RIOC Real Estate Committee Meeting Today To Discuss Status Of Island House Privatization/Affordability Plan and Ground Lease Extension - In Executive Session Closed To The Public, What's Going On?

Image of Roosevelt Island's Island House Entrance

Received this advisory from Roosevelt Island Operating Corp (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, September 6, 2011 at 6:00 p.m. at the RIOC administrative office, 591 Main Street, Roosevelt Island, New York.

AGENDA

1. Chair's Motion for Executive Session to Review and Discuss the Status of Privatization/Affordability Plan and Ground Lease Extension for Island House

A previous post discussed the circumstances when the RIOC Board can meet in Executive Session. An excerpt:

... a public body cannot close its doors to the public to discuss the subject of its choice, for the law specifies and limits the subject matter that may appropriately be discussed in executive session. The eight subjects that may be discussed behind closed doors include:

... (h) the proposed acquisition, sale or lease of real property or the proposed acquisition of securities, or sale or exchange of securities held by such public body, but only when publicity would substantially affect the value thereof....

More information on the circumstances under which RIOC is permitted to hold an executive session closed to the public available from the NY State Department of State Committee on Open Government.

It has been extremely difficult to obtain information regarding the privatization/affordability plan and ground lease extension for Roosevelt Island's Mitchell Lama Buildings at Island House, Westview and Rivercross. To date, none of these buildings have been privatized out of the Mitchell Lama program and only the Rivercross Building has received a ground lease extension from RIOC Board of Directors in January 2011. The reason given for Rivercross receiving a ground lease extension from RIOC was so that the Rivercross mortgage could be refinanced at a low interest rate to raise funds for building improvements. According to the January 2011 RIOC Board minutes regarding this issue (Page 9):

... In response to Mr. Kraut’s question, Mr. Leitner noted that, under the proposed agreement, as stated in term sheet item nine, the base ground rent paid to the Empire State Development Corporation (“ESDC”) would remain the same, while the amount paid to RIOC will increase by 4% compounded annually. Mr. Shinozaki noted that the entire building’s rent is less than that of some individual residential units in other buildings on Roosevelt Island. Mr. Kalkin noted that the low rent was consistent with the purpose of Mitchell-Llama properties to create and preserve affordable housing....

Here is the Rivercross Ground Lease Extension Resolution from RIOC and Term Sheet. Some Rivercross residents have expressed concerns that the new mortgage negotiated by the Rivercross Board is a bad deal for residents who plan on staying long term at the building.

None of the 9 RIOC Board members live in Island House or Westview. 4 of the 6 Roosevelt Island resident RIOC Directors live in Rivercross and all 3 current members of the Real Estate Committee live in Rivercross. At the time that the Rivercross Ground Lease extension was granted by RIOC, 2 of the 3 Real Estate Committee members lived in Rivercross.

By noting that 4 Rivercross residents are on the RIOC Board and voted for the Rivercross Ground Lease extension does not indicate in any way whatsoever that anything improper occurred though some residents, not only Mr. Farance, have raised conflict of interest questions concerning this RIOC Board vote.

The conflict of interest question gets asked because so little information is made public to explain what, if any, role the RIOC Board of Directors and Staff have in deciding issues regarding the privatization/affordability plans for the Roosevelt Island Mitchell Lama Rivercross, Westview and Island House buildings, what role New York City and State agencies play in the process and what is the current status of the privatization process?

If anyone knows, please tell.