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Wednesday, February 24, 2010
What's the Game Plan?
Above: Supported by Dan Garodnick, the Second Avenue subway line was a dumb, excessively costly idea from the start, and now its slow construction is killing businesses and neighborhoods in its wake. Some businesses will never return, either because they have been strangled into failure by the construction or removed by the MTA through eminent domain. Dan is at it again, supporting, with the Tenants Association, a tenant buy-out of Stuyvesant Town and Peter Cooper Village. But is this really in your best interest?
The effort by the Tenants Association and Councilman Dan Garodnick to have Stuyvesant Town and Peter Cooper Village tenants buy the complex and turn it into a co-op or condos is curious. If the object always has been to retain this complex as "affordable housing," how does the co-op/condo scenario fit into that plan?
One assumes, at its basic tenet, that if ST/PCV will be a co-op/condo, tenants will have the option of buying their apartments for probably a solid six-figure number, and thereafter pay monthly maintenance fees that could equal what they are paying in rent now. Who can afford this? Certainly not many seniors here, nor many other residents who are struggling as it is with financial issues, particularly in this woeful economy. And any word of "mortgage" in this current economy should make anyone pass out with anxiety. Those who opt to buy in will be burdened by rent-stabilized (and protected--we hope) tenants who will opt not to buy. Unless certain tenants are viewing a co-op situation as a potential to sell their apartments for a lucrative amount and make out like property bandits (in this economy this is a laugh), having tenants assume ownership of ST/PCV doesn't make much sense.
The bottom line is that if tenants had bought ST/PCV when the property was put on sale by MetLife, something the Tenants Association and Garodnick pushed for, tenants would have overpaid just like Tishman Speyer overpaid, and we would have been screwed (and rightfully ridiculed).
Furthermore, having Stuy Town/PCV a co-op or condo situation almost guarantees that, eventually, affordable housing will go out the window here and, ironically, with the very assistance of a group that has fought for affordable housing.
The newest issue of Town & Village unwittingly exposes different statistical data for tenants buying Stuy Town and Peter Cooper Village. An article by Michael Alcamo presents the case for condo conversion of apartments that would be "affordable, both in the initial acquisition, and also on a continuing monthly basis." Mr. Alcamo, a Stuy Town resident and president of the mergers and acquisition firm, MC Alcamo & Company, states that a one-bedroom could cost "about $105,000," with the purchaser needing a down payment of "about $20.000." Regarding maintenance fees, the net monthly costs would be "about $1,076," which could be a monthly savings if the rent had been higher.
In a letter to the editor, John Monel presents figures that are different. He claims that tenants want a two-bedroom apartment for $300,000, implying that tenants would consider this a fantastic deal, but that these apartments, in this neighborhood, should go for 1.5 to 2 million! While Mr. Monel's background, if any, in real estate is unknown, his letter underlines the lack of clarity behind this whole idea of tenants buying this complex. Mr. Alcamo's figures seem instinctively too low for me, but, hey, he may be right.
Even if he is correct, however, a condo conversion plan would mean that while tenants would own their apartments, they would still be under the rules of the condo board, meaning that they could not do what they wanted (as in subdividing their apartment into smaller rental units) unless approved by the board.
So far, I have not heard debate on one important financial obligation that tenants would have to meet if they owned their own apartments or if they were owners in a cooperative housing corporation. Property taxes! These can be pretty hefty here in Manhattan. What would they be? And what's the protection against them rising dramatically in the coming years?
Another imminent problem is the renewal of this complex, not just the upkeep. Even Mr. Alcamo admits that the "lawn is a mess" and that "lighting needs repair." There are many more problems that will demand to be addressed as Stuy Town and Peter Cooper Village deteriorate through simple age--and many more costs involved in staving off this deterioration and in upgrading the buildings and the property into the 21st century.
As all this energy and brouhaha is occurring over tenants buying Stuy Town and Peter Cooper Village, I'm left wondering if we are taking our focus away from making damn sure that tenant protection laws are renewed and strengthened in our State Senate. That's the key to affordable housing.