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Pols Tout 20 Years of Affordability in Stuy Town Plan, But Is it Enough?

By Jeff Mays | October 23, 2015 4:49pm | Updated on October 23, 2015 6:47pm
 A $5.3 billion deal to sell  Stuyvesant Town and Peter Cooper Village  to the private equity firm Blackstone Group will keep at least 5,000 of the development's 11,200 units affordable for the next 20 years.
$5.3 B Stuy Town Deal to Keep 5,000 Apartments Affordable for 20 Years
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STUYVESANT TOWN — Standing to the side of a press conference where politicians heaped praise on a $5.3 billion deal to sell Stuyvesant Town and Peter Cooper Village to a private equity firm, resident Jason Slibeck couldn't muster the same level of exuberance.

The pols touted the key piece of the sale to the Blackstone Group that would keep at least 5,000 of the development's 11,200 units affordable for the next 20 years.

"Twenty years is not a long time," said Slibeck, a 46-year-old entrepreneur who moved to the complex in 1995 after he left the Navy and now lives there with his wife and two children. "I'd like to think of this as someplace my kids would want to live someday, but I'm not sure after this deal."

What worries some tenants is that Blackstone — which has said it plans to be long-term owners of the complex — will have no incentive to keep apartments affordable after 20 years ends.

"There is nothing that would prevent every unit from becoming market rate," Slibeck said. "Blackstone has a fiduciary responsibility to its shareholders to return the highest percentage possible, not preserve affordable housing."

Mayor Bill de Blasio called the pact the "mother" of all affordability deals and the largest single preservation agreement in city history.

"This is a great victory for tenants everywhere," de Blasio said during the press conference.

“I’m not thrilled,” said one resident, who gave her name as Margaret and said she had lived in Stuyvesant Town for 29 years.

“Twenty years will go by in a heartbeat," she added. "It’s a long-term stop-gap measure, but after that it could all go back to market-rate rent."

The history of the complex's dealing with large real estate firms is also troubling, say some tenants.

Tishman Speyer and BlackRock purchased the complex for the record price of $5.4 billion in 2006. Residents say the real estate titans initially planned to push out rent regulated tenants in order to make the more than 11,000 apartments luxury units — but stopped when the housing market crashed.

Some market-rate units soared to $7,000 a month for a two bedroom, according to residents, prompting tenants to fight back by filing lawsuits. CWCapital Asset Management took control of the complex in 2010 after Tishman Speyer and BlackRock defaulted on a $16 million loan.

Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, said Stuyvesant Town was a "model of affordability" before the 2006 sale. That's why he understands residents' concerns.

"The only affordability is long-term affordability and 20 years comes and goes in the blink of an eye. If I was a tenant there I wouldn't feel totally assured, either," Dulchin said.

But given that the city did not have much leverage in essentially what was a private deal, Dulchin said the city fared well in not giving tax breaks and only a relatively modest amount of financial considerations.

"They did the best they could without getting their pockets picked," he said. "Is it perfect? No, but this is probably the best deal the city could get."

Slibeck said he was upset that the discussion of Stuyvesant becoming a tenant-owned complex was taken off the table, adding that he believes that would have been the only arrangement that could have kept the units affordable for the long haul.

Stuyvesant Town and Peter Cooper Village Tenant Association President Susan Steinberg said the idea of tenants purchasing the complex dissipated as its value soared over $3 billion.

Still, de Blasio, Councilman Dan Garodnick and Assemblyman Brian Kavanagh all said they felt 20 years was a long enough time to work out a deal to extend affordability at the complex.

"Future leaders will have an opportunity to come back to this," de Blasio said.

Kavanagh said rent regulation laws have gotten incrementally better during the two instances the complex's rent regulation came up for renewal during his tenure.

The Republican-led Senate has been the main obstacle to strengthening rent laws, but "the senate is shifting," he said.

"I'm confident at some point in the next 20 years we'll have a Democrat Assembly and Senate," Kavanagh said. "We are not declaring an end to economic pressure but this is a big step towards reducing that pressure."

Garodnick said the complex was losing 300 rent-regulated apartments each year as rents surpassed the threshold to maintain protections. The deal will serve as a stop-gap measure.

"I would have loved 40 years, but we'll take 20 years," said Steinberg, who praised the deal as a "solid outcome" during a press conference.

"Hopefully, rent regulations will still be with us when this measure expires," she added.

Noah Hurowitz contributed reporting.