Concerns Grow Over Starrett City

By ELIOT BROWN, Special to the Sun | February 13, 2007

A growing group of politicians is speaking out against the $1.3 billion sale of the Starrett City affordable housing complex and provoking some concern in the real estate community about the possibility of government intervention.

Senator Schumer became the latest lawmaker to criticize the deal yesterday, calling for the federal Department of Housing and Urban Development to block the sale unless the buyer makes a clear commitment to keeping the Brooklyn complex affordable. If the cost of units for existing tenants increases significantly, Mr. Schumer is opposed, a spokeswoman for the senator said in an e-mail.

Mayor Bloomberg, who took a relatively hands-off approach to the $4.5 billion sale of the Stuyvesant Town complex in Manhattan this fall, offered criticism of the potential buyer's track record as a landlord.

In an apparent move to gain influence, the winning bidder for the Brooklyn complex, Clipper Equity LLC, has hired a top lobbyist, Suri Kasirer, whose clients have included Elad Properties, NBC Universal, and KeySpan, according to a state lobbyist database.

While those in the real estate industry are unsure whether HUD or the state will attempt to block the deal — or whether they will even be able to block the deal — they criticized the prospect of such intervention.

"I think that will be a horrible message to send to the private investment community," a director for Real Capital Analytics, Daniel Fasulo, said.

But tenant advocacy groups have countered that intervention is needed, as selling the city, state, and federally subsidized complex for such a high price would ensure that the new owners would drive up rates to preserve their investment.

Clipper Equity has already said it intends to leave the Mitchell-Lama affordable housing program, though a spokesman said the company intends to preserve affordability.

The secretary of the Department of Housing and Urban Development, Alphonso Jackson, said in a statement that his office will "aggressively review" the sale. "This transaction has the potential to threaten New York City's low-income housing market and those who need it," Mr. Jackson said.