For Holdout Renters, Condo Conversions Can Be Messy

By C. J. HUGHES - March 13, 2015

In New York, elbowing aside others to make money in real estate is as old as the founding of the city itself.

And for every rental building that has been converted to a co-op or condominium over the years, there have been tenants who have felt the sharp jab.

This time around, with apartment sales on the upswing and the number of rent-regulated tenants on the decline, many of the buildings that developers are converting from rental to condo are large and located in areas that are pricey and desirable. And unlike the 1980s, when scores of buildings were converted to co-ops, the fabulous insider deal no longer exists. 

But some things remain constant. Those who insist on hanging on to their rental apartments can expect a noisy, dusty mess. “This is one of the hairiest times for renters that I’ve seen in my career,” said Kevin R. McConnell, a real estate lawyer who has focused on tenants’ rights since the 1980s. “There’s tremendous upheaval in the market.”

To their defenders, conversions are hardly an across-the-board bogeyman. They note that many renters move away after a few years anyway, as part of the natural ebb and flow of buildings. Still others, they say, wind up with fancy condos purchased at a discount. And the renters who remain often benefit from spiffed-up facades, upgraded swimming pools and new elevators.

Full article in The New York Times

Your rental building's going condo. Now what?

BY LEIGH KAMPING-CARDER on April 25, 2014

We don’t envy the tenants of 22 River Terrace, a 342-unit apartment tower in Battery Park City. The new owner plans to take it condo, and is relying on an unusual clause in the tenants’ leases to kick them out with a mere 90 days notice. 

Fortunately for the rest of us, such clauses are extraordinarily rare. Most of the time, when a building goes condo, renters are given the option to remain as tenants or purchase their apartment at an insider price, which is typically at least 5 to 10 percent lower than what they'd pay on the open market, says real estate attorney and buyout expert Steven Wagner of Wagner Berkow. 

Here's how the process usually plays out--and how not to get played if it happens to you.

Size up the plans

Before a developer can convert a building and start selling condos, they must get their "offering plan"—which describes the development plans in mind-numbing detail—approved by the New York Attorney General’s office. 

As a tenant, the first you'll see of this is the "red herring," a preliminary plan that earned its name because the words on the cover are bright red. (Yes, that’s what passes for a joke in bureaucratic circles.)

The attorney general's office has to wait four months before reviewing the red herring, which gives tenants time to  evaluate the specifics of the plan and negotiate a better deal. While it's legal for a developer to craft a plan that involves evicting the tenants, those kinds of projects are virtually non-existent these days, Wagner says. 

After that, the attorney general and the developer spend up to two months ironing out any issues in the red herring. Once the agency accepts it for filing—which is different from the final approval for the development—the document is called a “black book.” (And yes, it does have black letters on the cover.) At that point, the developer can start selling the condos, including to existing tenants.

Lawyer up

Typically, tenants hire an attorney to do the negotiating with the developer. They’ll also hire an engineer or architect to inspect the building and uncover any issues that aren’t disclosed in the red herring.

Full article on Brick Underground

Defining ‘affordability’ upward

By Ryan Hutchins

It was late April and Helen Rosenthal—Upper West Side progressive, City Council freshman—was not pleased with what she was hearing.

TF Cornerstone had brought plans for its latest Manhattan megaproject, with more than 1,000 units in Hell’s Kitchen, to the City Council’s Land Use Committee for approval. Planning officials clearly hadn’t wrung enough value out of the developer, Rosenthal believed, and decided more could be done.

And so it was. The Council generally defers to the local members on such matters, so Rosenthal was able to cut a deal with TF Cornerstone. It meant more “affordable” housing, to the tune of 10,000 square feet, and a guarantee that a preschool would be built on the site, which is now expected to cover some 900,000 square feet.

But Rosenthal looked at the neighborhood surrounding the West 57th Street development and thought it wasn’t enough. She felt there was a need for moderate-income housing that could go to people who live in the community now. Extell Development’s massive Riverside Center South project on the Hudson River, between West 59th and 72nd streets, is already slated to include hundreds of units for lower-income families.

So, in an unusual move, Rosenthal told TF Cornerstone that the threshold to qualify for the least-expensive units—the ones that would be set-aside for some of the poorest New Yorkers—should be raised.

She increased the eligibility cut-off from 40 percent of area median income, or A.M.I., to 60 percent. That means a family of four making about $33,500 per year would have met the threshold under the original plan, but that same family would need to make at least $50,300 to qualify under Rosenthal’s revisions.

“I said to the developer, ‘we’re done with the [40] percent lower income,’” Rosenthal recalled recently as we lunched at a Lenny’s near City Hall. “‘We’re giving you a break, because we’re going to make it at 60 percent A.M.I., not [40] percent. So you’re going to get a little more rent from these people.’”

That allowed her to negotiate more “affordable” units for much-higher-income families. Rosenthal told the developer to dedicate 10,000 square feet, or about 20 more units, for moderate-income households. She said all those apartments had to be big enough for families. “I don’t want any single-bedroom ones,” she said. Those new units will be dedicated to households making between 175 percent and 230 percent of the A.M.I.

Those numbers are so high they’re off the chart in Mayor Bill de Blasio’s affordable housing plan, quite literally. The plan defines “middle income” up to 165 percent. What does that actually mean? The range encompasses families of four earning between $147,000 and $193,000 per year.

Full article on Capital (30 June 2014)