FOR IMMEDIATE RELEASE
May 20, 2004
MAYOR MICHAEL R. BLOOMBERG ANNOUNCES AGREEMENT BETWEEN OWNERS AND TENANTS OF WEST VILLAGE HOUSES
Makes History as First Tenant-Sponsored Mitchell-Lama Conversion
Mayor Michael R. Bloomberg today announced that an agreement in principle has been reached among the owners and tenants of West Village Houses and the City on a plan to preserve affordable housing at the 420-unit Mitchell-Lama development located between Bank, Washington, Morton and West Streets in Manhattan. The agreement calls for a tenant-sponsored, non-eviction co-operative conversion plan, where more than half the existing renters would buy their units at the time of conversion. The plan would protect residents who might otherwise have been vulnerable to large rent increases and would allow renters to become homeowners. The owner is expected to withdraw the development from the Mitchell-Lama program at the end of the month, and the cooperative conversion is expected to occur in next 2005.
"This resolution will preserve affordable housing, relieving the anxiety that comes with a Mitchell-Lama buyout, in a neighborhood where tenants might otherwise have been priced out," said Mayor Bloomberg. "This agreement enables hundreds of New Yorkers to own their apartments and start to build equity in their homes and lets the remaining tenants stay in their apartments as renters at below-market rent. This is consistent with the goals of our housing plan, which will build or rehabilitate 65,000 units of affordable housing in New York City, while at the same time balancing the needs of tenants and building owners and to create homeownership opportunities citywide."
"Preserving the City's stock of middle income housing is crucial to making New York more livable for our hard-working families and more attractive to new businesses," said Housing Preservation and Development (HPD) Commissioner Shaun Donovan. "This agreement also ensures that low-income families at West Village Houses do not face overwhelming rent increases thanks to an innovative subsidy fund."
"This is the American dream come true for homesteaders of the old West Village," said Katy Bordonaro, President of the West Village Houses Tenants' Association. "With today's announcement, we are free from the looming nightmare of skyrocketing rents and displaced families. We're thrilled that this carefully balanced deal will keep affordable housing at affordable prices. Thank you Mayor Bloomberg and Commissioner Donovan for making this possible."
"I am proud to be part of this historic win-win-win resolution that accommodates the needs and concerns of the tenants of West Village Houses, the owner and the City of New York," said Jeffrey Cohen, a principal of Island Capital Group, which is the general partner of the owner of the property. "The tenant leadership demonstrated remarkable tenacity and resolve by engaging in a constructive dialogue over the past two years under trying circumstances. I thank Mayor Bloomberg and I especially commend the vision and creativity of Commissioner Shaun Donovan and the HPD team for the innovative solutions they developed to help make this tenant-sponsored conversion plan possible."
Under the terms of the Mitchell-Lama statute, owners may buy out of the program after 20 years by paying off their government mortgages and some may then increase rents to market levels. Without this agreement, rents at West Village Houses could have tripled from current levels. The process of buying out is often mired in conflict as tenants face uncertain rent burdens, and owners are often embroiled in costly and time-consuming litigation before they can buy out of the program. This agreement will end almost two years of litigation between the tenants and owner of West Village Houses.
The owner has agreed to sell the development to the tenants at a discount to its fair market value and to make other concessions. To facilitate the agreement, the City has agreed to forgive approximately $19 million of interest that has accrued on the City's mortgage loan. The City will recommend to the City Council that it approve an Article 11 tax exemption for the development for twelve years during which the tax abatement will continue at its current level. The purchase prices to tenants for the units and monthly maintenance costs will be set at a level that encourages home ownership. Rents for tenants who do not buy their units will increase to cover increased expenses associated with the purchase of the development, but the increases will be far less than those contemplated at the beginning of the process. There will also be an internal subsidy fund created to ensure that low-income tenants do not face overwhelming rent increases. Thus, the City, the owner and the tenants - both buyers and non-buyers - will all contribute to the success of this historic agreement.
In October 2003, Mayor Bloomberg announced proposed state legislation to protect more than 32,000 households in Mitchell-Lama housing from large rent increases and possible displacement in the event that the owners of their buildings. It passed the Assembly by an overwhelming margin on April 1st and is pending in the Senate Housing Committee. This bill is a top priority of the Administration, which continues to work closely with the State Senate to ensure its passage. In addition, the Mayor announced in March 2004 an agreement between the owners and tenants of Independence Plaza North (IPN) on a plan to keep rents affordable at the 1,332-unit Mitchell-Lama development in Lower Manhattan. The agreement calls for a rent structure for when the development leaves the Mitchell-Lama program, which protects residents from large rent increases. The IPN agreement differs from West Village Houses in that IPN will continue as a rental development after the owner buys-out of the Mitchell-Lama program, and West Village will become a tenant-sponsored co-operative.
Through the Mitchell-Lama program, a portfolio of 140,000 units of both rental and co-op housing was developed, which was divided between State and City supervision. To date, 46 Mitchell-Lama developments with 17,700 units have bought out. The pressure to buyout is greatest when Mitchell-Lama's are located in high market areas. In addition to West Village Houses and Independence Plaza North, there are buyouts pending at the following Mitchell-Lama developments: City-sponsored - Cooper Gramercy, Lands End I, New Amsterdam, Riverside Park Community, and Bethune Tower, all in Manhattan, Ocean Park Apartments and Court Plaza in Queens, and University Riverview in the Bronx. State-sponsored - Central Park Gardens, Roosevelt Hospital, Metro North, Schomberg Plaza, UPACA I and II, and East 106th Street in Manhattan and Sea Park East and Sea Park West in Brooklyn.
Ed Skyler / Jennifer Falk (212) 788-2958
Carol Abrams (HPD)
Frank Marino (Owner Rep.) (212) 889-0808
Katy Bordonaro (Tenants’ Assoc. Rep.) (212) 886-4598
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