HUD Boss Says Decision On Starrett City Sale Due In Two Weeks
By Verena DobnikAssociated Press Writer
The $1.3 billion sale of the nation's largest federally subsidized rental housing complex has quickly aroused government scrutiny.
The mayor has called it problematic. Congressmen Edolphus Towns and Anthony Weiner have called for hearings. And last Friday, during a visit to Starrett City, the federal housing secretary said he would consider blocking the sale, which requires state and federal approval before it is finalized.
The decision on the 6,000-unit complex, which underwent a name change several years ago to Spring Creek Towers, should come within two weeks, according to Housing and Urban Development Secretary Alphonso Jackson.
In one of the richest real estate deals in city history, the 46-tower working-class haven, owned by Starrett City Associates, was recently sold for $1.3 billion to Clipper Equity LLC, a real estate developer.
"This transaction threatens the low-income housing market and those who most need it," Jackson said in a meeting at St. Laurence 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!", 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.''
Some of the officials who have spoken out about the deal, including Mayor Michael Bloomberg, have raised concerns about David Bistricer, a Clipper Equity partner who owns 71 other buildings with 8,792 outstanding violations that range from mice, roaches and water leaks to broken doors, walls and windows.
Len Grunstein, a spokeswoman for Clipper Equity, said many of those violations were inherited when the company bought Flatbush Gardens, a Brooklyn housing complex, 18 months ago, and have since been fixed or are in the process of being repaired. He told the Daily News that the work hasn't been completed because some tenants have refused access to their apartments for the work to be done.
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."
Cuomo, Senator Charles Schumer and Borough President Marty Markowitz joined Jackson at the Flatlands Avenue church. Towns and Weiner could not attend as they had to remain in Washington to vote in the House resolution on Iraq.
Schumer said 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. 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, Cuomo said. Tenant complaints were so severe that Eliot Spitzer, New York's attorney general at the time, won a court injunction, he added.
Cuomo said he would enforce the injunction, which "may very well kill this ill-conceived deal and protect the tenants of Starrett City." The state attorney general gave Jackson related documents on Friday, saying they "should be enough to ban (Bistricer) from this deal."
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 33-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.
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 subsidized by the state.
Starrett City has its own shopping center, schools, churches, synagogues, power plant and armed security force.
New York State officials hold its $234 million interest-free mortgage and can approve or reject any new owner.
If the deal is finalized, it is speculated that Clipper Equity LLC would withdraw the complex from the Mitchell-Lama program by paying the balance of the mortgage, allowing it to raise rents.
Neil S. Friedman contributed to this article.