Zero at Ground Zero

City Leaves Key Tribeca Project Unprotected Against Speculators

In late July, Mayor Bloomberg, Governor Pataki, and HUD Secretary Mel Martinez held a press conference at Thomas Paine Park, near Ground Zero, to announce a $50 million federally funded program to build 300 units of downtown affordable housing for working families. As welcome as the new construction is, the announcement struck many of lower Manhattan's current moderate-income residents as a prickly paradox.

A day later, a couple hundred tenants, mostly from Independence Plaza North (IPN), the 1,329-unit, city-supervised-and-subsidized, three-tower project on Ground Zero's border, rallied on the steps of City Hall to support a bill just introduced by Council Speaker Gifford Miller. IPN's 3,500 residents were notified in June that new owner Laurence Gluck—just 24 hours after he completed his $100 million purchase of the complex—had filed papers to withdraw the project from the Mitchell- Lama program, a move that would free him to charge sizzling market rents.

That could potentially cost downtown a thousand more affordable units than what the ballyhooed announcement promises, making Tribeca the latest example of the ongoing loss of tens of thousands of affordable apartments citywide, caused by conversions like Gluck's. Indeed, as bold as the mayor's $3 billion, 65,000-unit, five-year housing construction plan is, it doesn't address the shocking erosion of the city's existing moderate stock, prompted by a loophole in federal and state laws that allows developers to buy their way out of rent regulation 20 years after their projects open.

Spending $300,000 in public funds per new apartment, while speculators grab more than that in profits on each unit they convert, is such bad municipal business that it may provoke our businessman mayor to focus his future efforts on preservation as much as new construction. Since Bloomberg spent last Wednesday in a campaign-mode swing through Queens, he might also recognize, as potential opponent Miller clearly does, the political gold mine these threatened projects are, with thousands of residents making voting decisions on the basis of who best helps them defend their homes.

Independence Plaza has a special claim on the city's conscience. The twin towers collapsed, as tenant association president Neil Fabricant puts it, on "our doorstep." Toxic fumes penetrated their doors and windows for months; they lived with masks in their own homes. Residents evacuated; kids were moved from school to school. Barges that hauled the wreckage woke them at 4 a.m. every day. Asbestos readings alarmed their families. IPN's response was so courageous it was featured in The Washington Post, on the BBC, and even in the Johns Hopkins University Journal at the mayor's alma mater. With more than 20 percent of Tribeca's total population, the complex is a third black and Latino. Twenty-two percent of the residents are poor enough to qualify for individual rent subsidies.

IPN owner Gluck, who also owns the old Daily News building, made a name for himself in Mitchell-Lama circles in 2000 when he and a partner, Joseph Chetrit, bought Park West Village on the Upper West Side. They were limited in how high they could raise rents at Park West, since it was built in 1961, long before a January 1, 1974, cutoff point in state law. All Mitchell-Lama projects built before that date revert to rent stabilization if the owner takes them out of the program after 20 years, while those built after it, like IPN, can go to market rents. Despite stabilization, Gluck and Chetrit's tactics provoked a rent strike and successful lawsuit. Another Chetrit project, Westgate, a post-1973 complex and the first to opt out of the program, experienced double and triple rent boosts prior to a legal settlement.

It's this kind of history that's gotten the City Council's attention. Though the state legislature launched the program in the 1950s, and 60 of the Mitchell-Lamas here are state rental projects regulated exclusively by the State Department of Housing and Community Renewal, another 25,000 are city assisted and supervised by the city's Housing Preservation and Development agency (HPD), including IPN. It's only those projects—especially the 13,000 post-1973 units—that Miller's bill can help. The bill can't block the opt-outs, since they're expressly permitted under state law, but it tries to make them less attractive to owners.

The bill requires owners to give 18-month notice of their intention to opt out, instead of the current 12 months, and allows HPD to conduct a "community impact study" of any opt-out, paid for by a $1,000 per-unit fee imposed on the landlord. It also sets up a public hearing and review process to determine if an owner has "substantially complied" with Mitchell-Lama regulations, imposing penalties if they've failed, as well as mitigation payments for any "adverse effects." Miller's bill covers IPN—since it applies to any incomplete conversion—but will not save it.

That's why Alan Gerson, the councilman whose district includes the project, has been talking to the Lower Manhattan Development Corporation and Deputy Mayor Dan Doctoroff about another solution. Gerson wants Liberty Bonds and other funds cobbled together to finance a tenant association takeover of IPN, by eminent domain if necessary. He says it can become "a model for a citywide trust fund," though some of the federal funds involved are restricted to the Ground Zero area. Gerson adds that other bills—including ones that may extend the Miller bill protections to tens of thousands of other, mostly federal, projects—are also planned.

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