Stuy-Town Deal Ends Years of Uncertainty

Photo by Bennett Baumer.The tenants of Stuyvesant Town and Peter Cooper (ST/PCV) recently celebrated a significant victory with the city of New York—the preservation of 5,000 units in our community as affordable housing for middle-class people.

Understanding the recent sale of ST/PCV to the Blackstone/Ivanhoe Cambridge private-equity fund requires understanding the turmoil of the past 15 years. In hindsight, the years from 1947 to 2000 were halcyon years for residents. Metropolitan Life Insurance Company (MetLife), which was known as “Mother Met” to tenants, ran the complex benevolently. They were quick to respond to problems and kept the buildings and grounds in peak condition with an iron hand. House rules were made to be obeyed. Tenants obeyed them, and while some chafed under the implacability of those rules, everyone knew what to expect.

In April 2000, MetLife become a publicly traded company, and the change in attitude towards tenants was immediately obvious. Residents were no longer a valued commodity, as the bottom line and shareholder returns became the prime motivators. Resident-services representatives were no longer quite so accommodating. The waiting list for rent-stabilized units was eliminated, and MetLife illegally started to deregulate vacant apartments that could be rented for more than the $2,500 decontrol threshold. (This was illegal because the complex was receiving J-51 tax breaks, which are designated to help landlords renovate rent-stabilized buildings.) Tenants started getting evicted, and many felt that the giant insurance company regularly reviewed its actuarial tables to see which tenants stood a chance of dying so the vacated units could be renovated and rented at market rate.

In 2006, MetLife sold the complex to Tishman Speyer for $5.4 billion, which was an unmitigated disaster. The feeling of uncertainty that had begun to emerge in the community during 2000–2006 blossomed during Tishman’s years. Tishman used every tool in the book to get tenants out, and started marketing the middle-class community as a luxury rental. Uncertainty turned to fear.

After the Tishman Speyer bust, CWCapital took over the complex. Remembering the recent history, the Tenants Association approached CWCapital regularly and repeatedly with a plan to buy the property, preserve its long-term affordability, and to promote homeownership. Ultimately, CW worked with us to develop a structure for a sale that would preserve a large chunk of the community—nearly half—as affordable.  

We could not have done this without the enormous political support that we enjoyed at every level of government—from Rep. Carolyn Maloney and Senator Charles Schumer’s intervention with Fannie Mae and Freddie Mac to state Senator Brad Hoylman and Assemblymember Brian Kavanagh’s pressure to strengthen rent laws. Mayor Bill de Blasio’s platform to preserve affordable housing was critical, and both Deputy Mayor Alicia Glen and city housing commissioner Vicki Been worked tirelessly to bring about a workable structure to preserve affordability.

Special mention goes to City Councilmember Dan Garodnick, who stood up and stood strong with the Tenants Association for almost a decade, fighting to protect our community. None of our successes here would have been possible without his tireless dedication.  

The deal preserves 5,000 units in Peter Cooper and Stuyvesant Town for the next generation of middle-income New Yorkers. When rent-stabilized tenants vacate their units, Blackstone will need to replace them with enough units to always have 5,000 units affordable to the middle class—for 20 years, with plenty of time to find a way to extend that period.

After 20 years—if there is no further agreement with the city and the state—the rents can go up to market rate, phased in over five years. The deal also gives additional protections to the most vulnerable Roberts tenants, by limiting their rent increases from 2020 to 2025 to 5 percent per year. (These tenants occupy units that had been illegally deregulated and became part of the landmark J-51 settlement, called the Roberts lawsuit for the first plaintiff, Amy Roberts.) Knowing what the future holds allows for planning.

Tenants living in rent-stabilized apartments will continue to be governed by the rules of rent stabilization as long as they remain in their apartment and as long as rent regulation remains in effect. 

As new affordable units become available, rents will be capped at a price where a future middle-income tenant can afford them. Future tenants will need to “income qualify” for the units. The rent on 4,500 of those apartments will be pegged to 165 percent of the metropolitan area’s median income—about $3,200 a month for a family of three making about $128,000 a year—and 500 units will be reserved for families making 80 percent of AMI, about $62,000 for a family of three, or $1,550 rent.

The Mayor called the deal the biggest city-led preservation deal in history: Future middle-class New Yorkers will be able to enjoy Stuyvesant Town and Peter Cooper in the way that so many long-term residents have.  The deal’s structure is also materially different from the last time the property was sold. Blackstone purchased ST/PCV under its recently inaugurated “core plus” fund, which offers lower returns than its other funds—perhaps half of the 18 percent return on more speculative investments—which creates less pressure to try to oust longtime rent-stabilized tenants 

Significantly, Blackstone has also committed to preserving the community’s valued open spaces, to keeping Stuyvesant Town and Peter Cooper as a unified whole and creating an environment suitable for long-term tenancies, rather than as student off-campus housing.  

This deal removes the fear and uncertainty that has plagued the community for the past decade and a half. Tenants know where they stand. Middle-class affordability is ensured for 20 years—enough time to give another generation an opportunity to experience a place where, in the words of Frederick Ecker, chairman of Metropolitan Life in 1947, “families of moderate means might live in health, comfort and dignity in park-like communities.” Enough time to work on another 20 years of affordability.

 

Susan Steinberg is president of the Stuyvesant Town-Peter Cooper Village Tenants Association.