Affordable Housing Institute : US

 

Say what one will about New York [And you do! -- Ed.], no one can deny they do things in a financially big way, and the starting gun has just been fired on what is sure to be a multi-post, multi-year, multi-billion-dollar …

 

Back when a billion dollars was a lot of money

 

… battle over a property, a neighborhood, and even possibly the future of New York City’s anachronistic, inequitable, and crippling system of rent stabilization. Let the New York Times sound the trumpets:

 

With rising housing costs squeezing middle-class New Yorkers and with the Bloomberg administration struggling to slow the loss of homes that people like teachers and nurses can afford, the news that Stuyvesant Town and Peter Cooper Village could be sold and turned eventually into luxury apartments illustrates vividly the uphill battle the administration and the city are facing.

 

An overview of the complex from above looking west along 14th Street. It runs from 14th up to 23rd Street.

(Colloquially it’s known as Stuy Town, pronounced like pig.)

 

To give a sense of the complex’s scale, even measured against Manhattan Island, let’s play Men In Black and zoom in from space:

 

Manhattan Island, from five miles up

(Roosevelt Island is the battleship-shaped sliver at top right)

 

The Lower East Side, no longer a hellhole

 

Close-up on the complex; waterfront views!

For an even better appreciation, tour the complex’s site map.

Now, Stuyvesant and Peter Cooper represent a huge stock of urban housing:

Nearly three-quarters of the 11,200 apartments in the two complexes, which Metropolitan Life is offering for sale, currently fall under the state’s rent regulation system [really, rent control -- Ed.] and rent for as little as half the open-market rate.

 

Quite possibly less than half market rate, Manhattan market rents being so high.

By itself, sale is a non-event in terms of resident protections:

 

While state law would prevent a new owner from charging market-rate rents to existing residents as long as they remain in their current apartments, an owner could in many cases have the unit deregulated when the current tenants die or move.

That’s either a new owner or the current one. So what’s the big deal about sale?

A new owner who pays the $4 billion to $5 billion (that MetLife is said to want) may have a powerful financial incentive to try to remove many or most of those units from the rent regulation system.

 

Imprecise. The current owner has just as powerful a financial incentive. What makes a buyer different? Not the financial incentive, but two other things:

1. Financial urgency and financial imperative. That much money will come from somewhere, and some of it will be very impatient and voracious.
2. Risk tolerance. Whoever buys the properties will be someone fully prepared to shoulder the burdens of converting, and the slings and arrows of outrageous headlines.

Now the competitive market process will push both attributes aggressively, which means that instead of Snoopy-esque Met Life as a landlord,

 

How much money will the developers contribute?

the new one will have money, brains, risk tolerance, and allegro con brio in spades.

 

Well, maybe not these guys

 

Just how much money is at stake?

 

Even enough for Uncle Scrooge

[Continued in Part 2, 3, 4, and 5.]

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