Stuy Town residents fighting, again
The tenants of Stuyvesant Town-Peter Cooper Village—a post-World War II refuge to tens of thousands of middle-class New Yorkers—were feeling emboldened on Friday morning after weeks spent in fear that their apartments would, yet again, be auctioned off to a wealthy developer with dreams of turning them into luxury condos.
Hundreds of residents from the Lower East Side complex—which spans 80 acres and includes more than 11,000 units—gathered on the steps of City Hall, rain at their heads, to proclaim they will fight to the end to ensure a sale like that won't happen. They were led by their local councilman, Daniel Garodnick, who also lives in Stuy Town and has been railing against the evils of what he calls “predatory equity.” By that, he means the purchase of a residential property at a price that can't be supported by existing rental incomes.
“To the sharks in the waters,” Garodnick, surrounded by his neighbors, called to the companies interested in Stuy Town. “These are the people that you're looking to push out of their homes. These are the parents, the grandparents, the hard-working New Yorkers of this city. And guess what? They're not afraid of you.”
It became clear this month that CWCapital Asset Management, which represents the senior creditors in control of complex, was moving to sell the property, which has been in default for years and carries $4.4 billion in debt. The firm went to court and formally took title on the buildings in what was reportedly an effort to fend off junior creditors.
The maneuvering added a sense of urgency, especially for the administration of Mayor Bill de Blasio, which has committed to preserve 120,000 units of affordable housing over the next decade. Losing 6,000 would deliver a powerful blow to those ambitions before the mayor's efforts even get going.
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.
Exactly what the administration—and, perhaps, the state—can cook up for Stuyvesant Town remains unclear. Glen wants a bidding process that would give more weight to buyers willing to keep rents low on some of the apartments in exchange for some sort of public support, such as a 40-year property tax incentive, according a city official. That's just one scenario she has floated, the official said, noting all they've really done at this point is reset the clock.
In a written statement, the deputy mayor said her staff is “aggressively using all the levers we have at our disposal to protect affordability at Stuy Town,” and that the recent news was “a very helpful step that give the City and tenants a better shot at shaping this outcome and protecting this community for middle class New Yorkers.”
But the fact remains that the sale is a private transaction and that CWCapital has a responsibility to make creditors whole. The apartment complex sold in 2006 for $5.4 billion in the largest real-estate deal in American history. But the buyers, Tishman Speyer and BlackRock Inc., defaulted in 2010 on the $4.4 billion it had owed to creditors.
It's likely CWCapital will pursue a sale price in excess of that defaulted debt, especially with some big-name developers reportedly showing an interest. While the administration is clearly making the preservation of those last remaining 6,000 or so rent-stabilized units—said to be affordable to households earning below 165 percent of the area median income—one of its most immediate priorities, there's only so much it can do. As the city official said, they don't have a royal flush, just some high cards.
No one from the administration attended the rally on Friday, where Comptroller Scott Stringer, Rep. Carolyn Maloney, some state legislators and a few others showed up. There were cheers at mention of de Blasio's name, but also some tenants who demanded to know where the mayor was in all this. Schumer said they should take some solace in the fact that the administration was fighting for them—something that didn't happen in 2006 under Mayor Michael Bloomberg.
“We have the city on our side. That is a very good thing,” Schumer said. The city wasn't on our side the last time, try as we might to get them there.”
Now, it seems, saving affordable housing at Stuyvesant Town-Peter Cooper Village is about as important a challenge as de Blasio's freshman staff could face. The point was not lost on Schumer.
“Your fight is not for your apartments,” he told the tenants. “Your fight is for the future of the heart and soul of New York City.”