Deputy Mayor Alicia Glen (Photo by Sabina Mollot)
Glen told reporters that if the market does go south and things don’t go the way Blackstone is picturing, even if the company sells the property, the next owner would be bound by the same terms Blackstone has agreed to.
In exchange for preserving affordability, the new owners will not have to pay transfer taxes, saving them about $140 million, and they won’t have to pay a $75 million mortgage tax.
This arrangement also saves tax payers money, Glen said, by offering a one-time exemption instead of an ongoing abatement. “Normally with an affordable housing project, the owner gets a break on taxes every year,” she said.
Until recently, CWCapital’s effort to sell had been hampered by a lawsuit filed by junior lenders represented by a company called Centerbridge Partners. The lenders had hoped for a chance to buy a key piece of the junior or mezzanine debt and accused CW of violating an intercreditor agreement when the servicer took title of the property through a deed last year instead of holding a foreclosure sale.
Joe DePlasco, a spokesperson for CW, issued a statement on Monday, saying, “We are pleased that we have finalized in principle the settlement of the outstanding litigation. CWCapital retained Doug Harmon at Eastdil Secured to advise throughout the process.”
CW did not respond to a request for comment on the sale.
Over 400 people listen as local state elected officials brief them on the uphill battle over the rent laws coming in June. (Photo by Sabina Mollot)
By Sabina Mollot
On Saturday, over 400 residents of Stuyvesant Town and Peter Cooper Village gathered for a meeting held by the Tenants Association that focused on the upcoming expiration of rent laws and the uphill battle tenants would have in trying to get them strengthened.
Speakers briefed the audience on the current power dynamic in Albany, while also telling those in attendance that without tenants writing to Albany lawmakers, especially the governor, the effort is a lot less likely to succeed.
“If I go to Albany and say (to Governor Cuomo) two and half million people are going to be very upset with you, if that’s not clear in the streets and not in the mail in his email inbox, it’s very hard to believe,” said Assembly Member Brian Kavanagh.
Kavanagh was one of the speakers of the event, which was held at Simon Baruch Middle School, along with State Senator Brad Hoylman and TenantsPAC treasurer Mike McKee.
McKee told the crowd if the laws are renewed in their current state, “It would be a terrible defeat for tenants.” Referring to a recent Daily News article that quoted Cuomo as saying the laws and the controversial 421-a tax abatement for developers could possibly just be renewed and not changed, due to the federal investigations being conducted in Albany, McKee added, “I’m sorry, but that is crap.” McKee has said that 421-a is expected to be used as leverage during the rent law negotiations.
Both Hoylman and Kavanagh spoke about Albany’s power system and how with the Senate in the hands of Republicans whose campaigns are financed largely by real estate, the only hope for tenants is in swaying the Assembly, led by Carl Heastie, and the governor.
Meanwhile, Kavanagh has said he wants to close the “LLC loophole” that makes New York one of the few states where each LLC created counts as a separate campaign contributor, but, he admitted, “I’m not sure we’re going to do that this year.”
However, he added that recent media attention on the issue may prove helpful anyway.
“There may an opportunity to shame people into backing off,” he said.
Assembly Member Brian Kavanagh, ST-PCV Tenants Association Chair Susan Steinberg and State Senator Brad Hoylman (Photo by Sabina Mollot)
McKee said that while in the past, major decisions in Albany have been made behind closed doors by the “three men in a room” (the governor, the Assembly speaker and Senate Majority Leader Dean Skelos) this year there might be four — if Jeff Klein is allowed to participate. Klein is the head of the State Senate’s Independent Democratic Conference, a breakaway group that caucuses with Republicans. McKee, who’s often blasted Klein as being a tool of the real estate industry, commented that his participation would only be to tenants’ disadvantage.
As for Skelos, McKee added, “Dean Skelos will not do anything voluntarily to help tenants or to hurt landlords. The Assembly has to do what’s called taking hostages. There are dozens of things everybody wants at the last minute. Some of it is minor stuff, nothing to do with housing even.”
One advantage of tenants, he added, is that with Heastie being new as speaker, “he has to prove himself. He has to be accountable not only to us but the members that elected him speaker.” Heastie has said he considers strengthening the rent laws a priority. That said, McKee warned, there’s still always the possibility a tough talking pol will “wimp out” at the eleventh hour. “There is always a wimp factor in Albany,” he sighed.
As for what tenants could do, he urged people to write to the aforementioned three men (letters rather than postcards), and get three neighbors to do the same as well as turn out, if possible for any upcoming rallies. One rally, organized by the Real Rent Reform campaign and the union 1199SEIU, which is aimed at strengthening the rent laws, is scheduled for Thursday, May 14 at 5 p.m. at Foley Square (corner of Centre and Worth Streets). The group will then march over the Brooklyn Bridge.
“We need a very big turnout,” said McKee.
Another rally is on Wednesday, May 6 in front of Cuomo’s Manhattan office at 633 Third Avenue (between 40th and 41st Streets) from 10 a.m.-noon.
He then claimed to have a plan aimed at shaming Cuomo into helping tenants. McKee declined to discuss this further. “That’s all I’m prepared to say,” he said later.
When taking his turn at the podium, Tenants Association President John Marsh echoed the sentiment of the other speakers, calling on neighbors to get involved. “If everyone takes a small step, we can have a very loud voice,” said Marsh.
He also mentioned a door-knocking campaign that he and Council Member Dan Garodnick led through ST/PCV the following day, with Garodnick’s two young sons in tow. Garodnick later said the building walk-throughs resulted in many tenants being appreciative of the reminder of the looming rent negotiations in June.
Kavanagh, when addressing the audience, said that while he realizes many new residents at ST/PCV probably feel the rent laws have no teeth when they look at the numbers on their rent bills, being rent regulated still offers New Yorkers protections they wouldn’t have otherwise.
“It prevents landlords from arbitrarily evicting tenants and that doesn’t exist for most tenants in the city,” he said.
Because of the outcome of the “Roberts v. Tishman Speyer” lawsuit, all units in ST/PCV will be regulated until the property’s J-51 tax abatement expires in 2020.
Kavanagh reiterated the goals for strengthening the rent laws, which include repealing vacancy deregulation and other policies that give incentive to owners to vacate units such as vacancy bonuses and reforming the way individual apartment improvement (IAI) rent increases are issued. Reform of major capital increases (MCIs) is another goal.
Kavanagh also got a round of applause after saying he wanted to close the preferential rent loophole. Due to preferential rents, which are given to most new residents in renovated apartments in ST/PCV, rent increases can be far higher than those issued by the Rent Guidelines Board, if the tenants’ legal rents are higher than what they’ve been paying (the preferential rent).
“In our community it’s a particular problem due to the way ‘Roberts’ played out,” said Kavanagh. “(Tenants) are facing enormous increases.”
Manhattan Borough President Gale Brewer, who’d been sitting in the audience at the meeting, along with Garodnick, at one point, popped up to comment about preferential rents, which she said was happening all around the city.
“We go case by case and try to fight it but there is no great answer,” she admitted.
The meeting then concluded with a Q&A period, with most of the questions from the audience—which were limited to the topic of rent—being on the theme of MCIs. Tenants mainly asked why they were being forced to pay them. Hoylman and Kavanagh suggested that tenants’ use their frustration and personal experiences as inspiration to write to the governor.
When a woman asked where the mayor was in this fight, saying, “He seems to have had a low profile lately,” Kavanagh responded to say he thought the mayor would be more visible soon. “This is the time we roll out this fight and I think you’ll see the mayor rolling out this fight,” he said. Hoylman added that a lot is done “behind the scenes,” going on to note that this is part of Albany’s dysfunction.
When a man asked if strengthening of the rent laws would help a conversion effort, Kavanagh said he thought it would in that it would help thwart predatory bidders.
Another tenant then asked if it could work to tenants’ advantage if Skelos, who’s being investigated by U.S. Attorney Preet Bharara, were to be indicted. The answer, however, was that it wasn’t likely to have any impact during rent negotiations.
“If he’s indicted and forced to step down, it’s unlikely that he’d go to trial before June and you don’t have to leave office until you’re convicted,” said Hoylman. “It would have a greater impact next year than this year.”
Town & Village later contacted the office of the governor to ask his position on strengthening the rent laws. In response, a spokesperson emailed prepared statements made by Cuomo at the Association for a Better New York breakfast on rent laws and 421-a.
Included in the written statement was a comment that “At a maximum maybe we can make some fine modifications in both of them.”
“The 421-a, first I believe has to be extended and I believe that’s essential,” the statement read. On changes to it, which he said he believed were needed, he said, “If it was a different time in Albany, frankly, and Albany was a little bit more of a stable situation I would normally take those negotiations to Albany and try to work it out among the parties. Albany has a lot going on right now let’s say, so I’m hoping and I’m asking the parties to work out the disagreements among themselves or their desires for modifications. If they can great, in any event 421-a has to be extended.”
He went on to say, “Rent has to be extended. It is a New York City issue. If we don’t extend rent you would have chaos in the real estate market, these are rent regulations, rent stabilization etc. You would have chaos in the real estate market unlike anything we have seen because it regulates the private industry not another government. It lapses one day you will see real estate entities and landlords start rising rents and evicting tenants. I mean it would be immediate mass mayhem.
“So at a minimum we have to extend those protections but in truth, because everyone has been watching the situation, to have these final negotiations on these delicate points is going to be problematic this year. So, at a minimum rents extended 421-a, is extended. At a maximum maybe we can make some fine modifications in both of them. The democratic assembly is going to be more aggressive on extending rent than the senate Republicans. 421-a, both houses want.”
A spokesperson, Frank Sobrino, when asked if the governor could clarify what was meant by “fine modifications,” said this was a general statement in response to suggested changes. He also denied that the statements were an attempt to remain neutral.
“He said that ‘at a minimum,’ both rent regulations and 421-a must be extended,” said Sobrino. “That’s not neutral.”
Stuyvesant Town leasing office (Photo by Sabina Mollot)
By Sabina Mollot
A federal court judge has decided that the lawsuit against CWCapital by a group of junior lenders involved in Stuyvesant Town should be handled by a state court, as the lenders had been hoping.
It was on Monday when United States District Judge Alison Nathan remanded the litigation to the New York State court where it was originally filed.
In the decision, Nathan wrote that “this case invokes no comparable federal interest, scheme or agency. Rather it is a contract dispute between private parties, turning almost entirely on construction of a private contract, and failing to present any dispositive question of federal law.”
The lawsuit was filed last summer after CWCapital took ownership of Stuyvesant Town and Peter Cooper through a deed, rather than holding a planned foreclosure sale on mezzanine debt. A group of lenders represented by Centerbridge Partners had hoped for a chance to buy a key piece of the mezzanine or junior debt and accused CW of violating an intercreditor agreement. The deed-in-lieu of auction wipes out the value of the junior debt, they’d argued, allowing CW to reap an “unearned windfall” when the property is sold.
They also accused CW of inflating the interest it was owed to calculate the total senior debt at $4.4 billion.
However, in its arguments, the lenders said that even though they believe CW’s figures are wrong, they still stand to “reap windfall profits regardless of how the interest rate is calculated on the senior loan.”
Even when using CW’s “incorrect and vastly overstated senior loan payoff amount of $4.4 billion, the value of Stuy Town is still worth hundreds of millions of dollars more,” the lenders said.
News of the court action was first reported on Tuesday by Law360, a legal news service.
Michele de Milly, a spokesperson for Centerbridge, declined to comment on the latest court action. Brian Moriarty, a spokesperson for CWCapital, didn’t respond to a request for comment.
Last month, the total amount of debt as calculated by CW reached $4.7 billion, a figure announced at a Tenants Association meeting by Council Member Dan Garodnick. He explained the amount was due to interest and fees. It’s also the amount that was reportedly being prepared as a bid by CWCapital’s parent company, Fortress. The Tenants Association has since said it is still hoping for a tenant-led condo conversion with partner Brookfield.
Following the suit being remanded, Susan Steinberg, chair of the ST-PCV Tenants Association said it basically just means more waiting around for would-be buyers.
“The decision to remand the case back to state court means that if CWCapital is waiting to settle with Centerbridge et. al. before proceeding with plans to sell, it will have a longer wait,” said Steinberg. “Ultimately, so will would-be buyers, including the tenants here. Whether the remand is a good or a bad thing for either the plaintiffs or the defendants will depend on which judge the case comes before. We will stay tuned.”
Susan Steinberg, pictured at a June Tenants Association rally (Photo by Sabina Mollot)
By Sabina Mollot
They want how much?
At a recent meeting of the Stuyvesant Town-Peter Cooper Village Tenants Association, tenants were told by Council Member Dan Garodnick about how the property’s bondholders say they’re owed $4.7 billion. A far cry from the roughly $3 billion in senior debt that was initially believed to be the amount CWCapital would have to recoup on the disastrous Stuy Town deal of ’06, the comment by Garodnick drew a collective gasp from the audience.
As Town & Village previously reported after the meeting, the $4.7 billion figure was explained as being due to interest and fees.
“A whole list of junk,” Garodnick informed neighbors. “Special servicing fees, that’s what they claim to be owed.”
The figure is also the same amount that Fortress, CW’s parent company, planned earlier in the year to bid on the complex.
While this amount would be reflected in the price of individual units in the event of a conversion, the TA maintained last week that it is still interested in bidding and a conversion, and that the TA’s partner, Brookfield Asset Management, is also still on board.
“It’s not a wonderful position (to be in),” Susan Steinberg, chair of the Tenants Association, said this week, while reflecting how at one point the property had been valuated at around $2 billion. “It’s creeped up more than twice that. The insider price is not going to be as appealing.”
But, she added that the TA’s talks with the mayor’s office on preserving affordability were still ongoing. “I’m hoping a structure for a sale will be reached that is palatable for everybody,” she said. “The 4.7 billion reflects a lot of interests, but I’m not giving up. I’m not being discouraged. It’s not over until the gavel bangs down and you hear the word ‘sold.’”
The mayor has so far not taken a position on the TA’s goal of a non-eviction condo conversion, though he’s focused on preserving affordability at the approximately 6,000 apartments in ST/PCV that are still in fact affordable.
Meanwhile, Garodnick said he too still believes a condo conversion is the best way to maintain stability at the property, where the smallest units, five newly built studios, currently range in rent from $3,162-$3,420.
“I think giving people that choice has great value for the deal and for people who live in the community,” said Garodnick.
This week, this Town & Village reporter quizzed a few residents to see if they thought purchasing their apartment would be in the cards for them – should an actual offer ever be made.
In response, one resident of five years answered, “hell yeah.
“I’d buy my apartment and my neighbor’s apartment,” he said.
The resident wouldn’t provide his name, explaining that his company represents the property’s lenders. But, he added, he thought any such possibilities were far in the future. “It’s going to be a long time. It’s not just a matter of being able to buy or not. It’s getting the necessary permits and in terms of upgrading the place, all of this is complicated. People are in rent stabilized apartments that haven’t been renovated since the 50s. Do you charge rent stabilized people equally? What if you’re paying $5,000 a month? I pay three times what my neighbors are paying. Two of my neighbors pay less than $1,000.”
He also said he tenants those in unrenovated apartments would find ways to buy, too. “You can always find someone to lend you money like family,” he said, “and then you can turn around and sell. I’ll lend my neighbor the money so she can sell to me in six months.”
Another resident, a woman who lived in Stuy Town for over 50 years, said she couldn’t answer the question without knowing the price.
“You can’t ask people if they could afford it if they don’t know what the price is,” she said. Still, she was open to the idea. “I would consider it because this is a very ideal place to live in New York. Even though I’m a senior, I would think of it more for my daughter more so than to live here. A lot of seniors would do it for their children.”
Another senior, however, felt differently.
John Pertusi, who’s been a resident for 47 years, said, “I’m 85 years old. I have no prospects for the next 15 or 20 years. So I certainly would be personally opposed to it.”
Lance Levitt, an 18-year resident who works for a small software company, said he was interested if the price was within the realm of reality.
“It’s always been a thought,” said Levitt, who lives in an unrenovated apartment. “They’ve been talking about it since the first sale. If it’s affordable we can do it, if not we can’t. It’s pretty black and white.”
He added that his stepmother also lives in Stuy Town and if he could, he would want to help her buy as well.
One resident for over 30 years told T&V he wouldn’t even consider buying until a policy is put into place that would “get rid of the transients.” However, he doesn’t think that will happen, nor does he believe CW is in any rush to sell, anyway.
“They’re waiting for the 1947-1953 people to pass on to increase the percentage of (vacant) apartments. It’s a business. It’s a waiting game. They’ve waiting this long. Can they wait another year?”