The idea was certainly novel and well executed while I was on the phone: A "town hall" meeting conducted via telephone, with the Tenants Association and several politicos, including the Senior Senator from New York, Charles Schumer. Listeners were allowed to send in their questions, but with over a hundred questions quickly lining up in the queue, most would not have a chance getting answered. Despite this, it was a valiant and probably necessary effort by the proponents of the TA/Brookfield plan (which still hasn't been clarified) to push the process of conversion along and stave off outside interruptions from real estate entities who may want to get in on the bidding.
Senator Schumer hit all the right notes, stressing the middle class and affordability, even making those as part of the "bigger picture" of what this fight is all about.
Still not answered (while I was on the line) is the question of how can one talk of the middle class and affordability when the conversion plan means that people will voluntarily give up their rent stabilized status and enter the market rate, with a significant mortgage (despite being drawn from an insider price), high maintenance fees, high real estate taxes, etc.
--------------
UPDATE 12/20/2011
Official release from Berlin Rosen, the media firm hired by the TA/Brookfield to publicize and promote the condo conversion plan:
Thousands of Stuyvesant Town-Peter Cooper Village Tenants Participate In “Tele-Town Hall” To Get Information On Tenant-Led Bid
New York – 2,450 tenants participated in a Tele-Town Hall Sunday evening hosted by The Stuyvesant Town-Peter Cooper Village Tenants Association with special guest Senator Chuck Schumer.
The town hall, moderated by Council Member and Peter Cooper resident Dan Garodnick, provided facts and answered tenant questions about the TA’s recently announced proposal to partner with Brookfield Asset Management on a tenant-led, non-eviction conversion plan that would protect current residents and permanently maintain the middle-class character of this historic community.
Senator Tom Duane and Assemblymember Brian Kavanagh joined Senator Schumer in participating in the event.
Brookfield representative Jonathan Moore, Tenants Association professional advisors Meredith Kane and Alex Rubin, and elected officials were on hand to answer nearly 25 tenant questions during the 1hr 15 minute town hall. Tenants submitted questions online during the registration process as well as posed them live during the event.
The Tele-Town Hall was sponsored by the entire Tenant Association Board of Directors. On hand to facilitate the event were Tenant Association President Al Doyle, Executive Vice President Susan Steinberg and board members John Sheehy and Jennifer Kops. Other board members monitored the call from their homes and from as far away as California.
“The fact that over two thousand of our neighbors joined the town hall indicates the tremendous level of interest and excitement in our plan to take control of our own future, protect current residents and ensure that Stuyvesant Town and Peter Cooper Village remain affordable to middle class families for the long haul,” said Alvin Doyle, President of the Stuyvesant Town-Peter Cooper Village Tenants Association. “Over the next several months as we put together our bid, we will continue to provide opportunities for tenants to get more information, offer input and get involved in this historic process.”
In addition to the elected officials who participated, the town hall was co-sponsored by Senator Kirsten Gillibrand, Congresswoman Carolyn Maloney and Borough President Scott Stringer.
Background:
This November, the TA announced an agreement with Brookfield to develop a bid over the coming months to submit to CW Capital – the special servicer that represents senior bondholders. The bid would allow tenants who wish to buy their apartments at reasonable rates while offering protection from harassment or eviction to those who wish to remain as rent-stabilized renters. The proposal would also aim to create a set of permanently affordable rental units with help from government sources, improve maintenance and upkeep across the development, and preserve the community’s existing open space.
132 comments:
Off topic, I know, but more important in real immediate life: has anyone noticed how these bastards give us heat on weekday evenings and on weekends, but NOT during the daytime during the week? It's 32 degrees outside and we have no heat. I guess they economize on heat at the expense of the elderly, the sick and those who work at home. Bastards! As for buying this place, they can shove it!
They can't give an exact price, but they could estimate a range, which was the question (unanswered) that I raised. They want to forge ahead as long as possible without talking any numbers so potential buyers who really are middle-class and hsve some but not a lot of resources, won't freak out. Maybe it's the best deal if you want to invest, but it can't be my deal. Another question I asked, which of course would not be answered, is why we should trust Brookfield rather than anyone else. Brookfield is not a charitable institution. They are in the deal to make money.
Sorry, but why should we trust Chuck Shumer who never saw a bank (or campaign contribution from Wall Street) that he didn't suck up to...especially when we're dealing with the largest bank-own real estate bankruptcy in US history, where the banks are trying to recover every dollar possible (at our expense)?
And secondly, who appointed the Tenant's Association as the official "filter" for any offers on the table...and why did they run into the arms of one potential bidder, thereb giving up much of their leverage to possibly join with a later more beneficial offer? Who picks the first buyer that walks through the door for their house when issues such as price have yet to be discussed?
This is all very disturbing...and seems to have developed a momentum all its own.
I was unable to listen to the telephone town hall. Was anything said to amplify or clarify what we heard at the TA meeting? I, too, am still waiting to hear how taking thousands of apartments out of rent stabilization represents a victory for tenants in general.
Sounds like the TA is living in Fantasy Land! As you said, STR, why would anyone in a rent stabilized apartment give that up for mortgage, maintenance and utilities payments that would rise faster than even the RGB could raise our rents and would be much steeper. Dream on, TA. Sounds like a dream that could be a nightmare.
Hey STR,
How come you didn't put a caption under that photo? You KNOW he just said "pull my finger!"
That conference call was little more than a Brookfield commercial. So few details and many non-specific assurances. If they plan to make a bid on April 1 (April fool's day, of course...) they must have a fairly good idea of what they plan to charge tenants to buy back their homes from them.
Getting back to the above-referenced caption, I think this deal is going to smell kind of bad.
"Was anything said to amplify or clarify what we heard at the TA meeting?"
Not when I was logged on. Hopefully the TA will have a transcription available soon.
It was generally a recap of the meeting, but in a bit more detail. I thought other than not legally being allowed to give any $/square footage estimates, and obviously not knowing if CW Capital will even sell, I thought it was a reasonable scenario. The condition of the property, our plumbing, electrical, etc. all remain an inspection issue, obviously, but then that's up to each resident to determine if it is a fair risk and price. Otherwise, if you don't want to buy, the deal is supposed to be noneviction, so the units will remain rent-stabilized as long as the laws are in effect.
It seemed pretty fair to me and based on the resident make-up here and the condition of the property, co-op would certainly NOT be a viable option. It's condo with rent-stabilized rentals, which I agree with the TA gives us a far less threatening scenario than just remaining the way we are now.
Brookfield said they "intend" to remain involved managing the property
for a "long time." "intend" and "long time" are both nonsense terms.
When you're anxiously waiting for a free stall in the bathroom, two
minutes is a "long time." I intend to do a lot of things but a lot of them don't happen. "Intentions" don't necessarily translate into actions.
So far this is all a lot of puffery with precious few specifics. It seems that their intention is really just to discourage other bidders in this process in the hopes that they can lock up enough buyers that another bidder might not deem a fight worthwhile.
Seems to me that, without a competitive process, we will be overpaying by default. I would love to see two or three other competing plans on the table--if there has to be one at all.
"why would anyone in a rent stabilized apartment give that up" December 19, 2011 11:05 AM
Because Rent Stabilization is over in 5 years and I plan to live much longer than that. I can think ahead longer than the next season of Survivor.
To the person who asked "why would anyone in a rent stabilized apartment give that up for mortgage, maintenance and utilities payments that would rise faster than even the RGB could raise our rents" the answer is that Rent Stabilization is threatened, and there is no guarantee of it's long term survival in a form as you now know it. If you're planning on living in NYC for another 10 or 20 years, then it might be a wiser choice to make the equity investment, rather than roll the dice. The downside of course is making an investment in an unsound property that has problems with maintenance and quality of life issues. Here's a thought, what's to prevent someone from buying their apartment at an inside price and renting it out as a "dorm" for $4K a month ? Nice investment property for the owner, and a nightmare for the neighbors. There are going to be some significant issues for people in a conversion project of this size. Nothing this big has been done before, and the result will be a mixture of owners and renters which is never a good situation. Owners have pride in home ownership, renters are less likely to care.
Was anything said about how big a reserve fund Brookfield will put up to rehabilitate (e.g. plumbing, elevators, massive vermin extermination etc.) this place prior to sales of apartments?
i think we need to see what the deal is--i thought the TA spoke to numerous entities regarding partnership..yes taxes can kill us so i hope that a long tax abatement-is included in this plan---Not sure if people realize that Manhattan property taxes for a 1br can be easily 7-8 thousand a year
Rent stabilization is going away. We need to face facts.
And I'd like to pass our place on to my kid so she can possibly raise a family here.
What's wrong with having that?
Chuck Schumer, the senator from Goldman Sachs, had to leave and attend another event. He was going to join Sylvia Miles in the opening of an envelope. I know, sorry, an old NYC joke here. Seriously, none of the options regarding the future of our community are glowing, to say the least. With the unbridled evil expansion of NYU, the super gentrification of the EV, The Bowery, etc., the option of just waiting for a buyer who will hopefully keep the RS status of this project intact is not a viable one. I am currently leaning right now to stay a RS renter in the proposed non eviction condo conversion but I am open to buy once all the facts are on the table.
If rent stabilization does go away in a few years, I will definitely buy a home. Not here though! Not Stuyvesant Town!
"And secondly, who appointed the Tenant's Association as the official "filter" for any offers on the table...and why did they run into the arms of one potential bidder, thereby giving up much of their leverage to possibly join with a later more beneficial offer? Who picks the first buyer that walks through the door for their house when issues such as price have yet to be discussed?"
Um, we did. As residents we organized and created bylaws for the Tenants Association, and annually elect its members, which under the rent stabilization laws in NY give it a real voice to represent us. If you choose not to join, they still advocate for your presumed interests, but your voice is not directly heard unless you join.
If you want a new set of bylaws for the Tenants Association, you have to run for board, get on the bylaws committee, change them to suit your interests, get the board to pass them and then hold them for a vote by members. And of course, it goes without saying, you should join the TA so you have a right to vote.
The property, as a whole, has been lost to affordability since Metlife sold out and 4K plus apts were taken out of RS. By the end of J51, circa 2017, a majority of the apts will be MR. To those who oppose a TA bid which would renew j51 and keep all rentals RS, what is your plan to restore RS when a new corporate owner takes over?
Anonymous 9:33: What gives the TA the authority to negotiate is the unity pledge that many tenants signed. On the one hand, we can present a united front. On the other hand, we may not like what the TA negotiates.
According to what I heard at the TA meeting, the lawyers were presented with many offers and chose Brookfield. Whether the choice was wise or the best is another matter.
Anonymous 2:46: I'm pretty sure rent stabilization was renewed for only 4 years, not 5.
Why did Chuck Schumer suddenly wake up? I'll have to ponder that one.
"Not sure if people realize that Manhattan property taxes for a 1br can be easily 7-8 thousand a year"
Please clarify how you know this to be true. Thanks.
Why will rent stabilization be over in five years? Hopefully it will be extended and strengthened. As someone else said pulling thousands of rentals out of the market will not be good for renters. The people who buy will no longer be interested in the fate of stabilization. A question was asked last night about the TA still fighting for rent stabilization and the Councilmember said of couse they would. I don't see why?
I really dislike the concept that accepts that rent stabilization will be over and that we have to accept the lesser of two evils. Not saying that this is an incorrect assessment, but I dislike it nevertheless. Makes the gut churn.
I also see the acceptance of the condo plan as the death knell for rent stabilization. Here in STPCV we probably have the most concentrated community of rent stabilized tenants in Manhattan, with a relatively powerful TA, and if the condo deal goes through that breaks it all up, including the TA, which by its own admission now states that there would have to be a different tenants organization set up for the tenants who remain under rent stabilization. This organization will be far less powerful and have a much smaller voice than the current one.
"Was anything said about how big a reserve fund Brookfield will put up to rehabilitate (e.g. plumbing, elevators, massive vermin extermination etc.) this place prior to sales of apartments?"
Yes. The sizable reserve fund will be created from tenants that decide to buy in.
Affordable housing for the middle class means PCVST remains rent-stabilized, plain and simple. I spoke to several of my fellow tenants and they all agree that the maintenance costs will probably be too high to make it worthwhile to purchase their apartments anyway. And most are so fed up with the noise, bugs and Rose Assoc. that they are willing to give up their very cheap RS apts to get the heck out of here! I agree with them. This place has turned into a dump. My college dorm was cleaner than these apartments. They should change the name to Pottersville!
There was something that was discussed on the town hall that isn't being discussed here. It had to do with a quality of life question which would be relevant to all the pet owners here. Meredeth mentioned that condo owners would be bound by the bylaws of the association. If it was decreed that we were to move to a no pets policy, all owners would have to abide by that policy. I would assume people who remain as renters would, in the least, be able to keep their pets for the duration of its life.
I guess every whore politician will soon be lining up to suck up to the folks at Peter Cooper/Stuy Town. If someone can explain what a FEDERAL senator has to do with STATE rent-stabilization, I will pay your rent for the next year. WHORES!
Poster at 9:40 pm: I agree. This is not a nice place any more and has myriad QOL problems. If I can't stay rent stabilized I will wait until I have totally no choice in that matter and then move and buy a decent place. Maybe not in NYC, but that's ok. However, I have no intentions of moving until either I'm evicted or a wrecker's ball comes through my wall. Buy buy this place? No Way Jose! I would hate to see rent stabilization disappear from this city because of the greed and avaricious of those who love to make a "killing" in RE. They are the same kind of people who like to make a killing Wall Street and have tanked the economy and destroyed millions of lives. Yech! Leave me out of the fray.
The argument that coop or condo owners will be more respectful of the property and their neighbors seems logical but isn't borne out in real life. I've been in NYC coops where shareholders behave badly—letting a dog bark incessantly, opening the door to exhaust the smell of burned food, not covering floors. Some people are pigs, and some people aren't, regardless of whether they own their home or not. What matters is how the rules are enforced, whether by a coop or condo board or a management company.
@ anon December 20, 2011 2:06 AM
It might be hard for a condo board to successfully enforce rules in a project of this size that has both Rent Stabilized renters and Owners. NYC housing courts make it a slow and difficult process to act against badly behaved tenants.
"letting a dog bark incessantly, opening the door to exhaust the smell of burned food, not covering floors."
Wow, you are a harsh taskmaster. I bet you are PERFECT. You probably took out your dog's vocal chords. And your smoke alarm NEVER goes off and you don't have to try to ventilate your apartment. And every INCH of every piece of wood on your floor is covered, so there's not one possibility of one clanking sound through the ceiling. You are absolutely PERFECT and everyone else is a pig.
Excuse me, but are we actually saying that that phony baloney Unity Pledge now binds us forever to any half-baked schemes the TA agrees to in some locked room without any actual prior consultation with the tenants?
And if I remember correctly, wasn't that Unity Pledge also loaded with disclaimers that specifically stated that you wouldn't be losing or giving up your legal right by signing it? And wasn't it also signed in anticipation of an earlier aborted attempt to purchase the property?
Hello...there's now talk of an actual bid as early as April 1...well it's now December 20...and when exactly will we start discussing "minor" issues like price per square foot, upward and downward mobility within apartments for growing and shrinking families, maintenance charges, utility charges, real estate taxes, mortgage availability, city/state tax abatements (like at Battery Park City), etc. etc. etc.
Or is the TA suddenly going to whip another phone call or email out of its collective ass late on a Friday afternoon and demand that we all send them a blank check made out to Brookfield Properties "Before It's Too Late"?
Give me a break...we're being asked to immediately trade not-yet-completely outrageous stabilized rents for immediately insane upfront costs, taxes, utilities, and ever-increasing maintenance costs thanks to decades of deferred preventive maintenance on 70-year-old weatherbeaten and college student/dorm abused real estate.
I need LOTS more details before I can even begin to weigh the biggest purchase decision of my life.
How could this deal be wrong when Sens. Schumer, Gillibrand, State Sen. Duane, Congresswoman Maloney, BP Stringer, some guy Kavanagh and our own incomparable City Council member Garodnick, (oopps almost forgot CC president Quinn) all have looked it over and all approve of the fact that the TA says it preserves affordability. Even though the TA and all these politicians plus the financial advisers (that the TA is paying with your dues although you didnt know it) are unable to actually show how this plan assures affordability in the future, we should believe them because they only have our best interests at heart. Politicians wouldnt lie to us. Although I thought this tele conference was nothing more than a sales pitch, it couldnt have been. After all politicians arent allowed to pitch products or services and politicians dont lie so this must be on the up and up.
NYC property taxes-ask anyone who owns property in Manhattan-also you can check the following site.
http://www.nyc.gov/html/dof/html/property/property_rates_rates.shtml
that is why a tax abatement would be very important and will be paramount in my decision to buy or not---if not it certainly could be the case that the taxes and the mt alone will be more than the rent you are paying--besides the mortgage---then again can we be sure that RS will be here as long as we are..i'm all for the TA trying to get a deal that will work for everyone-although i certainly am skeptical
A big "+1" to Rich's comments.
I may be tired of typing it out here but I wholeheartedly agree with everything you said. To think otherwise would be to completely ignore the facts--or lack thereof.
"Um, we did. As residents we organized and created bylaws for the Tenants Association, and annually elect its members, which under the rent stabilization laws in NY give it a real voice to represent us. If you choose not to join, they still advocate for your presumed interests, but your voice is not directly heard unless you join.
If you want a new set of bylaws for the Tenants Association, you have to run for board, get on the bylaws committee, change them to suit your interests, get the board to pass them and then hold them for a vote by members. And of course, it goes without saying, you should join the TA so you have a right to vote."
Could you show me the by-law that covers the TA hiding the fact that they were working on this process (in secret for over 7 years) and spending Tenants dues on advisers for a project that the membership knew nothing about? I dont think there is a by-law to cover that. This is an association of members not a dictatorship. Or perhaps you can show me when and where the mebers voted on this plan and approved the expenditures? Otherwise, the board at the TA has alot of explaining to do to avoid not just sanctioning but potentially civil litigation, or worse!
We seem to get mostly cranky responders here.
Most everyone I have spoken to in my building is in favor of the condo conversion plan, as am I. I place a great deal of faith in our TA and am confident they will strike a remarkable deal for us. As for the square foot costs, if you do a little online research, as I have, you will find estimates that run from $175 per sq. ft to $325 per sq ft (as outlined in the co-op conversion plan). This would put my 2 BR in PCV somewhere between $200,000 to $325,000. Not bad for a 2BR in Manhattan.
The average price for apts in the PCV/ST area is about $700 per sq ft. I see the conversion as a win-win situation. It is also believed that there will be some sort of stipulation that if you get this insiders price that you may not re-sell at market rate. There will be some market rate units available, but details are sketchy at best.
As for maintenance concerns, etc, who doesn't think that that will improve once Rose is shown the door?
No Rich, it's in the bylaws of every TA and in the law--we elect a TA board and it represents us.
The Unity Pledge was something else altogether, for the J51 lawsuit mostly.
@ anonymous December 20, 2011 5:15 PM
It was clearly explained at more than one TA meeting that both Paul, Weiss and Moelis were working pro-bono. Obviously, they'll take their cut on the back end.
If you showed up at any of the meetings, you would have known this.
Funny comment about the 2,000 call participants. I never signed up but they spam called me and all of my neighbors.
I wonder how they calculated the response rate? My answering machine did not stay on for the whole call but it did record mister All Doily's heartfelt intro...
To the commentor who mentioned "cranky responders". I don't know where you did your research, but you are figuring very low even for a deep discounted condo price. It is difficult to get exact figures, but the low number you give sounds like the Guterman estimate for a coop. Coops are significantly cheaper. The high number is also pretty low even for an insider price.
anon 12:20: I did not make these prices up. The higher price is actually for the coop conversion. These were reported by Business Week: http://www.businessweek.com/news/2011-12-13/brookfield-s-stuyvesant-town-plan-challenged-by-competitor.html
And Crains: http://www.crainsnewyork.com/article/20111204/REAL_ESTATE02/312049979/1009
Try Google some time, it's wonderful!
Furthermore, you can just do the math: There are about 11,000 units; If the TA pays 3 Billion for the complex, which is what CWC will likely want, that works out to roughly 275K per unit. If the TA were to pay what the property is currently valued at (1.8 Billion) that's more like 165K per unit. Unless the TA/Brookfield expect to reap a huge windfall, I think the prices reported in Crains and BW are not that far off. Granted, my 2 BR PCV unit will cost more than a 1 BR in ST, but I think we are all on the verge of a really sweet deal so enjoy it.
The part about not being able to eventually sell your unit for only a "minimal" profit (assuming you buy) is also a dream come true for the new property owner.
So let's say you sell for $400,000...and the going market rate is actually $600,000...who get's the $200k difference? Is the next buyer also going to get a discounted $400k proce...or is Brookfield going to act as the intermediary and pocket the difference when the new owner pays full price? Now that would be a great deal...for Brookfield...but for you, not so much.
And another question...by capping your upside...why would you want to essentially have your new "investment" be dead money...by not going up with the market?
The more equatible method would be to require all new owners to not flip their units for at least 5 years (or else realize a smaller gain)...and then the limits come off.
As much as I love STR, I miss Lux. Has anybody heard from him? There's something really odd about the way he closed down his sites so abruptly with no comment whatsoever. He didn't even post a comment over here to say goodbye. Before anyone accuses me of whining, I just want to sa that I think he would have goodbye if he were going of his own volition.
To Rich:
"So let's say you sell for $400,000...and the going market rate is actually $600,000...who get's the $200k difference?"
If you listen to the first town hall you will that there will be two options:
1) buy your apartment at a higher inside price with no restrictions on resale.
2) buy your apartment at a reduced price but there will be a limit on resale.
Someone also asked why would you lock your cash up in dead money? Depending on the price of #2 it could be equal or even less then what I'm currently paying in rent, and the mortgage will not rise every year. Plus someday if I do leave I'll get it all back in equity. Why not do this?
I miss Lux too. It think it's a very bad message that he did not say goodbye. If someone really ticked him off, maybe he fled or ?
Two things/
1. who came up with that $500k pricetag and how?
2. with interest rates this low and the tax deduction on our income tax, this is a win win for lots of us.
Let's hope it goes through. Everyone I know wants to buy their apartment.
"I miss Lux too. It think it's a very bad message that he did not say goodbye. If someone really ticked him off, maybe he fled or ?"
I think if someone had really ticked him off he would have said something. He wasn't shy about speaking his mind. There's more to this than meets the eye and I really hope that he comes back in some way, shape or form.
I know Lux personally. Lux appreciates that he/she is missed, but wanted to move on after years of writing about all the goings on here in STPCV. Please rest assured that nothing nefarious has happened to Lux. It hasn't.
Thank you Stuy Town Reporter for continuing to give tenants a place to have a voice. Those of us who frequent this blog, appreciate it, you and all of your efforts, which have been invaluable.
<>
Sorry, but unless we've suddenly entered the Land of Oz, I'm extremely skeptical that my mortgage (and interest) + maintenance + property taxes + utilities will be lower than the average rent stabilized rent...unless they're suddenly giving away these apartments (which they won't).
And while it's true that you're mortgage won't rise every year, your maintenance definitely will...and by whatever percentage is necessary to maintain the buildings after years of neglect and abuse.
I think the aliens abducted Luxie. They're probing him to try to understand why he would dedicate so much of his time to the 'good fight' for STPCV without compensation or appreciation. STR, you're next!
ABove poster: do you really believe rent stabilization will be around for very much longer? ROFL, sorry.
"I think the aliens abducted Luxie. They're probing him to try to understand why he would dedicate so much of his time to the 'good fight' for STPCV without compensation or appreciation. STR, you're next!"
He may not have got compensation, but he most certainly got appreciation. Some of us appreciated him very much. More than you may realize. Good luck to him in his new endeavors.
Sounds safe to me.
I think you are all wearing rose colored glasses.
So there will be a limit on the upside on any profit that you can make on selling your apartment. But, there will be no downside limit on the amount you lose due to the ever increasing costs of monthly expenses and ever increasing tax on your property.
Yeah, this sounds like a good deal.
Upside limit on profit, and no downside limit on a loss.
Welcome to "Candy Land" if you think this is a good deal. Upside $$ is going to be fixed", but no downside limit to the amount your monthly charges can rise. There is a very good chance that you yearly maintenance charge could out-strip any potential upside tp this deal.
The Risk/Reward model of this deal is for suckers. Much more of a risk, then any potential reward.
Boy, that anonymous sure is a jerk!
Not me of course.
It comes down to what you are currently paying in rent. I'm paying 3k for a two bedroom and I know of people paying 4k. for us the downside risk is minimal, but if you are paying 1k then yes it might not be worth it, assuming rent stabilization lasts of course......
Not much reward in ever increasing yearly rent, ever expanding dorm rooms and ever degrading rs protections.
"Sounds safe to me. I think you are all wearing rose colored glasses. So there will be a limit on the upside on any profit that you can make on selling your apartment. But, there will be no downside limit on the amount you lose due to the ever increasing costs of monthly expenses and ever increasing tax on your property. Yeah, this sounds like a good deal."
First of all, I think that the "r" in "rose" should be capitalized!
Second, your downside risk is most certainly limited. It is limited to the amount you pay for your apartment. When the maintenance soars to completely unaffordable levels (from initial "simply unaffordable" levels) you can always walk away from your investment. The downside is large but it is definitely limited.
Going forward, please check your grammar and your math...and hold on to your checkbook.
I guess the debate over the ice rink and food trucks is over? Rose did just what it wanted to do and everybody is distracted by the sale that will never happen.
The food trucks are not there anymore and the rink appears not to be bothering anyone, though a final say on the matter from the Dept of Buildings seems still pending.
>>So let's say you sell for $400,000...and the going market rate is actually $600,000...who get's the $200k difference? Is the next buyer also going to get a discounted $400k proce...or is Brookfield going to act as the intermediary and pocket the difference when the new owner pays full price? Now that would be a great deal...for Brookfield...but for you, not so much.<<
Excellent point. Brookfield is going to pocket the profit, for sure.
I thought the call was a very creative way of getting information out to people, so kudos to the TA for that. There are a lot of people here who seem to be confused. If you don't want mortgage payments and maintenance fees, you can just stay a rent stabilized tenant. Rent stabilization is not going away, but the next owner will try to kick out stabilized tenants and bring in more yuppies if the TA's conversion plan fails.
It just proves that many readers are living in the past. Lux? He went somewhere else. Ice rink? Turned out to be very nice for our grandkids. Why can't some people move on and think about the future?
Do you honestly think C.W. will take a bid from the TA ? SEriously?
You remember how they had said they would discuss a tenant buyout before they took control?
then coincidentally, after doing so, they refused to discuss it. They won't so the fuss is all for nothing. AS USUAL.
Considering, (for most of us) buying our own apartment represents the biggest single purchase (investment?) that anyone will ever make.
If I understand the previous posts correctly;
The monthly maintenance charges, electric, gas, and taxes can escalate at a higher percentage and at a faster rate than the percentage of any profit that you can make by selling your apartment (or at the very least, severely cut into the upside profit.
One previous post said , that said that there IS a down-side limit. You can always walk away from your apartment, and while you will lose everything, I guess it does limit your losses. WOW, and I was worried!
Another poster wrote about the “risk vs. reward” model. There does seem to be a bottomless (yes you can walk away) risk, and a limited reward.
If I wanted that “risk vs. reward” model, I would let my brother-in-law Steve handle my finances (he is up for parole this year (once again)).
STR.
Of course Brookfield will profit the difference.
It’s not like they have all this free cash flow laying around and they not going to put it to good use.
That’s what a business does. They make an investment with the hopes they make a profit.
They analyze their “risk vs reward” (just learned that phrase from a previous post).
For Brookfield their risk vs reward model, will be exactly opposite of ours.
There reward is that they can sell your apartment at “Market Rate”, they are under no restraints.
And their risk;
There does not seem to be any risk for them. It’s your apartment, they don’t own it.
It’s in their best interest for buying it back at the cheapest price they can. The apartment owner has all of the risk and is responsible for all of the escalating maintenance charges, utilities and taxes.
--- Second, your downside risk is most certainly limited. It is limited to the amount you pay for your apartment. When the maintenance soars to completely unaffordable levels (from initial "simply unaffordable" levels) you can always walk away from your investment. The downside is large but it is definitely limited. ---
Actually, your downside risk is not limited, unless you want to either default on your mortgage (and, unlike Tishman, you won't get away with that scot free) or lose your entire investment, which would be an absolute catastrophe for people of limited means already scared about RS "going away"...the logic of which I don't understand because if the financial crash has done anything, it's probably strengthened the need for RS going forward.
And who says that the complex will be any better maintained than it is now...except that the cost to maintain will now be coming out of our pockets? And once this place is set up as a condo, we'll also be competing with newer buildings with true lux amenities...so who says that the Pretty People will want to pay outrageous maintenance to live in tired, worn out buildings?
And finally, if they do more forward with this plan, they'd better drop the crap limited upside provision. At most, you might be able to put in a clause stipulating that you can't "flip" your unit for 5 or 10 years...but more than that is actually an unreasonable "lein" on your property/investment.
Actually the TA plan seems more like a "timeshare" arrangement, where you actually own nothing, while incurring expenses, and Brookfield would be the timeshare manager, pocketing all the upside.
I [unfortunately] inherited my parents timeshare...which I literally can't sell...but the ever-increasing maintenance bill still arrives every year...and sends my blood pressure soaring!
ok, completely random question and probably not at all appropriate but not sure where else to go for advice. I like in a renovated stuy town apartment and need to change the kitchen lights as they are dead (this is the ones on the ceiling, not under the cupboards). does anyone have any idea how to GET to the lights? I'm not sure how to remove the light fitting (big rectangle with smaller squares on it) in order to change the bulbs and I don;t wanna phone maintenance for something so small. Thanks in advance!
Re: rent stabilization
When the j-51 tax abatement expires in a few years (2017 or 2018) the owners of this complex are free to remove the RS from this complex. This was made clear by the Roberts decision. So yes, RS is going to go away.
@STR 12/21/11 10:18 PM
"Is the next buyer also going to get a discounted $400k price."
Yes, if that is what you can/decide to re-sell your apartment for. This would be the case of what is called a "limited equity condo / co-op" alla the Penn South houses.
If it sells for $400,000, then that is the final sales price. The $200,000 difference does not exist as the buyer of the $400,000 apartment is only going to get a mortgage for and pay a total of $400,000.
There is no magical $200,000 coming from nowhere and into Brookfield's pocket.
Everyone for or against buying: please do a little homework on condo / co-op real estate. If all of us are more educated, we'll be able to make a more informed decision if and when the time comes to consider buying our places.
Everyone is asking how Brookfield is going to make money...and for the record, that is what they are here to do. There is nothing wrong with that. We don't live in socialist Cuba.
With that said, the single largest way Brookfield is going to make money on this property is by warehousing and selling vacant apartments at market rate of $700-$850 per square foot. Remember, they're going to be getting these apartments for about $300 per square foot.
Do the math:
Let's say conservatively that they will be able to sell 2,000 apartments at market rate.
To make the math easy, let's assume that these are all 1bd apartments in ST which are appx 700 total square feet.
Selling a 700 square foot apartment at the market rate of $700 a sq foot equals $490,000.
They paid only $210,000 for that apartment (700 sq ft x $300 a square foot).
That is a profit of $280,000 per 1bd apartment. Multiply that by the 2,000 apartments mentioned above and you get a PROFIT of $560,000,000!
This is how they will make money. It's very simple.
Finally, CW Capital will absolutely sell this place. Their sole responsibility is to the bond holders who hold the $3b debt.
They only way to get $3b is by selling the place. Otherwise, they will never see that money.
Ownership: If not us, whom? Leaving the question of ownership to a hopeful, altruistic unknown owner is not a bet I'd wager. This plan may not be the ideal scenario for many, but I don't believe a better option exists.
Conversion plan: The TA needs to entice as many tenants as possible to convert to the insider price. We'll clearly require many more than the 15% conversion required in order to make the economics of 'home rule' work. As suggested on the latest phone conference, an insider discount rate of between 10%-40% is possible with stress placed on the discount being closer to 40% than 10%.
Who converts?: Conversion may not (financially) work for many long-time tenants. Current rent will be far less than mortgage, maintentance and tax expense of ownership? The question to long-term tenants is whether the psychic value of ownership is worth the increase in monthly housing expense.
If not long-term tenants, then the former market raters: There are more than 4,500 units now that are rented to 'improved apartments' (what was known as market rate). In order for the TA to have any chance at success a majority of these units must vote for conversion. Since rents in these apartments are >2,500/month, the economics work for these tenants to acquire their unit.
Irony: many of the long-term tenants abhor these newbie tenants. But the success of the TA bid rests fully in the improved apt. tenants' acquisition of their units. Without the newbies carrying most of the financial burden success has 0% chance.
I vote for Rich to represent the tenants! He's one of the few people here that have a handle on what Brookfield is trying to pull off.
There's going to be no free lunch here, folks. You will be handed a bill for that meal--one way or the other.
>>Re: rent stabilization
When the j-51 tax abatement expires in a few years (2017 or 2018) the owners of this complex are free to remove the RS from this complex. This was made clear by the Roberts decision. So yes, RS is going to go away.<<
I don't think this is accurate.
I have a question on the NY city transfer tax that we'd pay when purchasing a condo here.
Isn't it around 5%? Can any one verify? this is of concern as this could be another 11k++ to our purchase price at closing.
You gotta love living in nyc eh? Outrageous taxes.
>>Re: rent stabilization
When the j-51 tax abatement expires in a few years (2017 or 2018) the owners of this complex are free to remove the RS from this complex. This was made clear by the Roberts decision. So yes, RS is going to go away.<<
I should had added that the RS will go away for vacancies and those over the income requirements. That is accurate.
>>Re: rent stabilization
When the j-51 tax abatement expires in a few years (2017 or 2018) the owners of this complex are free to remove the RS from this complex. This was made clear by the Roberts decision. So yes, RS is going to go away.<<
This is not accurate at all...the NYS Legislature will either continue or abolish the RS program when it next comes up for a vote.
The Roberts decision only impacts those units that were illegally removed from RS while ST/PCV was receiving J-51 benefits (and BTW, I'm still waiting to see dramatic rent reductions thanks to that decision for "former" market raters/newly re-stabilized tenants). Oh that's right, you won't really get much back because they rammed through all those B.S. vacancy decontrol and MCI charges, every time a "dorm" unit turned over over the years...thank you Tishman and Met Life for that!
But anyhow, continuing the RS program entails a whole lot more than either Roberts or J51 issues (and yeah...I can just imagine the uproar over on Park Avenue if all the Blue-haired Ladies that Lunch suddenly had their rents doubled, tripled or quintupled on their pre-war castles in the sky)!
http://www.trulia.com/property/16320835-45-E-25th-St-20-C-New-York-NY-10010?ecampaign=con_day_propertysearchforsale_bk&eurl=www.trulia.com%2Fproperty%2F16320835-45-E-25th-St-20C-New-York-NY-10010
I hope someone can open this. This city is nuts. It's 650 square feet on 25th street. Not even a very desirable area. Insane here.
NY RPPT (real property transfer tax) is 1.425% for sales > $500k ; 1% for sales < $500k
(scenario assumes purchase from condo sponsor)
How many ST residents in renovated apartments does it take to change a light bulb?
Still waiting for an answer on that one but he definitely want's to buy the place because he KNOWS it's gonna be a windfall! Whoo hoo!
Oh, please....
>>If it sells for $400,000, then that is the final sales price. The $200,000 difference does not exist as the buyer of the $400,000 apartment is only going to get a mortgage for and pay a total of $400,000.<<
Even if this is true, then two questions immediately come to mind:
1. If the TA is talking about a "limited upside potential" option, then obviously somebody is going to be having their upside limited. And that somebody is the current owner/seller...regardless of all the hocus pocus accounting that results in that happening.
2. And how are some units going to be re-sold with limited upside potential while others are sold with no limits. In that scenario, all the units would tend to start selling at an average medium price, while some sellers [are allowed to] pocket more upaide than others.
Therefore, my question remains, who would be setting the "limited" upside and who gets to keep anything paid over that limit?
Let's take this example...the identical unit next to mine sells for $500k...so the following month I put my unit up for sale at $500k (for which I paid $200k)...and I get a buyer. But under the limited upside option, I'm only "allowed" to double my money. So does the seller get a bargain for 400k...or do they still pay $500k with Brookfield acting as some kind of agent...and skimming off $100k?
These are the types of questions we need answered by the TA, with great specificity...before we agree to anything.
"Anonymous said...
>>Re: rent stabilization
When the j-51 tax abatement expires in a few years (2017 or 2018) the owners of this complex are free to remove the RS from this complex. This was made clear by the Roberts decision. So yes, RS is going to go away.<<
I should had added that the RS will go away for vacancies and those over the income requirements. That is accurate.
December 22, 2011 2:01 PM"
Not quite, but close. All apartments right now are rent stabilized. When the J-51 goes away, those apartments that rent (and there are quite a few) for over the RS limit of $2500 a month or the tenants have a combined income of $200,000 or more for the prior 2 consecutive years will be de-controlled. Otherwise, Rent Stabilization remains in effect for as long as the State Legislature determines.
Now, that said, it is simply a slippery slope that will continue to push RS into virtual extinction as rents continue to rise, and the definition of "middle class" in Manhattan necessitates higher and higher income requirements. I don't believe that Rent Stabilization will continue to cover such a wide swath of tenancy in the future, as it does today. Perhaps those at the bottom end of the income spectrum will continue, but many others will become market rate.
I'm dissapointed the Guterman bid did not work out.However,I have high confidence in our TA reps,particularly Alvin Doyle and Susan Setzer.They are genuine,good people struggling with a highly complex financial issue.
It's important to recognize that even if rent regulation stays in place rents will continue to rise -by law.Those who pay truly affordable rents in ST/PCV are a dwinding minority.I have been a tenant since 1990,live in a one bedroom in PCV and now pay 1500.That's low by current ST/PCV market rates but is becoming competitive with market rates elsewhere in the city.Even with regulation ST/PCV regulated apts. will all be over 2K a month within a few years.24K in annual rent requires a 60-70K income for singles and close to a 100K for families.
In other words,we are rapidly moving towards becoming an upper middle class community,even with rent regulation.Going co-op or condo is the only realistic option for stabilizing the community for current tenants.
Maint. fees should be reasonable and stable.Tudor City,with much older buildings and considerably worse maint. issues converted in 1990 and maint. fees have remained very reasonable,averaging 500-750.Many of the upgrades in ST/PCV have already occured and will be included in the purchase price.Windows,electrical upgrades,elevators,rooves,lobbies,intercoms,green space and playgrounds have all be upgraded since 2000.The one big maint. issue is plumbing and in truth all NYC buildings struggle with plumbing,including condos and co-ops.It's simply the most difficult repair.
As to QOL issues,we will be better off with a manager who is directed by tenant reps rather than yet another landlord.Better to let our reps establish rules for sub-letting and so forth rather than another unresponsive landlord.
Time moves on,everything changes.In the last generation the real estate boom in NYC made this conversion inevitable.We will be far better off taking the initiative and purchasing the community ourselves rather than allowing it to fall to yet another greedy,self serving landlord.
So I take the optimistic view.And,having personally participated in the Tudor City co-op conversion I know from experience these non-eviction conversions can actually be a real blessing.
I keep seeing J-51 expiring in 2017 or 2018. If I recall correctly, TS got a 14 year J-51 in the third quarter of 2008 which means J-51 is here until 2022. You can check this on the Dept of Finance web site.
The expiration of J51 benefits means that were rent stabilized because of J51 - former market rate or those apartments where the rent exceeded the high rent decontrol - formerly $2k now $2,500 per month would also be deregulated - provided the current tenant received J51 lease. A J51 lease has a clause that states, in essence, that the apartment is rent stabilized pursuant to J-51 and when the J51 period expires, the apartment will return to market rate and no longer be under rent stabilization. Absent a J51 notice in the lease, an apartment subject to rent stabilization pursuant to J51 stays rent stabilized as long as the current tenant stays in the apartment.
An open issue in the Roberts case is what happens to those tenants who rented MR prior to Roberts and did not receive a J51 notice in their initial lease but received such notice after Roberts was decided.
The expiration of J51 has no immediate effect on tenants who were stabilized under the law without J51 (old rent stabilized).
It still comes down to Risk vs. Reward.
The risk is going to be way too large fpr me.
Risk that has not been fully determined/identified.
The Lack of transparency is a show stopper for me. The TA seems to be only presenting an “upside” the “reward” without explaining the “Risks” to us. DO your own due diligence people. Every business deal has a risk, the ying and yang, the other side of the equation. And if anyone tells you differently, you are being lied to.
I am not betting the bank on this.
I have five years until I retire.
Good luck to you all.
Does anyone here know anything about the operation of co-ops? They have a Board of Directors who makes the major decisions. In a conversion, the Sponsor controls for the first 5 years OR after losing 50% of the apartments to sale. Those of you dreaming about running the place better plan on waiting around seven years or so...until the conversion is complete and the Sponsor has less than 50%. Just a dose of reality...not that anyone at the TA wants reality.
Anon 10:55 brings up a great point about control. Sponsor does maintain 'control' for a certain period no matter what percent of units are sold. At the end of this period (typically 5 years), the board is voted in, BUT THIS IS NOT A TYPICAL CONVERSION. Could the TA be negotiating with Brookfield to seat a number of the current TA board on the Condo board? Is that a factor in selecting Brookfield? Of course the TA wouldn't do something as egocentric as that. Or would they spin it as 'in the best interest of the community'???
Maybe Guterman wouldn't promise Al etal seats on the new board!
It's sad, every time a new item comes up in the collective 'wth', I get a sickening feeling of the TA making collective decisions for the true interest of a few. I know it sounds ungrateful of me to think this way but this 'behind the curtain dealing', 'don't worry we'll take care of you', 'you have nothing to worry about, 'we know what we're doing' frightens me.
"Risk VS Reward"
Right now the housing market is depressed.The time to invest in any market is when prices are depressed by a down market.
We can purchase this community for 3-4 billion.Would anyone prefer we have purchased in 2006 and paid nearly double that figure?
Of course not.
Overall,the buildings in this development are in better condition than either Tudor City or the Grand St co-ops - both converted developments that have done very well post-conversion.In fact,if you take a walk through the east 20s or the East Village you'll see many co-op/condo buildings that were poorly constructed or old and have serious maint. problems.
ST/PCV is still a GREAT place to live,particularly for families.If you have kids this place is a miracle oasis right in the middle of Manhattan - totally unique.Kids can [play here,socialize here,do most activities here and with a degree of safety and security unparalleled in NYC.
As to QOL issues we are better off with a management beholden to tenant reps than a landlord.In both Tudor City and the Grand St. Co-ops the priorities of owners and renters are essentially identical.QOL issues affect property values along eith the annoyances.So,it is naturally in the best interest of renters and owners to require tenant serving management to resolve QOL or maint. problems.
All in all,this is a good time to invest in an apt. in this community,we'll be offered below market prices and like the Tudor City non-eviction conversion [1990,also when the housing market was down] and the Grand St. co-ops should produce outstanding equity returns over time.Even now Tudor City apts. are selling at 300-400% increases over the original insider purchase prices.
I see no reason why the ST/PCV conversion shouldn't produce similar gains.
>>All in all,this is a good time to invest in an apt. in this community,we'll be offered below market prices and like the Tudor City non-eviction conversion [1990,also when the housing market was down] and the Grand St. co-ops should produce outstanding equity returns over time.Even now Tudor City apts. are selling at 300-400% increases over the original insider purchase prices.<<
What you are saying is that tenants can make out like bandits in the future if they accept the plan. Fine. What about affordable middle class housing? Where is THAT in the future?
It really comes down to greed for the proponents of the conversion plan, doesn't it? Here's something about the Grand St. Co-ops (http://www.lohorealty.com/nym061400/):
Realty Bites:
Ain't It Grand?
Workers' utopia goes market-rate. Built by unions after world War II, the Grand Street co-ops were a middle-class housing project with socialist pretensions, complete with agitprop murals of Abraham Lincoln and Franklin D. Roosevelt surrounded by children of all races. Until recently, it remained a fairly closed loop of mostly elderly Jewish owners, who got apartments cheap -- often for about $3,000 a room -- and were required to sell them back to the co-op for the same price when they left. On June 12, that egalitarian system was overthrown, meaning the development's 4,500 apartments, many with views of the East River, can now be sold at market rates. Already Jacob Goldman, a resident who set himself up as a real-estate broker, is hawking a three-bedroom for $1 million. "It's better than investing in Microsoft in the beginning," he says of the jackpot residents gave themselves by voting to lift the restrictions. Unfortunately, socialism always lost points on aesthetics -- one resident describes the brick towers as "very utilitarian," with brown tile floors in the hallways. That old look may be purged: With the revenue generated by the "flip tax," the co-op is upgrading the lobbies (the murals were in danger, but they'll stay). Also, "it caters to Orthodox Jews," complains one Reform resident, to the point where an elevator in each building stops on every floor on the Sabbath so the observant don't have to press a button. The new residents are "lawyers and professionals and single moms -- yuppies," says Goldman. "Would it make the socialist founders of the area turn over in their graves? Sure. But the grandchildren are reaping the rewards."
Thank you STR for the website concerning Grand Street Housing and giving a voice to those of us who don't think a condo conversion is such a great idea, not from the pov of whether we make money or not, but whether it helps or hurts middle class housing in NYC. I happened to be on the LES yesterday at two senior centers demonstating e-readers for The New York Public Library. I and walked past those very coops. There was a time in this country when government thought it had some sort of responsibility for housing its people. That time and the socialist dream is not only over but reviled today. If we put all our assets together my husband and I could probably buy but we will not participate in the death of middle class housing, which when it comes to ST/PCV condo conversion is a huge step towards helping to end what is left of it. Better for all of us to work towards maintaining RS than to help take thousands of apartments out of the rental market. Occupy Stuyvesant Town. What a good idea!
Maxschactman said
>>"Right now the housing market is depressed.The time to invest in any market is when prices are depressed by a down market."<<
When someone only mentions the "upside reward" and does not talk about the "downside loss", Watch out my friends, there is a very good chance you are being rail-roaded!. Every deal has risk, every deal has potential down side.
Anyone pushing this deal who does not mention the "downside/risk" DOES NOT HAVE YOUR BEST INTEREST AT HEART!
Please RE-READ what Maxschactman said at 12-23-11 ~ 1 am
Sounds great? Only good? No downside?
Due diligence my friends, you owe it to yourself and family. Caveat emptor, buyer beware. Don't buy into what they are pushing down your throat. Every Deal has a downside, every deal has a risk.
Know your risk, do your own homework!
Things that can go wrong;
1) Escalating taxes?
2) Escalating maintenance costs on buildings where maintenance has been deferred for years?
3) Maintenance work that has gone to the lowest bidder?
4) Existing STY/PCV work force has been reduced over the years to what seems to be a minimum , do you want the same quality of poor service when you own your own apartment? Of course not, and that means more employees, more cost to you?
5) Competing sales of newer condos/co-ops where the buildings have been well maintained?
6) The housing market stays stagnant, or worse goes down (As we all learned real estate values can drop and can continue to drop?
7) 11K apartments, Infighting and lawsuits among the apartment owners alone can make this place unmanageable.
8) A deal without transparency? Only pushing the reward, and never mentioning the possible risk?
I'm not really sure why I'm even going to attempt this but I would like to ask a question to all the "what about affordable housing for the future " people. I understand that you are all against the conversion plan. If you could please explain to me how keeping the current RS system for Stuy Town accomplishes this I would appreciate it. Of course this is assuming that the next landlord won't pull a Tischman Spyer, AND RS laws will remain in effect into perpetuity (huge assumptions). How will RS assure this?
Of course, I realize that I Won't get an answer because RS assures unaffordability. It is precisely this conversion plan which WILL assure some level of affordability.
Fortunately, just about everyone I speak to regarding this is able to exercise basic logic and follow a though to its logical conclusion.
@Rich December 22, 2011 3:02 PM
Regarding "limited upside potential"...
This is what would essentially be a "limited equity condo / co-op".
It limits the price you pay--keeping the buying price low and limits the price you can sell it for--limiting any "profit" so that the apartments are kept affordable for the next buyer. Read up a little on the Penn South Houses to see how this works. While you won't "make a killing", you'll get your "equity" back. Essentially, you're getting your rent money back. No loss, maybe small profit.
Also, the TA mentioned that there would be two "sales" options:
1) Buy at a low price, with a limit at what you can re-sell for. I.E. Limited Equity
2) Buy at a higher price, though still under market value, and eventually sell for whatever you want.
While your posts are well intentioned, I think you're a little misinformed about real estate. As I mentioned in an earlier post, everyone here needs to read a little bit about real estate in NYC and educate themselves.
Also, to reply to your question below:
"Let's take this example...the identical unit next to mine sells for $500k...so the following month I put my unit up for sale at $500k (for which I paid $200k)...and I get a buyer. But under the limited upside option, I'm only "allowed" to double my money. So does the seller get a bargain for 400k...or do they still pay $500k with Brookfield acting as some kind of agent...and skimming off $100k?"
To answer, your apartment would only sell for $400k if that is the max that you price it at (limited equity).
Again: THERE IS NO MAGICAL EXTRA MONEY that Brookfield will pocket.
The perfect is the enemy of the good. Inaction through endless hand wringing for the perfect plan will end with another TS in place.
recorded message left on phone from al doyle. what did it say?
Max Scheister said:
"Maint. fees should be reasonable and stable.Tudor City,with much older buildings and considerably worse maint. issues converted in 1990 and maint. fees have remained very reasonable,averaging 500-750."
The average apartment in Tudor City is around 400 sf. Multiply those numbers accordingly to account for larger average size of EVERY apartment in this complex and you have a jumping off point for calculating what our costs would be. Then you can fold in the cost of maintaining a fleet of vehicles, a public "safety" army (hey, someone's gotta guard that rink!), and all of the other costs we have that they don't and you're off to the races.
I don't completely agree with those that criticize the maintenance of the buildings in ST/PCV. There has been a substantial investment in infrastructure over the last 10-15 years, with major work done to roofs, heating, brick pointing, lobby renovations and an extensive IP (computer network) based intercom/camera/security system, that is only partially utilized to it's potential.
Any buyer would need to do an engineering inspection that would disclose any major infrastructure weakness. There's no doubt that the plumbing will have to be replaced, and submetering installed. The elevators were done on the cheap, and they should be looked at carefully, but beyond that, what other major work can anyone suggest ?
I agree that they have cut staff (in the wrong areas), but that can be fixed with an operating budget that doesn't have the same financial pressures that currently exist.
For 4k plus (and growing) residents there is no future affordability in STPCV w/o a conversion. These are the former MR tenants facing the loss of RS protection at the expiration of J-51. When this happens, a new corporate owner will be free to raise rents at will and deny leases at will. The RS laws make no provision for their protection.
Understandably, their plight may be of little concern to pre-roberts RS tenants, however, one shouldn't obfuscate in calling conversion a threat to affordability.
I dont understand the fear that maintenance will be too high, we know what past expenses are, 150M minus 10M for electric, (hopefully the complex will move to submeter) we will do engineering due diligence for future costs and hopefully build in a capital budget cushion for those repairs.
Also, someone mentioned CW wont sell, I think that is nonsense, they barely meet debt service with the rental income and they have to pay 150M in expenses annually. It could be that CW is losing over 100M a year on this place.
The truth is that the era of middle class housing has already ended at Stuy Town. How can the TA and the elected officials claim that they are going to reverse time? And the new co-op owners are REALLY going to care about the elderly, low rent paying remaining people who chose to or couldn't afford to buy? I doubt it.
It's not that CW won't 'sell'.
CW won't sell to us. To us.
I'm quite sure CW has other offers.
"CW Capital wont sell to us, they have other offers"
The place is worth 1.8 - 2B based on current cash flow/rents in place. It doesnt make sense for any real estate company to bid more than that. Plus, I dont think its possible, what are they going to say to potential investors, "hey lets by a 2B asset for 3.5B"
CW Capitals financial responsibility is to get as much of the 3B back as possible. They are not a real estate company, they will cut losses and split if they know whats good for them.
I wouldn't buy into this filthy, seedy, student-infested dump if they were practically GIVING it away. It's gone too far downhill to ever be brought back up to anything more than one notch above a slum without massive spending and re-staffing.
Some posters make statements and sell them as truth. Please research your facts. And then reconfirm the first source with a second source. To say that the purchase price for STPCV shall be $2bln is inaccurate. Current NOI exceeds $110mm (a fact pulled from STPCV audited statement of 2009; of which I have a copy). Cap rates of NYC multifamily: someone will buy STPCV at at least a 4% cap rate (how do I know? because my profession is real estate finance and I could source funds to buy this at that rate).
Minimum bid due is then $2.75bln. Expect bids much more aggressive than that since initial yield is not the price driver. Rather, value of conversion, reduction of equity over investment timeline, increased cash-on-cash return on equity, fee generated from ownership/management, etc will drive bids higher. Even Brookfield will need to earn a fair rate for its equity investment (they better. I’ve owned their stock for a good number of years).
"I'm quite sure CW has other offers": When CW capital is ready to bid this asset, we will all know. Don't expect the TA or any other bidder to get exclusivity (unless of course bid is near advance value of note). Saying your "quite sure" infers you have inside info. If you do not, than your statement has no use (and in fact clouds the dialogue). I know the CW guys; they're not showing any of their cards.
The TA should be able to bid a very fair price for STPCV since they have the best information re possible conversion percentages. Don't get hung up about the price right now. And certainly do not assume a low-ball offer will win this asset in a bid. Expect to pay greater than $3 billion. If we get it for less, than we should use that 'savings' to , in perpetuity, assign a good number of the units to affordable housing (or the STPCVTA defintion which they throw out as 2x median NYC MSA earnings).
Also: CW needs to clear up the matter of Roberts in order to establish what the legal rents for every apartment in STPCV are. Only after this matter is cleared can CW begin to 'shop' this deal. Expect many suitors to make public their versions of conversion. Guterman was the first but there will be more. And don't 'believe' that the TA's option is the best offer for you. Require the TA to sell their plan to you as you would any other prospective STPCV purchaser.
Let’s stick to the facts. And offer opinions on the facts. Then we can have a clearer dialogue about them. If you don’t know the facts, ask a question here. STR has been kind enough to spend a great deal of time and resources in facilitating this arena. Let’s use the site to enlighten one another and advance our community goals.
I look forward to the opportunity to buy my apartment, and everyone I know feels the same way. It's the only hope we have to bring maintenance back to an acceptable level, and have people abide by the established laws of this community. Conversions have worked out very well in places that were far worse off than Stuy Town in the city. I also support the conversion as I am a supporter of affordable housing in Manhattan for future generations: something this conversion addresses far better than current RS laws.
@12:07--Why are you still here???
I asked these two questions:
"1. Where's the "LONG-TERM AFFORDABILITY" in taking thousands of apartments out of Rent Stabilization and converting them to unrestricted, market rate condos?
2. Why don't we make ALL the apartments long-term affordable condos or rentals?"
As far as I can tell from the T&V article, Dan Garodnik dodged the questions by saying the TA Plan is better than nothing.
I've been asking these same two questions for 18 months on Lux Living, Lux Living Facebook, TA Facebook, at TA meetings, at TA advisory committee meetings, at meet and greets with TA board members, etc., and have NEVER gotten a direct answer.
"I've been asking these same two questions for 18 months on Lux Living, Lux Living Facebook, TA Facebook, at TA meetings, at TA advisory committee meetings, at meet and greets with TA board members, etc., and have NEVER gotten a direct answer."
I've been essentially asking the same questions and still no response, either.
The answer is that there is no entity, private or governmental, willing to pay off the share holders (3 billion)and gift the place back to tenants as a full RS complex in perpetuity.
Long-term affordable program:
At the Baruch town hall, the TA via Meredith ? related two programs for tenant acquisition of units: (1) the insider rate and (2) the extra affordable rate.
The insider rate would offer a discount to market for persons intending to acquire their unit without resale restrictions (except for a burn-off flip-tax).
The extra affordable program would offer an additional discount to purchases price but would restrict resale by (1) amount unit can resell for and (2) to whom unit can sell to. Resale price would probably be marked to inflation (my assumption) and prospective repurchasers was marked to families earning 2x Stuy Town median income (Meredith's statement).
At the town hall, Brookfield made an interesting comment which I'll paraphrase: so long as we can work out the finances, we'll look at the extra affordable proposal (if someone has the exact verbiage Brookfield used, it would be helpful).
Moving forward to the phone-in: Meredith's verbiage was much more calculated. Again I'll paraphrase. She said that a number of units can be acquired at the extra affordable rate capped at an unknown number of apartments. This statement was a retreat from the Baruch town hall that said anyone who wants to buy at the extra affordable rate is welcome to...
I can understand the retreat. Brookfield and the TA do not know how much it will cost to acquire STPCV. So they cannot determine how many units can be purchased at extra affordable rates. Another way, as the purchase price increases I will assume that the number of extra affordable units offered will decrease.
I would think that they wouldn't be able to pull off the purchase if all apartments were sold at the "deeper discount" and had their resales controlled. Someone posted earlier about hand wringing for the perfect plan. Perfection isn't going to come. All things considered I believe it's out best option. With this plan there is SOME level of future affordability, without it there is none.
I suspect the fix is in.
I think that 12 out of the 14 TA board members do NOT believe in the goal that ALL the apartments here should be subject to long-term affordability limitations.
That's why "choice" has gradually replaced "long-term affordability" as the most frequently stated goal when the TA and Dan speak publicly.
That's why the TA's legal and financing advisers have zero (or practically zero) experience in affordable housing.
And that's why our long-term affordability questions have never been answered or answered directly and adequately.
Until these questions are answered adequately, I can only conclude that the goal of long-term affordability will be better served if the TA/Brookfield plan and bid are rejected.
I'm a big skeptic on this deal. That said, I'd be happy to "buy in" at the deeply discounted, limited resale rate--provided that the cost of ownership is about what I pay now. Not going to quibble about $50-100/mo more because we'll get there soon enough regardless.
Happy to leave ALL of the upside to our benefactors at Brookfield. I hope they make a fortune on my place when I move in 30 years! Meanwhile, I'll be expected to shoulder the potential burden of maintenance issues and inevitable assessments. They'll get it in MCIs if we don't buy.
There's no way I'd pay for the "privilege" of "unlimited upside." More likely to find myself upside down. If they really thought the place would be worth something down the road, they'd be PUSHING the limited appreciation units but, apparently, they are not.
That tells you all you need to know.
@12:07--Why are you still here???
Because I love my apartment and, most importantly, I have a very good rent. However, I try to avoid all other aspects of the project such as laundry, recycling area, etc. I've been here for over 30 years and remember it being a lovely place to live. I know that is over because of the greed of MetLife and the total destruction of the qol by the Evil Speyers, but I will stay until I absolutely have to leave. Still think it's become a nasty, seedy, student-infested dump that is beyond repair at this point and I certainly will not buy my apartment.
12:21 CW has other offers. I know this for fact. You are not alone in the RE world. FWIW
Just been watching "It's a Wonderful Life." Amazing that Old Evil Potter should be reincarnated in the form of Rob Speyer and his vile ilk.
Tom,
Very well said!
Is there a public record of how individual TA board members voted?
If not, we should demand all future upcoming votes be transparent. I think for the record (the legal record) we should have some acountability for any future legal actions.
You guys are on crack if you thing that the TA has the slightest idea of how many buyers exist in their membership. No one knows that answer because it is unknowable. Just more hot air.
Walking by the oval and overheard a guy telling someone that his friends were now looking to rent at pcv/st due to the fact that they'd heard there was the "buy" option coming.
Definitely had me thinking CONSPIRACY. What a great way to lure new tenants.
hmmm
Has the sublet/ rental policy been discussed within the buyout?
Would we be buying into a place with sublet rules?
-taxes if not abated could be costly--lets say 700/month add mt lets say 600/mt--that is 1,300 month without adding your loan payments...if you are currently RS and paying 1,500 where is the benefit-- mt and taxes as well RS rent will always go up so that may cancel each other out..although i would find the investment appealing not such if the economics are in this case
Are you on the facebook stuyvesant town peter cooper village tenants page?
To: December 24, 2011 12:21 PM
The 1.8-2B figure is based on a rental, as fitch and others have
have stated, this was in 2010, maybe a bit higher now.
Yes, the place is worth at least 2.75B if its turned into Condos/Coop, not as a rental. But how is another potential bidder going to do that, the TA is working with Brookfield and there is only one party representing the tenants, the TA.
Also, is (110M NOI) a revelant number? Sure they can make 110M a year above rents but NOI is without debt service right?
Last comment, I think you are hoping too much from this board, I am in RE and I dont know 1/2 what your talking about, (didnt know someone would lend on a 4 cap for this)
Ok,
You are using NOI - 110M to establish cap rate = NOI/Purchase
Price.
Still, I dont see how competing bidders will bid more than 2B if they dont have the T's support.
So far I don't feel the TA and Garodnick have sufficiently enabled communication and discussion around the various proposals. And I'm concerned they may be backing the wrong horse.
Over the next 20 years under ANY plan, as the rental apartments vacate they'll be sold at market rate. That's unstoppable. The more units that actually sell to current tenants, the longer this place might stay middle class.
There's a legal requirement that 15% of existing tenants must indicate an willingness to buy for a plan to be accepted. The greatest incentive for any developer like Brookfield is to eliminate competition through any means (like getting the TA endorsement & political endorsements) and to work things so that the apartment prices get them as close to a 15% tenant buy-in as possible so they can sell the rest of the apts at market rate as the vacate (the more apts they have to sell at market rate, the more money they make). The only power the tenants have is to influence and somewhat control how the buyer voting occurs. Without out that kind of discussion and control, the voting might go like this: Plan A (higher price) - 18% indicate they will buy; Plan B (lower price) - 40% indicate they will buy. Plan B benefits more tenants, but Plan A will render more money to the developer so he offers more money to CW. So CW chooses Plan A. But if tenants KNOW how to control their vote, then the voting might go like this: Plan A gets 5% buy-in and Plan B gets 40% buy-in. This way CW has to go with Plan B if it wants to sell now because Plan A doesn't meet the 15% buy-in legal requirement.
MBaar,
That's why they have plan A & B. If they only get 4% on plan A, they accept 14% on plan B. Then they get to do the deal and sell the rest at market.
That's why this deal is so quietly evil while purporting to be "fair."
But hold on, this guy is putting up the 3 billion or whatever right?
so he's not entitled to make lots of money? ?????
Actually I now understand the mechanics of all this a little better. My understanding is that CW will have to pick one plan & one plan only. The sponsor of the plan will then need to have it approved by New York State...that is, the plan will need to be judged realistic & credible. That done, the sponsor will then need to address the tenants and get signed contracts that show a commitment to buy. If 15% of the units contract (commit) to buy, the plan rolls ahead.
The role of tenants & the TA is rather minimal. However, if there is a lot of bad buzz about a plan, CW has to consider...is it worth spending all the time to get the plan vetted and approved through Albany only to discover that 15% of the units will not sign up to buy. At which point they're back to square one.
So the buzz is actually quite important. In my view Guterman's should be looked at by everybody and questioned by everybody just as they should look at and question Brookfield's. That's how we can best understand where to put our weight.
Post a Comment