Exploring a Bid, Stuy Town Tenants Lawyer Up with Paul Weiss

Thank you for letting us know. I will watch this!

Or you can get the direct link from the TA website www.stpcvta.org

I didn't get the impression that the legality or illegality of deregulating units mattered going forward. I thought they were just pointing out that the landlords got advice from DHCR that said that the deregulation was legal. Wasn't there some wording that was open to interpretation because it wasn't entirely clear? Ultimately, of course, the court decided that the deregulation was illegal. The two big takeaways for me were (1) that the taxpayers via Fannie and Freddie have been left holding the biggest bag, so the tenants are effectively on both sides of the issue, and (2) united tenants will have a big part to play in how the situation is resolved.

RR
On first point, I think it was just a matter of real estate professionals trying to make one of their brethern, TS , look less bad. They didn't want to leave the impression that TS is a slum landlord but rather acted in accordance with prior DHCR opinion. They were right except to the extent Dan correctly pointed out that prior DHCR guidance was inconsistent on this subject.
Fannie and Freddie may have to take a small haircut on their senior debt too given the plummeting value of STPCV. Clearly everyone else who invested with TS will be wiped out. The banker's point was that if STPCV goes coop some of the upside of owners when they subsequently resell their apartments should go to the government. I think that depends on what ,if any, haircut they have to take. Dan argued that since Fannie and Freddie are now owned by all of us this should not be an issue.We shall see but if we can buy our apartments at the price mentioned by one of the bankers ($400/sq ft) and Fannie and Freddie have to take a haircut to make that work, I would not object to the government getting a small percentage of any profit I might make upon resale of my apartment.

We need to define what affordable housing is. I agree that it may very well be rental housing--that's the only way people starting out can get a toehold and people with limited incomes can stay in their homes. On the other hand, if this place stays rental we'll always be at the mercy of greedy landlords and the state legislature. Changing to coop or condo may be the biggest shift in defining what this place is, not MR vs. RS.

RR
Except to the extent Fannie and Freddie take a haircut, the taxpayer takes no hit here. The banker is wrong.
While it is true that if tenants get apartments below market the upside in value of STPCV will inure to tenants rather than TS and the other idiots who invested with them, that does not qualify as a hit to taxpayers!
In fact if this occurs tenants will finally get revenge on the Speyers. How sweet that would be!
As for those already commenting that $400/sq ft for an apartment in Manhattan is not affordable housing, that depends on your definition of affordable housing. That price (which is only one person's estimate and would vary building by building and floor by floor depending on location, view etc) is certainly below market. What the real estate guy further said is that this should be handled like Lincoln Towers which went coop under a noneviction plan, meaning that anyone who didn't want to buy their apartment remained a rent stabilized renter. Such a plan would be fair to all STPCV tenants.

I would hate to see ST/PCV turned into "affordable" housing under today's definition, which is in fact, city housing. This was never a "affordable" community, it was a middle class community and there is a big difference.

I think we all need to open our eyes to the current economy and realize that costs do go up, and that you cannot continue to operate a complex like this unless the maintenance costs are met at the prevailing rates. Whomever operates ST/PCV will have to pay current market costs for materials and labor, and you just can't do that if everyone is paying "cheap" rents.

When I was growing up here, the general rule of thumb (tho it doesn't seem to be the same today) was that your rent should be 25% of your gross income. Let's assume today that a middle class income in NYC is between 75 & 100K a year, and that would mean rents averaging between $1500 - 2000 a month. Unfortunately, the rule today seems to be closer to 30%, so the numbers become $1900 - 2500 a month in rent.

As far as sale, $400 a square foot doesn't seem to be unreasonable. That would put the cost of a 2br apartment at around 400K, which even at today's prices can be as little as 1/2 to 1/3rd of what it would cost you for a market rate 2br in a decent doorman condo.

If you put 50K down and a 350K 30yr fixed at 5% your monthly mortgage payment is around $2400. Add about 1000 - 1200 a month for common charges, taxes and electricity. Plus there are income tax benefits, you're building equity etc...

And... my guess is there are probably a large number of long term residents here who could swing this deal on a 15 yr fixed with at least 50% down, and cash out with a neat profit in time for retirement if they wished.

BUT ALSO... don't forget that there will be some significant maintenance assessments on the property, most notably the replacement of the plumbing that will happen in the not too distant future.

And finally, one thought that I had was on the issue of fairness. If the development was co-op'ed or condo'ed, there would be a renovated and unrenovated buy-in price. Considering that everyone who "bought in" to ST at market rate was given preferential treatment in terms of apartment location and amenities in exchange for paying a short lived market rent (assuming it ends when they buy), it doesn't seem fair that long time residents who might be living in unrenovated apartments in far from good locations would not be given preference in some manner. How this would shake out, I don't know, but it troubles me that someone who's been here for 40, 50 or 60 years would get the short end of the stick.

Yes there would certainly be price differentials between renovated and nonrenovated apts. The same was true in Lincoln Towers as I understand it.

I remember that about overmaintaining but am going to watch again for more tidbits. Also, Dan said that only a few (or a small percentage) of tenants saw a significant reduction in rent.

If there were to be a co-op conversion, it would be a non-evict conversion without_a_doubt. Life would go on the same for RS renters as long as rent laws stay in effect.

I just hope they leave what remains of the beautiful old trees that survived the Stadmeyer cull.

I just hope that the new owners don't cut down any more of the lovely old trees that managed to survive the Stadmeyer cull.

Why would a tenants bid (or any other bid) be higher than the rent roll since all the apt are RS and there is no possibility of deregulate?

Here's the backstory on that...

4400 (formerly MR) apts. out of 11,227 is not 40%, but is 25.5%... big diff. Also, "middle class," in NYC, has always been a relative, and loaded, term.

Agreed
Maintenance costs here could be quite high. But an extra high reserve fund could be priced into price of apartments to cover known major repairs eg plumbing and ongoing maintenance. While $400/sq ft was not explained , using part of that for the reserve fund would account for much of discrepancy noted in PAG's analysis.
BTW I know the maintenance at Lincoln Towers is below average for Manhattan coops. They have land to maintain(although clearly less than STPCV) but they have doormen and much fancier interiors (although in driving past there last week the exterior of their buildings looked terrible)

Sounds like my hypothetical from the other thread was pretty accurate.

And as ziggy notes, there needs to be a sizable reserve fund, but even with that, I doubt it would cover the plumbing. I would strongly anticipate an assessment if that scenario happens.

As far a cost of maintenance on the grounds, if they revert back to grass and modest plantings AND they can keep the dogs off of it, it's possible. Otherwise, fuggedaboutit, ST/PCV will continue to be in the running as New York's Biggest Dog Toilet.

Thanks. I thought the story sounded familiar, but the VV has a lot more details.

Sorry. My bad.

It would make sense financially and environmentally to replace our unsustainable, expensive to maintain lawns with better alternatives. Same for the non-native, hard to maintain plants.

Oval Compost could help.
http://www.lesecologycenter.org/index.php?option=com_content&view=section&id=3&Itemid=6&28e5bbf660cb545fc854f5c048c7be7c=b4c5ba5a575b2a83b80b6f0cf50ceb26

BTW--how do I insert a hyperlink with a different name from the URL?

To me that is the biggest problem. Who will run this place? I and others don't like the secrecy of the TA leadership. Can you imagine the secrecy of a coop Boardand fights when they involve tenant money?Under NY law coop Boards have great discretion in their actions
Also there are many tenants here who think they should be able to buy their apartments for a relative pittance , I have heard any number say they shouldn't have to pay more than $100K for their apt. Also some tenants want to keep costs as low as possible while others want to maintain this place much more nicely and maybe even add doormen!
Oy vey!

That's what I've said from the get go. It's too big, Does any one know of a coop or condo with 11,000 units?

could they split them?

Of course it would be a huge ass-ache, but it's better than the alternative: to be at the mercy of yet another mega-developer who wants to wring every penny out of the place...

The HTML code would be invisible if I tried to posted it. Go to here to hypertext links to see the code.

Many people have not been aware that landlords have long secretly blackballed tenants who went to housing court.

Co-op City in the Bronx is bigger than Stuyvesant Town/Peter Cooper Village. But I don't know anything about its governing structure.

Yes, it's bigger, but Co-op City is a Mitchell-Lama development with non-appreciating shares and income restrictions on qualifying for an apartment. It was built as a cooperative, and is vastly different from the situation that we face here.

All you wanted to know about Co-op City on the Wiki:

http://en.wikipedia.org/wiki/Co-op_City,_Bronx

So what's the difference you speak of? You can still govern 11,200 units, which is what I thought we were talking about. Also, how do you maintain affordable housing on an appreciating shares basis, unless affordable housing is not a goal of yours?

Yeah, I don't have the answer to that. Co-op city was built as as a co-op and you don't have that mixture of renters and owners. Maybe the answer is a non-appreciating cooperative, but I'll note that the Grand Street co-ops were designed that way and eventually became free market. Many of these developments including the ones mentioned were developed by the garment unions for their members who were essentially working/middle class.

There's a battle going on right now at East Midtown Plaza across the street from PCV over converting it from Mitchell Lama to market rate so shareholder can cash in on windfall profits.

I'm far from an expert on this stuff, other than to absorb the details of things I read. Frankly, you couldn't pay me to live in an appreciating co-op. I might tolerate a non-appreciating one since everyone is on the same level, and it would pretty much be like the way Met ran the place, their way or the highway. But there are also issues of maintenance costs and there's no way you can run ST/PCV on a comparable cost basis as Co-op City, the common charges would be much higher.

Whatever the scenario in a condo or co-op conversion, if you and I prefer to rent then in all likelihood we will still be able to rent and remain protected by the Rent Stabilization laws.

But the TA wants more than that ... it wants to maintain ST/PCV as LONG TERM affordable housing, i.e., after you and I are gone, the place will still be affordable for those who follow.

I agree with this goal, and am unwilling to support anything less. So when I hear talk about how good it will be if we could pay $400,000 for a 1000 sq ft space ("But it's market value is over $1,000,000!!!"), I get sick.

Boo, I agree with you. But the playing field was badly upset by Tishman taking out that 5.4 billion dollar loan, and there are going to be considerations that just can't be overlooked. If the government steps in and backs up the senior debt so that the place could be converted into sustainable affordable housing might be one approach. I'll remind you that the models for sustainable affordable housing include income limits, and here they are;

# One-bedroom — $22,288 minimum/$71,064 maximum
# Two-bedrooms — $32,384 minimum/$101,520 maximum
# Three-bedrooms — $48,620 minimum/$132,072 maximum
# Seniors have a reduced minimum income of between $19,872 and $43,092

So as you can see, in ST/PCV you're not building from the ground up as they did in Co-op City and the demographics here are much, much different.

It would be fascinating to hear a forum of experts really brainstorm this subject. The Stoler Report was just a tease.

I don't know what the answer is as to how to keep ST/PCV affordable in the long term (which I minimally define as maintaining whatever we have now, forever). I'm sure it's going to require government help.

* * * * * *

I heard that Calvin Klein's mom stayed in the Grand Street co-ops even after Calvin got rich.

* * * * * *

One thing I never understood about Mitchell Lamas is the going private business ... if the Mitchell Lama incentives were good enough to get developers to build and maintain the co-ops as affordable housing for 20 years, wouldn't the same incentives have been good enough to keep them as affordable housing forever?

Don't know about the governing structure but the parking structure was on the verge of collapse.

http://www.nydailynews.com/ny_local/bronx/2008/01/08/2008-01-08_final_coop_city_parking_garage_reopens.html

I don't think anyone want's this place to become CO-OP City. Let's try to "live a little bit better."

You know, if you proposed it to him, he might just do it! Of course, it would be renamed Bloombergville & Bloombergtown.

Sounds stupid but I'd be OK with it if it came with a rent rebate...

Again with the dogs! clearly people feel that their lives are enhanced (QOL)by owning pets; it is a 1-5-10 (how many zeroes in billion?) figure industry. Others are indifferent. Anyway, you don't do any of us any favors by describing our home as the city's largest canine potty.

Methinks you have deep bitch issues, or something, and I hereby sentence you to 30 days at the post-Katrina superdome with absolutely no access to any type of written communication, after which you may come back and talk to us. ;-)

There's no way one could predict that (too many variables go into determining an individual apartment's maintenance, e.g., I assure you that an 11th floor 1BR in the Stuy Town SW Quadrant will have a significantly higher maintenance than an M floor 1BR in ST's NE Quadrant).

But assuming that operating expenses for the entire ST/PCV complex were $111,200,000 a year (I thought I read a number like that), then the monthly maintenance per apartment (I can't give you a number specific to any particular apartment) would be $827 per month. It would be less than that if the complex qualified for affordable housing tax breaks. It would be more than that if there's any underlying mortgage at all.

Does anyone know what the 2006 sales packet stated as being the 2005 operating expenses?

You might try reading the thread, but I hear that for brunettes it is even more costly than is predicted for blondes.

I hadn't read your post yet but was basically thinking the same thing. It could be a potential nightmare for residents. This line of thought started because I just had to close my bedroom window the 1/8" I had hoped for because it just too noisy on the lower floors. In all my years in this, my 2nd, ST apt. I have never had the privilege of fresh air at night. I also do not get ANY sunlight, ever. The light I do get is at night and is the equivalent of a lighthouse beam. These not-so-little things are priceless.

Then there's those pesky brownfields which could be killing the trees for all we know so far.

Actually, the reason for my avatar is that I'm a fan of To Kill A Mockingbird (and Boo Radley). But I like Robert Duval too.

I'm blonde. ;-) And I'm not so bad, you'll see.

TKAM great flick and book.

Um, $100 million really isn't that much money in NYC real estate dollars, especially considering the size of the property and the diversity in class (residential, commercial, and professional).

Also, you can't blame a company for making a profit on its sale? You bought a home in Westchester for $700k in 1995 and sold it in 2005 for $1.5m, and you wouldn't be happy? Isn't that the goal of real estate transactions? I'm sure the villians were still TS/BlackRock in any light you see this.

Don't understand your logic.

AFAIK, with the aid of government, MetLife developed and made a lot of money on ST/PCV during its 59 years tenure. By 2006, ST/PCV was making $100 million a year profit for MetLife. Then it sells ST/PCV and makes another $5.4 billion.

TS/BlackRock owns ST/PCV for 3 years and loses its entire $230 million investment. And that makes it the villain of the story?

What's there not to understand? The logic is simple in real estate terms. TS is just a sucker for having spent that %5.4b on the joint.

Welcome to LL, Brunette. Just ignore yetai - she's the resident crazy.

DR yamaka,

MetLife is not equivalent to some guy in Westchester turning a profit on the sale of his home.

The city went into a public/private partnership with MetLife after WWII to provide decent, affordable housing for middle income NYers. A neighborhood was condemned and razed, land was handed over to MetLife for nothing or next to nothing, and tax breaks and other incentives were thrown in...That's why the City Council was pissed off at MetLife over the sale. In hearings regarding the sale, councilmembers vilified MetLife as a "bad citizen." No matter, MetLife pretty much said, "OK NYC, we say we fulfilled our part of the bargain long enough so that's it for the partnership. See ya! We're gonna cash in while the market is soaring, you can hold the bag! Of course, it's too bad that ST-PCV will no longer be affordable as middle income housing, but if you don't like it, tough shit."

so it means MetLife laughed all the way to the bank- hardly means their a villain.

I think it does mean they're a villain. What they did was unconscionable. Unless, of course, you don't consider unbridled greed with no heed to the disastrous consequences to thousands of "collateral damage" tenants and lenders villainous.

"It would be fascinating to hear a forum of experts really brainstorm this subject. The Stoler Report was just a tease."

I think Stoler said at the end of the show that next week's show was going to be on affordable housing. I'm going to tune in next week and see. I'm going to start watching the Stoler Report anyway as I liked what I saw.

One of Dan Garodnick's comments concerned me a little. He said that he and the TA want an ownership situation where the tenants could build equity in their homes. I hope he was talking about some sorta limited equity structure because I for one do not want a scenario where I can buy my home at a below FMV price, and then flip or sell it at FMV for a big personal profit. I want ST/PCV to be affordable housing forever.

Maybe in your world.

Brunette -- Welcome aboard. Don't worry about it. There's plenty of hostility on LL, but as you can see with Boo, for example, there's smart insight as well.

yeah, the same world i share with about 2b other people with the same view.

So when did you take the survey?

I believe that business plan is still classified as "Top Secret"

Dan Garodnick was a lawyer at Paul Weiss before running for City Council

I know. But I doubt that he's paying Paul Weiss. I interpreted Meredith Kane's statement as meaning someone was paying something to Paul Weiss, but it wasn't the TA.

My understanding is that it is pro bono.

ziggy,

That's not my understanding. Am Law Daily reported:

"The firm will represent tenants without seeking compensation from them, providing counsel on offers from competing groups seeking to take over management of the complex from Tishman. A Paul Weiss spokeswoman told The Am Law Daily that the matter was not pro bono, but declined to comment on how the firm would be paid."

http://amlawdaily.typepad.com/amlawdaily/2010/02/stuytown.html

I stand corrected. The various reports state that the firm will not seek compensation from the tenants. That might mean they are doing it pro bono or maybe someone else is paying (which I highly doubt) unless we have become the latest beneficiaries of the anonymous largesse of The Lord Mayor ( for life) Bloomberg

Isn't it possible that they're doing it on contingency ?

no

LOL!

1492

Re TA:

Who appointed Al Doyle president of this secret society? And shouldn't there be, like, elections?

Who is that guy???