http://www.nytimes.com/2010/10/27/nyregion/27stuytown.html?_r=1
Lenders formally took control of Stuyvesant Town and Peter Cooper Village on Tuesday, ending a four-year odyssey that put this affordable middle-class enclave at the center of both the biggest real estate deal in history and a major financial debacle.
CW Capital, the company representing the complexes’ senior lenders, is now expected to begin negotiations with tenants over what could be the country’s largest conversion of rental buildings to a condominium or cooperative. That could start battles among the 25,000 tenants over whether the apartments should remain affordable or be allowed to trade openly on the real estate market.
The changes occur under strikingly different circumstances than in 2006, when a partnership of Tishman Speyer Properties and BlackRock Realty bought the 80-acre property from the original owner, Metropolitan Life, for a record-breaking $5.4 billion.
The plain red brick buildings, built by Met Life more than 60 years ago for returning World War II veterans, were considered by investors to be a gem in the rough because of their Manhattan location and sturdy construction.
The buyers expected to triple their net income by 2011 by replacing longtime residents paying regulated rents with tenants paying higher market rates. But their plans fizzled after residents resisted and the partners failed to convert enough apartments to market rents. In January, they defaulted on a $16.1 million monthly mortgage payment.
The casualties from the ruptured deal spanned the globe, as analysts revised the value of the property to $1.9 billion, less than one-third of the acquisition cost. The Church of England, the government of Singapore and several publicly traded American companies lost hundreds of millions of dollars, while three public-employee pension funds in California and Florida saw their combined $850 million investment evaporate.
On Tuesday, CW Capital, which represents a multitude of investors who held the $3 billion first mortgage, effectively took control by buying out the interests of William A. Ackman, chairman of the hedge fund Pershing Square Capital, and Michael L. Ashner, chairman of Winthrop Realty Trust. The two had paid $45 million for a $300 million block of secondary loans with the hope of taking the property away from CW Capital.
Their strategy failed after CW Capital successfully blocked them in court, although Mr. Ackman and Mr. Ashner are getting back all but the legal fees they spent. By buying the men out for $45 million, CW Capital was able to avoid future litigation, but more important, it allowed them to structure the transfer in a way that avoids, or at least defers, upwards of $100 million in state and city taxes.
“This brings one chapter to a close,” said Gregory A. Cross, a lawyer for CW Capital. “We have control of the property, and we’ve resolved all the outstanding litigation. We now have maximum flexibility in dealing with the different constituencies, in particular, the tenants.”
Little will change immediately for the 25,000 residents of the sister complexes overlooking the East River; CW had already installed Rose Associates as the manager of the 11,226 apartments, garages and retail space at the complexes, replacing Tishman Speyer Properties. Rose had managed the properties for Met Life for several years before the sale.
But CW Capital has told the tenant association and real estate executives that its first priority is to try to reach a settlement over rents and overcharges for about 4,300 apartments at Stuyvesant Town and Peter Cooper Village. Last year, the New York State Court of Appeals ruled that the owners of the complexes had wrongfully deregulated and raised rents for those apartments while getting special tax breaks from the city.
More at the above link.
"Sturdy construction" notwithstanding, the walls are paper-thin and the floors are not "floated." You can hear your neighbors breathe!
ReplyDeleteWhy can't I comment on your site anymore? I've written several times and they never go through.
ReplyDeleteI think some of the tenants who want to buy are getting themselves into feeding-frenzy mode. I think they will have buyer's regret in the long run. The maintenance costs will be astronomical!
ReplyDeleteWhy can't I comment on your site anymore? I've written several times and they never go through.
ReplyDeleteI've no idea what's happening. There may be some glitch/delay, but I'm putting through everything I come across.
I think you have to refresh the page BEFORE you write the message because the word verification thingy doesn't come on until the page has refreshed. That's been my experience lately. Don't type the message first and then refresh because that wipes out the message. Of course, you can copy and paste it if you forget to refresh, but it's best to refresh the page before you start typing.
ReplyDeletePaper-thin walls? Ever try drilling into one?
ReplyDeleteYep, they sure went for cheap and flimsy back in the '40's. Not like that good sheetrock stuff they use nowadays.
If your neighbors are bothering you, maybe you should knock on their door, talk to them, and ask them to be a little more considerate. Nah, better to call Security every half-hour.
So many masochists. If you really hate it here, you might consider, y'know, leaving, eh?
My comments weren't showing up either but in STR's defense they did eventually post. Thanks STR for your efforts!
ReplyDeleteRight now as I sit here at my computer, I hear the dormies DOWNstairs from me stamping around in their jackboots or clogs or whatever it is they wear on the bare floors. NO NO NO I don't want to buy! I think I'm paying too much rent to live with this! We should get a rent reduction for never having a moment's peace!
ReplyDelete"I think some of the tenants who want to buy are getting themselves into feeding-frenzy mode. I think they will have buyer's regret in the long run. The maintenance costs will be astronomical!"
ReplyDeleteClearly there are some folks who have no inkling what's going on in NYC real estate or how to assess value - even when the figures are publicly available-right on the web.So,in place of finding out they make silly assumptions.
If Guterman gets his open market price of 700-735 pr sq ft the ones who will be filled with regret will be those who do not buy.They will have passed on a chance to control 375-400K in equity for a downpayment of 40-50K.10-15-20 yrs from now that equity will be in seven figures.
Instead what they will have is a monthly rent that is 25% then 50% then 100% more than what they are now paying - and getting nothing in return.
Meanwhile their neighbors who bought will have stable monthly costs far below the rents and equity in the high hundreds of thousands.
"The maintenance costs will be astronomical!"
More assumptions.Incredible.Gerald Guterman is trying to give our residents a once in a lifetime financial opportunity and folks prefer to make wild assumptions and stare a gift horse in the mouth.
No,maintenance costs will not be sky high.They will be 600-700 a month.After ten years of MCI's there is nothing left to improve.
Walls can't be thickened and old plumbing can't be replaced,though it could be upgraded.
The flip-tax will create enough revenues to cover unexpected cost fluctuations and it's fact of maintenance costs that they sometimes GO DOWN.
But you can always stay rent regulated and pay the endless annual increases.That will be your choice.
"Right now as I sit here at my computer, I hear the dormies DOWNstairs from me stamping around in their jackboots or clogs or whatever it is they wear on the bare floors. NO NO NO I don't want to buy!"
I agree.The smart thing for us to do is not buy but let the community go to someone like Lefrak.He'll LOVE to hear your complaints.Then he'll know that the dormies are not only filling vacant apts. but actually driving regulated renters out.Then he'll get his market rates!
The one thing we don't want to do is buy and take control of our own community.Then we could re-impose the old rental standards and weed out the "dormies".
Musn't have that now right? So let it go to another landlord so the dormies can stay and even MULITPLY!
I figure since my straight forward explanations ain't workin' I'd try a little sarcasm,see if that gets through.
Max, you should be on the late-night info-mercials. You have the slick gab and pushy attitude. I still won't buy into this dump though. If and when I buy a home it will NOT be here!
ReplyDeleteNo,maintenance costs will not be sky high.They will be 600-700 a month.After ten years of MCI's there is nothing left to improve.
ReplyDeleteWalls can't be thickened and old plumbing can't be replaced,though it could be upgraded.
The flip-tax will create enough revenues to cover unexpected cost fluctuations and it's fact of maintenance costs that they sometimes GO DOWN.
Max, you must be working for commissions? Plumbing can't be replaced? Flat out lie. In fact the plumbing has to be replaced and when TS bid it out several years ago the lowest bid was $4 million that's why they didn't do it. Double that bid now.
The flip tax will create enough revenue to cover costs? Maybe in the year or 2 after sales are allowed but after that there won't be enough flipping to cover the cost of the water to water the lawn. Oh and Max, who's going to cover the electric bills, the gas bills, the water bills etc. Maintenance fees will settle in eventually at around $1500 to $2000 per month in todays dollars factor in inflation and they will go up forever. I guarantee you that once a co-op board has a set amount they will never lower them, they'll just find another thing to spend the money on. This place is an absolute money pit.
Let's face it, Stuyvesant Town is a SLUM, a nasty, vermin-infested SLUM. It is not going to get any better because it is broke. Tishman Speyer and it's lousy partners in crime (including CW) took something beautiful and destroyed it. My advice to anyone who has a "cheap" rent-stabilized apartment is: hang on to it, put up with the conditions for as long as possible and save every penny until the time comes when rent stabilization ceases to exist and then get the hell out. It may be difficult, if not impossible for some elderly people to get out and I feel very sorry for those people. I don't know what will happen to those people. Unfortunately, it is not going to get better here. It's just the way of the world that the greedy destroy everything good in this world.
ReplyDelete"I still won't buy into this dump though. If and when I buy a home it will NOT be here!"
ReplyDeleteYou must be a teabagger...you're angry and have no solutions...and a socialist to boot, you want the government to bail out your subsidized apartment complex. You are a very complex man/woman.
Off topic for this thread but, wasn't the "1947 Stuy Town Plaque Honoring Met Life Chairman F.H. Ecker (Removed in 2002 and never seen again)" actually in Peter Cooper Village just South of building #6?
ReplyDeleteGuterman was quoted in T&V stating that maintenance costs would begin at $1,500/mo for the smallest ST apartment. Larger places would be $1,800/mo and up.
ReplyDeleteCan I ask where you came up with the $6-700/mo figure? Is there a story or a link someplace? Those figures are very, very low and not even comparable to the least expensive co-ops in the neighborhood.
Look forward to seeing your backup info!
"Guterman was quoted in T&V stating that maintenance costs would begin at $1,500/mo for the smallest ST apartment. Larger places would be $1,800/mo and up.
ReplyDeleteCan I ask where you came up with the $6-700/mo figure? Is there a story or a link someplace?"
T&V messed up.They got the projected maint fees and mort. costs mixed up.Guterman has said he aims for the monthly mort and maint costs to be roughly equal to current rents.The mort payments for these homes will be roughly 110-1200 bucks a month.The balance will be maint.
http://ny.curbed.com/archives/2010/09/17/stuy_town_wannabe_says_hell_sell_apartments_dirt_cheap.php
http://www.brickunderground.com/blog/2010/09/stuyvesant_town_rumors
"Plan allows tenants to be owners at rental price" ---
http://www.reuters.com/article/idUSN1520134520100915
None of these links you provided quote a maintenance figure. This is as close as it comes:
ReplyDelete"So how does this translate into real numbers for residents able to grab a piece of the insider pie? Check out the two examples below, using Condo Recovery's $290-per-square foot number as an average insider price.
850-square-foot one-bedroom in Peter Cooper Village
Current asking rent: $3,731
Insider price: $246,000. With 15% down and a 30-year-mortgage at about 5%, that works out to about $1,800 per month plus maintenance."
They're implying that people could buy for current asking rent: $3,731 - $1,800 (mortgage payment) = $1,931 estimated maintenance.
So many masochists. If you really hate it here, you might consider, y'know, leaving, eh?
ReplyDeleteSure, run away from the problem, instead of standing up and fighting to win my home back. Not me. That may be your strategy but mine is to stay and fight for as long as I can. I will file lawsuits every step of the way on this. Maybe then you will leave and the rest of us can have our lifetime homes back!!!!!!!!
From the Reuters article -
ReplyDelete"The Condo Recovery plan would price the apartments at an average of what rent-stabilized tenants pay as their monthly rent,"
Maintenance fees will be comparable to Tudor City and The Grand St. co-ops - 600-700 a month. Ther's no reason for them to be higher.
Having attended saturdays' meeting I came away with a pretty good idea of how this plan will be completed.
ReplyDeleteGutermen will get to implement his plan.Basically it will work like this -
-It's a non-eviction plan.Those who do not buy will simply continue as regulated renters with no change to their rent status or services.
-Insiders will get Guterman's approx. 290 per sq ft. price.Financing will require 15% down and banks will offer below market lending rates.
- There will be no long term restrictions on resale price,other than a modest waiting period of 12-24 months and the standard flip tax.
- Guterman will offer vacated apts. on the open market for the "quick sale" discount to fair market value of 700-735 pr. sq. ft. thereby establishing the rock bottom market value for all the apts.
- CW Capital will compromise on their asking price of 3 billion.To the degree they reduce the price the TA will be able to set aside a portion of the cummunity as permanant rent regulated housing without increasing the insider buying price.
The politicians and the TA are under some pressure to insert some kind of affordable housing provisos in the plan.Mike McKee wants heavy restrictions on resale rights.He won't get it.The Guterman plan needs 75% tenant participation and that won't happen with resale restrictions.The equity gap between the insider price and Gutermans outsider price is meaningless with resale restrictions.To get 75% participation the plan has to have maxximum incentives to buy.
But McKee might get his set asides.I believe CW Capital will recognize the political realities and bend a little on the price to allow for some set asides.If they'll come dwon 100 million that might allow for several hundred apts. to be set aside.
And that's it.That is gonna be the deal.Buy and you get a pile o' equity,even with the housing market trailing along a bottom.15 years from now it'll be seven figures.
Don't buy and your regulated rent status will remain unchanged.
EVERYBODY BENEFITS.MCI's come off the rent bills giving all regulated renters a reduction of roughly a hundred bucks a month depending on your particular building.Tenant management could loosen travel time restrictions or give a little on succession rights.The tenants take control of community rules and standards.The TA won't have to appeal to a landord anymore.They'll simply issue directives to management.Tenants won't have anymore MCI's shoved down their throats by a landlord.The original renting rules can be reimposed to weed out "dormies" and the carpeting rule can be reinstated.Think of any realisitc improvement [other than thickening the walls or re-doing all the plumbing] that a majority of residents want and they'll probably happen.Buyers and renters will want the same thing.Better services,fewer quality of life problems,take your pick - those improvements make life better for everyone in the community and in the process add to the value of the apts. That's why there's no reason for renter/owner conflicts.
My guess is the plan will be finalized and offered to the tenants in early 2011.
"Max, you must be working for commissions?"
ReplyDeleteNope.I simply understand how non eviction co-op conversions work and you don't.
Are you working for LEFRAK?!?!
Because only a landlord would benefit from the failure to convert to co-ops.
"Plumbing can't be replaced? Flat out lie."
Excuse me?
If the walls of every apt. can be torn open,and the millions devoted,with tenant approval,it can be done.Otherwise the best that can be done some upgrading and perhpas some technological improvements.
"The flip tax will create enough revenue to cover costs?"
The co-op will start with cash reserves to get through the first couple of years.After that the flip tax should provide 15-20 million a year in revenues rising over time with the price of apts. If the TA works out a deal to set aside some apts as "permanant" regulated rentals then they have a stock of apts to sell in the future.That could produce additional revs if necessary.That's why I put "premanant" in quotes.Eventually regulated rents will be so high the term "regulated" will no longer equate to "affordable".So what's the diff at that point? They could rent tem out at market rate for some revenue or sell 'em.
"I guarantee you that once a co-op board has a set amount they will never lower them, they'll just find another thing to spend the money on."
Isn't that cute? You "guarantee".
Do you know ANYTHING about these tyoes of conversions or what has happened in other converted developments?
No.So you'll understand why I don't think much of your guarantees.
"This place is an absolute money pit."
It's nothing compared to Tudor City,built in the 20's.Yet maintenance costs average 600-700 a month and have been stabe for twenty years.
I know.
I was an owner there.
before we bough there NO MCI's had been done.Here? Most of them HAVE been done.That's why they're on the rent bills.
But they won't be anymore after we buy the community.
"Let's face it, Stuyvesant Town is a SLUM, a nasty, vermin-infested SLUM.It is not going to get any better because it is broke."
ReplyDeleteYou should see the inside of some of the condo buildings in this neighborhood.Thrown up by developers for fast buck.You have no idea how much better these buildings are than those.
My advice to anyone who has a "cheap" rent-stabilized apartment is: hang on to it, put up with the conditions for as long as possible and save every penny until the time comes when rent stabilization ceases to exist and then get the hell out."
Yeah.
That'll fly.
It may be difficult,if not impossible for some elderly people to get out and I feel very sorry for those people. I don't know what will happen to those people."
So do I.I've lived here since 1970.For some seniors who can buy they'll be elligable for a reverse mortgage.That will cut the mortgage payment out of their monthly costs and pout a little money in their pocket too.Their only monthly housing costs at that point will be mainenance.But the others will be at the mercy of the rent guidelines board - the price to be paid by every regulated renter who can't or won't buy.
"It's just the way of the world that the greedy destroy everything good in this world."
What is greedy about a modest or middle income family that wants access to the equity offered in Guterman's paln? I don't get this "greed" stuff.Who should benefit from the full asset value of this community? Long time middle income residents or anoher predatory landlord?
And as far as what is "good in this world" don;t blame resident who want to buy.Blame your political leaders who failed to keep "regulated" the equivilnat of "affordable".
The RGB will continue to increase rnets EVERY YEAR and soon enough the rents in this community - regulated as well as market - will be affordable only to upper middle income residents.This conversion plan is the ONLY way middle income residents can stabilize monthly costs and own their home.
"I still won't buy into this dump though. If and when I buy a home it will NOT be here!"
OK.
Just don't expect to buy a home with 350-400K of equity built into the asking price with only 15% down.On the other hand,buy yur apt,sell it in five years and realize enough capital gain to PAY for that house.
"So many masochists. If you really hate it here, you might consider, y'know, leaving, eh?"
Yeah,sure seems like a lot of folks on the message boards don't like living here.That's fine.When they move out the TA will just sell their apts and fatten the cash reserves.That'll help stabilize maintenance fees.
"Sure, run away from the problem, instead of standing up and fighting to win my home back.I will file lawsuits every step of the way on this. Maybe then you will leave and the rest of us can have our lifetime homes back!!!!!!!!"
Did somebody lose their home?
Gee,I wasn't aware.And sue whom? Since regulated renters have the choice to remain as regulated renters who they gonna sue?
Did somebody lose their home?
ReplyDeleteGee,I wasn't aware.And sue whom? Since regulated renters have the choice to remain as regulated renters who they gonna sue?
Owners!
Max, if Guterman is not paying you then you are working for him for nothing.
ReplyDeleteMark,
ReplyDeleteCan I buy my apartment and rent it out ?
It's the only way I can afford to carry it until I sell.
That last comment about renting it out until selling it just about sums up the mentality of those who are ghung-ho to buy and what a total disaster for the whole community a co-op or condo conversion would be.
ReplyDeleteMax,
ReplyDeleteI don't know who you are but, if you are correct, I will be paying less to buy than I do to rent--and my rent is not "2 damn high" as it is.
That's how I know you've got to be wrong.
Guterman is not about to give me a free ride here, as much as I would love to have it.
No point in arguing about it. It will all be laid out in the offering prospectus, if we ever get to see one.
Until then...
"Max, if Guterman is not paying you then you are working for him for nothing."
ReplyDeleteAnd if Lefrak is not paying you then you are working for HIM for nothing.Particularly since the Guterman plan will win and the landlord you work for will not get the chance buy the property.
And if I buy my apt. I will not be getting "nothing".I will most definately be getting "something".
Even you will benefit,though you'd prefer not to.Those MCI's will be included in the purchase and come off the monthly rents.That's a rent reduction for all regulated renters equivilant to about a months rent every year - in perpetuity.Like getting a months free rent.
But only if we buy the community.
If the landlord you work for buys then the MCI's stay on the rent bills and more involuntary MCI's will be shoved down our throats in the future.
One more thing.
You're full of criticisms,all based on wild assumptions,but haven't offered a single alternative.Just another indication you're probably working for Lefrak.
Sorry buddy.
The people will win this one.
"Can I buy my apartment and rent it out?"
ReplyDeleteI believe technically in a co-op it's considered a sublet.I would certainly be in favor of residents being allowed to sublet at market rates.That was the condition at Tudor City.
But once the tenants buy the community management should reimpose the original renting standards.It's time to weed out the dormies or any other problem tenants brought in by Tischman Speyer.And so long as subletting owners abide by the renting regulations they should be allowed to sublet at market rates.
At Tudor City management set up a real estate dept. If you have a vacant apt. they rent it for you.They find the renter and make sure they meet the requirements.
I think it's a good bet we'll have similar dept. set up here.They'll also handle sales and make the commissions,providing management another source of revenue.
Max,
ReplyDeleteAny thoughts on what CW will take for the complex.
At the tenants meeting Molis said CW is not interested in 1.9B, it would be more.
I am wondering how much more
I was trying to comment on the price CW will take for the complex.
ReplyDeleteAre you not publishing it for some reason?
"Any thoughts on what CW will take for the complex."
ReplyDeleteThey want 3 billion.That's why the apts will be offered at 290-300 per sq. ft.
But if they don't sell to us they have to turn to another landlord buyer.As a rental property it's only worth 1.9 billion.
Mike Mckee and the political reps want to use this conversion to make a stand on the "affordable housing" issue.Never mind that regulated rents will eventually be so high this community will be entirely upper middle class.That's politics.
I think it's possible CWC will compromise a little on the price.That would allow for a portion of the development to be set aside as permanant rent regulated housing without increasing the insider price.
Mckee also wants resale restrictions but he won't get it.I think Mckee is actually working against us now.He clearly wants the development to go to another landlord.That would be a disaster for us but he doesn't care.He wants ST/PCV to remain inside the rent regulated universe.He knows we'd be a powerful ally in future rent regulation battles.
That's his priority.
Without unrestricted resale rights there will be no deal and he knows it.Tenants will have to come up with 40-50K in up front costs and monthly costs will roughly equal to rent.Mortgage payments on loans of 245 to about 325K plus maintenance fees will roughly equal regulated rents.
So The ONLY real incentive to buy is to acquire the equity derived from the gap betweeen the insider price and the open market value.
Mckee knows that of course.That's why I think it's clear he supports another predatory landlord,incredible as it might seem.
We'll get the plan without resale restrictions.Those who want to remain rent regulated will see no change to their status.And CWC might accept the political realities,compromise on price and allow for some apts.to be set aside for regulated housing.
That's what the deal will probably look like.
"That last comment about renting it out until selling it just about sums up the mentality of those who are ghung-ho to buy and what a total disaster for the whole community a co-op or condo conversion would be."
ReplyDeleteExplain why?
Bet you can't.
"Anonymous said...
Max,
I don't know who you are but, if you are correct, I will be paying less to buy than I do to rent--and my rent is not "2 damn high" as it is.That's how I know you've got to be wrong."
Nope.
The Guterman plan is public,look it up yourself.I've posted the link and his quote that combined monthly mort and maint will be roughly equal to REGULATED rents.
Again,lots of assumptions here but nobody doin' their homework.Look up interest rates and what the monthly cost of a 200-250K loan would be.Add 600-700 bucks for maint/ and there's a rough idea of total monthly costs.
Guterman is not giving you something for "free".He sells us our apts. at cost.That gets CWC their three billion.Then he sells the vacated apts at market rate - 700-735 pr. sq. ft. That's how he makes his piece.
I was trying to comment on the price CW will take for the complex. Are you not publishing it for some reason?
ReplyDeleteEverything I get, I pass. Sometimes you may have to wait a whole day, depending on my availability due to work.
Max is clearly working for Guterman. Fair enough, but let's have honest, upfront disclosure about that. I am a longtime rs renter and I have no interest in buying my apartment, but I have no objection to a conversion so long as I can continue to live in my apartment at an affordable rent. I only have a problem with someone coming on discussion boards to push for a particular entity and pretending to be just a regular tenant.
ReplyDeleteMax,
ReplyDeleteYour ok in my book, I dont think your working for Lefrak/Gutterman, just someone who is knowledgeable about options for the future of the complex.
"Max" is also taking liberties with the truth. His links don't pan out and his numbers don't frank.
ReplyDeleteFunny, because this kind of promotionalism is basically a waste of time. Tenants will be provided with a prospectus to review with "actual" numbers (albeit, projections) prior to any transaction occurring. Prior to that, it's kind of pointless to make hard assertions.
If Mr. Max claims to have this document in his possession, he would have to be working for the entity intending to sponsor the conversion!
Which is it, Max? Are you just blowing smoke or are you employed by a prospective sponsor?
I believe it is the former...
"Max is clearly working for Guterman. Fair enough, but let's have honest, upfront disclosure about that."
ReplyDeleteIf you'd read my prior posts you'd know my real name.That you don't says you're just throwing around accuations for amusement.
Are working for Lefrak?
I've asked before but you won't respond.
This deal is already set,corraled by the financial,legal and political realities.The final plan will offer tenants a great opportunity.They can take or remain rent regulated.
-Apts will be offered at cost - 290-300 pr sq ft.
On those apts Guterman makes nothing.
Guterman's plan works because it offers the lowest insider price while giving CW Capital the best chance to recoup it's 3 bill.Would you have preferred Ackman's SIX HUNDRED BUCKS A SQ FT plan? Guterman will offer vacated apts at the open marker price of 700-735 pr.sq. ft. And there's your positive equity gap - roughly 400.00 pr. sq ft.
-Those who want to remain rent regulated will see no change to their status.
Anyone opposed to that plan is opposed to freedom of choice.
- There will not be resale restrictions on price.Buyers will have 40-50K in up front costs and assume monthly costs roughly equal to rent.Therefore,the only big incentive for buying will be to acquire the equity derived from the gap between the insider price and the open market value.Furthermore,the community will need the flip tax revenues and commissions derived from apts sold at open market prices.
-CW Capital will compromise on the price.That will allow for a little extra portion of the community to be set aside as permanant regulated rentals without increasing the insider price.
The political reps want the clout derived from keeping a solid plurality of regulated renters in the community.
That keeps the community on the side of rent regulation for future political battles.
But it also benefits CW Capital.CW Capital stands to lose big dollars if the plan fails.But the insider price can only be that low if 75% of the tenants buy.That is probably too ambitious.Reduce the price,set aside apts. as permanant rentals and the threshold for success could drop to 65% or lower.That's a more realisitc goal.So a lower threshold for a successful conversion benefits both sides.
Most will be owners,thousands will remain regulated renters,a minority will be market rate renters.All tenants benefit as we say goodbye to landlords and take control of our own destiny.
"Max is clearly working for Guterman. Fair enough, but let's have honest, upfront disclosure about that."
ReplyDeleteHilarious.
The simple fact that you refer to me as "Max" demonstrates you haven't even read my posts.
The fact that you think Guterman would hire someone to write these long messages on a blog with about half a dozen contributors is even more hilarious.
Yeah,that'll convince 25-30 thousand residents to buy!
Only a landord would sink that low.And I notice you've yet to deny you work for Lefrak or some other landlord.
Max, I don't work for Lefrak. The reason I suspect you work for Guterman is because you promote his plan so zealously.
ReplyDeleteI like Max AND stuy town reporter!
ReplyDeletethanks for keeping the conversation alive.
"Max, I don't work for Lefrak. The reason I suspect you work for Guterman is because you promote his plan so zealously."
ReplyDeleteAnd I don't work for Gerald Guterman.I've been a resident of PCV since 1970 and a tenant since 1990.I don't care about Gerald Guterman.The point is we should HOPE to be offered a plan like his.
We faced two serious threats.One being the possibility of another landlord.The other being someone like Ackman getting control.Ackman wanted crazy insider prices,like 600 a sq. ft. That's because he was trying to make a killing.
Guterman is not trying to make a killing.His plan works because it gets CWC what they need while offering us the lowest possible insider prices.Whoever implements such a plan will make a modest return by selling off the vacated apts. on the open market.Guterman is the right guy mostly because he's experienced at these conversions.Keep in mind they're somewhat unique to NYC,so experience in this particular area matters.
And it's a non eviction plan.
Nobody is forced to buy,nobody will lose their regulated status.
In any other converting development this is recognized as a tenant friendly plan.When I lived in Tudor City it was 100% rent regulated yet the vast majority embraced an identical plan.
But here it's met with a lot of suspicion.
This is the best possible option available.That's why I support his plan.And it has a realistic chance of success.Failure is not an option.If the conversion fails we lose control of our own community to another landlord.
That would be the worst outcome for everyone.
And yes,in addition to the whole menu of benefits derived from taking control those who buy will acquire an equity windfall.And most of them will be modest or middle income families and individuals.So how can that be a bad thing? All I've done is list the ways in which it's good thing.
Guterman or somemone else,makes no difference.What matters is a realistic plan that offers low insider prices,the option to remain regulated and the opportunity for tenants to control the future of this community.And I'm hopeful CWC will compromise a little,work with our reps and set aside some extra apts. as permanant regulated housing. That would keep the development as an important ally in future rent regulation battles.
Put all those elements together and you've got an excellent conversion plan.And I believe the final plan will look something very much like that,wether it's implemented by Gerald Guterman or someone else.
Max
ReplyDeleteThere are those in our community who believe the government should bail us out by buying off the senior debt and keeping STPCV as a rental-only. Many of those same folks believe that no MCIs should ever be paid by tenants.
Admittedly the MCI program has been abused by landlords, but to ignore needed work , like the plumbing, is foolhardy.
And there are those in STPCV who believe that coop-ing STPCV is bad because for tenant/owners to make a profit on their apartments is EVIL.
These people (who I believe are in a distinct minority) live in a fantasy land if they think the government will bail us out (IMO that should not happen) . As to those who think that it is EVIL for tenant/owners to make a profit ,they ignore the fact that the alternative is for the next Tishman Speyer to buy STPCV and seek to make a profit by trying to force out as many old RS tenants as quickly as possible and after 2017 (or 2020) to deregulate every apartment in STPCV ASAP.we are never going back to those "wonderful" days of yore when Metlife ran STPCV as a RS rental property primarily because the State Legislature adopted vacancy decontrol and luxury decontrol.
Guterman may or may not have a plan that works. But a plan like he outlined in the local newspaper last month seems quite reasonable both as to price and as to allowing those who can't afford to buy or don't want to (because, God forbid ,they might make a profit , or for other reasons)to remain as RS tenants
Suffice it to say that with over 11,000 apartments in STPCV, no plan for the future of STPCV will satisy all or even the vast majority of tenants. The good thing about a noneviction plan is that it needs only 15% of apartments to approve in order to become effective (although to make any such plan in STPCV economically viable (given the senior debt load) will likely require a higher percentage of tenants to agree to buy.
"Max
ReplyDeleteThere are those in our community who believe the government should bail us out by buying off the senior debt and keeping STPCV as a rental-only...."
I agree with everything you said.But ultimately I am hopeful the vast majority will support the plan.
The main reason being there is no alternative.That's just the reality of the situation.The TA is going to do this slowly,stage by stage.The meeting at Baruch was essentially held to get one message across - no one will be evicted or lose their regulated status.Once that sinks in a lot of folks will calm down.
Next up is to present a completed plan.I expect that will happen by March.But they will wait at least six months before implementing the plan.They will want to give tenants considerable time to absorb it,weigh in on any aspects they don't like,and prepare financially.
By the time the offering is activated and buying begins I think those who object will be an even smaller minority than now.
Max
ReplyDeleteIt will likely take at least a year for the NYAG to approve a conversion plan for STPCV,during which time tenants should have access to, and the ability to comment on, the preliminary offering statement filed with the NYAG