Wednesday, March 14, 2018

Good News, But Fingers Still Crossed - Agreement In "Principle" For Roosevelt Island Westview Affordable Privatization Plan To Exit Mitchell Lama Program Says RIOC President - Terms Not Disclosed Yet And Status Of Retail Lease Renewal Unknown

As reported almost one year ago on March 28, 2017:

Six months after approving an affordability plan to exit the NY State Mitchell Lama housing program, residents of Roosevelt Island's Westview building are worried that no final agreement has been reached between the Westview building owner/sponsor (North Town Phase 111 Associates LP) and various NY State government agencies, including the Roosevelt Island Operating Corp (RIOC), NY State Homes & Community Renewal (HCR) and the Empire State Development Corp.

As of last week, there was no word about the status of Westview privatization.

A possible obstacle - the expiration in April 2018 of Westview retail space lease to RIOC which is subleased to Hudson Related as part of the Main Street Retail Master Lease.

Would the Westview building ownership renew the retail lease space to RIOC or,would  Westview ownership recover the space for themselves and to what extent does the retail lease negotiation impact the privatization negotiations?

In response to my question last Friday about the Westview Privatization status, a spokesperson for Roosevelt Island's NY State Assembly Member Rebecca Seawright replied:
Assembly Member Seawright continues to work with State Homes and Community Renewal (HCR) and the Westview Taskforce. A meeting is being held in the district office today with Westview Task Force leadership and HCR officials to discuss the status of negotiations.
I asked RIOC President Susan Rosenthal and HCR Commissioner RuthAnne Visnauskas:
... As far a the Roosevelt Island community knows, nothing more has happened regarding Westview Privatization since this March 2017 story describing stalled negotiations.

The Westview residents have no idea what is going on.

My understanding is that the latest element in Westview privatization is the upcoming expiration in April 2018 of the Westview ownership retail space to RIOC which is subleased to Hudson Related as part of the Roosevelt Island Main Street Master Retail Lease.

What impact, if any, does the Westview ownership retail lease renewal negotiation with RIOC have on the Westview Building privatization?

What is the current status of Westview privatization?...
Ms.Rosenthal replied on yesterday:
I know you reached out to HCR and are anxious to know the terms of the proposed deal.  As soon as we share the terms with the board members,  we will share them with you.  The good news: we reached a deal in principle and we are moving forward!
I asked David Kramer of Main Street Retail Master Leaseholder Hudson Related about the Westview retail space lease renewal:
... My understanding is that the lease has not been renewed yet.

If Westview retail lease with RIOC is not renewed, what impact will that have on the Master Retail Lease with Hudson Related which includes the Westview stores?

Also, what impact will that have on Roosevelt Island retail leasing efforts and those current Westview retailers that have lease terms past April 2018?

What is the annual rental revenue from Westview retail tenants and how much revenue does RIOC receive under the Master Lease from Westview retail tenants?...

Mr. Kramer answered:
I think there are 2 substantive issues if the retail sublease is not extended.

First, it's a big hit to RIOC. They earn most of the revenue from the Westview stores (we earn a percentage of the upside over time).  I'm not sure why anyone would want RIOC to have less recurring, annual money.

Second, I think there's a logic to the Master Lease having a greater point of view to help the island. Whether it's paying for the new way finding system, or holiday lights, we've tried to help all the retailers.

We've made plenty of non-economic choices, whether it's signing a lease with NYPL or working to keep RIVAA in their space that are good for the island but don't maximize profits.

Our JV pays them ground rent from the retail revenue plus profit participation ... it comes out to approx. 83% of net proceeds. So I don’t understand why the RIOC Board wouldn’t fight to retain that revenue source.
Westview building owner David Hirschorn declined to comment on the Westview privatization status or the retail lease renewal at this time.

The Westview Task Force sent this notice out last evening to residents:
Friends, Neighbors, Westview Tenants,

We are pleased to report that we met with HCR officials and representatives of our elected officials this past Friday.

We were informed that, after prolonged negotiations, the agencies (HCR, RIOC) and Owner are now on the same page regarding all terms related to the WV Affordability Plan. Details are expected to be formalized and released soon.

We will keep everyone informed as we learn more.

Thank you for your continued support.

Westview Taskforce Inc.
Below is an excerpt from a November 3, 2017 email from the Westview Task Force to HCR Commissioner RuthAnne Visnauskas supporting the return of Westview retail space to the Westview Building ownership (click text image for larger sized print).

Today, RIOC announced that the Real Estate Advisory Committee will meet April 3 in Executive Session (closed to the public) to discuss Westview as well as an apparent settlement of Rivercross ground lease arbitration. According to RIOC:
PLEASE TAKE NOTICE that a meeting of the Real Estate Development Advisory Committee of the RIOC Board of Directors will be held on Tuesday, April 3, 2018 at 5:30 P.M. at the RIOC Administrative Office, 591 Main Street, Roosevelt Island, New York.


1. Chair’s Motion for Executive Session to Discuss:

a. Rivercross Arbitration Settlement

b. Southtown 8 & 9 Environmental Assessment and Zoning Overrides

c. Westview Ground Lease Negotiations

2. Any Other Committee Business That May be Brought Before the Committee.
My understanding is that if the Westview retail space lease to RIOC is not renewed, the current retail tenants will have to renegotiate their agreements with Westview owner.