Feds May Block Starrett Ciy Deal
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NEW YORK (AP) – The federal housing secretary told tenants at the nation’s largest federally subsidized rental complex Friday that he will consider blocking the $1.3 billion sale to a real estate developer.
The decision on the complex – best known as Starrett City, though its name was changed to Spring Creek Towers in recent years – should come within two weeks, according to Housing and Urban Development Secretary Alphonso Jackson.
“This transaction threatens the low-income housing market and those who most need it,” Mr. Jackson said in a meeting at St. Lawrence Parish Hall, a Roman Catholic church on the edge of the 140-acre property where 12,000 people reside.
“The Starrett City sale would quickly displace most if not all of the residents here.”
With the residents clapping and shouting “Amen!”, Mr. Jackson said the proposed deal could lead to “a human tragedy – the destruction of one of the safest, most friendly communities in New York City.”
In one of the richest real estate deals in city history, the nearly 6,000-unit affordable housing haven, owned by Starrett City Associates, was sold last week for $1.3 billion to Clipper Equity LLC.
Federal and city officials have spoken out against the deal. Some, including Mayor Bloomberg, have raised concerns about David Bistricer, a partner in Clipper Equity who owns 71 other buildings with 8,792 outstanding violations – from mice, roaches and water leaks to broken doors, walls and windows.
A spokeswoman for Clipper Equity said many of those violations were inherited when the company bought Flatbush Gardens, a housing complex in Brooklyn, 18 months ago.
Mr. Jackson believes he has the right to make a decision on the sale, but withheld any further comment until he reviews documents about the potential new buyers given to him by state Attorney General Andrew Cuomo.
“I want to review every aspect of this sale. I do not want to prejudge anything,” Jackson said. “However, it’s very difficult for me to believe that if you pay $1.3 billion dollars for that property that it can stay affordable. It’s almost impossible.”
Mr. Cuomo and Senator Schumer, Democrat of New York, joined Mr. Jackson at the Brooklyn church.
Mr. Schumer said Mr. Jackson can block the deal because it goes against HUD regulations, under which prospective buyers of federally subsidized housing must be “responsible individuals and organizations, and that an unfavorable record reflects an unacceptable risk to the public interest.”
The senator said he has no doubt that it is not in the public interest for Clipper to buy the property, citing the housing violations. Mr. Cuomo, a former HUD secretary, said the buyers have “a long and troubled history of tenant abuse.”
In 1998, Bistricer was banned from converting rental buildings to condominiums or cooperatives, Mr. Cuomo said. Tenant complaints were so severe that New York’s attorney general at the time won a court injunction, he added.
Mr. Cuomo said he would enforce the injunction. He gave Jackson related documents on Friday, saying they “should be enough to ban (Bistricer) from this deal.”
Mr. Schumer, who chairs the Senate Housing Subcommittee, acknowledged that “the law is murky” when it comes to the housing secretary’s right to block the Starrett City sale. But the senator said that if the sale can’t be stopped under existing federal law, “we will change the law.”
Lloyd Kaplan, a spokesman for Bistricer, disputed the terms of the 1998 order. He said the company believes that “a far and full review of the facts will demonstrate he’s rescued Flatbush Gardens, and has owned property in a responsible manner.” Bistricer is “totally and absolutely committed to preserving affordability.”
Many tenants in the 30-year-old development pay between $200 and about $400 monthly for a federally subsidized apartment. The families live on annual gross incomes of about $20,000 to $40,000.
Residents like Yeva Sverdlova, a retired librarian who pays $197 a month for her one-bedroom apartment, fear the new owners would jettison tenants by raising rents and pricing them out of their homes.
“I’m nervous because I’m alone,” said Ms. Sverdlova. “Who will help me?”
About 2,000 tenants pay up to $1,200 in rent under the state’s Mitchell-Lama program, which since the 1950s has provided land and lucrative government financing to developers in exchange for building low- and middle-income housing that is state subsidized.
Starrett City, which straddles Brooklyn’s East New York and Canarsie neighborhoods, has its own shopping center, schools, churches, synagogues, power plant and an armed security force.
State officials hold its $234 million interest-free mortgage and can approve or reject any new owner.
If the deal is finalized, Clipper Equity LLC could withdraw the complex from the Mitchell-Lama program by paying the balance of the mortgage.