This afternoon I had a 15 minute one on one interview with NYC Mayor Eric Adams. According to the Mayor:
... No matter what we do with Roosevelt Island, we should have the input of the residents to determine their destiny. I think that's
crucial and I support how those who live there, who have made it a vibrant community, how they believe is the best way to run it....
We spoke about:
Extension of Roosevelt Island ground lease - it's a long way off he said.
RIOC Governance and Mayoral appointments to the RIOC Board.
Roosevelt Island Tram boarding preference for residents to alleviate overcrowding which he says is a good idea.
Future Status of Coler Hospital - it will remain open. Rumors of Coler closing are untrue.
Repair status of Steam Plant and tunnel,
Impressions of Roosevelt Island - Mayor Adams says it's a hidden jewel and would like to move Gracie Mansion here.
The Roosevelt Island Operating Corp (RIOC) Real Estate Advisory Committee (REDAC) is meeting next week to discuss the status of currently under construction
Riverwalk Building 8 (341 units of affordable housing) in a session open to the public. Followed by an Executive Session discussion, closed to the public, about ground lease negotiations for the future Riverwalk Building 9 (market rate rental) as well as amending the Manhattan Park ground lease.
According to the May 29 RIOC REDAC Agenda:
PLEASE TAKE NOTICE that a meeting of the Real Estate Development Advisory Committee of the RIOC Board of Directors will be held on Wednesday, May 29, 2019 at 5:30 P.M. at the RIOC Administrative Office, 591 Main Street, Roosevelt Island, New York.
AGENDA:
Status Report on Southtown Building 8
Chair’s Motion for Executive Session to Discuss:
Ground Lease Negotiations for Southtown Building 9
Ground Lease Amendment Negotiations for Manhattan Park
Any Other Committee Business That May be Brought Before the Committee.
Will update when more is learned about these matters.
The last remaining Roosevelt Island Mitchell Lama building, Westview,
took another step closer to privatization and exiting the NY State affordable housing program this weekend with the residents approving an affordability plan negotiated between their representatives, the Westview Task Force (WTF) and building ownership....
... The Westview Task Force added that the Affordability Plan has the support of local elected officials, NY State Homes & Community Renewal and the Roosevelt Island Operating Corp (RIOC). RIOC is expected to approve an extension of the Westview Ground Lease through 2068 during its January 2016 Board meeting....
Image of September 22 WTF Affordability Plan Informational Meeting
... Westview is the last building remaining in the Mitchell-Lama program on Roosevelt Island and will exit with an affordability plan supported by Assembly Member Seawright. Seawright acted on the numerous concerns raised by her constituents and worked with public officials Congresswoman Carolyn B. Maloney, Senator Jose M. Serrano, Manhattan Borough President Gale A. Brewer, NYC Council Member Ben Kallos and New York State Homes & Community Renewal’s Commissioner James S. Rubin to ensure the affordability plan was fair for all. The proposed plan, which was overwhelmingly approved, protects Westview residents who chose to continue to rent rather than purchase. The affordability plan specifically protects residents on fixed incomes who simply cannot afford to purchase their apartments or pay market rent. At the same time, this is an opportunity for many middle income Westview residents to become first time home buyers at affordable purchase prices...
But, to date, the Westview building owner/sponsor and the NY State agencies have not reached a final agreement leaving the residents worried and the fate of their homes unknown.
I spoke with Westvew owner/sponsor David Hirschhorn about the current status of the Westview affordability plan and exit from the Mitchell Lama program. According to Mr. Hirschhorn:
The Affordability Plan is essentially a very detailed term sheet that sets forth all of the details for how Westview will withdraw from the Mitchell Lama Program and how it will operate following Mitchell Lama withdrawal. It is modeled on the Island House Affordability Plan and includes: (i) the purchase price to be paid by tenants who elect to purchase their apartments, (ii) the rent to be paid by tenants who elect not to purchase their apartments, (iii) the ground rent and transfer fees to be paid to RIOC, and (iv) the payments in lieu of real estate taxes to be paid to ESD.
Following the Island House template, the Westview Affordability Plan was the product of many years of negotiation and compromise between the Sponsor and the Westview Taskforce. DHCR was involved in every step of these negotiations and used its good offices to ultimately bring the parties together resulting in the Westview Affordability Plan Dated September 1, 2016 - FINAL. The agreed upon Final Affordability Plan was then overwhelmingly approved in a tenant referendum on October 3, 2016. The economic terms were carefully balanced and reflect substantial concessions; therefore, any change will have a ripple effect resulting in multiple changes. Its very complicated.
The sponsor and RIOC were to finalize the Ground Lease extension using the Island House Ground lease as the Westview template. The final approved Westview Affordability Plan provided for the same ground rent and the same transfer fees agreed to by RIOC in Island House to be incorporated in Westview. The Westview Affordability Plan actually states:
This Affordability Plan contemplates the execution of a formal Ground Lease Modification Agreement incorporating the terms of this Affordability Plan. The Sponsor and the New York State agencies agree to cooperate with one another in a good faith effort to prepare and execute such Ground Lease Modification Agreement (and the Sponsor-RIOC Sublease herein described) as expeditiously as reasonably possible.
All of this was supposed to have been completed by January 31, 2017 because effective February 1, 2017, the Affordability Plan provides that the purchase price paid by Westview tenants increases (with additional increases each month thereafter). The Sponsor deferred the February increase, but the March 1st increase is effective. The next increase will take effect April 1st.
I presume RIOC is evaluating whether it will proceed with the ground lease extension on which the Affordability Plan was based (the same as RIOC agreed to in Island House) and approved by Westview Tenants, or whether it will instead require a greater ground rent to be paid by the Coop (which would require that the monthly maintenance fees be increased that could result in the coop not being viable and thus the failure of the entire deal), and/or higher transfer fees from the Sponsor and tenants when apartments are sold. As noted above, any change in one provision beyond what was carefully negotiated, such as an increase to the Sponsor, would result in other changes, such as an increase in the purchase price to be paid by tenant purchasers.
Without a ground lease extension there cannot be a cooperative conversion and tenants would not be able to become homeowners. Remaining a Mitchell Lama is not an option and so Westview would become a market rate rental building. This would be a most unfortunate result.
All of the New York State agencies (RIOC, DHCR & ESD) need to finalize the Westview Ground Lease Extension substantially in the form that these same agencies signed for Island House. This could be done very quickly since the form is actually included in the Westview Red Herring which all of the agencies have had since its filing in 2015. ESD has already stated that they are prepared to move forward using the Island House documentation. So its really up to RIOC and DHCR as to whether they will proceed as provided in the Final Affordability Plan.
I am cautiously optimistic. I believe that RIOC and DHCR are carefully considering what is at stake and they are certainly aware of what was agreed to and the economic terms that everyone (tenants and sponsor) relied upon in compromising upon a final consensus back in September. I do believe they are working hard to make the Westview Affordability Plan a reality. It would be most unfortunate to now upset the apple cart. Island House was a smashing success and as the Sponsor, I would hope that we can replicate and bring that success to the Westview Tenants. Both the Sponsor and the Westview Taskforce desire to conclude the Westview Ground Lease Extension as originally contemplated without further price increases to the Westview Tenants. With interest rates rising, it would be good for the Westview Tenants to get this done very soon.
The Westview Task Force representing building residents issued this March 20 statement:
We were unpleasantly surprised and very disappointed that the effective date of the Westview Affordability Plan did not materialize at the end of January, this after the agencies assured us that a January effective date was achievable as long as we came to an agreement with the Sponsor and demonstrated Tenant support for the Plan. An overwhelmingly positive vote by Tenants was delivered at the end of September 2016 moving the Plan forward for final approval by the agencies.
We have not been provided with any specifics related to the new demands put on the Sponsor by the agencies and we are not part of any negotiations. Therefore, we are not in a position to comment on the status of such negotiations. We have, however, clearly expressed to the agencies and Sponsor our concerns with any potential outcome that might adversely affect the affordable preservation of our homes, and our position that any such adverse outcome would be unacceptable.
We remain hopeful that the affordability terms as of the promised January effective date will be retained and quickly approved by the agencies.
RIOC President Susan Rosenthal responded to my inquiry on status of Westview affordability plan and ground lease extension saying:
RIOC is working in concert with HCR and ESD to negotiate with the Owner. We remain hopeful that the parties will reach agreement.
The last public statements by RIOC on the subject of Westview ground lease extension and affordability plan occurred during the October 13, 2016 Real Estate Advisory Committee meeting. RIOC President Rosenthal reported to the Committee:
We had a meeting with the Task Force at their request and we also had conversations with Hirschhorn before the vote and I indicated to both groups that we are having an appraisal. It is very possible that the rent proposed by us will be higher than the Island House rent based upon the increase in market value and they should know that before going forward....
... We're not going to agree to an amount that's not based upon the market value....
RIOC Director Margie Smith added:
There's just so many variables. It is similar to Island House but certainly not the same building. There are so many issues that one building has and not the other one. We should have been involved all along in this, certainly before they voted....
Ms. Rosenthal replied:
HCR did not look at the affordability plan before the vote. ESD has not looked at the TEP payment before the vote. I'm not sure why it was done in this chronology.
Here's portion of the Real Estate Advisory Committee discussion
Island House Mitchell Lama exit was under an affordability plan, Rivercross Mitchell Lama exit was a market rate plan.
There is currently an arbitration under way between RIOC and Rivercross regarding the Rivercross ground lease extension fee. Not currently known if the Rivercross ground lease extension arbitration effects the Westivew ground lease negotiations.
Westview residents are very worried.
UPDATE 4/11 - NY State Assembly Member Rebecca Seawright adds:
It is in everyone's best interest that Westview exit from the Mitchell Lama program ensures affordable housing for Roosevelt Island residents. We have come so far in negotiations, and I will continue to work with DHCR, ESD, RIOC and the Westview Taskforce to maximize the benefit for the residents. At this time, negotiations are still in progress and there is every reason to believe that the final plan will be affordable and fair for all.
Reported previously that a proposed Island House Ground Lease Extension agenda item had been removed from the Roosevelt Island Operating Corp (RIOC) July 29 Board of Directors meeting and asked:
That question remained unanswered but modifications of Roosevelt Island building's ground lease are back on RIOC's agenda this week. The proposed Island House Ground Lease extension as well as the proposed Ground Lease modifications for Southtown Building 7 -9 are on the Agenda for RIOC's Real Estate Committee meeting this coming Friday. The meeting will be held in Executive Session which means that the public will not be able to attend the meeting. 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 Friday, August 10, 2012 at 3:00 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:
a. Proposed Modifications to the Ground Lease for Island House;
b. Proposed Modifications to the Ground Lease for Southtown Buildings 7, 8 and 9; and
2. Any Other Committee Business That May be Brought Before the Committee.
More information on Island House Ground Lease Extension/privatization efforts available here. No additional information available on Southtown Ground Lease modification other than Hudson Related has previously announced plans for developing building 7 in early 2013 and:
... Southtown 7,8 & 9 – as noted in the budget for the past two years, the development of Southtown 7, 8 & 9 will have a significant impact on the future cash flow of the Corporation. The developer, Hudson/Related (HR) holds an option to develop the site that expires on December 31, 2012....
The Roosevelt Island Operating Corp (RIOC) Real Estate Development Advisory Committee will be meeting this afternoon in Executive Session (closed to the public) to discuss proposed ground lease modifications for Hudson Related Southtown's Riverwalk Buildings 7 - 9 (shown in picture above as future construction). 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, July 3, 2012 at 1:00 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 Proposed Modifications to the Ground Lease for Southtown Buildings 7, 8 and 9;
2. Discuss Any Other Committee Business That May be Brought Before the Committee.
I do not know yet what type of ground lease modifications for Southtown Riverwalk Buildings 7-9 are being discussed and since the meeting is in Executive Session, closed to the public, will not be able to report on what happens today. More information on Southtown buildings 7-9 development available in RIOC's 2012-13 Budget including (Page 6):
... Southtown 7,8 & 9 – as noted in the budget for the past two years, the development of Southtown 7, 8 & 9 will have a significant impact on the future cash flow of the Corporation. The developer, Hudson/Related (HR) holds an option to develop the site that expires on December 31, 2012. Preliminary discussions appear to be positive although development would depend on market conditions. If development should not go forward the future cash flow would be significantly negatively impacted as detailed on page 13....
... Early discussions with Hudsion/Related appear to be positive although development would depend on market conditions. If Hudson/Related did not go forth with development of 7,8 & 9 they would owe the Corporation a de-designation fee of Approx. $1,500,000 and the net effect on projected cash flows would be as follows:....
As reported last April, Hudson Related exercised its option on building 7 and plans to start construction in early 2013.
Roosevelt Island ground lease issues were one of the reasons RIOC Chief Financial Officer Steve Chironis cited for hiring CBRE as a real estate consultant during the June 28 RIOC Board of Directors Meeting. CBRE is replacing RIOC's former real estate consultant Jones Lange LaSalle.
When asked by RIOC Director David Kraut if there is any urgency to approve CBRE as RIOC's new real estate consultant at the June Meeting, Mr. Chironis replied yes. Here's that portion of the discussion
and the full discussion in which Mr. Chironis asks the Board to approve CBRE as RIOC's real estate consultant explaining that CBRE is very experienced in ground lease issues having worked on similar issues at Battery Park City and provided a cheaper bid than Jones Lang LaSalle.
Reported previously on Mitchell Lama privatization/affordability plan and ground lease extension issues for Roosevelt Island Rivercross, Island House and Westview buildings.
On May 8, RIOC issued a Request For Proposals (RFP) seeking a real estate consultant to assist in negotiating ground lease agreements for several building. According to the RFP:
The Roosevelt Island Operating Corporation (“RIOC”), a NYS Public Benefit Corporation, was established to develop and maintain the 147 acre Roosevelt Island located between Manhattan and Queens along the East River. The Island was leased from the City of New York by RIOC under a 99 year lease terminating in 2068. RIOC seeks to engage a real estate consultant to assist in the negotiation of ground lease extensions for several island buildings....
... The contract will be for a one year with an option for RIOC to renew for an additional two years...
The due date for submissions to the RFP for interested real estate firms is May 29. Full RFP is here.
In December 2009, the RIOC Board had previously approved the hiring of Jones Lang LaSalle to advise RIOC on Rivercross, Island House and Westview negotiations. Who will be next, Jones Lang again or someone else?
Now, the owners of Roosevelt Island other Mitchell Lama rental building, Westview, have given notice of their intent to leave the Mitchell Lama program. According to the Westview Task Force (WTF), the Westview owners anticipate negotiating an affordability plan with the WTF over the next few months and will submit an affordability plan to the tenants, Roosevelt Island Operating Corp (RIOC) and NY State agencies within the next 30 days.
... justification and rectification of the estimated 20 vacant apartments. Also an explanation on why "internal apartment transfers" have been frozen....
Roosevelt Island's Assembly Member Micah Kellner provides some additional details on Island House Privatization with this Press Release:
“The Island House Affordability Plan signifies the next generation of affordable housing on Roosevelt Island and it should be used as a template for other Mitchell-Lama conversions throughout New York State,” said the Assembly Member. “This deal ensures affordability for all Island House residents and I am proud to have played a vital role in making it a reality. I will sleep well at night knowing that tenants will be able to keep their apartments – whether they own or rent – for years to come.”
“Our focus throughout this long process has been on maximizing affordability and protection for every tenant so that any tenant who wishes to stay in Island House, either as a buyer or renter, would be able do so,” said Graham Cannon, Chairman of the Island House Tenants Association. “We are delighted with this outcome. This is a very important breakthrough for the tenants of Island House. I especially recognize the efforts of our elected officials – especially Assembly Member Kellner and Councilmember Jessica Lappin – who played such a critical role in moving this forward.”
“The Affordability Plan is the culmination of many years of hard work among all of the stakeholders and was made possible only through the willingness of those involved to work cooperatively toward achieving a delicate balance among competing interests,” said David Hirschhorn, the General Partner of the ownership group.
The plan provides the following:
Island House residents will be able to purchase their apartments at a discount of approximately 65% off of the market price.
For those Island House residents who do not wish to purchase their apartments, they may remain as tenants for the next 30 years and will be protected under a rent stabilization- like program.
The Division of Housing and Community Renewal (DHCR) will continue to supervise the property to insure that the terms of the Affordability Plan are adhered to.
Owner contributes $9.6MM to building improvements and reserves
Owner pays $4,500,000 in transfer fees to RIOC
Tax Equivalency Payments for affordable units remain low during the 30 year affordability period and thereafter phase into a market level tax payment
During the 30 year affordability period, Island House residents (and future owners) may resell their apartments but are limited to the amount they can charge and are required to pay a significant portion of their profit back to the building, as well as a 1% fee to RIOC
Roosevelt Island Operating Corporation (RIOC) will receive substantial additional ground rents upon the expiration of the affordability period.
Under the Public Authorities Law, a 90 day notice letter was filed by RIOC on April 27, 2012. The closing of the Affordability Plan is scheduled for July 31, 2012.
The offering portion of the deal must still be submitted to the Office of the New York State Attorney General for acceptance of the cooperative offering plan.
More information on the Island House privatization as well as RIOC's 90 day notice letter available at prior post. I have asked RIOC to comment on the plan but have not received a response. Questions regarding the Island House privatization and affordability plan remain including from this reader:
What will this mean for those not currently residents of Island House but interested in moving there? Will the current wait list for rentals be converted to a waitlist to purchase, or will be there a new mechanism for filling future vacancies?
Roosevelt Island is a mixed income, racially diverse waterfront community situated in the East River of New York City between Manhattan and Queens and is jurisdictionally part of Manhattan. The Roosevelt Island Tramway, which connects Roosevelt Island to the rest of Manhattan, has become the iconic symbol of Roosevelt Island to its residents.
The Purpose of this Blog is to provide accurate and timely information about Roosevelt Island as well as a forum for residents to express opinions and engage in a dialogue to improve our community.
