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Meeting Addresses
Maintaining Affordable Rents At Starrett City Hundreds of residents, elected officials and members of the clergy attended a meeting last night to determine what can be done to preserve affordable rents if the Starrett City's current owners opt out of the federally-subsidized Mitchell-Lama program. After the $1.3 billion bid by Clipper Equities to purchase Starrett City was rejected by federal, state and local officials, Starrett City Associates, the owners of the 6,000-unit housing complex east of Canarsie, last week announced in a letter to tenants that it was considering other "alternatives," one of which is leaving the low-rent program. That option would likely result in rent hikes for most tenants, which may not be within their limited budgets. It is estimated that about 90 percent of residents receive some type of government assistance. At a protest in Manhattan last month, demonstrators insisted Starrett Associates meet with tenants and representatives of the Bloomberg and Spitzer administrations to develop a long-term plan to preserve affordable housing at the 140-acre site. The federal program allows owners to opt out after 20 years of initial occupancy. The correspondence pointed out that Starrett City has remained under Mitchell-Lama guidelines an additional 12 years. "That said," the letter continued, "we have filed notice of intent to opt out of (Mitchell-Lama). This does not mean that we have decided to opt out; the filing allows us to preserve this option should we choose to exercise it..." As required by law, they filed the formal notice with the state housing authority to leave the program. But the letter, dated August 28, cited Starrett Associate's "fiduciary responsibility" to its investors as the motive to leave the Mitchell-Lama program, which has been in place since the housing complex opened in 1974. In a previous letter, the owner wrote, "It is now time for our 250 investors to profit from their investment." Starrett City, which was formally renamed Spring Creek Towers five years ago, began as a real estate investment for some 249 limited partners, including Donald Trump in one of his first major property ventures, who pooled $33 million in 1974 for a five percent down payment and received a one percent fixed mortgage. Investors, who risked their money on a low-income housing project in what was then a blighted Brooklyn community, have thus far reaped more than a 100 percent profit, not to mention generous tax breaks and low-interest government loans they were granted over the years, according to a Daily News article last month. Now, those investors are looking to cash out, which could possibly earn them at least $500 million. State and federal regulators rejected the $1.3 billion bid from Clipper Equities in July because the deal would have led to significant rent increases for tenants, the eventual loss of thousands of apartments for low- and moderate-income New Yorkers, requiring an additional, and costly government subsidy. If Starrett City Associates leaves the Mitchell-Lama program, the process is expected to take about a year to finalize. The owners would also be required to pay the remaining balance, estimated to be more than $200 million, on its interest-free mortgage held by New York State. The anxiety felt by many residents ever since the housing complex was put up for sale last December will likely remain until the future of Starrett City is resolved and they know that rents will remain affordable and within their restricted budgets. | |||||
