Roosevelt Island Elected Officials Express Concern Over Westview Rent Increases To DHCR Commissioner - Is Conversion Agreement Jeopardized?

Image of Westview From Corrections History

Received a copy of the following letter from a Coalition of East Side Elected Officials representing Roosevelt Island to Deborah Van Amerongen, the Commissioner of NY State's Department of Housing & Community Renewal (DHCR) regarding the ongoing Budget Rent Determination at Roosevelt Island's Westview building. The East Side Coalition is composed of Assembly Member Micah Kellner, Borough President Scott Stringer, State Senator Jose Serrano and Council Member Jessica Lappin.

COALITION OF EAST SIDE ELECTED OFFICIALS
C/O ASSEMBLY MEMBER MICAH Z. KELLNER
315 EAST 65TH STREET
NEW YORK, NY 10065

July 21, 2009

Hon. Deborah VanAmerongen
Commissioner
NYS Division of Housing and Community Renewal
25 Beaver Street, 7th Floor
New York, NY 10004

Dear Commissioner VanAmerongen:

We are writing to express our concerns with respect to the ongoing budget rent determination (“BRD”) at 595 Main Street and 625 Main Street on Roosevelt Island (“Westview”). We are informed that, in the year since the August 2008 hearing relating to the Westview BRD, the building’s owners have abandoned their initial request for an 88% rent increase, instead insisting that an increase of “only” 12-16% would be necessary. This dramatic shift in the owners’ position gives rise to troubling questions about whether the owners are using the BRD process to manipulate ongoing negotiations with tenants over a conversion agreement. Additionally, Westview Task Force, Inc. (“WTI”), through its advisor Chad A. Marlow, has alleged that DHCR may be in substantial violation of the statutes governing the BRD process.

As you are aware, in 2006 WTI negotiated with Westview’s owners a conversion agreement designed to fund a building rehabilitation while preserving affordability for residents. However, the resulting letter of intent was negated in 2007 by the Roosevelt Island Operating Corporation’s refusal to grant Westview a ground lease extension. In April 2008 the owners served their petition for an 88% increase in rent.

As we have previously expressed in testimony and in other communications with you, we believe that granting any significant rent increase at Westview would be destructive of the tenants’ efforts to negotiate a fair and reasonable conversion agreement with the owners, as well as of DHCR’s own stated goal of preserving affordability in the building. Moreover, we are concerned that the owners’ initial request for an extraordinarily high rent increase may have been intended to prejudice these ongoing negotiations. We believe that any increase would be unjustified, given the owners’ failure to implement energy efficiency measures in the building, to refinance the building’s mortgage, or to make proper use of funds raised by previous rent increases. For instance, a 2003 increase earmarked $752,000 for improvements to Westview’s elevators, yet residents report that the building’s elevators have not been modernized and the owners have not accounted for the money intended for this purpose. While there is no doubt that funds will be required for building rehabilitation, it would be inappropriate and unfair to place this burden on the tenants in the form of a rent increase—rather, the owners should fund the rehabilitation out of the profits they generate from any buyout agreement.

Finally, we are in receipt of a letter from Chad A. Marlow, who is advising WTI, to Assistant Commissioner Richard McCurnin, observing that any rent determination with respect to the first budget year of the BRD should be made using actual data now available for that period, as opposed to the projected data provided at the beginning of the BRD process. Mr. Marlow also alleges that DHCR is in violation of statutes governing the BRD process, in particular with regard to the requirements that the Division undertake a review of the housing company’s second-year budget 165 days prior to the end of the first year of the budget cycle (in this case, on January 16, 2009), and that it then pursue one of three allowable courses of action with respect to the BRD.

In light of the drastically different economic situation since the 2008 hearing, as well as the points raised by Mr. Marlow, which cast doubt on the legitimacy of the Westview BRD process, and the facts of this case, we believe that DHCR should terminate the current BRD without awarding Westview’s owners an unjustifiable rent increase, and start the process anew.

Thank you for your attention to this matter.


Very truly yours,

Micah Z. Kellner Scott M. Stringer José M. Serrano Jessica S. Lappin
Assembly Member Borough President State Senator Council Member

cc: Assistant Commissioner Richard McCurnin, DHCR
Opher Pail, Westview Taskforce Inc.
Johan Marfey, Westview Taskforce Inc.
Chad A. Marlow, The Public Advocacy Group LLC
Stephen H. Shane, RIOC