By Sabina Mollot
and Holly Dutton
Another round of rent hikes at Stuyvesant Town should make the massive East Side apartment complex more attractive to investors.
City Council Member Dan Garodnick said this week that the move announced by the state housing agency would bulk up the rent roll, a dangling carrot for potential buyers.
The state’s Division of Housing and Community Renewal last week sent out letters to the 30,000 Stuy Town and Peter Cooper Village tenants advising them that five Major Capital Improvement charges for various renovation projects around the 110-building complex were about to be lumped onto their rent checks.
The charges were retroactive to 2009 when the work was done by then-owner Tishman Speyer.
CompassRock, the management company appointed by special servicer CW Capital to run the complex while it remains in ownership limbo, then made an offer to try to reduce the amount of retroactive payments owed if tenants agree to start a clean slate going forward with the fresh charges applied to their rent.
In a statement, CW said it intends to make public the final settlement terms for each apartment affected by the beginning of next week. “In doing so, we are seeking to mitigate the effect of the MCI’s and provide residents with clarity regarding their ongoing rents,ˮ said the statement, which also noted that the company’s legal advisors anticipate that all, or almost all, of the MCIs that have now been approved by DHCR will ultimately be granted.
Conceding that the overdue bill from repairs done by Tishman was undoubtedly a blow to residents, CW said it was moving to “waive a meaningful amountˮ of the retroactive charges for residents as a gesture of good faith.
However, apparently anticipating a loud response from the influential ST/PCV Tenants Association, the special servicer added, “Unfortunately, the way the rent stabilization system works, it seems that appeals from a small minority of residents could disrupt a settlement of which a significant majority of the property is in favor. We feel that it is important people know and understand this.”
Decisions on whether to grant MCIs are made by the state housing agency, the Division of Housing and Community Renewal (DHCR) of New York State Homes and Community Renewal (HCR).
Speaking at a rally of tenants held at the local Simon Baruch Middle School on 20th Street on Saturday, council member Garodnick said that he thought the offer to reduce the retroactive amounts, but not the monthly increase that would be charged in perpetuity, was only made because the monthly increase is added to tenants’ base rents. This would bulk up the property’s rent roll, which would be attractive to a potential buyer, noted Garodnick, while the retroactive charges “do nothing for that.ˮ
He added, “While we appreciate the gesture, we may have to challenge them in any event. CW is well aware that we have the ability (through a challenge) to tie the system up for quite some time.”
The two sides have clashed several times since the CW was appointed to try to recoup some of the $6.4 billion Tishman’s investors lost in what became the biggest commercial mortgage default in US history.
In 2011, Brookfield Asset Management began working on a plan with the tenants association to buy the property and convert a portion of its apartments into condos. In a statement today (Tuesday) spokesman Andrew WIllis said the company was “still interested in working with tenants to acquire Stuyvesant Town and Peter Cooper Village.”