FINANCIAL DISTRICT — Debate is heating up at affordable housing complex Southbridge Towers as residents prepare to decide whether to take their apartments private.
Residents are set to vote in July on whether those living in Southbridge — a 1,651-unit complex of several towers that sits between Pearl, Frankfort, Gold and Fulton streets — will turn their subsidized co-op into market-rate apartments, which would allow residents to sell their units for upwards of $1 million.
Proponents say the privatization will enable residents who paid $10,000 or less for their apartments decades ago to sell them at market rate and gain financial security.
Other Southbridge owners, however, said that going private would remove a source of affordable housing in the city that could serve future generations. Plus, some residents take issue with several points within the recently released 900-page offering plan, which, they said, make going private seem more risky than beneficial.
“I would never have been able to afford living in Manhattan if it weren’t for Southbridge Towers,” said John Fratta, 62, a member of the complex’s board of directors. “To take 1,651 apartments of affordable housing away for the sake of greed is unconscionable to me.”
Others added that it’s not so clear, in the dense privatization plan they were given to sort through, that the benefits of going market-rate outweigh the risks.
Some said they fear that their low cost of maintenance will increase if the plan goes through.
According to the privatization plan, each apartment owner will have to pay a 28 to 33 percent “flip-tax” back to the co-op when he or she sells at market rate. The money from those taxes, according to projected revenues based on selling 3 percent of the apartments each year, will keep the maintenance fees the same, according to the plan.
If no apartments are sold after privatization, maintenance fees will increase by 63 percent, according to the plan. And, in the worst-case scenario described in the offering plan, if no apartments are sold, and one-third of the apartment owners decide to remain under the current subsidized program — a choice that owners will have even if the complex goes private — maintenance fees will be 93 percent higher than the current fees.
“There are a lot of twists and turns in the 900-page offering plan,” said Paul Hovitz, a longtime Southbridge resident who is opposed to the plan. “We’re having a lawyer sort through all of this because we’re not sure all of this adds up to actually benefiting everyone if we do go private.”
But some residents say the benefits of going private far outweigh any potential downsides.
“I’m retired and 84 years old and being able to give hundreds of thousands of dollars to my family would be of great value to me,” said Joseph Scharff, who owns a one-bedroom apartment in the complex that he paid less $10,000 for 25 years ago. “I’d like the freedom to decide what to do, and I think this complex could thrive with privatization.”
Wally Dimson, the president of Southbridge’s board of directors, said he encourages all residents to carefully read through the privatization plan, with the help of lawyers and accountants if necessary, to make sure they are getting the most accurate view of the plan and its potential benefits.
“We want residents to make the best decision for themselves,” said Dimson, adding that the board will be having an informational question and answer session in June, though the date has yet to be determined.
The 900-page offering plan was given to residents on April 21, nearly eight years after residents had voted to allow a feasibility study, to examine what going private would look like. The plan was recently accepted by the state's attorney general.
The vote, originally scheduled for June, has been pushed back to July to give residents more time to study the offering plan. Privatization will only go forward if two-thirds of apartments vote in favor of it. An official date for the vote had not been set as of Tuesday.