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Feds Block $1.3B Starrett City Deal - For Now
By
Jen Chung
Published Mar 2, 2007
Modified Mar 7, 2008
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By
Jen Chung
Published Mar 2, 2007
Modified Mar 7, 2008
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The Department of Housing and Urban Development has blocked the billion dollar sale of Starrett City. A group of investors had bid $1.3 billion for the federally subsidized 46 apartment building complex in Brooklyn, but two weeks ago, NY State Attorney General asked HUD Secretary Alphonso Jackson to stop the sale. The lead investor, David Bistricer, has had a "sordid" real estate history in New York City.
Secretary Jackson said that the group of buyers, Clipper Equity, hasn't provided enough financial information about the deal, making him doubtful that the rents will stay reasonable. Apparently Jackson's letter said Clipper Equity's bid was $500 million more than the second highest big, though there's some debate as to whether that's true. He did, however, imply the deal could be saved if the information was provided. The NY Times described Clipper as "desperately trying to keep the deal afloat." However, Senator Charles Schumer and Attorney General Cuomo are doing everything they can to fight the sale.
The AP had a good explanation of how Starrett City is subsidized:
Many tenants pay between $200 and about $400 monthly for federally subsidized apartments. The families live on annual gross incomes of about $20,000 to $40,000 and fear the whopping purchase price for the complex means their rents will rise dramatically.
About 2,000 tenants pay up to $1,200 in rent under the state's Mitchell-Lama program. Since the 1950s, the program has provided land and lucrative government financing to developers in exchange for building low- and middle-income housing that is subsidized by the state.
State officials hold Starrett City's $234 million interest-free mortgage and can approve or reject any new owner, but a buyer could withdraw the complex from the Mitchell-Lama program by paying the balance of the mortgage.
We bet any developer would be happy to pay off the mortgage and kick people out. Schumer and Jackson are expected to be a press conference this afternoon at Starrett City to announce the HUD decision.
More at Save Starrett City.
Photograph of Starrett City by Adam Rountree/AP
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Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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