Stuyvesant Town / Peter Cooper Village Tenants Association
Steps Up Organizing Drive in Preparation for Tenant Bid
The Stuyvesant Town / Peter Cooper Village Tenants Association, which last week informed CW Capital that it is actively pursing a tenant-sponsored restructuring plan, is backing that effort with a massive organizing drive to demonstrate that the tenants are united in that goal.
The Tenants Association has mobilized a network of volunteers to reach all 11,232 apartments with unity pledges for residents to sign.
“Being organized will be a key to victory — and we are already well on our way,” said Al Doyle, president of the Tenants Association. “As we have said all along, it is critical for the tenants to speak with one voice. Our position at the bargaining table is much stronger when we have our 25,000 residents united behind us.”
While not legally binding, the pledges formally designate the Association to negotiate on tenants’ behalf; to express support for a plan that gives people an option to buy or continue to rent their apartment, keeps the community affordable, and preserves open space and quality of maintenance; and promises that, prior to making any agreement to purchase their apartment, tenants will first give the Tenants Association the opportunity to present a plan for their consideration.
Volunteers in all 110 buildings will be distributing and collecting signed pledges on an ongoing basis to illustrate the unity among residents.
Last week, Doyle sent a letter to Charles Spetka, CEO of CW Capital, the special servicer currently in control of the property, to tell him, “The Tenants Association expects to play a constructive and key role in the restructuring of Stuyvesant Town and Peter Cooper Village.”
A restructuring could take several different forms, including allowing tenants to purchase their individual apartments while letting others remain renters and protected under rent stabilization laws. The Tenants Association is planning a meeting for Saturday, March 13 to give tenants additional details about how these plans could be structured.
“We will be communicating with our neighbors every step of the way to make sure that whatever we propose reflects the will of this community,” Doyle said.
Council Member Dan Garodnick said of the unity effort: “The tenants have an opportunity to take control of their own destiny — and to be successful, we need everyone’s active participation. Everyone in real estate and finance is watching. This is our chance to stand up and fight for the future of our homes.”
Foreclosure law requires posting of an ALARMING notice that says “you will be allowed to stay in your apartment for the time being.” We anticipate that this notice, intended as a consumer protection, will be posted shortly.
DO NOT BE FRIGHTENED.
The notice is a formality. Your right to remain in your home is protected by New York State rent laws. The foreclosure suit itself also makes clear that it does not affect current leases.
]]>We have received a number of questions from tenants about the legal status of Peter Cooper Village and Stuyvesant Town. We have created this Frequently Asked Questions document to help address them.
Who is the owner of Stuyvesant Town and Peter Cooper Village today?
What is the meaning of the news that there was a foreclosure proceeding commenced?
Can you explain the structure of this transaction in a way that I can understand?
Has the TA had any contact with CWCapital?
Will the tenants be proposing their own restructuring plan?
Who will be the next manager of the property?
Will there be any time that there is no manager of the property?
Why are Fannie Mae and Freddie Mac important here?
What is the involvement of Mayor Bloomberg in this?
What is happening with the Roberts v. Tishman Speyer case?
Who is the owner of Stuyvesant Town and Peter Cooper Village today?
Tishman Speyer and its partners. As you recall, there was significant news a couple of weeks ago about Tishman Speyer “walking away from the property.” However, they have not yet transferred the deed to any other party. Tishman Speyer also continues to serve as the manager of the property today.
What is the meaning of the news that there was a foreclosure proceeding commenced?
For tenants, this will have little immediate impact. On February 16, CWCapital commenced a foreclosure proceeding in Manhattan federal court. Press reports indicate that this proceeding will not be contested by Tishman Speyer, and will result in the transfer of the deed to CWCapital. A stable, orderly transfer of title is a good thing for tenants, and we are hopeful that this process will be conducted in a smooth and professional manner. The actual foreclosure is expected to take at least two months, and, if successful, will culminate in an affiliate of CWCapital becoming the owner of the property. That affiliate would then be able to sell the property. As explained below, the Tenants Association expects to participate in this process.
Can you explain the structure of this transaction in a way that I can understand?
If you’re confused, it is no surprise. This is one of the most complicated real estate deals in history. The deal was financed with approximately $1 billion in equity (Tishman Speyer, Black Rock and others). That equity is the “owner” and represents the party that takes the most risk - and is the first to lose out if the property loses money.
Tishman Speyer and BlackRock also borrowed a total of $4.4 billion to finance their $5.4 billion purchase. That includes a $3 billion first mortgage (which includes participation from Fannie Mae and Freddie Mac, two government-sponsored companies) and $1.4 billion in “mezzanine loans”. On January 8, Tishman Speyer missed a payment to its lenders, creating a “default.”
Generally, a “first mortgage” is the least risky investment to a lender, because it is secured by the property and is the first to get paid if a deal goes sour. The “mezzanine” lenders get paid only after the first mortgage and other property-level debts (e.g. the costs of operating the property) are satisfied. The mezzanine lenders and the first mortgage holders have varying rights set forth in the agreements between them. If the less than $2 billion current estimate of the property’s value contained in recent press reports is accurate, the first mortgage lenders would be underwater and the investments in the property of everyone below the first mortgage would be worthless.
CWCapital was appointed as the “special servicer” to represent the interest of all of the first mortgage lenders, including Fannie Mae and Freddie Mac, which were bailed out by taxpayers during the financial crisis and are now effectively owned by the federal government. A “special servicer” gets appointed to service the first mortgage loan if the loan is at risk of an imminent default or is already in default.
Has the TA had any contact with CWCapital?
Yes. At the request of the Tenants Association, our Council Member, Dan Garodnick, met with CWCapital to communicate our priorities. These include protecting the long-term affordability and stability of this community, maximizing choices for tenants, ensuring adequate maintenance and preserving the historic configuration of the property.
Will the tenants be proposing their own restructuring plan?
Yes. The TA has recently retained the New York law firm of Paul, Weiss, Rifkind, Wharton and Garrison LLP in order to advise us, including in connection with proposing our own restructuring plan. The TA will work to try to ensure that tenants will secure additional protections in this process, that we have the maximum number of choices— which could include buying our own apartments—that maintenance is secure, and that nobody interferes with the configuration of this community for development purposes.
To help formulate the tenants’ proposal, the TA will be distributing a survey seeking your input regarding the community’s future, including whether you would want to buy your apartment. When you receive it, please fill it out and return it to us promptly.
Who will be the next manager of the property?
Rose Associates, the former manager, has been hired by CWCapital as a “transition
consultant” to work with Tishman Speyer as the owner hands over the day to day operations
of the complex. Rose Associates has agreed to a consultation process with tenants about
the status of maintenance today, and where there is room for improvement. We expect the
formal transition to a new manager to take place in the next few months. While Rose
Associates is serving for now as CWCapital’s “transition consultant,” it is also possible
that they may become the permanent manager.
Will there be any time that there is no manager of the property?
No. Tishman Speyer has pledged to stay on until the next management team is selected. CWCapital’s hiring of Rose Associates as “transition consultant” is helpful in this regard and is consistent with CWCapital’s obligation to the first mortgage lenders to ensure that the property is managed properly - which includes having a well-qualified manager at all times.
Why are Fannie Mae and Freddie Mac important here?
Fannie and Freddie are government-owned companies charged with promoting affordable homeownership. As it turns out, they are reported to have provided approximately $2.1 billion in first mortgage financing in this transaction. We and our elected representatives have let it be known that we expect Fannie and Freddie to support a tenant restructuring plan.
What is the involvement of Mayor Bloomberg in this?
Mayor Bloomberg’s Housing, Preservation and Development Commissioner, Rafael Cestero, said the following on January 8: "Since the 1940s Stuyvesant Town and Peter Cooper Village have served the housing needs of the hardworking middle-class families of New York, and it is our overriding concern that they remain a key component of the city’s affordable housing stock for generations to come." Mayor Bloomberg, however, has not said where he stands on the issue. It is important that we continue to push him to stand with the tenants of ST/PCV. Recently, volunteers slid a set of four postcards—including one to Mayor Bloomberg—under your doors. If you haven’t already signed and mailed them, please do so now. Or send your own card urging him to speak up for ST/PCV affordability to: Mayor Michael Bloomberg, City Hall, New York, NY 10007.
What is happening with the Roberts v. Tishman Speyer case?
As you may know, as part of an agreement between the tenants’ lawyers and representatives for the owner, rents were temporarily adjusted for formerly market-rate tenants starting on January 1. That was a temporary agreement which was extended in early February until the end of June 2010. Under the temporary agreement, the 4,400 affected tenants will also continue to be afforded certain rights as if they were covered by the Rent Stabilization Law, including renewal and succession rights.
The attorneys involved in that case anticipate that over the next few months, the rents for the approximately 4,400 affected apartments will be calculated based on the Rent Stabilization Law by an independent consultant, who has been selected but not yet formally retained.
We believe that the future of this community will be determined by a well-organized and unified tenant body. We need to communicate information quickly to tenants, and need considerable volunteer help to do that. If you are willing to volunteer as a Building Leader or Floor Volunteer, please let us know by phoning our Volunteer Line: 1 (917) 388-9558 or electronically through our website at: <http://www.stpcvta.org/kb/contact>. Choose subject, Organization and Volunteering, from the drop down list.
Finally, in an effort to demonstrate to would-be future owners the unity of our community, we are asking every apartment to financially contribute something to the Tenants Association between now and April 30th. Your contribution will serve two needs: it will demonstrate your support for an affordable, tenant-led Stuy Town and Peter Cooper and will help us defray some of the expenses that lie ahead. You can also demonstrate support by paying your annual dues - $35 per apartment. Please—right now—make out a check to: ST/PCV-TA. Mail it, with your name, full address, e-mail and phone to P.O. Box 1202, New York, NY 10009-1202. Or pay online at our website: <http://www.stpcvta.org/donate>.
]]>Bank of America Sues to Force Stuyvesant Town Foreclosure, Sale
By David Glovin and Oshrat Carmiel
Feb. 17, 2010 (Bloomberg)—Trustees including Bank of America Corp., acting on behalf of senior creditors holding $3 billion in debt on Manhattan’s Stuyvesant Town-Peter Cooper Village apartments, asked for court approval to foreclose on the 80-acre property and have it sold.
Bank of America and U.S. Bank National Association filed the complaint yesterday in federal court in New York against an affiliate of property owner Tishman Speyer Properties LP.
Tishman Speyer and BlackRock Inc. bought the development, Manhattan’s largest residential enclave, for $5.4 billion in 2006 near the height of the U.S. real estate boom. The companies said Jan. 25 that they planned to hand over the complex to creditors after missing a $16.1 million debt payment. The plan was delayed in part because of questions over who would pay about $90 million in real estate transfer taxes.
“The borrowers have failed to make any payments of the outstanding principal,” the trustees said in the complaint.
Any New York property transfer requires payment of city and state taxes, said Rafael Cestero, New York City’s commissioner of Housing Preservation and Development, in an interview last week. Tishman Speyer was negotiating with CWCapital, the special servicer representing senior debt holders, over who must pay the taxes, Cestero said.
The foreclosure lawsuit asks for the property, which runs from 14th Street to 23rd Street on Manhattan’s east side, to be sold and the proceeds to go to the plaintiffs to cover the mortgage, late charges, exit fees and expenses including legal costs.
Foreclosure Timetable
A foreclosure will likely take 12 to 18 months, Fitch Ratings Senior Director Adam Fox said yesterday in an e-mail.
David Iannarone, president of CW Capital Asset Management, didn’t return a phone call seeking comment. Beth Orcutt, a CWCapital spokeswoman, said in an outgoing voice-mail message that she wasn’t in the office yesterday and that the company doesn’t comment on properties in its special servicing portfolio.
Bud Perrone, an outside spokesman for Tishman Speyer and BlackRock, declined to comment.
The case is Bank of America N.A. v. PCV ST Owner LP, 10-01178, U.S. District Court, Southern District of New York (Manhattan).
]]>Quoted in a February 12th report in Business Week, Tenants Association president Al Doyle said, “There are may tenants who will think that having Tishman out will probably be a positive thing.” Councilman Dan Garodnick said, “While Rose has firsthand knowledge about the property, the real expertise is with the tenants themselves.”
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Paul, Weiss is widely recognized as one of the top law firms in the country, with robust real estate and restructuring practices—expertise the TA is seeking for the upcoming complex negotiations over the future ownership and management of ST/PCV.
“This is a firm that is second to none, and we are proud to have them on our team,” said Al Doyle, president of the Tenants Association. “If anyone thought the tenants were not a force to be reckoned with at the bargaining table, they will now realize that we are serious, we are organized, and we have the resources we need to determine our own destiny in this process and ensure we are treated fairly.”
The TA selected Paul Weiss because of its experience in some of the most significant and complicated real estate transactions and restructurings of recent times. It has represented major creditor groups and other parties in the chapter 11 reorganizations cases of Lehman Brothers, General Motors Corporation, GMAC, Charter Communications, CIT, the New York Racing Association and Pacific Gas & Electric, California’s largest investor-owned public utility and the largest public utility in U.S. history to file for chapter 11 relief. Paul Weiss’s real estate practice includes the representation of private and governmental clients in the proposed sale and development of MTA’s West Side Railyards and Atlantic Yards, the lease and redevelopment of the World Trade Center site, the financing for the Time Warner Center in Columbus Circle and the Venetian Resort Hotel in Las Vegas, and the acquisition, sale, development and financing of thousands of units of housing and millions of square feet of office and commercial space in New York City and around the globe. The firm also represented the Miami Heat basketball team in the development of the American Airlines Arena in downtown Miami and the Government of Hong Kong in the development of Hong Kong Disneyland.
“We are honored to represent the Stuyvesant Town/Peter Cooper Village Tenants Association in this matter,” said Meredith J. Kane, a partner in the Paul Weiss real estate department. “We believe that the tenants are the key to a successful solution to the ownership of this iconic housing complex—and we are looking forward to helping them achieve their goals.”
The sale of ST/PCV in 2006 was the largest real estate transaction in American history. The deal’s collapse last month and speculation about the property’s future has been a major focus of the business and real estate media.
Paul, Weiss will represent the TA without seeking compensation from tenants.
“They’re putting themselves on the line for us because they believe, as we do, that the tenants are the future of Stuyvesant Town and Peter Cooper Village,” Doyle said.
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Appearing on The Stoler Report, the three real estate representatives said that the future of Stuyvesant Town and Peter Cooper Village could very well be in the hands of its organized tenant association. Such a message from such a group is unprecedented. Remaining showings, which you can watch on either your television or computer - http://www.cuny.tv/audiovideo/detail3.lasso?ProgramID=PR1011428 - are:
Tuesday, February 9: 10:30pm
Wednesday, Feb 10: 8:30am, 2:30pm; 10:30pm
Friday, February 12: 5:30am
Saturday, Feb. 13: 12:00 midnight
Sunday, Feb. 14: 10:30am
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“SAVE OUR HOMES” say 25,000 to Mayor Bloomberg, CEO’s Freddie Mac & Fannie Mae and CW Capital Asset
http://www.youtube.com/watch?v=-TzL2UyUwHQ
Schumer, Garodnick Make Direct Appeal to Heads of Fannie and Freddie; Agencies Are Best Hope to Keep Complex Middle Class As They Are the Largest Creditors
Fannie and Freddie Have Leverage Over Servicer CW Capital Who Lawmakers Insist Must Install New Management that Keeps Building Affordable and Not Let Building Maintenance and Repairs Slip During Transition and Sale
Schumer Successfully Led Similar Effort at Starrett City to Preserve Middle Class Affordability
U.S. Senator Charles E. Schumer, Councilman Daniel Garodnick and dozens of tenants and local leaders today made a direct appeal to the heads of Fannie Mae and Freddie Mac demanding that, as the largest creditors who now effectively control Stuyvesant Town and Peter Cooper village, they ensure that new management is installed, building maintenance is kept up during the transition and the sale process is conducted to ensure that whoever ends up buying the buildings keeps them affordable for middle class families. Last weekend, the owners of one of the largest affordable housing complexes in the world announced that they turned over the massive complex to their creditors, after defaulting on their highly-leveraged multi-billion dollar mortgage.
CW Capital, as special servicer representing the creditors, is now in charge of operating the properties and will be responsible for hiring new management and managing the sale process. Fannie and Freddie, both of which are now in conservatorship and majority-owned by the federal government, are the largest and most senior creditors and stand to get paid first on any sale of the properties. Schumer today said that Fannie and Freddie both have an obligation now to actively insert themselves in the negotiations, and work to ensure the buildings don’t fall in to disrepair during the default process. In addition, Schumer strongly urged the heads of the agencies to craft a sale process that will ensure whoever buys the properties keeps them affordable in the long term. Since the current management has indicated it will no longer manage the properties, Schumer also called on servicer CW Capital to install new management to ensure residents’ needs continue to be met.
“At the end of the day we have to put the needs of thousands of middle class residents and the need for New York City to maintain middle class housing first. They were caught up in a high stakes real estate gamble that ended up going bust. Now Fannie and Freddie must guide this process to a conclusion with the least amount of impact on current tenants and families. I am going to watch them like a hawk to make sure they do just that.”
“Preserving affordability is Fannie and Freddie’s core mission—there are 25,000 tenants who are watching to make sure they don’t cut and run on us now,” said Council Member Garodnick. “These two government-owned corporations, along with their agent CW Capital, are in the unique position of being able to steer the long-term future of this community, to keep these apartments affordable and to bring in responsible management, and we will hold them to that.”
“Since the initial sale of Stuyvesant Town and Peter Cooper Village nearly four years ago, the Council has been working to ensure that the rights of tenants are being protected,” said City Council Speaker Christine C. Quinn. “Today we’re standing with those tenants, and sending the message that we will not allow anything to jeopardize Stuyvesant Town as a home for middle class New Yorkers. We need Fannie Mae and Freddie Mac to use their power and leverage to ensure that tenants’ needs are being met right now, and that any buyer keeps these apartments affordable long into the future.”
“I join Senator Schumer and my colleagues here today in calling upon Fannie Mae and Freddie Mac to protect the interests of Stuyvesant Town/Peter Cooper Village (ST/PCV) tenants, said State Senator Tom Duane. “Certainly, as the complex’s largest debt holders and as quasi-public enterprises that have received $110.6 billion in taxpayer-funded aid, they have the leverage as well as the obligation to do so. Indeed, to all the complex’s creditors as well as their special servicer, CW Capital, I say first and foremost that the affordability, upkeep, and open layout of ST/PCV must not be compromised.”
“There was a time when a sense of stability and security pervaded Stuyvesant Town and Peter Cooper Village—when individuals and families could live here without fearing that an extraordinarily aggressive landlord would eventually succeed in its relentless efforts to push them and their neighbors out of the community,” said Assemblymember Brian Kavanagh, who represents all of Stuyvesant Town and Peter Cooper Village. “I call on the creditors who are now taking ownership of the complex to work with me and the other elected representatives of the residents, and with the residents themselves, their great Tenants Association, and their attorneys to ensure that the new owners do not replicate the mistakes of their predecessors. It is my hope that by closing watching and working with CW Capital, Fanny Mae, Freddie Mac, and other interested parties, this community can regain a sense of relative peace, stability, and long-term affordability.”
Schumer today said that he has led efforts to monitor the sale of similar affordable housing complexes across the city that successfully ensure that a preservation buyer was brought in and the building remained affordable for its tenants. He pointed to the federal intervention he spearheaded at Starrett City in 2007, as a successful model for retaining affordable housing as well as efforts to preserve other multi-family housing that were over-leveraged, like Ocelot in the Bronx. Schumer worked with officials at the federal, state, and community level to craft a bidding and sale process that ensured a preservation buyer was able to buy the property and keep it affordable.
“The tenants stand with their elected leaders in calling on Fannie and Freddie to preserve this community for the middle class people of this city,” said Al Doyle, President of the Tenants Association. “We are determined to make certain that our homes remain the stable, family-oriented, park-like place that it has been since 1947. Fannie and Freddie, and CW Capital, must ensure that tenants do not feel any effects from a change in mangement, that the buildings do not fall into disrepair, that our open spaces are kept open and that affordability is maintained for the long-term.”
Noting that he is chairman of the Senate Sub-Committee on Housing, Schumer promised to bring pressure on Fannie and Freddie to help keep the community affordable for the middle class. Although the two agencies have claimed that they don’t have the power to influence the outcome of the current situation, he said that they are, in fact, in a strong position help shape the future of Stuy Town and Peter Cooper.
Speaking in support of Senator Schumer’s position and the community were a number of our elected officials — City Council Speaker Christine Quinn, State Senator Tom Duane, Assemblyman Brian Kavanagh, and Councilmember Dan Garodnick. Garodnick called attention to the irony of Freddie and Fannie’s huge investment in Tishman Speyer’s failed 2006 purchase. Although the charters of the two agencies call on them to support affordable housing, he pointed out; they nevertheless invested in a venture whose success depended on ousting rent-stabilized tenants. Again asserting residents’ interest in controlling their future, he promised to help seek a way for tenants to buy the community or to partner with an organization committed to sustaining affordability, family orientation, open spaces and responsible management.
Al Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association, ended the press conference on a personal note:
“First, I want to thank our elected leaders for standing with us at this important time for the complex.
”All of us see the media coverage and see and hear the terms ‘Stuyvesant Town’ and ‘Peter Cooper Village,’ usually followed by talk about the value of the property, perhaps some mention of the history of the property, and often a discussion of the finances of the property. Well, to the tenants of Stuyvesant Town and Peter Cooper, this property is not a football for various real estate moguls to fight over as a prize for their portfolios. To us, Stuyvesant Town and Peter Cooper Village are OUR HOMES.
“I was born in Stuyvesant Town and I have no plans of leaving anytime soon. I look around and see childhood friends still here, now with children of their own; I see the playground where I had my first catch with my dad as a kid; I see the small hill that seemed like an Olympic ski run when we little kids rode our sleds down it; and I see hundreds — more likely thousands — of kids today out in the open spaces doing what I did years ago.
“That is what this community is about. This is our home. And we are determined to make certain that our home remains the stable, family-oriented, park-like place it has been since 1947.”
]]>This Monday, February 1, Scott will be joined by Al Doyle, President of the Stuy-Town-Peter Cooper Village Tenants Association, a 110 building complex, where the owners recently defaulted on their mortgage, and turned over the development to their lenders.
Housing Notebook, produced by Met Council, (http://www.metcouncil.net), airs Mondays on WBAI, 99.5 FM, from 8 to 9PM in the New York metropolitan area, and on the World Wide Web at http://www.wbai.org.
]]>With the TV cameras rolling, Senator Schumer will publicly announce his support for an affordable Stuyvesant Town and Peter Cooper Village.
We need a crowd on hand to let the world and prospective owners know - via TV coverage - that we are united in our determination to protect and maintain our homes.
]]>Your Building Leader should be posting this in the hallways of your buildings soon. However, you can help speed the process. If you don’t see this posted, please post it yourself.
If your building lacks a Building Team (a Building Leader and one or more Floor Volunteers) and you want to help, or have offered to help but have not been contacted, call us now at our Volunteer line at (917) 388-9558. You may also reach us through our website’s Contact Form by choosing subject, “Organizing and Volunteering”.
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