TA not scared off by $4.7B debt figure, Residents mixed on if they’d buy

Jan1 Susan Steinberg

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?”

Editorial: The silence is deafening

UPDATE: Following Town & Village’s Wednesday afternoon press time, the de Blasio administration has discussed options being explored in the effort to keep Stuyvesant Town affordable with the press.

Following weeks of silence regarding a reported $4.7 billion bid being prepared by Fortress, CWCapital made a decision to take ownership of Stuyvesant Town/Peter Cooper Village itself. This was a defensive move, and it remains to be seen how long this arrangement will last. (The company did not respond to a request for comment on that one.)

Council Member Dan Garodnick said last week he’s seeing this as an opportunity for tenants to buy some time to consider the next moves, but so far CW hasn’t even given a hint as to whether a tenant-led bid is something that will ever be considered. Also mum is the mayor who, while still a candidate, crowed at Stuy Town that “over my dead body will this place be privatized.”

The de Blasio administration has since ignored multiple requests by T&V on what the mayor’s thoughts are on the now-canceled foreclosure sale as well as the Tenants Association’s plan to rally on Friday, the 13th of June, over concerns about the future. While Garodnick has said he’s gotten the sense the mayor’s office is trying to be helpful to tenants, considering de Blasio’s declarations on the campaign trail, there really shouldn’t be any question as to whether or not he should get involved in the fight for continued affordability in the complex. Lip service isn’t enough and yet right now there isn’t even any of that. The silence is deafening.

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‘CAPE’ crusade aims to fight predatory equity

Council Member Dan Garodnick, with other elected officials at City Hall, discusses the “CAPE” coalition. (Photo by Ilona Kramer)

Council Member Dan Garodnick, with other elected officials at City Hall, discusses the “CAPE” coalition. (Photo by Ilona Kramer)

By Sabina Mollot
On Wednesday, Council Members Dan Garodnick, Jumaane Williams and Ritchie Torres announced the formation of a coalition of over 40 elected officials who are committed to keeping affordable housing from turning into overleveraged housing.
Specifically, the Coalition Against Predatory Equity (CAPE) was organized in an effort to avoid the type of massive debt deals that have led to the loss of affordable housing like at Stuyvesant Town.
“We have a wide-ranging, diverse group and together we have some powerful principles,” said Garodnick, adding that the coalition is “strength in numbers.”

The four goals of the group are:
To get Fannie Mae and Freddie Mac to commit to not lending to any owner in a deal that puts affordable housing at risk.
Avoid investment of city and state pension funds in deals that harm tenants.
Stop offering tax abatements or subsidies to development deals that would lead to the loss of affordable units.
Come up with legislation aimed at limiting “the abuses of predatory equity, and assists tenants in over-leveraged buildings.”

Garodnick, who released a report about the dangers of predatory equity in April, said the coalition is also concerned about the Stuyvesant Town foreclosure and the reports of a bid by CWCapital’s parent company Fortress.
“We are looking into the appropriateness of all that activity,” said Garodnick, adding that all of the coalition’s four principles are relevant to a post-predatory equity Stuyvesant Town.

Congresswoman Carolyn Maloney, who’s previously authored legislation that if passed, would ensure more responsible lending by Fannie and Freddie, said she’d reintroduce that bill this week.
“Nothing was more shocking about the Tishman Speyer/Stuy Town/Peter Cooper transaction than finding out that the federally-chartered Government-Sponsored-Enterprises tasked with expanding affordable housing were actually investing in a deal that could only succeed by converting as many affordable units as possible into luxury rent apartments,” said Maloney. The congresswoman said she hoped the bill would “send a message that these GSEs cannot game the system and fail to comply with their affordable housing responsibilities.”

Along with politicians, over a dozen organizations, including the ST-PCV Tenants Association, Tenants and Neighbors and the Urban Justice Center, have joined the coalition.

Letters to the editor, May 29

Cartoon by Jim Meadows

Cartoon by Jim Meadows

Time to stand up against predatory equity

On Friday, June 13, after CWCapital forecloses on the mezzanine (junior) debt for Stuyvesant Town and Peter Cooper Village, there is a very real threat that Fortress, the parent company of CWCapital, could use a questionable contract clause to instantly become the owner of our two complexes.

What happens on that day will affect us all. It could be Tishman Speyer redux. The financial press is speculating, full of scenarios providing detailed financial road maps to our demise.

Fortress is seeking to bid $4.7 billion for a property valued at $3.2 billion. Possibly adding nearly 50 percent more debt to the property in ​yet another overleveraged buyout will lead to problems for every one of us. These problems will assuredly be worse than what we have faced since 2006.

A show of our strength starts at 10 a.m. on June 13, when members of our community will assemble at City Hall to demonstrate our backing of the elected representatives who right now are working to try to save us from a predatory takeover. Let’s show Mayor de Blasio that we are a community worth saving, and show the hedge funds and real estate moguls that we are a community to be reckoned with. It’s worth making a serious effort to swell the group that will be bused to City Hall and back.
The two core groups that make up our community must stay united.

The first group — the young families and responsible singles and couples — I like to call the “New Stabilizers.”

The New Stabilizers have held on, many by their fingernails, so they can convert their high rents into more affordable long-term equity as apartment owners. Members of this group are the most vulnerable to losing their homes via exorbitant rent increases. The point will come when large numbers of New Stabilizers will be driven from a community that has suited their needs. More instability for everyone.

It’s heartbreaking that New Stabilizers will have to uproot their children from our fantastic local schools that I and others here got the opportunity to go to. These parents will have the painful task of explaining to their kids why they have to make new friends as they are forced to find another home. For this group, a takeover by anyone other than the tenants is their tipping point.

The second group — long-term traditionally rent-stabilized tenants — has a target on their backs too. They’re not as easy to hit, but a predatory owner will try, using the same tactics so ferociously applied by Tishman Speyer to challenge the legality of tenants’ stabilized status. Demolition of buildings is also a possible — and perfectly lawful — means for eviction. Tearing down our aging structures and “developing” our green spaces with shiny new towers is one sure way to pay down the debt.

For all of us, a tenant-led purchase is the only defense against a new predatory landlord. If you’re a long-term rent-stabilized tenant, you’ll be able to stay in your home and enjoy the same rent-stabilized protections you’ve always had with neighbors as your owners rather than hedge funds or dynastic New York real estate families.

For all of us, a new predatory landlord means more bad leasing policies that expand the number of “converted” apartments, which create higher concentrations of roommates in dorm-like occupancy, accompanied by more of the inevitable noise and bad neighbor behavior.

Churn, transients and predatory speculation are the problems. The answers are the young stabilizing families and responsible couples and singles vesting in their community and standing shoulder to shoulder with their longer-term neighbors who may wish to remain as renters living peacefully in their homes.

We all share the desire for our children and our neighbors’ children to grow up in the same safe, unique, extraordinary city setting many longer-term tenants have had. We need to carry on that tradition.

If ever there was a time to be vocal and visible, that time is now. If we just accept what might happen on June 13, we and our children will have to face the consequences.

Don’t let Friday, June 13, be the final chapter. Join us and fill the steps of City Hall to show the world we are organized and that we are a community, not a commodity. For more information about the rally and to RSVP for transportation, visit http://stpcvta.org/june13 or call (866) 290-9036.

John H. Marsh III,
President,
Stuyvesant Town-
Peter Cooper Village
Tenants Association​

Answers on local effects of climate change

To the Editor:

I’d like to bring to the attention of our neighbors who were affected by Hurricane Sandy but who may still be questioning whether climate change is happening due to human continued use of fossil fuels like coal, oil and natural gas (methane) that the Sierra Club has some answers.

Their monthly meetings take place in the Seafarers & International House located at 123 East 15th Street on the northeast corner of Irving Place on the third Wednesday of the month. On May 21, I attended the third in their sustainability series called “Photovoltaics.” To my surprise and delight the first speaker was Chris Neidl recently back from India and at work again with Solar One. Chris was followed by Marlene Brown from the New Mexico Department of Energy. Both speakers answered many questions from the packed audience about solar energy for New York City.

Many of us remember how when Hurricane Sandy hit, the Solar One building in Stuyvesant Cove Park was the only place in our neighborhood that had electricity due to solar energy stored in its generator and people were coming to power their cell phones and medical apparatus. Solar One staff and volunteers brought solar panels and apparatus to the hard hit areas of the Rockaways and other coastal areas of NYC to help out.

On Wednesday, June 11, Solar One will celebrate its 10th anniversary with a boat trip from the East 23rd Street pier at 6 p.m. followed by a picnic supper and dancing under a big tent at the Cove until 10 p.m.  For more information and other events go to www.solar1.org.

The last in the Sierra Club Spring series takes place on Wednesday, June 18 on President Obama’s climate action plan with the Judith Enck, Head of Region 2 EPA (NY, NJ and Puerto Rico) as the speaker. There have been many ideas suggested for how hard hit coastal areas like ours can be protected from future storms. This would be a good time to ask our questions and hopefully get some answers. Doors open at 6:30 p.m. for socializing and refreshments. Programs start at 7 p.m. $10 suggested donation; $3 for students.

Who knows? Maybe it’s a dream, but perhaps sometime in the future Stuyvesant Town could become an Eco Village and resilient.

Joy Garland, ST

 

Stuyvesant Town-Peter Cooper Village Tenants Association will rally on day of foreclosure sale

ST-PCV Tenants Association President John Marsh, pictured in May, 2013 with local elected officials and tenants, protests a mid-lease increase. (Photo by Sabina Mollot)

ST-PCV Tenants Association President John Marsh, pictured in May, 2013 with local elected officials and tenants, protests a mid-lease increase. (Photo by Sabina Mollot)

By Sabina Mollot
Following reports that Stuyvesant Town/Peter Cooper Village’s special debt servicer, CWCapital’s own parent company, Fortress, intends to bid on the property on the day of a foreclosure sale, the ST-PCV Tenants Association has organized a rally to protest the way business is being quietly conducted.
Because the Fortress bid has been reported to be $4.7 billion, according to Bloomberg, TA President John Marsh said at that price, the pressure to make a profit is likely to create a repeat scenario of the Tishman Speyer purchase with its business plan of evicting tenants paying lower rents.
“Right this instant we all need to start talking about what we are going to do about Fortress and the other sharks circling us,” TA President John Marsh told neighbors on Facebook. “The writing is on the wall. It’s about to happen again. Tishman Speyer redux. The financial press is speculating, full of scenarios providing detailed financial road maps to our demise.
Another issue is the debate over whether a purchase by Fortress is a conflict of interest, which Susan Steinberg, chair of the Tenants Association, said is difficult to answer without looking at a contract that’s confidential.
“So nobody can read the clauses, and I think that would have been very helpful if some attorneys would have been able to take a look at it,” she said.
“To me,” Steinberg added, “it looks like insider trading. That’s my perception. But without having access to a basic document, it’s really hard to make a judgment call.”
She also said she thought it was disingenuous of the special servicer to refuse to talk business with the TA, after initially saying the company just wanted to wait until the “Roberts v. Tishman Speyer” negotiations were concluded. “They were stringing us along,” said Steinberg.
The Tenants Association announced its own intention to bid, with partner Brookfield Asset Management, in 2011. The TA/Brookfield bid has never had a dollar amount attached to it and that has not changed. However, the TA has stressed that the bondholders would be made whole.
A spokesperson for CWCapital has previously declined to comment on the reported Fortress bid and was not immediately available for comment on the upcoming rally.
The purpose of the rally, the TA said, is to show any potential owner the political might of the tenants.
“It’s to let them know if they think we’re going to sit down and let them roll over us, they’re wrong,” said Steinberg. “If they think we can’t create trouble for them, they’re wrong. We expect the elected officials to continue to support us.”
Marsh added, “We need a responsible owner, who takes the long view and not just someone looking to make a quick buck, getting in and getting out.”
On May 13, CWCapital announced it would begin foreclosure proceedings on a chunk of the mezzanine debt that’s reportedly worth $300 million and set a sale for June 13. By doing so it will be able to take over the property, at least temporarily.
The TA’s rally will begin that day, a Friday at 10 a.m. on the steps on City Hall. Local elected officials are expected to attend and the TA is asking tenants to show up as well.

ST-PCV Tenants Association still in, despite reported Fortress bid

ST-PCV Tenants Association President John Marsh speaking at a Tenants Association meeting on Saturday, with Assemblyman Brian Kavanagh, Comptroller Scott Stringer, State Senator Brad Hoylman and Council Member Dan Garodnick (Photo by Sabina Mollot)

ST-PCV Tenants Association President John Marsh speaking at a Tenants Association meeting on Saturday, with Assemblyman Brian Kavanagh, Comptroller Scott Stringer, State Senator Brad Hoylman and Council Member Dan Garodnick (Photo by Sabina Mollot)

On Thursday morning, the Stuyvesant Town-Peter Cooper Village Tenants Association announced that it was still interested in buying, and hoped that now that foreclosure proceedings have begun, CWCapital would be ready to talk business.
In an email sent out to neighbors (also available online) Tenants Association President John Marsh said, “We want to make certain that the young families just now trying to put down roots here, can carry on that tradition and that no tenant will ever again be at the mercy of a predatory landlord. The TA-Brookfield plan would deliver full recovery to the primary bondholders. Now that CW can no longer claim the place is not for sale, we hope they will take our offer seriously.”
CWCapital has so far kept its tradition of not saying anything about selling the place, other than a brief statement on Tuesday to announce the foreclosure on the property’s mezzanine debt and a sale scheduled for June 13.
Marsh also said in the email, “CWCapital will become the owner of the property on June 13, at least temporarily. Subsequently, they could hold an auction similar to what we saw in 2006, when Tishman Speyer bought the property.”
A report by Businessweek has said CW parent company Fortress was preparing a bid of $4.7 billion.
While he was running for mayor, Bill de Blasio promised he would keep ST/PCV affordable. Council Member Dan Garodnick has said he learned that a tenant-led bid would have the support of the city’s housing commissioner, Vicki Been, and the deputy mayor for economic development, Alicia Glen. In an official statement, Glen said, “Stuy Town and Peter Cooper Village are critical bulwarks of affordability for middle class families. Our housing plan emphasizes preservation, and with so many affordable units at risk in these developments, the stakes are too high to be hands-off. We are in active discussions with the lenders, Councilman Dan Garodnick and tenants in the hopes of reaching a joint approach.”

 

CWCapital foreclosing on Stuy Town debt

Stuyvesant Town leasing office (Photo by Sabina Mollot)

Stuyvesant Town leasing office (Photo by Sabina Mollot)

By Sabina Mollot
After years of remaining silent on its plans for putting Stuyvesant Town/Peter Cooper Village up for sale, CWCapital made a move on Tuesday to foreclose on the property’s mezzanine debt and then it was reported that Fortress, CW’s parent company, was preparing a $4.7 billion bid.
Neither Fortress or CWCapital would comment on that report, but in a brief written statement, the special servicer of the property, which also manages a chunk of the mezzanine or junior debt, said that a sale was scheduled to take place on June 13.
The company went on to say the action “will have no impact on our residents or on property operations.”
In response to the news, which was first reported in the New York Times, ST-PCV Tenants Association Chair Susan Steinberg said she was tired of seeing the community being treated “like a football.”
“Everything that went into building a unique residential complex for the middle class has been upended in the interest of the bottom line,” she said. “We are being punted towards a goal that isn’t ours.” She added that it was time to have tenants own the place. But that was before hearing about the potential Fortress bid.
The Tenants Association had partnered with Brookfield Asset Management in 2011 in the hopes of buying the complex and going condo. CWCapital had declined to negotiate though saying no business could be discussed until “Roberts v. Tishman Speyer” was settled. But after the settlement, there was still no chatter about bidding or a conversion.
Council Member Dan Garodnick said anyone could bid in the foreclosure, but CWCapital itself could be the winning bidder, using its unique position as debt servicer.
“They could bid billions of dollars without writing a check,” he said, “Because they are owed money here.”
He added that the move to foreclose on the mezz debt wasn’t really a surprise, since technically the property’s already been in foreclosure for years.
“It just hasn’t been formalized because there hasn’t been any action to foreclose on the lenders,” said Garodnick. Ultimately, he said what matters is that tenants’ rights are preserved.
In an official statement, the Council member also said the great bidding war of ‘06, in which potential owners were wrongly led to believe the sky was the limit on what they could charge for rents, shouldn’t be repeated.
“We cannot allow an overheated auction with wild expectations that puts a target on the back of rent-stabilized tenants.” he said. “We have seen that movie before. Tenants, and the City of New York, cannot afford to let that happen again.”
That view was shared by Assemblyman Brian Kavanagh, who said any developer with eyes on this particular prize needs to know that “This is a community that will stand up for itself.” He also said he hoped the real estate industry will have learned from Tishman Speyer’s mistakes of unrealistic expectations and disregard for the Rent Stabilization Law.
“They shouldn’t bank on being able to remove any of the tenants,” said Kavanagh. The “Roberts v. Tishman Speyer” class action suit will keep ST/PCV stabilized until the J-51 tax abatement expires in 2020. On the other hand, with one-bedroom apartments in Stuy Town going for rents that start at close to $3,000, many of the newer residents of the community still consider themselves stabilized in name only.
Developer Richard LeFrak, who bid on the property in 2006, is possibly interested in doing so again, according to the Times piece. Another developer, Gerald Guterman, who’s openly expressed a desire to turn ST/PCV co-op, said that now he’s not sure what he wants to do.
Noting that the announcement by CW only gives potential bidders a month lead time, he quipped, “Fortress makes an offer today. You think it’s because they own CW and they’re not giving outsiders the opportunity? How do you have time to (plan) unless you are familiar with what’s going on?”
As for the reported bid amount, Guterman said he isn’t sure how that sale price could make it possible for current tenants to buy if given the option. He also wasn’t sure if the price is worth it considering all the students and others living in apartments converted with pressurized walls.
“It’s still a number where I could do it but I’m not sure I want to,” he said.
Meanwhile, last August, while still a candidate for mayor, Bill de Blasio penned an op-ed for this newspaper, saying the city should make sure ST/PCV remains affordable.
“While Peter Cooper Village-Stuyvesant Town is privately owned, the city has an obligation to keep its homes affordable for hardworking New Yorkers and their families,” he said. “PCV/ST was created through the power of the city and its use of eminent domain – therefore, it’s the responsibility of the city to ensure that these homes and other affordability housing are never beyond the reach of middle class New Yorkers.”
A spokesperson for the mayor did not respond to a request for comment on this story, but Garodnick said he learned that a tenant-led bid would have the support of the city’s housing commissioner, Vicki Been, and the deputy mayor for economic development, Alicia Glen.
News of the imminent sale comes on the heels of a settlement over five MCIs between CWCapital and the Tenants Association and word that “Roberts v. Tishman Speyer” tenants will finally be paid the money they’re owed by CW.
With Tishman having paid a record-breaking price of $5.4 billion, along with $1.4 billion in mezzanine debt, there was $3 billion in senior debt (the lenders of which are represented by CW) and $1 billion in equity.