The saga of a massive New York apartment complex in default is one step closer to a happy ending for its tenants. A federal court ruled on Monday that Manhattan's Stuyvesant Town-Peter Cooper Village can be foreclosed on and sold at auction.
This action paves the way for the tenants association to bid the complex.
"This was totally expected and is fine for the tenants," said Daniel Garodnick
, a New York City councilman and lifelong resident of the complex. "We are working on a proposal for the senior lenders that will address all of the issues that we have identified, as well as the concerns specific to stakeholders."
The tenants association is working to develop a plan that offers tenants the option of purchasing their apartments, while also allowing an option for those who want to remain as renters, without fear of eviction.
This latest ruling, by U.S. District Judge Alvin Hellerstein, paves the way for bids to be made for the complex. The tenants association, which is looking for investment partners, will be required to put down a $100-million deposit in order to bid on the property.
Garodnick is confident that the tenants association will be able to put together a winning bid. "We have shown that the tenants are organized and able to put together a deal," said Garodnick. "We are in a very good position, and we hope to deliver the right outcome here."
Part of that plan is to make some units co-ops that would be available to residents for purchase. While Tishman's strategy to convert rentals to co-ops put tenants up in arms, the difference with the tenants association's plan, said Garodnick, is that it will not force anyone to purchase their apartment. "We think that a non-eviction conversion is the right route, and one that will bring the most value and the best long-term protection for the community," he said.
"We want the tenants to have options," he continued. "That includes buying their apartments if they wish, or staying as a renter. We want to ensure that the next generation of middle income tenants will be able to afford to live there."
While foreclosure and auction aren't normally two words you want to hear when talking about real estate, the tenants of this property, encompassing 11,000 units on 80 acres of Manhattan's East Side, have been living with a large amount of uncertainty since the complex was sold to Tishman Speyer Properties LP and BlackRock Inc. for $5.4 billion in 2006. Tenants, many of them lifelong and second generation residents, faced rising rents and concerns that they might be forced out, as the new owners attempted to convert the rentals into co-ops.
A ruling last October
that Tishman had improperly raised rents on thousands of units, along with the economic recession, made it difficult for the owners to pay creditors. In January,
the owners missed a payment on its mortgage. The investors currently owe $4.4 billion to creditors.
The efforts of the tenants association since the property was purchased in 2006, said Garodnick, have been to maintain it for middle-class renters. The complex has been an oasis for the middle class in high-rent Manhattan since it was built by Metropolitan Life in the 1940s to house veterans returning from World War II.
"What motivates everything we do," Garodnick said, "is the stability of the place, the protection of tenants and giving people reasonable choices, while also delivering a positive outcome to the relevant stakeholders."