SolidarityEconomy.net

Tenants’ Bid Among a Dozen for Complexes (original title)

A group aligned with tenants of Stuyvesant Town and Peter Cooper Village submitted a $4.5 billion bid yesterday to buy the 110 apartment buildings overlooking the East River in the hope of retaining the complexes as middle-income housing.

Their offer was neither the highest nor the lowest in one of the biggest real estate auctions of all time. Metropolitan Life, the company that built Peter Cooper Village and Stuyvesant Town in 1947 for returning veterans, got roughly a dozen offers by its 3 p.m. deadline yesterday, ranging from $4.3 billion to slightly more than $5 billion, according to real estate executives.

The rare opportunity to own 80 acres of prime property in Manhattan and 12,232 apartments has drawn national attention and bids from some of the biggest developers and residential developers in the country, as well as banks and foreign investors. Bidders include Related Companies, the Lefrak Organization and Apollo Real Estate Advisors.

It has also touched off a raging political debate about the loss of middle-class housing in Manhattan as the current real estate boom has sent prices sky high. Nearly three-quarters of the apartments along First Avenue, between 14th and 23rd streets, have regulated rents at roughly half the market rate.

In a bid to slow down the sale of the property and give a boost to the tenant bid, City Councilwoman Rosie Mendez said she plans to submit legislation next week that would slow down MetLife’s plan to sell the property and boost the tenant bid. The legislation would require the owners of large residential properties, where more than half the apartments are rent-regulated, to notify the city’s housing department 120 days prior to a sale.

The city, in turn, would be required to assess the impact of the sale on the city’s dwindling supply of housing affordable to low and middle-income families. The city could suggest ways of mitigating the problem, although it would not prevent the transaction.

“We have a housing crisis,” Ms. Mendez said. “The city really needs to take a look at this. It alarmed me how much affordable housing we might be losing.”

It is unlikely that the legislation by itself would offset the $500 million gap between the tenant offer and the highest bid. But the proposed bill has already picked up key support in the council and made some bidders nervous that the deal could be embroiled in politics and costly delays.

Word of the proposed legislation circulated through the real estate industry yesterday, setting off alarms. Steven Spinola, president of the Real Estate Board of New York, the industry’s powerful lobbying arm, said he opposed the bill, suggesting it was unconstitutional and risked exposing the city to lawsuits if the sale is upended.

“I’m convinced it would be thrown out if it was passed,” Mr. Spinola said. “What are the fiscal implications.”

But Christine Quinn, the city Council speaker, was sympathetic to the proposal by Ms. Mendez.

“We’ll be giving the bill careful consideration,” she said. “Stuy Town and Peter Cooper in some ways represent New York’s version of the American dream. People thought if they could make it if they got in. The decline of middle-class housing is a citywide problem.”

MetLife announced earlier this year that it was putting the two complexes up for sale and bridled at suggestions that the company had any continuing obligations to provide below-market housing. Real estate companies leaped at the deal.

Company executives have suggested to city officials and reporters that many of the 25,000 residents of Peter Cooper Village and Stuyvesant Town, which has long been an affordable oasis for firefighters, nurses and teachers, made too much money to qualify for any kind of assistance.

In recent years, MetLife has ousted illegal sublets and tenants whose apartments were not their primary residences. Under rent regulations, an apartment can also be decontrolled after it becomes vacant, or if the rent reaches $2,000 a month and the existing tenant’s household income rises above $175,000 for two successive years. As a result, about 27 percent of the 12,232 apartments are now at market rates. An additional 1,600 units will be decontrolled over the next two years, according to sale documents.

But tenant advocates like Ms. Mendez and Councilman Daniel L. Garodnick, who lives in Peter Cooper Village, say that the city cannot afford to lose the middle class, which is coming under increasing pressure from high prices and rents, especially in Manhattan.

Mr. Garodnick and the tenant association have assembled a group of developers, pension funds and union investments and a plan to convert the complex to a cooperative. They say it would preserve 20 percent of the apartments for middle-income families who rent and make another 20 percent affordable for residents who want to buy. The remaining apartments, under their plan, would be sold at market rates and at a slight discount to market.

“This is a stable working and middle-class community that we believe needs to be preserved,” said Ed Ott, director of the city’s Central Labor Council, which has agreed to provide mortgages for residents who want to buy their apartments. Mr. Ott estimated that 40 percent of the 25,000 residents were union members.

Stuyvesant Town was built in 1947 under a contract with the city that limited MetLife’s profit to 6 percent a year, in return for property condemnation by the city and a 25-year tax exemption intended to keep the rents low. Next door, the company built Peter Cooper Village, which has larger apartments, without tax exemptions.

Company executives say that MetLife kept Stuyvesant Town and Peter Cooper affordable for 25 years after their agreement with the city expired. But it now has an obligation to get the best deal.

But Ms. Quinn, the Council speaker, said that she hoped that MetLife takes the tenant offer seriously.

“MetLife also has an obligation to its shareholders,” she said. “Does this mean MetLife has to get the biggest dollar possible? They should remember all the support the city has give them historically and the critical role they play in providing middle-class housing in our city.”

[View the original New York Times article here]