August 1st marked four decades of my having lived at PCV. The management (MetLife) was the owner and operator in 1975. Careful screening was done as the waiting list was about 15 years. At that time, all aspects of PCV/ST were perfect.
And the resident manager Bill Potter was one of the finest and most sensitive persons I have ever known. The residents were mixed and included the famous and the middle class. Maintenance was 24/7. Perfecto except that my late wife thought that it looked like a city project.
Then about 12 years ago CEO Robert Benmosche decided to convert the developments to upscale. (From about $1,500 to over $5K.) As Manhattan has become the hot place to live in the U.S…. more $$$! The only significant advantage was an upgrade for the elevators.
Well, you know the rest… Affordable housing was on its way out in Manhattan. So, people convergent in algorithms were replacing the middle class.
Why does my title include the USA? When President Ronald Reagan was elected it was clear that this nation was concentrating on the mantra: greed is good. During the past 35 years union membership is now one third of what it was and the middle class is being squeezed as Fox and friends concentrates on what is supposedly a war on Christmas.
The Judeo-Christian ethic has been replaced by outrageous materialism. And, what has been done to PCV/ST is just a mere microcosm of the morphing of our nation to a new Gilded Age.
And Murdoch, allies and the Koch brothers now through the Citizens United SCOTUS decision have made the election of our politicians according to how much money they can raise. Is this what our founders envisioned?
The changes in PCV/ST are congruent with the changes in our nation since the end of WWII. Or was this period where the middle class shared in the wealth a mere aberration? Who know? But, we do know how flawed the human condition is and the disastrous results it can bring.
David Brooks, conservative op-ed columnist for The Times, and a regular commentator on the PBS Newshour and Meet the Press, has just published: The Road to Character (Random House, 2015). Brooks spent his formative years in Stuyvesant Town. He remembers these years with warmth and appreciation.
In his most recent book he speaks about two aspects of our lives: “resume virtues” and “eulogy virtues” which can be quite antithetical. The former deals with our accomplishments: wealth, fame and status; the latter deals with our integrity, kindness and bravery and who we are.
The dichotomous relationship of our worldly accomplishments and eulogy virtues both exist, but Mr. Brooks believes that how one is remembered is more important.
This reminds me of two persons here: Mr. Bill Potter, the resident manager of both developments who was very kind to me during my most trying time and others who remember him when he worked here always say the most laudatory things about him.
And then there was MetLife CEO Robert Benmosche who began the decline of our developments from ideal and rare apartments for the middle class to faux luxury and pseudo-upscale units. Benmosche, who recently died, must have made billions of dollars but sans many significant “eulogy values.”
Mr. Potter’s life mainly was left others with memories of his sensitivity and many kindnesses while Mr. Benmosche is now remembered as having made lots of money and lacked the higher spiritual values. And much of his wealth was made from the destruction of PCV/ST.
In his letter, “How the Affordable Health Care Act Works,” Floyd Smith was kind enough to clarify my “Who Does What for Whom?” Mr. Smith contrasts a 20-year-old and a 70-year-old within an individual private health insurance plan, a group private insurance plan, and lastly, within the Affordable Health Care Act. The chief difficulty I have with Mr. Smith’s clarification is his framing. He freezes our focus on claims, cost and payments, then infers correctly that (his) 20-year-old subsidizes (his) 70-year-old, but leaves out other considerations that bear more fully on the question, “Do 20-year-olds subsidize 70-year-olds?”
According to Mr. Smith, since the 20-year-old belongs to a group that will, on average, make fewer claims than on average for 70-year-olds,the price for a 20-year-old who purchases health care for himself/herself from the “free enterprise insurance market” will be less than the price for a 70-year-old.
Fair enough! (Though I should add “All things being equal.”)
Second, however, when the 20-year-old, as a member of an employer’s group, purchases from the same market, his/her payments become based on the risk presented, on average, by the people in that group, but now includes higher costing 70-year-olds. When costs here are averaged over the population in the group, the premium level of 20-year-olds will be higher than when he/she bought private insurance. Thirdly, when the 20-year-old finds himself/herself part of a huge nation-wide group, she/he is again subject to higher premiums because this group includes those that make greater claims. So, again, the question: Do 20-year-olds subsidize 70-year-olds?
Grant for a moment that a 20-year-old who purchases a private individual health policy pays less than a 70-year-old who purchases the same insurance, but let’s look into the (actual) life of the 20-year-old and ask:
1. What in fact did the 20 year-old-pay when the 20-year-old paid as a private individual in the free enterprise health insurance market policy?
2. What does he/she pay when he/she pays into a free market group policy?
3. How do these private market policies for the 20-year-old compare with premiums within the government/private Affordable Health Care Act?
4. What happens within each if the individual cannot pay the premium?
5. What are the costs of drugs within each policy type?
Do we just assume throughout, along with Mr. Smith, that because a group contains 70-year-olds, the pristine 20-year-old paid more as a member of that group than he/she would have paid as a single buyer winging it on his/her own? That strikes me as too narrow a focus, and grants too much.
Within my knowledge, a 20-year-old going it alone will find health care exceedingly expensive, indeed, perhaps too expensive and often problematic.
Tim Collins, counsel for ST-PCV Tenants Association
By Sabina Mollot
Just one week after residents of Stuyvesant Town were hit with a major capital increase (MCI) for video intercoms and a security command center installed in 2009, residents of Peter Cooper began receiving notices in the mail that their rents too would be increased, in this case $10-$15 per apartment. The MCI, also for security upgrades, comes with a retroactive portion tenants are responsible for paying of $480-$650.
Though as of Friday, only two buildings got the notices, Susan Steinberg, chair of the ST-PCV Tenants Association, said that the rest of the buildings in PCV were also likely to get the same news, and possibly Stuy Town, too.
In a Facebook post, the Tenants Association said that its attorney Tim Collins filed objections in May of 2012 to this MCI “and as in the case of the ST Video Intercom MCI, these objections have either ignored or overlooked.”
Currently the Stuyvesant Town video intercom MCI is being disputed by the TA via a petition for administrative review (PAR) and Collins will also do the same for the latest MCI.
The Tenants Association said it has a few general objections to the MCI, which include claims that:
• The system replaced a full electronic security management system installed in Peter Cooper Village only in 2004. Before a system is replaced, it must have exceeded its useful life.
• Critical documentation, such as government permits, and plans and specifications were not submitted, but should have been. There were different contract amounts cited. Change orders lacked proper verifiable information. Some change orders were for repair and restoration not eligible for MCI rent increases.
• The security command center was a new facility installed at 518 East 20th Street. This security center was relocated to 317 Avenue C as part of an overall rental plan for retail spaces on the property. This work did not qualify for MCI treatment, even before Sandy destroyed the command center.
Steinberg added that she is concerned because “there are other MCIs out there and I would hate to think they are all going to be approved. What would be horrible is getting thousands in retroactive fees and the rest will be there forever unless something happens with our rent regulation laws.”
As with the Stuy Town MCI, the Tenants Association is asking that residents don’t file individual PARs at this time, but instead send the association the docket numbers that appear on their MCI documents.
The Tenants Association will be preparing a Google form for affected tenants to send the docket numbers and will soon be spreading the word via an email blast and building postings.
Steinberg also noted that the cost of fighting the MCIs is going to be pricey and requested that tenants consider making a donation to help with the effort.
“This is going to be an enormous legal fee,” said Steinberg.
MCIs are rent increases owners of rent stabilized properties can charge for making improvements and upgrades and are added to tenants’ base rent. According to the Tenants Association, there are currently five pending for ST/PCV. In 2009, the Tenants Association learned that 20 percent of the MCI applications filed in this city came from ST/PCV alone.
CWCapital has not yet responded to a request for comment.
This article has been revised to include additional information about the the Tenants Association’s arguments against the MCI.
Even before the default of the property in 2010, the purchase of Stuyvesant Town for $5.4 billion by Tishman Speyer and its partners only four years earlier had come to be recognized by many as the biggest mistake ever made in real estate.
So why then, was Tishman, as well as countless other key players in the world of New York real estate, not to mention those from offshore and even pension funds and the Church of England, so convinced that a historically middle class apartment complex was in fact an untapped goldmine? And why was the property’s previous owner, MetLife, not held accountable for its initially racist leasing policy while receiving all kinds of breaks from the government for the complex’s construction?
These are just a couple of the questions surrounding the property’s history-making moments to get tackled in a new book by New York Times reporter Charles Bagli, set for release on April 4.
Bagli, who’s been covering major New York real estate stories for the past quarter century, signed a deal with publisher Dutton in 2010 for a book about the infamous Stuy Town deal, Other People’s Money: Inside the Housing Crisis and the Demise of the Greatest Real Estate Deal Ever Made. The book is priced at $28.95 but is currently available for pre-order for $15.98 on Barnes & Noble’s website as well as on Amazon.
This week, Bagli said the book was something he’d been thinking about since he began covering stories about the property.
“The more I learned about Stuyesant Town, the more intriguing it was,” he said. “It had this rich history that most of us don’t know anything about. It’s such a cauldron for the lives of the middle class.”
The book hardly reads like a history textbook though since right from the start the reader is the fly on the wall as negotiations between real estate execs, brokers and attorneys are played out.
Much attention is also paid to the backstory of Stuyvesant Town/Peter Cooper Village, including the initially unsuccessful attempts to make the complex integrated and then over the years, the various attempts by tenants to fight planned rent hikes.
“Every time they did that, the tenants would rise up,” said Bagli. “It’s funny because there were all of these regulations issued in Stuyvesant Town. There were lots of guards to tell you not to run on the grass and rules about the apartments having to be covered in carpets, but on the other hand there was all this rebellion.”
In doing research for the book, Bagli conducted around 100 interviews, many with real estate bigs, including the normally press-wary Rob Speyer. Bagli said he figured Speyer, who spearheaded the doomed deal, agreed to talk due to the fact that he’s interviewed him before, including right after the sale in 2006, but also because they knew each other from 10 years earlier when they both worked at the New York Observer. At that time, Speyer, who later became a reporter, was working as a fact checker.
Other interviewees include developer Richard LeFrak, who was a bidder early on but bailed when the price reached $4.5 billion, and ST/PCV residents, including former Tenants Association President Al Doyle and Council Member Dan Garodnick. There were, naturally also a few individuals who refused to be interviewed on the subject of the Stuy Town sale, including Larry Fink, CEO of BlackRock Realty, Tishman’s main partner on the venture, and Mayor Bloomberg.
During the course of his interviewing, Bagli said he thought it was interesting how many parallels there were between two men who had ended up becoming adversaries, Speyer and Garodnick.
“Both were about the same age, both bright,” he said. “They got involved with a woman during the course of all of this and got married around the same time and had kids the same time. But they represented very different interests.”
Other sources of information for the book came by way of library archives of public documents and newspaper articles, including many from Town & Village, and Met Life’s press archives. Though he never lived in Stuy Town, Bagli’s had connections with the property over time through different residents, including his publisher and agent, who’d both lived there.
While the book mainly focuses on the sale to Tishman Speyer at the height of the real estate boom and the subsequent default after the bubble burst, another aspect of the story is how a greedy industry still hasn’t learned its lesson. Too many players, said Bagli, are still paying for major deals with a two thirds or more of the cost in loans and simply hoping for the best when calculating returns.
“And of course nothing ever is ideal like that,” said Bagli, who noted that when calculating potential rents for Stuy Town, the buildings were compared to a new tower on East 23rd Street with a doorman.
“That’s really not comparable to apartments with one bathroom, 60-year-old pipes and no doorman,” he said. “It was absurd.”
Yet there was no shortage of plans to turn the rent-stabilized property into the goose that laid golden eggs in 2006, including converting the apartments to co-ops, or at least some of them. Ofer Yardeni of Stonehenge Partners hoped to have specific buildings set aside for the elderly after getting those older residents to move out of their two and three-bedroom apartments. Douglas Durst wanted to erect a building on Stuy Town’s green spaces, though he dropped out after bidding climbed higher than $4 billion.
Ironically, it was another one of the bidders, LeFrak, who seemed to be one of the few voices of reason when considering the future worth of the complex. As the owner of 15,000 rent regulated units in Brooklyn and Queens, LeFrak didn’t believe ST/PCV was worth more than $3 billion. Though he did eventually bid as high as $4.5 billion, after being pressured go up to $5 billion if he wanted to play with the big boys, he dropped out.
Like many of its residents, Bagli sees the Stuy Town of today as being in jeopardy since close to half of the 11,232 units are renovated and therefore renting at close to market rate.
“You’re not talking about middle class families anymore and I think it’s a tremendous loss for the city,” he said. “For all the racial history, it’s still a refuge for a lot of people who would otherwise not be able to live in Manhattan or New York City.”
Bagli will be discussing his book, alongside Times columnist Michael Powell, at the Stuyvesant Town Community Center on April 4 at 7 p.m. A preview of a documentary about Stuy Town’s history, co-produced by tenants, director William Kelly and preservationist Marie Beirne, will also be screened. The Community Center is located at 449 East 14th Street.