StuyTown letter from Dan Garodnick

Not sure how the monthly rent you were paying prior to Tishman Speyer is maintained for the benefit of the new landlord who has a higher basis. Nice dream...

Does that mean if Stuytown goes condo or co-op and I'm paying $3k a month my price per square foot would be higher than a tenant paying $1k a square foot...i was thinking of moving to stuytown because if it converted to condos everyone would be paying the same square foot..my balloon just burst.

No I think the difference in prices will depend on whether you are in a renovated apt or a non renovated one. It's much more complicated than this! Just because your rent is higher doesn't mean you will pay more in the conversion. That wouldn't be fair.

It means that insiders will buy their units, move out and rent them out at the very same prices that Tishman Speyer would have done in the first place. The whole issue with regards to Tishman Speyer violating rent controls/stabilization only to see the units sold off shows what a mockery the system is. All that needed to happen was that the existing renters get a piece of the pie. We've seen the beginnings of the end to rent stabilized Stuy Town.

And of Course Dan Gardonick is supportive of this effort, it's a guaranteed vote getter telling his residents he's going to make them some money, many of which can readily market priced units, but are saving money at the public's expense.

no julia, paul weiss attorneys have indicated that they will be providing rent/buy analysis for all units, but that the price would be an average per square foot that would apply to all units independent of rents paid. the cost would range from unrenovated in inconvenient locations on low floors to newly renovated in best location on top floors.

they also intend to keep the units that don't sell to insiders as rent regulated units, and they would remain rent regulated regardless of any change in the RS laws.

thanks for posting my stuff, veyello. if anyone wants additional information about what's going on at stuytown there is a forum topic on brickunderground.com that discusses yesterday's tenants' association meeting in some detail.

Your stuff? This is from Garodnick.

AR,CCCharley...great to see you on SE and what you posted makes sense...

AR: that doesn't make sense to me, unless I'm reading it incorrectly. So a longtime RS tenant will be offered the same price/sqft as a newer "free-market" tenant.

yes, price will not be based on how long you have been here. it will take into account, however, whether or not the unit is renovated, which obviously is only true for the formerly free-market tenants.

I just read the BrickUnderground post. Okay, I get it. If they are all RS units, then it makes sense that they are all offered the same "discount". But in order for the numbers to work, it seems to me that the insider prices would have to be low enough to get x% to sign on, but they are not going to be so low as to make sense for long-time tenants. So say, you have a long-time RS tenant who vacates. While the unit may remain RS indefinitely according to the proposed regulation, what is the incentive for the sponsor to keep the unit a rental?

BTW, if anyone thinks that it's a new thing to offer same $/sqft to all current tenants, regardless of rent paid, they should look at the NYT archives. It was common back in the earliest conversion wave that people would actively look for rentals in buildings that looked like they might be converted.

during the conversion process the sponsor will become the TA, i believe. there was also some discussion of having a not-for-profit take over the RS units as it would be cost-effective.

i believe they fully expect many of the longest-term tenants won't buy. i'm not certain, but it sounded as if some support might be coming from the city if the units remain RS in perpetuity. a couple of speakers said that there was strong support for that aspect of it.

AR: but RS is state law. So the state (as far as I know) has the ultimate right to abolish RS forever - are you saying that they will carve out special RS status for PCV + Stuy. That would be interesting. However, that doesn't answer the question of whether the tenant association will have the power to sell those units or have to keep them as rentals. I'm a-thinking that the TA 20-30 years down the road will probably want to sell.

CC: you did well, girl :)

no, i think there will be covenants (or whatever) in the deal documents that will prevent the units from ever being sold. it would be contractual, independent of what albany does. how they would determine rent increases if rent stabilization were to be abolished, i'm not certain, but i'm sure it will be covered in the deal documents. the TA during the conversion would be voluntarily agreement to have a form of rent regulation attached to those units forever.

it's a very clever way of making sure the complex will never be sold again.

How would they enforce that though? It's a contract between X & Y, where I presume X is the current owner and Y is the TA. If they chose to breach the contract 20 years later, can they do so (vacant apt of course), what's the fallout? Just paying X something at worse or changing the offering docs or whatever, maybe requiring Z% of owners & tenants to agree. I can't see how they can make RS stick unless it's a deal between state & TA.

there would be a cloud on the title. it could never be sold.

i presume it will be part of the offering plan that's presented to the AG.

i'm fairly certain a clever attorney could draw up something that will stick, maybe they'll be put into an irrevocable trust of some sort. i don't know the details, but paul weiss isn't a low-rent firm.

I'm not so +ve. Offering plans can be amended, subject to AG approval. I'm also curious as to which units will be in the perpetual RS pool.

also, if they have entered into some sort of agreement with the city, in return for assistance, to keep the units RS I believe the city could sue for injunctive relief.

Yeah, that's different. But the city doesn't have to sue for anything. In the case of the Hudson Yards development, there was a covenant (?) that the developer had to build a school, if the city wished it. The city chose to allow them not to build, years later and not to sue to enforce. Anyway, it's all about the numbers. Anything can be smooshed over if there's a huge monetary reason to.

it depends on who doesn't buy. i don't know their target number of units for RS, nor what they will do with the currently vacant units (although they indicated that they would make every effort to enable insiders who wished to purchase a vacant unit rather than their own do so).

it all depends on how the sales document reads. there could very easily be an iron-clad restriction on the sale of certain units in a sales document. if so, the real issue is title insurance. they wouldn't be able to sell.

There's no title insurance for co-ops. This is a co-op conversion, no?

not necessarily. a lender will let someone buy a coop without ensuring there's clear title? that's not what i recall from my coop purchase.

This makes it much clearer that I should rent in stuytown hoping it will convert...AR..any guess on what the price per sq foot...

Hope is definitely a good strategy for real estate.

julia, i think they're looking at it more from a perspective of total monthly cost. so if it's a condo there will be a certain ppsf. but if they have an underlying mortgage for a coop the ppsf will be less.

if it converts the prices will be very good.

I know that there is NO title insurance requirement for a co-op. You're buying shares in a corp., not real property and you can't transfer or encumber those shares without knowledge & approval from the co-op. That's how the "title" process works. Lender checks with co-op as to "title". So ultimately, the definition of what the co-op owns or possesses or has the right to do is bound up in the offering docs. If those offering docs can be changed, with approval of AG, I can't see that anything is tied up in perpetuity. Of course, it can be not worth the while of anyone to muck up. But that's another issue.

My interest is as a lowly city taxpayer. If I'm supporting with my dollars, perpetual RS apts, fine. But if later on, they can be sold to yield profit for some private entity, not good.

Julia: I can't see why you would not rent in Stuy for the option of purchasing, unless it costs much more than your current rental.

it doesn't have to be in the offering plan. it could be in the sales document between cw capital and the purchaser.

Wait, I'm getting deja-vu. Kind of goes back to the creation of Stuy-PCV. I'm told that demolishing an entire community and letting a private co. (Metlife) profit is fine because we're getting better housing stock to be kept affordable forever. Then, Metlife turns around and sells for huge profit what it got at a lower price and it's able to do so because the original contract didn't foresee the possibility of a sale.

Well, I'm interested in seeing how they'll make it stick. As in, will the sales doc just refer to the offering plan, which in turn contains pool of perpetual RS apts. Luckily, I won't care so much in 50 years.

that's why this time the documents will address that. they're even talking about setting up a not-for-profit entity and transferring the RS units to it.

i'm not a real estate transactional attorney, but i don't find it so difficult to conceive of this occurring. a future TA may not want this, but the current one does VERY much so, and they are the ones who are currently involved in the terms of the documents.

Thanks 10023 - it wasn't easy to move again after a year but hopefully now I will finally payoff. We'll wait and see. We really want a 2 br vs a 1 br but I am sure we aren't alone.

Hypothetically speaking, if every insider buys a unit, then there will be no RS units right?

So a self-run (i.e. board members made up of RS renters) entity that owns the units? Can such an entity vote to dissolve itself or to change its constitution or whatever?

Unfortunately, our city doesn't have a great track record in enforcing RE contracts when confronted with private money interest.

Are there any PCV units available now for rent? Esp. unrenovated at "stabilized" prices?

I finally see a light at the end of the rental nightmare tunnel...i hope it works out.

Also, if there are perpetual RS units, there should be some transparency as to how to get on those waiting lists. Or maybe there should be no waiting list, and a lottery for vacant units. Also not clear if there's going to be enforced income limits for those units? It would be a travesty, but nothing new under the sun, if there's RS in perpetuity but no income limit + strict inheritance rights.

How much of the 3.5bb will end up as a mortgage that the Sty Town coop purchasers will take on. Shifting the debt of One to The Many.

Hey by the way - why are we all up so early on a Sunday?

It's 10am. Been awake for 4 hours. Anyway, I shouldn't waste my time thinking about something that I have zero control over and only a small stake in.

there are no waiting lists for the rs units at market price...i don't know about the unrenovated units even being up for rent anytime soon. everytime i call they say they haven't been told anything about them. cccharley..nytimes and bagel run..

can someone link to the brickunderground forum, i saw a column but not a forum...

there is absolutely no way everyone will buy their unit, not even close.

streetview, it doesn't matter. the conversion will only occur if the cost for the buyers makes economic sense, so that would include any underlying mortgage if this becomes a coop. everyone has admitted that a conversion has not a chance in hell of succeeding here unless the monthly costs make sense to many of the "true" RS tenants.

10023, obviously answers won't be available until and if the deal is brokered.

One should tread carefully before buying as an insider if there's to be a pool of RS tenants. If the costs of repair go up, the rents can't increase. And as with any landlord, there's always the difficulty of collecting rent on a timely basis. If I were to rent an RS apt from a non-profit entity that is composed of renters and neighbors, I'm curious to see how the eviction process would work.

If I had an apt in Sty-PCV at an attractive rent, I'm not sure I would go ahead and buy even if the monthly costs were equal given the unknowns. I'd rather stay RS. I still get the "protection" of living in someone's investment, timely repairs, etc. without risking capital and best of all, my rent increases are limited.

i'm more worried about resale financing. if the banks were to institute a 75% owner-occupancy requirement we could get screwed.

i'm buying for the kid. and they're not dumb, 10023, major engineering studies are being planned, and a healthy reserve fund is a prerequisite. it likely will be less risky than a normal coop purchase from that perspective.

it's not much capital to risk, really. FHA is what, 5% down? around $20k to purchase. i certainly wouldn't do it if i felt i might ever need to sell it, but i could carry this forever.

AR...i agree, i wouldn't buy with the intention of one day selling for a profit...i see it as a long term home..and regarding repairs, etc. rents still go up, even on rent stablized apts. 5-6%.

appraisal on stuy town: worth less than loan balance

http://therealdeal.com/newyork/articles/stuyvesant-town-and-peter-cooper-village-now-officially-worth-less-than-its-loan-balance-after-new-appraisal-by-special-servicer-cw-capital

Whatever happened to julia?