What she did not disclose was that her agency had already developed a plan involving a mix of affordable co-op conversions and market-rate apartments. Youssouf says now that she "spent a lot of time discussing it with Doctoroff," and is unsure if she ever discussed it with the mayor. She says he asked many "penetrating questions," and that "the price wasn't as high as the sellers wanted." To her knowledge, the proposal was never presented to MetLife.

When the tenants later put together their bid, HDC worked behind the scenes to try to help them shape it. While this "rogue" action, as one participant called it, went on, Housing Commissioner Shaun Donovan met with advocates of the tenants' plan and tried to figure out a way to make it work. Senator Schumer called the mayor and MetLife to push consideration of the tenant bid, according to his press spokesman. Quinn, as loyal an ally as Bloomberg has in city politics, told the Voice she believed that the tenant bid had "real potential and could be done," acknowledging that she raised it with the mayor "briefly" at the end of a private meeting. Thompson, who is now running against Bloomberg, but was then on excellent terms with him, proclaimed that he was willing to invest pension funds in support of the tenant bid, and contacted Doctoroff. The mayor's spokesman, Loeser, regurgitated the same numbers cited by Doctoroff at the time about how much more cost-effective it was to use city subsidies to build new apartments than to safeguard Stuy Town's, a hotly disputed numbers game that does not address why the city offered no help at all and cheered MetLife and Speyer on as paragons of the market.

But Bloomberg had reportedly assured MetLife in a conversation that preceded the announcement of the bid process that he would not interfere with what he regarded as a "private transaction"—a meeting that Loeser acknowledges occurred, but he says "we don't recall" if Stuy Town came up, adding that, if it did, it would only have been "in passing." (He did not deny that Bloomberg made this premature assurance.) The advocates who were then pressing the mayor to act cited many instances when his administration saw a public purpose in helping to shape a deal between private parties. MetLife, alarmed by this public drumbeat, went back to City Hall to check the mayor's temperature, and Doctoroff calmed their jitters.

Mike’s kind of guy: Steve Rattner
Newscom
Mike’s kind of guy: Steve Rattner

Details

special reporting by Jane C. Timm
research assistance by Johanna Barr, Dene-Hern Chen, Aaron Howell, Lucy Jordan, Jesus Ron, and Grace Smith

When Speyer beat the second highest bidder—another real estate giant named the Apollo Group (the tenants came in third)—by less than $100 million, the Times reported that Apollo was "so incensed about losing the bid" that they went ahead with a planned victory party, convinced that Speyer had been given a "last look" at their bid so they could marginally exceed it. Doctoroff simultaneously agreed to only fine MetLife $5 million, rather than the $24 million penalty he could have imposed, for reneging on an unrelated tax abatement deal with the city involving their headquarters building (Loeser says that this dispute was the focus of the earlier meeting between Bloomberg and the company).

Speyer has certainly always been a Bloomberg favorite. Rob Speyer, who spearheaded the Stuy Town negotiations for the family company, was appointed chair of the Mayor's Fund to Advance New York City by Bloomberg. Jerry Speyer, the patriarch at the firm that also owns Rockefeller Center, was the prime mover at the New York City Partnership, the elite business group that adopted Bloomberg as its pet mayor from the outset and would, in 2008, become the sledgehammer for a term-limits extension and another four years for Mike.

The only debate among Bloomberg insiders is whether his hands-off approach was more a favor for Speyer than it was an ideological market preference. With the Speyers dominating the headlines, no one paid attention to the fact that they had a partner in the purchase, or who their banks were. Merrill Lynch was involved at both ends. New York magazine later reported that Merrill was the second biggest financier of the deal, putting up half a billion dollars. In the months leading up to the deal, Merrill also bought a 49.8 percent interest in Speyer's partner at Stuy Town, BlackRock, which matched Speyer and put up $125 million of equity in the deal.

The Merrill/BlackRock merger had been announced with great fanfare back in February 2006, but did not close until shortly before they and Speyer won the MetLife sweepstakes. So, at the very time that Mike Bloomberg was "endorsing" Speyer and stifling options like HDC's and the tenants', the mayor's only corporate partner since the inception of Bloomberg LP, Merrill Lynch, was becoming the top institutional investor in the company that, together with Speyer, would win the bid.

When Merrill began sinking into the mire that forced its collapse two years later, its interests in BlackRock and Bloomberg LP began appearing side-by-side in news story after news story. In a July 2008 search for new capital, Merrill was simultaneously shopping its stakes in both companies. Bloomberg LP wound up buying Merrill's 20 percent on Bloomberg's terms, with Merrill financing all but $110 million of the $4.4 billion purchase price with up to 15-year notes. Since Merrill was getting less than 3 percent of the value of its stake in cash, the business "association" between Bloomberg and Merrill referred to in the COIB decision, as well as the bar on Merrill dealings, continues (Merrill is, of course, now owned by Bank of America).

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