New York's Stuy Town Renters Try to Buy Their Buildings

Patricia Orsini

The middle-class tenants of Stuyvesant Town and Peter Cooper Village in New York City are trying once again to take ownership of their apartment complex. And they are asking for help from an institutional investor that once bet against them.

The iconic, 110-building complex, which includes the two adjoining developments, went into foreclosure earlier this year. That was because real estate giant Tishman Speyer, along with BlackRock Realty and other investors, defaulted on debt they took on in 2006 from their controversial, $5.4 billion purchase of the buildings from Metropolitan Life.

Tishman's business plan for the complex was based on converting rent-controlled apartments into market-rate apartments. This raised the ire of many middle-class New Yorkers who saw Stuy Town, as it's known, as an oasis of affordability in a notoriously high rental market.

Now, the tenants association is hoping to purchase the complex. To do that, they need investors -- and they are asking CalPERS, the huge California employees pension system that bet against them as an investor in the 2006 purchase, to join forces.

Is this a historic case of a power to the people, or simply a marriage of convenience? And if successful, would this maneuver inspire others in ailing rental complexes around the country to take matters into their own hands?