Monday, April 6, 2015

Decade Long Efforts For Affordable Privatization Plan At Former Roosevelt Island Mitchell Lama Island House Building Nearly Done Say Tenants Association - Residents Can Purchase, Remain Protected Renters Or Receive Buyout From Sponsor

As reported January 23, 2015:
Roosevelt Island's Island House rental building exited the Mitchell Lama program in September 2012.  As reported October 20, 2012 by former Roosevelt Island Operating Corp (RIOC) Acting President and current General Counsel Don Lewis:

... We are very pleased to note that, as result of several years of negotiations, Island House, a 400-unit affordable housing development on Roosevelt Island, will continue to remain affordable to its residents for the next 30 years. The Island House deal is historic in nature and marks the first successful conversion of a State Mitchell-Lama rental to affordable home ownership as a solution to a market-rate exit from Mitchell-Lama. Without the State’s intervention in extending affordability, apartments within Island House, a development at the threshold of leaving the Mitchell-Lama program, would have been allowed to be rented at market rates, severely affecting residents.

Under the Island House Affordability Plan, Island House, constructed in 1975 as one of the first four modern housing developments on Roosevelt Island, will exit the Mitchell-Lama program. The Affordability Plan, however, protects all current tenants by allowing them to remain in their apartments with future rent increases calculated in a manner similar to rent stabilized apartments. Rent protection will remain in effect for 30 years. The owner of Island House will apply to convert the building to Co-Op ownership. If the conversion is approved, current tenants will be offered the option to purchase their apartments at below market prices.

The Affordability Plan was initially drafted and agreed upon by the Island House owner and tenants. The Plan was later approved by a multi-agency working group that included: RIOC, which administers operations on Roosevelt Island; New York State Homes and Community Renewal (HCR), the State’s housing agency, which administers both the Mitchell-Lama program and the State’s rent laws; and Empire State Development (ESD), which in 1969, as the Urban Development Corporation, first leased the land under Island House from the City of New York. The Affordability Plan was the result of several years of negotiations among the agencies, the Island House Tenants Association, and owners’ representatives....
Island House is currently in the process of converting to a Condop (Co-op for residential units and condo for commercial units) under a non-eviction Affordability Plan.
Today, Island House Tenants Association Chair Graham Cannon reports:
It has been a long journey, at least a decade, but the Island House tenants are transitioning into the Affordability Plan that was envisioned long ago: some tenants will continue to be renters with strong rent protections for the next 30 years, some tenants will purchase their apartments at affordable rates. The Sponsor's offering plan was recently amended to offer a buy-out option and extend the exclusive period 20 days (April 20) so that tenants could review the options (rent, buy-out, purchase). The Attorney General will review and declare the conversion plan Effective. At that point, tenants will finalize mortgages, with closings expected to begin in the summer, and the co-op board will be elected. As of today, over 50% tenants have indicated that they will purchase their apartments, so the co-op board will be tenant-controlled with the sponsor holding under 50% of the board seats.

Fortunately for Island House tenants, we have had productive working relationship over many years that has included some tough negotiation with our Sponsor/Owner, represented by David Hirschhorn and moving forward we anticipate collaboration to maintain and expand the quality of life for all Island House residents. Our attorney Stuart Saft, who has literally Written The Book on coop conversion law, has helped guide use through the process with extensive knowledge, skill and effective negotiation. Our government entities, RIOC, ESDC, and DHCR (Rich McCurnin) have collaborated on this Affordability Plan and have created a template that can be used to preserve affordable housing in other Mitchell-Lama building complexes throughout the City and the State.

Concurrently, Island House will be engaged in window replacement and energy efficiency program. The windows will be energy efficient and similar to the present windows that slide, and the exterior will have modern treatments that update the faded yellow panels. Island House will also pursue submetering and rent reductions. Island House learned many things from the failed submetering attempts at Roosevelt Landings (Eastwood). Most importantly, Island House tenants already pay their full electric bills within their rents, so any sub metering plan is about apportioning costs that the tenants already pay (and coopters will pay), not adding new costs.

The submetering plan, in cooperation with the Sponsor/Owner, will NOT mark-up the low bulk electric rates, incorporate various energy efficiencies, (and we intend to pursue a range of additional conservation options after conversion) and the rent reduction strategy is intended to be revenue-neutral with a special focus by everybody involved in ensuring cost neutrality for those who remain as tenants.

We look forward to completing the transition to the Affordability Plan by late summer or fall this year."
More information available on the Island House privatization and affordability plan at this June 2012 post which includes video explaining the plan from May 27, 2012 Island House Tenants Association meeting.

Information on obtaining a mortgage for Island House residents is here.


Jean M. Shea said...

Thank you for sharing this, Rick.. This deal with have a lot of impact on Westview going private, if and when it does. The tenants here in WV are pretty much in the dark about any proposed deal going forward as of right now. We are hoping the WTI will do a large public meeting and present information for all of the legal tenants of Westview ASAP.