Docstoc

Investigation of Starrett City Sale

Document Sample
Investigation of Starrett City Sale Powered By Docstoc
					STARRETT CITY BROKER TURNS AWAY AFFORDABLE DEVELOPER
Tuesday, February 06, 2007 | New York Daily News | Topic: Housing

According to the New York Daily News, broker CB Richard Ellis, who is coordinating the sale of Starrett City, the largest federally subsidized rental property in the United States in East New York, turned down the offer of affordable housing developer Mo Vaughn. Vaughn and his company Omni New York LLC attempted to imitate tactics used by tenant groups during the sale of Stuyvesant Town Peter Cooper Village to prevent a mega sale in upwards of $1 billion. Affordable housing advocates are worried that the impending sale of Starrett City will create a migration of lower and middle-income residents from the complex. STARRETT CITY BID EXCEEDS $1 BILLION
Wednesday, February 07, 2007 | New York Sun | Topic: Housing

The New York Sun reports that developer Berkshire LLC has submitted the highest bid for Starrett City, the largest federally subsidized rental unit in the country, which exceeds $1 billion. Other bidders include Related Companies and Apollo Real Estate Advisers. Bids for Starrett City were due on Monday evening. The 5,881-unit apartment complex in East New York is currently up for sale, drawing concern from public officials and residents who fear that a mega sale will make the complex unaffordable. STARRETT CITY SOLD TO CLIPPER EQUITIES FOR $1.3 BILLION
Thursday, February 08, 2007 | New York Times | Topic: Housing

Starrett City was sold today for $1.3billion to Clipper Equities, LLC, a partnership between David Bistricer and Sam Levinson. Tenants have continued to assert the need for the housing complex to remain a site for affordable housing, with concerns that the new owner may raise rents or cut services within the complex. The tenants position has been supported by state and city officials. The new owners plan to develop new luxury and affordable housing on the available vacant land within the complex. They have stated that while they do plan to exit the Mitchell Lama program which helps subsidize housing for middle-income families, they will keep the existing buildings’ rents within an affordable range. Concerns remain about the new owners maintenance record, the actual availability of vacant landing for new

1

buildings, and the fact that existing the Mitchell Lama program may create such a large tax increase that owners may be forced to raise rents despite promises. MAYOR SKEPTICAL OF BID WINNERS OF STARRETT CITY
Friday, February 09, 2007 | The Real Deal | Topic: Politics & Government

Mayor Michael Bloomberg has expressed worry about the new owners of Starrett City, Clipper Equities, who won the sale of the apartment complex with a bid of $1.3 billion. The mayor's main concern is that Clipper is not as reputable a landlord as Tishman Speyer, who bought Stuyvesant Town and Peter Cooper Village for $5.4 billion. Citing past violations by the group led by Sam Levinson and David Bistricer, the Mayor remains apprehensive about new ownership. The sale has inspired criticism from other leading public officials who fear the sale will compromise the affordability of the complex, the largest federally subsidized rental property in the country. STARRETT CITY SALE EMBLEMATIC OF DECREASING AFFORDABLE HOUSING IN NYC
Sunday, February 11, 2007 | New York Daily News | Topic: Housing

The statement by new Starrett City owners that they will be exiting the state’s Mitchell-Lama subsidized housing program is emblematic of a recent trend in the city. The Mitchell-Lama program, originally implemented in 1955, stimulated construction of affordable housing by providing property tax exemptions and low-interests mortgages in return for limiting landlords profits and setting income limits for tenants. Since 1996 the city has lost about 38% of the affordable apartments which were originally created under the Mitchell-Lama program as properties have been sold and new owners have chosen to exit the program. Bloomberg has stated that he is committed to preservation of existing affordable housing units as well as creation of new affordable housing in his New Housing Marketplace Plan, which could offset some of the recent trend. NEW YORK REPRESENTATIVES CALL FOR CONGRESSIONAL INVESTIGATION OF STARRETT CITY SALE
Monday, February 12, 2007 | AM New York | Topic: Housing

Congress has been requested to investigate the sale of Starrett City by two Representatives from Brooklyn, driven by concerns that the
2

sale price will require the owner to raise rents and cut services in what has been the nation’s largest subsidized housing development. Specifically, they requested an investigation by the House Subcommittee on Housing and Community Opportunity to examine how the Starrett City sale could impact the city’s real estate market. The new owners have stated that they remain committed to providing affordable housing, but opponents remain skeptical given the high price that was paid for the development. MORE POLITICIANS SKEPTICAL OF STARRETT CITY SALE
Tuesday, February 13, 2007 | New York Daily News | Topic: Housing

Alphonso Jackson, President Bush's Housing and Urban Development Secretary, added his name to a long list of political leaders weary of the recent sale of the nation's largest federally subsidized complex for $1.3 billion. Housing advocates and politicians, including Senators Schumer and Clinton, point with caution to real estate mogul David Bistricer's history as a landlord of 71 buildings in Brooklyn where he has received 8,792 housing violations. Bistricer's company, Clipper Equities, won the bid and has promised to keep the complex, in which 90% of the units are subsidized, affordable. Some are clamoring that the promise be made in writing. The Congress and the department of Housing and Urban Development have vowed to nix any deal that dislocates the lower and middle-income residents the complex was meant to house. RE-BID ON STARRETT CITY, SAYS SEN. CHARLES SCHUMER
Friday, February 16, 2007 | The Real Deal | Topic: Housing

Senator Charles Schumer (D-NY), chair of the Senate Housing subcommittee, is calling for the re-bid of Starrett City, the largest federally subsidized rental property in the U.S., which sold for $1.3 billion to the Clipper Equity group. The senator believes that the sale was inappropriate because the federal government had no role in the negotiation and that the bid book price was so high that it excluded certain bidders. The sale has caused a stir among public officials, tenant advocates, and residents who all fear it will not only displace the residents the complex was meant to house but fall into the hands of a landlord with a history of violations DOUBLE STANDARD OF CODE VIOLATIONS?
Friday, February 16, 2007 | New York Times | Topic: Housing

3

Mayor Bloomberg referred to the 8,792 outstanding housing code violations of landlord, David Bistricer, when he registered apprehension about the sale of the Starrett City complex in Brooklyn to Bistricter's company, Clipper Equities. Yet, when the Coalition for the Homeless, an advocacy group for the homeless and formerly homeless, accused the administration earlier this month of housing formerly homeless in units with housing violations, the Bloomberg Administration maintained that code violations are not indications of an unsafe apartment. Is a double standard at work? This article in the New York Times explores the intricacies of city code violations, and how they are used at times in political ways. STATE ATTORNEY GENERAL MAY STOP STARRETT CITY SALE
Saturday, February 17, 2007 | New York Times | Topic: Housing

State Attorney General Andrew Cuomo has uncovered a 1998 court order that bars developer David Bistricer from converting rental buildings in New York to condominiums or co-operatives because of financial irregularities. Bistricer's company Clipper Equities recently won the bid for Starrett City, the largest federally subsidized rental complex in the country in East New York, for $1.3 billion. Tenants, advocates, and public officials have joined in an effort to prevent the massive sale should it make the complex unaffordable to residents. Federal Housing Secretary Alphonso Jackson committed to taking Cuomo's finding into evidence as the federal government continues to process the deal. STARRETT CITY REMEMBERED AS SUCCESSFUL UNIQUE HOUSING EXPERIMENT
Wednesday, February 21, 2007 | New York Times | Topic: Housing

Starrett City residents reminisce about the development as a coherent community which was unique due to its racial diversity and community tolerance. But the atmosphere at Starrett City was no accident. The planners carefully arranged apartments to keep floors racially diverse, and originally had a racial quota to fill the building with 70% white renters. The plan was struck down in 1988 but original rental policies had an influence on community demographics. Today, most residents believe they benefited from living in a building without prejudices, and the development has remained racially mixed although market forces now control who will live there. Residents are concerned that their unique community will be destroyed if the new owners of Starrett city raise rents, forcing tenants out.
4

CITY CONSIDERS TEMPORARY OWNERSHIP OF PROPERTIES TO PRESERVE AFFORDABLE HOUSING
Monday, February 26, 2007 | New York Daily News | Topic: Housing

Bloomberg administration is in discussion with HUD on the possibility of buying mortgages of approximately 25 properties which currently provide federally subsidized housing but are in danger of being sold to private owners who may choose to exit the subsidy programs. If possible, the city would take temporary ownership before selling them to private owners who are committed to maintaining affordable housing. The program is being discussed due to concerns about losing existing affordable housing when it comes under new ownership, as epitomized by the debate over the future of Starrett City. STARRETT CITY AFFORDABLE HOUSING PRESERVED BY RENT PROTECTION BILL?
Monday, February 26, 2007 | New York Times | Topic: Housing

New York State Legislature is being asked to consider extending an existing program which requires rent protection for former MitchellLama units. Currently, state law only requires protection for units built before 1974, while the proposal would extend protection to all developments built or substantially rehabilitated since that year. Successful of such a proposal would have a large impact on the future of Starrett City, a Mitchell-Lama building built in 1974. Mayor Bloomberg has thrown his support behind the proposal as a way to protect affordable housing at Starrett City as well as other properties across the city. SKEPTICISM OVER SECTION 8 VOUCHERS AND STARRETT CITY'S NEW OWNER
Wednesday, February 28, 2007 | New York Times | Topic: Housing

Developer David Bistricer, whose company Clipper Equities recently won the bid for Starrett City for $1.3 billion, has a history of refusing Section 8 vouchers at one of his properties, according to the New York Times. Community-organizing group Acorn is making the allegation about a Bistricer-owned property known as Flatbush Gardens. The refusal, which is illegal, continues to raise doubts that the developer is committed to maintaining affordability at the 5,881unit apartment complex on Jamaica Bay, which is the largest federally subsidized complex in the country. Bistricer contends that

5

Starrett City will not discriminate against anyone on the basis of income, inviting the use of Section 8 vouchers. State Attorney General Andrew Cuomo is currently reviewing the transaction. The federal Department of Housing and Urban Development, which has the power to approve or reject a new owner, will decide the case by Friday. HUD BLOCKS STARRETT CITY SALE
Friday, March 02, 2007 | New York Times | Topic: Politics & Government

HUD has rejected the proposed $1.3 billion sale of Starrett City to Clipper Equities arguing that they have failed to supply adequate financial information or a plan for how the complex would remain “a viable community for New Yorkers of modest means.” While the secretary left open the possibility that the deal could be revived, Secretary Jackson expressed “serious concerns” about whether Mr. Bistricer should be involved in federally assisted housing, given the “numerous housing code violations” at a separate Brooklyn housing complex owned by him as well as a 1998 court order barring him from converting rental buildings to condominiums or cooperatives because of financial irregularities. Clipper Equities vowed to supply all needed financial data and argued that the complex will remain affordable. SENATOR SCHUMER AND OTHERS TO CELEBRATE STARRETT SALE REJECTION
Friday, March 02, 2007 | The Real Deal | Topic: Housing

News that federal housing secretary Alphonso Jackson rejected Clipper Equity's $1.3 billion bid to buy Starrett City has led to celebrations among many housing advocates and public officials, including Senator Charles Schumer (D-NY), State Attorney General Andrew Cuomo, and Representative Edolphus Towns. The three officials, along with a host of others, will celebrate the decision by the Department of Housing and Urban Development this afternoon at the housing complex in Brooklyn RESALE OF STARRETT CITY DOUBTFUL IN EYES ON FEDERAL HOUSING SECRETARY
Saturday, March 03, 2007 | AM New York | Topic: Housing

Housing and Urban Development (HUD) Secretary Alphonso Jackson rejected the $1.3 billion sale of Starrett City on Friday, the country's

6

largest federally subsidized housing complex, over fears that the winning bidder, Clipper Equities, would not keep the complex affordable to its largely lower-income residents. While Jackson did add that a deal is not absolutely off the table with the developer Clipper and its partner David Bistricer, he did say that, "the door is not open; the door is actually closed." Jackson reiterated that HUD would not allow the displacement of low-income residents at the hands of exorbitant rental prices. Prominent New York politicians and advocates have been petitioning Jackson to reject the deal TWO RESPONSES TO TWO SALES: STUYVESANT TOWN V. STARRETT CITY
Saturday, March 03, 2007 | New York Times | Topic: Housing

This New York Times article assesses the recent mega sales of Stuyvesant Town-Peter Cooper Village and Starrett City, the former receiving the blessing of city officials including the mayor and the latter vilified by city officials and public advocates. Why did the city and its leaders react so differently to the $5.4 billion and $1.3 billion sales respectively? The article contends that the Stuyvesant Town sale satisfied the concerns of those interested in preserving affordable housing for the mostly middle-income residents who live there because the developer, Jerry Speyer, has an "insider" reputation in New York that Starrett City developer David Bistricer does not have. In addition, the article contends that the massive amounts of city, state, and federal subsidies at Starrett City contributed to the public's unease with such a large sale to a private developer. CITY PENSION FUNDS AND REAL ESTATE DEVELOPMENT
Monday, March 12, 2007 | Metro New York | Topic: Finance

In this NY Metro interview City Comptroller William Thompson discusses the implications of the city's projected $3.9 billion surplus for fiscal year 2007 as well as the challenge of managing the city's $105 billion in pension funds. According to Thompson, nearly $1.2 billion of city pension funds have been invested in housing or real estate and between $500-$600 million, in particular, in affordable housing. Thompson, who opposed the $5.4 billion mega sale bid for Stuyvesant Town and Peter Cooper Village, says that the city does not invest pension funds in real estate transactions that lessen affordable housing options for lower and middle-income residents.

7

STARRETT CITY BIDDER UNVEILS NEW PLAN
Monday, March 12, 2007 | Crain's New York Business | Topic: Housing

Developer Clipper Equities, whose $1.3 billion bid for Starrett City was blocked by the federal Department of Housing and Urban Development, has submitted a revised plan that it hopes will overcome the myriad criticisms of the purchase. To answer the principal allegation that the bid's price will make the entire complex unaffordable at $221,000 per unit, Clipper has formed a series of cost-cutting methods to lower the operating costs at the 5,881-unit complex in East Brooklyn. The plans include installation of new heating and cooling systems, adding new housing for seniors, and utilizing 6 million square feet of development rights by bringing smallscale retail space to the complex. To ensure affordability, the developer has also suggested making a benchmark of the units dedicated to affordability at 30% of median area income. Public officials in New York have vowed to block any deal that would take current residents out of the Mitchell-Lama program. NEW STARRETT CITY PROPOSAL HAS INFLUENTIAL BACKING
Friday, April 06, 2007 | New York Times | Topic: Housing

Clipper Equities developer David Bistricer went back to the drawing board after the federal Department of Housing and Urban Development (HUD) rejected his $1.3 billion bid for the Starrett City apartment complex in East New York, the nation's largest federally subsidized complex. Clipper has elicited some influential supporters in its attempt to satisfy the concerns of HUD and other bid opponents, including Mayor Bloomberg, Senator Charles Schumer (D-NY), Attorney General Andrew Cuomo, and Governor Eliot Spitzer, who believe that Bistricer's high-priced plan would displace the tenants who flocked to Starrett for its affordability. In particular, Bistricer has invited two powerful lobbyists, a renowned architectural firm, and two "politically influential" African-American ministers to his cause. Public officials and HUD will review the modified plans, but many original skeptics maintain that no plan will be approved that sacrifices the affordable character of the 46-building complex CLIPPER EQUITIES' SECOND STARRET CITY BID REJECTED
Sunday, April 08, 2007 | NY1 | Topic: Housing Clipper Equities’ second proposal to buy Starrett City was rejected by the state on Saturday, despite gathering some influential support. The Housing Commissioner stated 8

that the proposal was rejected because it does not sufficiently protect the current residents. Clipper Equities’ purchase attempts have drawn criticism as many believe the developer wants to bring as many units as possible to market-rate, while federal officials and residents want it to remain affordable for current residents. Clipper Equities will continue to edit its proposal and that it believes it can maintain affordability for its tenants. SALE OF STARRETT CITY: AN OVERVIEW Monday, April 09, 2007 | Dealscape | Topic: Housing

This article by Dealscape summarizes the Starrett City bidding process and the difficulties that Clipper Equity LLC has faced since winning the initial bid. The author notes that while state and city officials have agreed to try and prevent any new owner from raising rents substantially, the current owners could remove the development from the Mitchell-Lama program as well. Clipper Equities last proposal specified how it would maintain affordability, including cutting operating costs and management fees, plus adding additional services such as a retirement facility and retail space SCHUMER AND STATE LEGISLATORS UNITE AGAINST STARRETT CITY SALE
Saturday, April 14, 2007 | New York Times | Topic: Housing

Senator Schumer and Democratic members of the New York State Assembly have united to demand that federal housing officials to reject Clipper Equities plan to buy Starrett City arguing that it would require millions of dollars in additional subsidies and would fail to protect the current residents from rent increases and displacement. They are also pushing legislation that would extend rent regulation to apartments in the state’s middle-class Mitchell-Lama housing program like the ones at Starrett City. Present owners, Starrett City Associates, say if the $1.4 billion dollar sale is continually blocked, they might privatize the complex themselves CLIPPER EQUITIES FORMS NEW PARTNERSHIP TO BOOST THEIR STARRETT CITY BID
Sunday, April 22, 2007 | Crain's New York Business | Topic: Housing

In an attempt to bolster the credibility of Clipper Equity’s promise to keep Starrett City affordable, the firm is planning on partnering with the Abyssinian Baptist church to help them operate the housing development. Clipper Equity’s two previous attempts to buy Starrett City were rejected by federal regulators largely due to concerns that the company would remove the development from the state’s Mitchell-Lama subsidized program and drastically raise rents. The
9

new partnership aims to maintain the housing complex in the MitchellLama program and attract additional investment to provide social services to residents CLIPPER EQUITIES' NEW TACTICS IN STARRETT CITY BID
Thursday, May 03, 2007 | New York Times | Topic: Housing

David Bistricer of Clipper Equities is still going forwarded with negotiations to purchase Starrett City, currently trying to work out a lower sale price and a partnership with Reverend Butts of Harlem in order to convince state and local officials that he will maintain affordability within the development. A lower price might convince some that it will not be as necessary to raise rents or cut services in order to make a profit, and Reverent Butts is a well-known housing developer who may bring some credibility to his vows of future affordability. Bistricer still plan to develop market-rate housing on vacant land within the development. A rally against the sale was held yesterday at City Hall, drawing about 75 people. AFFORDABLE HOUSING RALLY AT STUYVESANT TOWN
Thursday, May 17, 2007 | The Real Deal | Topic: Housing

A large rally for affordable housing has been planned for next Wednesday at Stuyvesant Town and Peter Cooper Village. The site was chosen because the controversial sale of the two developments was such a well-known event and was criticized from removing a large amount of affordable housing from the New York City market. However individuals are expected to come to the rally from all over the city and outer boroughs, including from Starrett City and other buildings that have recently been taking out of the Mitchell-Lama program. The rally’s organizers are asking from reform of rentstabilization and Mitchell-Lama, as well as increased control by New York City of vacancies and high rents. On December 1, 2006, Disque D. Deane, chairman of Starrett City Associates, announced the sale of Spring Creek Towers—better known as Starrett City, a 140-acre apartment complex on Jamaica Bay in Brooklyn. Starrett City is the largest federally subsidized rental complex in the country, comprising 46 towers, 5,881 apartments, 14,000 residents as well as schools, churches, synagogues, a shopping center, post office and power plant. Built in the mid-1970s by a limited-profit housing corporation under the state’s Mitchell-Lama program as subsidized housing for moderate-income workers, today

10

about 90 percent of the tenants get direct federal rent subsidies or other types of government assistance from the city and state. Critics fear that the new owner could choose to drop out of the Mitchell-Lama program and raise the rents for some tenants. Opponents are also worried about the development of some of the vast amounts of vacant land on the complex. On February 8, 2007, Clipper Equity L.L.C. a partnership of David Bistricer and Sam Levinson, outbid eight rivals paying $1.3 billion dollar for the complex ($221,000 per apartment). Confirming many people's fears, they say that there is great potential to develop luxury and affordable housing on vacant parcels in the 140 acre complex. They also plan to buy out of the state’s Mitchell Lama program for middle-class families, but insist that Starrett’s existing buildings will remain affordable. In March, 2007 HUD rejected the proposed $1.3 billion sale of Starrett City to Clipper Equities arguing that they Clipper failed to supply adequate financial information or a plan for how the complex would remain “a viable community for New Yorkers of modest means.” Clipper Equities’ second proposal to buy Starrett City was rejected by the New York State Department of Housing and Urban Development, despite gathering some influential support. Despite these two rejections, Clipper says it will continue to work on the proposal until approved. As a landlord, Clipper Equity has a mixed record with the city reporting 8,792 outstanding maintenance code violation across 71 buildings. Attorney General Mario Cuomo recently announced that he had discovered that David Bistricer, one of the would-be owners of East Brooklyn’s Starrett City, was permanently banned from selling and operating co-operatives in New York City back in 1998 and vowed to enforce the ban should the landlord try to convert any of Starrett City or build new for-sale units

11


				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:26
posted:12/14/2008
language:
pages:11