Wall Street Journal Reports On Plans For Rivercross and Other Roosevelt Island Buildings Leaving Mitchell Lama Program

Image of Rivercross Building Entrance

Today's Wall Street Journal reports on plans for Roosevelt Island buildings to leave the Mitchell Lama program:

... In the case of the 365-unit Rivercross co-op, the board of the 38-year-old building has created a framework that will initially cap the sale price of 80% of the units at $500 per square foot.

Of that $500, the building will take a "transfer fees" of $150, which will allow it to subsidize the remaining 20% of units in the building, keeping prices near Mitchell-Lama levels

The strategy provides a middle way, supporters say, between moving to market rates or staying in the Mitchell-Lama program and allowing a building to fall into disrepair because of a lack of maintenance funds. ...

... "The board has put the building in a position where it must vote in favor of this thing because they borrowed $50 million, much of that is to be recovered from the so-called flip taxes as apartments get sold," said David Bauer, a resident of the building since it opened....

and:

... The Eastwood building went market rate a couple of years ago, renamed Roosevelt Landings. Two other large rental buildings, Westview and Island House, are also contemplating how to exit the program.

Island House is experimenting with an approach that would allow it to exit the Mitchell-Lama program by converting the rental to co-ops that will be sold with income restrictions, according to Frank Farance, a resident who has worked on the plan.

"We worked on this for five years to finally hone in on what made it work for everyone," Mr. Farance said. "The owner is happy, too, because he doesn't have to fight with us."...

Click here for the entire article.

Rivercross resident David Bauer adds some concerns regarding any Rivercross privatization:

- the State, under Nelson Rockefeller created the model community here in an effort to turn the tide of the middle class leaving NYC

- the State put in the proceeds of a quarter of a billion dollars to build the infrastructure

- I have lived in the coop since 1978

- I have been lucky to live in a pleasant place, close to the big Island of Manhattan

- I believe the idea of privatization of Rivercross coop should be investigated

- until there is a piece of paper with a definite plan it is hard to tell whether privatization is good or bad

- until the final plan is put together and voted upon we do not know whether there is a decision to exit ML

Some factors:

- the Rivercross Board has a majority of large apartment owners. One member has an interest in four apartments

- large apartment shareholders have benefited from an under allocation of shares (and carrying charges) for large apartment

- shareholders are inclined to believe there is a pot of gold at the end of the rainbow to which they are entitled, at a ratio of $10 back for every dollar they used to purchase shares

- I come from Syracuse

- the whole stretch from Schenectady through to Buffalo had been devastated by the loss of manufacturing

- relatives of mine have lost their jobs by the economic changes

My dilemma:

is it reasonable for anyone to benefit from the State investment in the Island until that quarter of a billion has been paid back to the State? Should the rust belt of the State be subsidizing 1000% gains by Rivercross coop shareholders?"

More information available on Rivercross privatization and Roosevelt Island affordable housing issues here. including questions regarding how the recent Rivercross 10 year, $50 million, interest only mortgage refinancing will be paid back.