http://www.capitalnewyork.com/article/real-estate/2014/06/8547200/stuy-town-residents-fighting-again
Extract from above:
But the developments of last week provided some comfort—and breathing room—to both tenants and the officials on their side, leaving them all encouraged by Friday.
First, U.S. Senator Chuck Schumer was able to secure commitments from Fannie Mae and Freddie Mac—the nation's largest sources of housing equity—not to guarantee any deal that does not ensure long-term affordability for the roughly 6,000 units that are below market rate. He said they will not help any purchase that does not have the consent of both the city and tenants, “no ifs, ands or buts.”
“Without Fannie and Freddie's backing, it will be very hard for one of these rapacious lenders to come in and change the whole way Stuy Town is,” Schumer said at the rally Friday morning, where he drew many cheers from the crowd. “It will be very hard for them to say they are just getting rid of the affordability and charge any rate the market wants.”
Then, Alicia Glen, the deputy mayor for housing and economic development, was able to secure a commitment of her own: CWCapital agreed to give the city at least 60 days to find a way to support a sale that would indeed guarantee the long-term affordability for those 6,000 units. Andrew MacArthur, the managing director of CWCapital, put the agreement in writing by way of a letter dated last Wednesday. He said the plan has been for some time to begin “evaluating resolution alternatives in late 2014 or early 2015.”
“As such, we have no immediate intention of pursuing a resolution of the property and believe we should both commit the next 60 days to exploring structures that could ensure the continuance of some of the City's policy objectives, while also allowing us to satisfy our obligations to our investors,” he wrote to Glen.
31 comments:
Perhaps it would be good if we knew the specific outcomes tenants are hoping for. For example, with respect to RS what exactly are some new protections people are hoping for?
From what the pols have been saying, their preferred outcome is still a total victory for the rapacious ghouls who end up finally owning this dump. Sure the 6000 old-time RS tenants will be protected.But what of the thousands of apartments which have been taken out through illegal churning of leases and rent for obscene amounts? ( Yes I know technically all the apartments are RS but we know in reality that is bullshit ). What you will have is two classes of residents, RS and MR...just like now. And as the old-timers move, die ALL of Stuy Town will be market rate. Voila! As far as condo or coop or any form of tenant ownership, keep drinking the Kool Aid...ain't gonna happen. Just my humble opinion...contrarian points of view gladly welcomed.
What about the 5000 apartments who are paying OVER THE TOP RENTS and no one gives a damn that they're illegally being jacked up to ridiculous levels?
What about us, what about us? If you're not going to support us, we'll return the favor.
Hippo is right. Using the current paradigm, as old timer apartments vacate, they'll get filled with guess what....students. There's no way an owner can be legally constrained from renting to students. So the churn begins. Right now close to 50% of the apts are MR. Renting to students, what do you imagine the ratio will be in 20 years? I say about 90% MR. Which effectively means that RS will be dead here. And at the end of 20 yrs, there would be no great benefit rendered to anyone but the owner. Essentially, this means that the only way we'd have any semblance of stability would be to have some type of tenant ownership plan that allows many tenants to buy. At least the people here (other than the owner) would get some benefit and RS folks would be treated with respect.
June 17, 2014 at 12:06 PM
Off the top of my head.
• Repeal of vacancy decontrol.
• Repeal luxury decontrol.
• Do away with the apartment improvement loophole in rent law that allows landlords to increase rents on vacated rent stabilized units by $1,000/month for every unaudited $60,00 supposedly spent on said improvements.
• Rewrite MCI law that currently allows landlords to keep charging tenants forever for major capital improvements after they've been paid for.
• Repeal Urstadt Law. That would restore home rule to NYC which would allow the city free rein in writing our own rent laws -- that way we can vote out our local elected reps who do renters wrong. As it stands now, with Albany writing NYC's rent laws, upstate Republicans in the State Senate are paid by landlord lobbyists to fuck over us downstate renters and there is no way for us to hold them accountable on election day.
Passage of this stuff is in the realm of possibility in the near future. The anti-tenant GOP only holds a bare majority in the State Senate thanks to a few faux-Dems who switched sides and vote with the GOP. Gov Cuomo could have laid down the law and brought those Dems back into the fold, but this arrangement was convenient for him because it suited him and his first term GOP-lite agenda. The WFP and unions just forced Cuomo's hand and to get their endorsement for his re-election, Cuomo promised to either bring those Dems back into the fold or campaign against them. This is a big deal.
I'm not well versed in the mega real estate industry, but if a potential owner can't get a loan from Fanny or Freddy, couldn't they get one from a consortium of other banks and lenders?
http://ny.curbed.com/archives/2014/06/11/landlord_group_launches_ad_campaign_for_higher_rents.php
fyi humor
Screw the landlords. Complaining their buildings will disintegrate if THEY don't get a rent increase?
Well you know how much it costs just to put their commercials on TV? BULL........................!!
12:06 - these would deal a crippling blow to CW. Especially vacancy decontrol. These would be out of the mayor's hands. Would have to go to Albany. Someone has to be the organizer. Not sure if the mayor has a role. Certainly Hoylman and Kavanaugh.
Do away with the apartment improvement loophole in rent law that allows landlords to increase rents on vacated rent stabilized units by $1,000/month for every unaudited $60,00 supposedly spent on said improvement
Yes! Return those to normal rents. People are not expecting to pay $1,000 but 4k and +++ , with no end in site, on a one bedroom is impossible (again J52 people) illegal and unfair.
June 17, 2014 at 2:09 PM-Returning those renovated apartments to "normal rents" legislatively is not probably not possible, undoing doing permanent MCI increases already approved is definitely not possible. All this would only apply going forward.
I find it comical that tenants who willingly signed market rate leases to live in PCV/ST are now demanding that their rents be rolled back to original RS rates. Let us remind those folks that in order to obtain one of those original apartments, your name had to be on a waiting list that could be 8-10 years long, unlike the MR tenants who simply walked into the leasing office and immediately obtained an apartment. I'm all for affordability and the continuation of RS, but don't dig your grave, lie down in it and then complain you're getting dirty.
And the expectation that MR apartments will be returned to old rents is just a fantasy. There's nearly 5 billion dollars of debt tied to this place, and those market rents couldn't even cover the debt service. If it gets sold for 4.5b, what do you think that means ? It's not a pretty picture. (for anyone)
But if the apartments were illegally increased that is a crime.
illegally = criminal
There are ways to address it and roll back to correct rents. Even this blog had Cuomo quote on 25,000+ apartments rolled back to correct RS rents in NY.
Yes it is possible to correct. Should also be possible to address criminality too yes?
But will anyone have the balls to do it?
Good points 423p.
June 17, 2014 at 4:23 PM
All good points
Imagine if we could repeal all the permanent MCI'S as being illegal? Won't happen, but I can't believe it's 100% legit.
It's really not fair. Thanks Gov. Cuomo, I know you really care about us. At least DeBlasio's RGB people are going to give us a big break this Monday. THANK YOU Bill!
I've written to Kavanaugh and Hoylman asking their positions on current vacancy decontol law. Without changes to this, due to student rentals, RS in PCVST is doomed in about 20 yrs. The only significant thing that's happened is possibly limiting funding from Freddie & Fannie. I say possibly because how will Freddie and Fannie determine what tenants do and don't support. God help us if they go by the say-so of the TA board. I don't see involvement of the mayor as being significant at all. Either we're headed toward a 100% rental situation with increased student rentals or a high priced conversion with very aggressive developer behavior in the first 5 years. Because the 5 year control limit wouldn't be enough for most developers, I think a rental scenario is more likely. So dig this. Over 10-20 years, under a rental plan, units are churned using students and new long term tenants are given leases with preferential rents. Then the developer converts sometime between 10-20 years raising preferential rents at will to legal limits forcing many vacancies that the developer can then sell at near market rates and really clean up. About as predatory as you can get. If two bedroom condos are selling for 1.2M-1.5M now, what do you imagine they'll be in 10 years?
In the very near near future, much of the property will be more than 50% MR.
This is the key. The apartments are turning over rapidly. On our floor alone, two were done swiftly in just a few months. 2!
" If two bedroom condos are selling for 1.2M-1.5M now, what do you imagine they'll be in 10 years?"
Better yet, imagine how much common charges and utilities will be in 10 years. Anyone think that it will be an affordable place to retire into, even if you own your apartment ?
That's their evil plan. They will out-wait us and eventually win.
50% of the apartments are renovated at Market Rate and this TA never called for an audit! Shame!
Find a compounding calculator on the internet and do the math for yourself. My rent is a little over 2K. In 20 years during which time I'll go on fixed income @3% increases per year, my rent will be over $3600. No way I'll be able to stay. Those of you who keep speaking against ownership, do the math for yourselves. Will you be able to stay in 20 years. If an ownership plan is offered, I'll take a good look. Everything depends on price of the unit. Today electric, gas and heating oil would cost me about $350/mo. I'll take 3% increases against that over 3% increases on $2000/mo. Maintenance remains to be seen.
Find a compounding calculator on the internet and do the math for yourself. My rent is a little over 2K. In 20 years during which time I'll go on fixed income @3% increases per year, my rent will be over $3600. No way I'll be able to stay. Those of you who keep speaking against ownership, do the math for yourselves. Will you be able to stay in 20 years. If an ownership plan is offered, I'll take a good look. Everything depends on price of the unit. Today electric, gas and heating oil would cost me about $350/mo. I'll take 3% increases against that over 3% increases on $2000/mo. Maintenance remains to be seen.
CWC will continue as a rental, wait for many to die off, which is happening more rapidly then you think, and Voila --- sky is the limit - no pun intended, but that's what landlords, developers do people.
IT'S A BUSINESS. Nothing less.
It's eventually going to be impossible to live here or anywhere else in this city, unless the RGB consistently gives us very low rent increase. I am worried as is probably everyone else.
6:59: I have to agree. Especially given the divisions among us, I see no unified action emerging. The guys who support RS only seem unmovable which enrages the MRs. Among those who'd like the option to buy, the TA has inspired no unifying confidence and there'd be no agreement on what sort of plan to support. So there you have it. Squabbling tenants, single-minded, one-dimensional developers, and gov't & politicians limited by the laws governing free market sales. I had hoped for some tenant unity at some point, but it's clear now that's not going to happen. No big news. Guess who wins.
A rental model is a loser for any developer eyeing the place. Yes the place will steadily turn MR thru attrition but the wear and tear of transciency eats away at profit. A condo conversion w/slight discount for lease holders coupled with steady - high- maintenance/common charges make this place a Veritable Goldmine for the investor.
Take a look at some figures given a condo plan with slight discount off market (20%). The market for 2BR condos in this area is roughly at 1.2M if not more. So let's say the insider cost is 1M+100K closing costs. Minus 10% downpayment, you're carrying a 1M mortgage at 4.5% = 5000/mo. Plus taxes, plus individual insurance plus common charges, we're probably at over $6500 per month. Minus tax deductions, let's say we're at a little over $5500 per month. No way the required 15% would buy. The discount would have to be deeper. Around 50% for MRs here now to buy soon. At 550K for a 2BR, monthly payments would probably net out to a little over 4K. But if the winning owner stays rental for another 10 years and then does a condo conversion, the potential is much greater. 10 years gives time to get much more affluent people in here while condo prices rise another 40%.
This is why PEOPLE SHOULD OWN THEIR APARTMENTS IF THEY WANT TO.
CW doesn't give a shit about you or me. They don't need our approval to hike rents in creative ways and /or slap on additional Mcis. It's their land and you don't own it. At the very least, if you buy or your neighbors buy, we'll all have a say, a stake in our community. Make it a Mitchell Lama then. Make it NO FLIPPERS, control the cost of the sale of it, Anything but having the Nyc vulture landlords for another decade or more.
6 09 rental model not a loser on 20 acres of prime MANHATTAN - US Real Estate. Are you kidding me? Please, think about the possibilities.
I have but more importantly they have thought about the possibilities. The best return wil be through MR or near sale of units and continued - massive - monthly profit thru management fees. Renting to multiple transients per unit is a losing game with wear and tear, vacancy losses, deadbeat factors, and fluctuating rental patterns. Imagine immediate profits from sale of thousands of units at or near MR, common fees that will rival current RS rents, coupled w/continued commercializations of open spaces.
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