Divide $3 billion by 11,200 apartments, and it only comes out to $268,000 for a Manhattan apartment. ..on a closer look, there is good reason for skepticism. Ask around the real estate world, and one is hard-pressed to find anyone who believes that the tenant bid, in its broad concept, can raise anywhere near enough money to satisfy the mortgage holders. (Based on the current rents, the property... [more]
Divide $3 billion by 11,200 apartments, and it only comes out to $268,000 for a Manhattan apartment.
..on a closer look, there is good reason for skepticism. Ask around the real estate world, and one is hard-pressed to find anyone who believes that the tenant bid, in its broad concept, can raise anywhere near enough money to satisfy the mortgage holders. (Based on the current rents, the property is likely worth about $1.9 billion, but investors eyeing long-term rent increases would presumably pay more.)
The chief problem is the multitude of goals articulated by the tenant leaders and Mr. Garodnick. For instance, they want to convert the complex from rental to ownership, and are resolute that no one can be evicted and anyone who doesn't want to buy can keep paying their regulated rent. They also want those who do buy to pay below-market rates and be able to sell for a profit. Additionally, they desire long-term affordability restrictions, and to have Stuyvesant Town serve as a middle-class oasis in Manhattan.
But with every inclusive protection and affordability restriction comes an added cost. In a no-eviction plan, there is far less certainty of how many people will buy; those paying the least in rent would be least likely; and it's unclear if different tenants would be allowed to pay different prices. The more uncertainty and the less market-rate sales, the less likely it is that the tenants will be able to find investors.
"It doesn't matter with the restrictions or not-they're not going to get to $3 billion," said an executive who has looked closely at the property. "I don't know who would finance it."
And while there are sure to be requests for government help of some sort, few officials, as of yet, seem to be running toward the tenants with open arms.
http://www.observer.com/2010/real-estate/taking-stuy-town[less]
Response by DaBulls
about 16 years ago
Posts: 261
Member since: Jun 2008
A system needs to be in place that encourages purchasing for the tenants. This rental system, although supported by the government, is not a natural state for families long-term and frankly is not viable either as proven out by the prior complaints by the tenants about Met Life and then of course the fiascos with Tishman Speyer. Unfortunately, if this rental system continues, the lifestyle at the complexes will continue to deterioriate for years.
Ignored comment.
Unhide
Response by Riversider
about 16 years ago
Posts: 13573
Member since: Apr 2009
If the idea is to maintain cheap rental housing then the idea doesn't work. It just benefits the existing class of renters and gives them a windfall by buying at an insider price and then selling. Of course Stuy Town residents won't object to this form of ending rent stabilization...
However if no gov't hand-outs are used here. Then the quicker we end rent stabilized Stuy Town the better. The Irony if Stuy Town residents sowing the exiting of its being rent stabilized are all too amusing.
Ignored comment.
Unhide
Response by Riversider
about 16 years ago
Posts: 13573
Member since: Apr 2009
One idea of a buy-out that I do find intriguing is seeing former renters as owners now in a position to assess maintenance fees. Would they raise them in order to build a reserve fund, and fund needed improvements in aging complex to repair elevators, replace windows, roofs, boilers... If they do it, might improve the complex and see more money committed to it than another owner could get away with.
A system needs to be in place that encourages purchasing for the tenants. This rental system, although supported by the government, is not a natural state for families long-term and frankly is not viable either as proven out by the prior complaints by the tenants about Met Life and then of course the fiascos with Tishman Speyer. Unfortunately, if this rental system continues, the lifestyle at the complexes will continue to deterioriate for years.
If the idea is to maintain cheap rental housing then the idea doesn't work. It just benefits the existing class of renters and gives them a windfall by buying at an insider price and then selling. Of course Stuy Town residents won't object to this form of ending rent stabilization...
However if no gov't hand-outs are used here. Then the quicker we end rent stabilized Stuy Town the better. The Irony if Stuy Town residents sowing the exiting of its being rent stabilized are all too amusing.
One idea of a buy-out that I do find intriguing is seeing former renters as owners now in a position to assess maintenance fees. Would they raise them in order to build a reserve fund, and fund needed improvements in aging complex to repair elevators, replace windows, roofs, boilers... If they do it, might improve the complex and see more money committed to it than another owner could get away with.