Wednesday, October 23, 2013

Roosevelt Island Rivercross Board Of Directors Meeting With Shareholders Tonight To Update Residents On Status Of Privatization Efforts To Exit Mitchell Lama Program

Image of Rivercross Building Entrance

Roosevelt Island's Rivercross Board of Directors are meeting with its shareholders tonight at the Good Shepherd Community Center to present an update on its privatization plans for the building to exit the Mitchell Lama Program.

At 7 PM this evening I tried to attend the meeting in order to report on this important Roosevelt Island issue but was denied entry to the Good Shepherd auditorium by the Rivercross Board although I was advised that the Rivercross Board would be willing to speak with me tomorrow.

Below is an excerpt from Rivercross Board of Directors memo to its shareholders summarizing portions of the privatization plan.

Will update when more information available.

According to the September 28 Main Street WIRE:
...The plan will allow owners of Rivercross apartments to sell them at market prices, giving up to the cooperative a 45% transfer fee on the portion of the selling price that exceeds their original Mitchell-Lama purchase price. Under the plan, when owners give or bequeath apartments to adult offspring, parents, or spouses, this transfer fee will be deferred until the recipient sells at some future time...
and:
Estimates provided for preparation of the privatization plan suggest that the largest apartments in the building will sell for over one million dollars. For all sizes, the estimates (in thousands) are:
Here is prior post on the Rivercross Building's privatization efforts to leave the Mitchell Lama program as well as previous meeting on the Island House privatization efforts which was open to the media and allowed the meeting to be video recorded. Also, previous post on the Rivercross $50 million interest only 10 year mortgage refinancing and December 2010 ground lease extension from the Roosevelt Island Operating Corp (RIOC).

UPDATE 10/24 - How much did the Roosevelt Island Rivercross building co-op owners pay for their NY State Mitchell Lama subsidized apartments? According to this 2005 NY Times article:
... Discussions have also begun about privatizing Rivercross, a Mitchell-Lama co-op where an average one-bedroom apartment now goes for $33,000 and an average three-bedroom for $54,000. Privatizing would entitle Rivercross owners to sell their apartments at market rate, but they would be subject to substantial flip taxes in order to keep the maintenance charges reasonable.

"We don't want to increase maintenance so much that people will have to leave," said Mr. Weatherhead, the board's president. "We are a middle-income building and don't want to privatize ourselves onto the street."...

20 comments :

bakgwailo said...

If they bought at 54k, they shouldn't be able to sell for over 100-150k, with 50% of that profit going to the building. The limit should then be slowly raised during X number of years, after which point they can sell for market rate. I can't believe they can straight up sell for market rate. So, if they payed 50k, sell for 1 million, even with the 'substantial' 'flip tax', they still pocket 500k. What happened to limiting the square price per square foot that they said they would do before? Why to just completely rip off the tax payer, and so much for affordable middle income housing on the island.

Bill Blass said...

This is the deal of the century for the tenants.just like the deal of the century was for the owner of Eastwood

Bill Blass said...

When I am elected rioc pres. I will turn rivercross into a homeless shelter

Jean M. Shea said...

Wow, it does look like a great "deal" for RC, here in Westview, we don't know much of anything that may be going on in our complex. The little we do get to hear or find out is not always based in fact, as we don't get much info. What we do hear does not sound good at all. I am afraid Westview will be thrown out to the wolves and highest bidder. This is a disgrace to the whole Mitchell Lama program and how and why this Island was settled in the first place. The IH deal does not sound good, either.
Very very sad.

Bill Blass said...

Really

Jean M. Shea said...

I totally agree...

Jean M. Shea said...

agreed...

Bill Blass said...

All i can you is to go to every tenant meeting.trust no one. This is the lesson learned in eastwood.first the tenants committe will do whats best for them.this is what happened in eastwood.just keep on top of this.other wise you will be sorry. Remember the tenants on the committee Will do what best for them

Bill Blass said...

Jean there are a few people who moved out of Eastwood who moved into westveiw. I am sure they will be watching over this.as they dont want to be sold out again

Jean M. Shea said...

Bill, yes I know and WV is happy to have them here. I am so sorry about what happened in Eastview aka Roosevelt Landings.

APS said...

It's nice to see people who don't live in the building wax poetic about what is right and wrong. Many of the founding residents are the ones making it possible to keep the building in the shape it is today as they are already paying a surcharge above any beyond their neighbors. There's no possible way to move to NYC or even LIC at the value they are offering with a 45% flip fee on first time sellers. Even at the over $1mil mark, where can you find a comparable space for half of that?

OldRossie said...

At the risk of sounding ignorant... why is it a rip off to allow them to sell at market? "Them" = owners/tenants, correct?

Bill Blass said...

Well I see you dont know about m.l. co ops

CheshireKitty said...

Yes, visions of dollar signs must surely be dancing in the heads of RC coop owners rights about now.

Is what they're doing any different from what is going one throughout the City - rampant gentrification, with the accelerating loss of affordable/middle-income housing?

After RC goes through its gentrification process, if no more affordable housing open to the general public is built on RI, you can throw the GDP into the Samhain bonfire. http://en.wikipedia.org/wiki/Samhain



Let us hope the expected change of course in NYC (Deblasio administration starting in January 2014) inspires Cuomo to pick up the pace of building affordable housing in his "personal fiefdom" - RI.

YetAnotherRIer said...

I think owners that want to sell have to pay the price a comparable apartment was worth at the time they bought it first. The data should be there to figure out how much the market price was a decade or two or three ago. Only then should they be allowed to sell.

Jean M. Shea said...

I agree, why did RI ever even have the GDP, if it keeps not being upheld and amended whenever convenient. RC is no different than the rest of the city, but this is or used to be Roosevelt Island... the whole reason it was developed and came to be was for "Safe Affordable Housing for EVERYONE." What happened to the Lease between the City of NY and NYS that started in 1968 and is supposed to be in place for 100 years. Gov Cuomo doesn't care about RI at all except to place whomever he likes as Head of RIOC.

CheshireKitty said...

I would say the infrastructure that the State has put in was already paid for - either in tax dollars or by means of a bond. We pay enough State tax as it is. The State tax that we already paid before RI was developed was used to build the infrastructure. We don't pay for the infrastructure again because we used it. Also, the infrastructure isn't used up. RI does not have to be developed all over again. The normal maintenance cost doesn't equal the original cost of development.


As far RC is concerned, the tenants became the owners when the building converted to a coop. The original owner/developer sold the building to the coop. While the building was under M-L, the prices were kept low. The coop owners do not wish for the building to remain affordable after exiting M-L. Although to me, this is regrettable, if this is what the owners want, I don't see what outside parties can actually do about it, since they are the owners etc. It does deplete the stock of affordable housing in NYC.


As I said elsewhere, the island is undergoing gentrification, and the RC exit is another example of it. The r/e industry has purchased a lot of politicians in Albany. I wouldn't be so sure it was the RIOC Board alone that let Shane go. Many politicians of both political parties are "beholden" to donors with deep pockets.


The RIOC Board is a relatively weak body, probably usually wouldn't dare act on its own without direction/OK from the Governor. For quite a while, at least since the time of Pataki, Governors look to development to drive growth and increase State tax revenue. The more luxury units built, the more money flows to Albany, etc. It's a cynical way of looking at it, and certainly, it's resulted in the housing crisis of today, but luxury housing catering to the rich, will yield more tax revenue since the rich send more in taxes back to Albany. In this equation, the 99% are given short shrift, since they don't send as much tax revenue back to Albany. Once again, money talks.


Thus, the overall trend would be - building more luxury housing, and letting the affordable housing convert to luxury housing, as in the case of Eastwood and RC - so as to get more rich residents leasing apartments and thus more tax revenue flowing to Albany. This wish for more money drives many decisions in Albany and at City Hall. Unfortunately, it's a short-sighted view, because it doesn't take into account the 99%. The encouragement and promotion of luxury housing as opposed to affordable housing has resulted in the present housing crisis.


So I would not say the RIOC Board was solely responsible for the departure of Shane. Shane was probably not with the program in a general sense, and instead of the Governor removing him, which he could have done anytime, the Governor probably assigned the task to the RIOC Board, so as to distance himself from the changeover. The Governor always keeps quite a distance from RI, preferring to work mostly through the RIOC President and on occasion through the RIOC Board.


Although I agree that it is a shame that RC is privatizing in such a spectacularly un-affordable way, I don't think there's much that can be done. Certainly Albany isn't going to do anything about it since the promotion and encouragement of the spread of luxury housing is in its interest (they get more tax revenue from rich owners/buyers than from low- or middle-income residents). The spread of luxury housing is Albany's program.


Albany's program however, is the 99%'s problem.

Frank Farance said...

$300 million Rivercross Profits equates to 30 years of extra $2000/year every Island apartment, which we will all pay for in rent or increase maintenance (regardless of what it says in your ground lease.

For example, Southtown 5 (415 Main) has the following wording in its ground lease: "Section 40.1 (a) Charges for Island Services. Landlord may impose on Tenant a charge, in addition to Base Rent, for the furnishing of any Island Service, except for services referred to in Sections 3.1 [Public Safety fees, which are calculated separately], 11.2 [municipal utilities, water/sewer] and 40.4 [AVAC, Refuse Disposal] and charged under such Sections, but only if Landlord imposes a charge for such Island Service on all other lessees of buildings on Roosevelt Island containing residential apartments, its pro-rata share ..."

Other ground leases have similar provisions which allow RIOC to assess fees.


So the mechanism for charging us is there, and the $300 million will walk off the Island, right?

bakgwailo said...

They were given the chance to buy into the coop at extremely reduced rates due to the tax subsidized mitchell-lama program, which they are now exiting. Also, it was one of the original buildings on the island, so they are also profiting off of the millions of tax dollars spent on developing the island - including the Tram, subway, roads, etc, etc. And now, as soon as they leave the program they get to cash out big time.

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