Stuy Town Renters Fight for Their Homes
Where does that leave the people who live there?
They are trying to buy the complex, according to a recent New York Times story. Whether they succeed or fail, Stuy Town's fate will provide an omen for people living in more than 100 other New York apartment buildings facing foreclosure.
The residents' bid to buy Stuy Town might not even be such a long-shot.
In the past, working-class New Yorkers who tried to buy their own buildings had to outbid wealthy speculators who often planned to sharply raise the rents. This time, Stuy Town's residents have a better chance to outbid these speculators, mostly because New York's rent stabilization laws have proven stronger than anyone anticipated.
The laws protect residents from eviction and limit rent hikes as long as they follow the rules in their leases, which they have the right to renew. Also, whoever buys Stuy Town will also have to pay 4,000 of the residents about $200 million in rent refunds-the result of a court case that says the prior owners hiked up rents illegally.
As potential buyers from the Related Companies to the LeFrak Organization circle the wounded complex, these housing regulations will sharply limit any ambitions to raise rents, which will have big effect on what bidders are willing to pay. Though Tishman Speyer and its partners paid $4.5 billion for the properties in 2006, the real value of the apartments based on their current income-without any rosy projections for future rent increases-is just $2.13 billion, according to credit rating company Realpoint LLC. Subtract the $200 million in rent refunds, and the properties are worth just $1.93 billion to a new owner.
That lower value works out to roughly $200,000 per apartment, something the everyday people who live in these buildings could probably afford.
Housing officials in New York are carefully watching Stuy Town and other properties like it. More than 100 properties totaling as many as 90,000 rental apartments are facing possible foreclosure, according to local housing advocates. Many of these buildings were created to provide homes to working class New Yorkers but were bought in the real estate boom by big-spending developers who planned to remarket them as "luxury apartments."
As banks seize these properties, residents and housing advocates hope that bidders who plan to keep the apartments clean, safe and affordable might have a chance to win the day. This would, "preserve, maintain and strengthen our City's affordable housing stock," according to the city's Housing Commissioner, Raphael Cestero.