30,000 apartments put on auction block

The giant insurance company MetLife wants $5 billion more in its corporate pockets and so has put the homes of 30,000 people up for grabs. After months of rumors and hints, the company announced it would sell its Stuyvesant Town/Peter Cooper Village on the east side of Manhattan for at least that sum.

Worried tenants hear of MetLife’s plan to sell their homes. WW photo: G. Dunkel

The complex consists of 110 buildings on 80 acres of land stretching from 23rd Street to 14th Street, and from First Avenue to Avenue C. Of the nearly 11,000 apartments, 27 percent are rented at “market rate.” This means a landlord can charge whatever he can get. The remaining apartments—73 percent—are “rent stabilized.” A landlord can only charge what the New York City Rent Guidelines Board permits.

For example, a stabilized tenant might pay $1,200 a month, while her next-door neighbor in a market-rate apartment could be paying $3,600 for essentially the same space.

MetLife has been converting rent-stabilized apartments to market rate, using a provision of the New York rent laws. When an apartment becomes vacant, MetLife invests money into “fixing it up” by putting in a dishwasher, air-conditioning, marble counter tops or other embellishments that allow the rent to be raised over $2,000 a month, the level at which the apartment is no longer rent-stabilized.

MetLife grosses $39 million a year more from the market rate apartments than from the rent-stabilized apartments.

MetLife built Stuyvesant Town/Peter Cooper Village in the 1940s, using New York City’s power of eminent domain to seize land and erect affordable housing for returning World War II veterans. The insurance behemoth enjoyed a 25-year tax rebate from the city as well as a number of other governmental benefits for performing this “public service.”

The complex is one of the largest blocks of affordable rental units in the United States today. Affordable housing, according to the U.S. Census, is housing that middle-income people can obtain for no more than 30 percent of their monthly income. Over 2 million units of affordable housing have been lost in the United States in the last decade.

A few days after the announcement that Stuyvesant Town/Peter Cooper Village was on the market, its Tenants Associ ation, along with New York City Council member Dan Garodnik, a resident of the complex who was also raised there, announced a plan to buy the complex. The attempt is to put together a purchase package from state and city pension funds, along with some large union pension funds.

A surprising number of complex residents are union members—teachers, firefighters and nurses mainly, but also some from construction unions like ironworkers, elevator erectors, carpenters and painters.

The first reaction of MetLife to the tenants’ bid was to deny the tenants access to the financial documents needed to arrange for financing. Other bidders, who also need to put together financial alliances to meet the price, would be allowed to get the documents, however.

Then every Democratic politician in New York—from U.S. Senators Charles Schumer and Hillary Clinton to Christine Quinn, speaker of the New York City Council, and Eliot Spitzer, Democratic nominee for governor—started leaning on MetLife. Bowing to this pressure, MetLife turned over its financial memos to the tenant group on Sept. 15.

On Sept. 16, over 400 tenants showed up at a Tenants Association meeting and hundreds more were turned away because the room was filled. Council member Garo dnik outlined the tenants’ strategy and exposed how a new owner could try to “wring more revenue out of the complexes,” as the New York Times reported on Sept. 13. For example, there are 260,000 square feet of developable land in the complexes, mainly the playgrounds and a peaceful park in the center of Stuyvesant Town. Air rights, that is, putting towers on top of existing buildings, might also be sold for additional revenue.

And while a new owner would want a bigger revenue stream than MetLife needed, if only to pay off the loans needed to buy the complex, the real prize for profit-making would be condominium conversions.

Every speaker emphasized that the tenants needed to be united to get the best deal possible and fight off a sale to a new profit-hungry landlord. A victory for the tenants in this struggle would be much more than a local victory—it would be an inspiration for other struggles to preserve affordable housing.

The federal government under recent Republican and Democratic presidents has essentially abolished rent vouchers for low-income families and direct subsidies to public housing projects. Now the real estate industry is going after middle-income families, an effort which, if successful, would also have a catastrophic effect on low-income families, who would then have to compete with higher-income families for a diminishing housing stock. This is a recipe for more homelessness.

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