And it was suggested on the TA Facebook page. And it is NOT tenant co-ownership of this property with Brookfield, which, as I have already stated, is never going to happen according to people in the know.
The suggestion came from Pete Harrison on May 14:
"I got my masters degree in Urban Planning with a focus on housing issues
inspired largely by my experience living in Stuytown for the last 5
years. For what it's worth, I think the TA needs to at least explore
alternative options to an acquisition. I would strongly suggest (and
I'd be happy to assist) looking into the feasibility of converting the
property into a community land trust. This type of solution has been
creating and sustaining affordable housing successfully in a number of
large cases (see follow up link below). It's never been done on this
scale, but the political environment might just be aligned to seriously
consider this option."
Mr. Harrison provided a link to a Wikipedia article on community land trust:
http://en.wikipedia.org/wiki/Community_land_trust
In a follow-up, Harrison continued:
"CLTs
are badass, but there are significant economic and even cultural
barriers to making a workable model here, certainly. Political will [...] is the potential gamechanger right here, right now. I think the broader point
to consider is this: Do we accept the premise that STPCV is, in fact, a
commodity, and try to play that game. Or do we reject that premise
altogether and say that No, housing is not a commodity - that the
property is not an ATM machine as Dan has also said - it's a right. The
market, which has a vital role to play in this, make no mistake, should
therefore be constructed around that value statement first. I think if
you accept the latter, you'd be surprised by how many viable, economical
models like CTLs are on the table."
So that's it. If the politicians can walk the talk, and not just keep on bullshitting us, then this is doable. The government has to get involved, because that is the only thing that can trump the Real Estate big-shots and their power-plays.
It's not sufficient to say that there's a magic bullet and not explain it. What are the specific steps and how does $3B in primary debt get covered?
ReplyDeleteIf only we had a strong politician like Elizabeth Warren who takes on these challenges and is an agent of change.
ReplyDeleteBut NY is seriously absent of this.
That said, I love the idea. Its genius.
>>What are the specific steps and how does $3B in primary debt get covered?<<
ReplyDeleteCalling Pete Harrison.
Or even Carolyn Maloney who was supposed to speak to Freddie Mac and find out how they justified their financial support of Tishman Speyer and may now support Fortress.
And, obviously, despite the reality, there is no way that tenants should have to suffer because Tishman Speyer fucked up here. How about the government (city/state/national/whatever) suing Tishman Speyer?
ReplyDeleteAnd where are the communists when you need them? We have purportedly a commie Mayor and a commie President. Let's save Stuy Town/Peter Cooper Village for people!
ReplyDeleteThere is no question Brookfield and Fortress are same as Tishman. Same vision. Same goals. Same destruction of the community. Same priority - above all else profit profit profit.
ReplyDeleteThere are too many dirty hands these recent years with
the construction,
the commercialization,
the 25% conversion rate of pcvst to nyu campus,
No more.
No to Brookfield.
No to Fortress.
5:24 - You got that right.
ReplyDeleteWe already have a similar model to CLTs in New York called Mitchell-Lama coops. Tenants pay a fee and own shares, the coop owns the land and buildings, it is self governed and is designed to be affordable. Today you could have a 3BR for $700/ mo. if you could get into one. The problem is the city started focusing on market rate coop conversions and condos under Koch, Guiliani and, most egregiously, under Bloomberg.
ReplyDeleteThere is a new group of City Council members now working with tenant groups to bring back the program and expand it to new and existing buildings. StuyTown could use these existing models to stay affordable but it would take a major push with City, State and Federal funds to make a buyout happen.
I posted this concept on the Conversion Forum more than a year ago. that's the 411.
ReplyDeleteAt the time, the consideration was a $3billion+ purchase. At that price point it was nearly impossible.
CLT's, in essence, acquire the land for the long-term benefit of affordability. The land then leases its use to each unit (cooperative). The lease requires specific rules regarding sale of units and to whom. (ie limits the gain each unit owner can realize upon sale and the income bracket of the prospective owner).
For Mr. Harrison, I tell him its a great idea but has no practice here. The purchase price is too high. I'll not into the details of the math here so hope you'll take my word for it.
Also, the federal government has specific requirements for its mortgage purchase programs via Fannie/Freddie and neither of the entities (or the government oversite agencies ) have yet to fully support CLT mortgages. So financing of units in the coop are cloudy at best (although some banks will lend).
FOr those interested, there is a great resource for this strategy.
http://cltnetwork.org/
Check out the website, specifically its 'resources' tab.
This concept is great. In it, the concept of affordability is attached to a unit not a tenant. It infrequently allows an owner to remove itself from the program once enrolled because the program becomes attached to the title (or coop agreement).
That said, I applaud Mr Harrison for thinking outside the STPCV box.
Here's the math: I'm sure someone will roll me under the bus unless I provide it!
ReplyDeleteTax 320
Opex 1120
Land 742
Unit Mtge 1140
Total $3,322
The total household expense would be $3,322 (this is an average over the community).
Taxes are taken from latest NYC financing (tax) roll. Operating expense is taken from 2011 audited book plus my account for inflation since then. Land cost assumes a $2.5 billion loan at 4% (very aggressive pricing assumes government assistance). And mortgage cost is 4.5%, 30 year amortization.
Sorry, but does not work.
9:44 Your approach and attitude is wrong - each of your numbers can be manipulated to work. Things don't just work. You have to find a way it make it work. That is what Fortress did with CW and Compass Rock in this what was from the onset a fraud foreclosure. Fortress manipulated the situation to make it work for fortress.
ReplyDelete10:07 You're response is typical. If data is not provided to support a statement, you say "BS". If data is provided to support a statement, it's "manipulated".
ReplyDeleteHere's a thought, provide some data which supports your ability to sit on your ass and tell everyone else they're wrong.
Yes, facts can be manipulated. If you think I did that then tell everyone just how I did it. Because, honestly, the numbers are the numbers and I provided each one of my assumptions.
The purchase price for the asset will be $4.7 billion+, that's the story in the news. The tax bill comes from the NYC.gov website. The operating costs for the asset comes from the required paperwork each owner must submit to the City annually (my source: propertyshark). The rate for a large AAA loan in a city like NYC starts at 4%. And the cost for mortgage is 4.5% (check yahoo finance or your mtge broker).
Now supply facts to support your condescending attitudes or just go outside and enjoy the sunny day. But in your world it's probably not sunny, is it?
Oh 10:55 it is very sunny in the Hamptons.
ReplyDeleteAnd if you read my post correctly you will see that I am saying find an innovative way to rework the numbers so they work for tenants instead of just saying it will never work for tenants. A little innovation is what tenants need. It is what Fortress is using. Innovation. Stop trying to convince tenants there is nothing we can do. We just need some innovation and clearly that will not come from you.
Am enjoying the sunshine. Are you?
10:06 Enjoy your Hamptons retreat. In some cases, things just don't work. A clever guy came up with a thought, a thought I had some time ago. I worked hard on trying to figure it out. I tell you I cannot. And your continued advice is to keep working on it because if I do then it will work. That is a type of reasoning that borders senseless.
ReplyDeleteHere's a thought: there has been info about land trusts on this thread. Why don't you take that big brain of your's and tell us all how you can will this to work. No snide comments, just give us all a tutorial on how through your stunningly brilliant mind, you can make it work.
We all await your plan. No BS comments about what someone else should do to figure it out. Your plan???
9:09 why are you so rude and insulting to 10:06? sounds like you two are on the same side and they haven't insulted you at all. I suggest you two disengage. Its unproductive when one insults the other eg saying big brain. Grow up.
ReplyDeleteMust get word out to public regarding all this. Must post all over social media. MUST MUST MUST.
ReplyDelete