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The Jewish Hospital Apartment Complex goes market rate?! — Brooklynian

The Jewish Hospital Apartment Complex goes market rate?!

imagephoto: wikipedia

Details are still coming out, but here's a summary:

-The hospital complex was converted into apartments, which came on line (one building at a time) between 2006 and 2009.

-Since moving in, tenants have been given leases which conformed with rent stabilization rules.

-The management of the large complex (Alma) now states that they were under no obligation to offer leases that conformed to RS rules, and only did so because they would need to have such leases in place in the event that they were able to receive a J51 tax credit.

-J51 tax credits are not a "right"; the city has no obligation to award them to landlords who apply for them, and landlords are under no obligation to apply.

-Alma doesn't seem to have secured a J51, and now is issuing only market rate leases.

....tenants are concerned that large rent increases loom in their future.

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Comments

  • edited February 2015
    -So far, new leases are being offered to existing tenants at rates that average about 5% higher. For unknown reasons, some tenants are getting increases of as low as 4% and as high as 20%.

    -I believe the complex has over 1000 apartments in it. It is massive.

    -Tenants are scrambling to see if Alma took any tax breaks that would require the apartments to be RS, and have always assumed that the leases were RS as a result of some mandate or tax credit.

    -Sometimes, large landlords which are about to move large numbers of units (ie tenants) to market rate are offered tax breaks to not do so.

    In those instances, the tenants are often poor and elderly, and politicians hold press conferences to announce how they helped secure the tax breaks and saved the vulnerable tenants from losing their homes.

    In this instance, the tenants are not predominantly poor or elderly.
  • So, this will only happen for people who are renewing their lease? 
  • edited October 2014
    Yes, present leases are valid legal documents. Unless one party breaches the terms and goes thru a court process to get the lease voided, the leases must be upheld by both parties (landlord and tenant) until they expire.

    When the present lease expires, a market rate landlord has the discretion to offer a new lease to a given tenant, and set the price.

    Note: My advice is not legal advice. People in the above situation should get legal advice re: Alma's obigations and lack thereof.
  • Does Alma own the building being constructed across the street from Compare?

    Are all buildings in the complex under the same rules? I thought they were all independent enterprises.
  • edited October 2014
    I believe the buildings in the former hospital complex were all developed by Alma, and that each building is seperately incorporated as an LLC for tax and insurance purposes.

    The LLCs could have a variety of investors. All of the buildings are managed by Alma.

    I do not believe that Alma is developing the building under construction across from Compare.

    Update 10/17/2014: I am correct. The building across the street is being developed by a different firm, Realty Within Reach.
  • edited September 2014
    This is going to be a case study highlighting the fact that LLs need incentives to keep RS apartments and what happens if LLs don't get the incentives the desire; it is not a given or mandatory that LLs factor in the best interest of the community into their decisions process.

    While LLs have no requirement to take government handouts, they will likely do so if they feel it is beneficial (i.e., profitable), and only if they take the handout will they be required to do something for the community in return.

    LLs/companies have the fiduciary duty to do what is best for the company (i.e., make as much profit as they can/enrich their shareholders) and to get their expected rate of return on their investment by either increasing revenue (i.e., rents) or decreasing expenses (e.g., taxes).

    Most of us understand this, but seeing what is going on out there (rallies, unions, protests), many don't.
  • edited September 2014
    I agree.

    It seems Alma (and/or the LLCs which comprise the complex) has either patiently waited for several years and now concluded the J51 will never happen,

    OR

    has decided that even if the J51 can happen, the benefits are not worth the RS rules that come with it.

    All of which is to say: Housing goes to the highest bidder. When the highest bidder is government, government will get what it wants. But it won't until then.

    If gov wants these units to be RS, then it has to pay up.

  • Update:  
    Reputable attorney's were consulted by residents and it was determined that the buildings have the right to issue leases which do not abide by rent stabilization rules (ie they can issue market rate leases).

    Tenants have been advised that they will receive approx 5% hikes at the time of renewal.

    It should be interesting to see how mgt proceeds in future years.   The apartments are recently renovated and very desirable.

    I have often thought to myself "many of the buildings are large enough that they could support a doorman, if they were filled with market rate tenants."

    At present, all of the buildings are pretty similar in their costs and accommodations.

    As time goes on, will the mgt pursue more amenities (and rents) for some buildings than others?


  • edited November 2014
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    555 Propsect Place
    545 Prospect Place
    480 St Marks
  • edited October 2014
    Some of the tenants are meeting to form a tenant association tonight, 10/2/2014.

    I hope whatever they decide to do is best for them in light of their legal rights and market power.

    It seems that Alma may have gone about this in a sloppy way: Alma reportedly gave tenants renewal leases to sign that were RS compliant, yet not yet signed by Alma. When the tenant brings the lease they signed in for Alma's signature, Alma is reportedly stating that they will not sign.

    Instead, Alma is only offering leases which are not RS compliant, with approximately 5% increases.

    ...a lease is not valid until BOTH parties sign it.
  • Thanks for the info whynot. I'm thinking about going to see what the consensus is.
  • edited October 2014
    From what I understand, the meeting was well attended and residents are calling the HCR rent line to see if their apartments are subject the RS.

    If they are not on that registry, it seems Alma is within its rights to issue only market rate renewal leases. If they are one the registry, it is unclear how and why they were placed on it.

    HCR should not be placing units on the registry before a tax credit is finalized.

    Tenants feel they have been deliberately mislead into believing they were moving into RS units, and are exploring legal action on the basis of fraud. It is not certain whether they will win.

    It is more certain they will need to sign a market rate lease to stay....
  • edited October 2014
    Brownstoner and Curbed linked DNA.info's article today.

    Despite this, Alma was granted a variance (which is discretionary on the city's part) for Astoria Cove today.

    http://ny.curbed.com/tags/alma-realty
  • edited October 2014
    So far, I have yet to hear that Alma is exceeding its legal rights.   However, some residents think a protest may be productive:

    "Attention Neighbors: Please join us at a rally and press conference this Sunday, 10/19, at 11am in front of 545 Prospect Pl. to demand that Alma keep our homes affordable.
    As many of you know, Alma is attempting to take our apartment out of rent stabilization, meaning high rent increases and even eviction! 


    Please join your neighbors, elected officials and housing groups to send Alma the message that we will not go down without a fight! If you have any questions, please email 

    bkjewishhospitalta@gmail.com

    "

  • Does anyone else think ALMA will be joined by other realty management companies that try to go market rate in response to De Blasio's push for rent-stabilization at 1%?
  • edited October 2014
    The rate of increase for RS tenants is established by the Rent Guidelines Board on a yearly basis.

    Alma (along with all the other RS landlords) was only able to get a 1% increase.

    ...this is a different issue. Briefly, the Jewish Hospital tenants believe those rules and rates apply to them, and Alma disagrees.
  • edited November 2014
    imageWhile some of the politicians accused Alma of using a loophole, none of the politicians stated that Alma was doing anything illegal.

    Instead, they are trying to tie this action to the City Council's support of Alma re: the Astoria Cove project.

    Apparently, the City Council could vote on the action this week.

    If Astoria is granted, Alma is in the driver's seat: It can tell the local representatives that it is going to need better incentives than the J51 provides, or else it will continue to only offer market rate renewals.

    BTW, it seems the hospital complex has 735 units, as opposed to my rough estimate of 1000 units above.

    Also, it seems HCR places units on the RS registry when a developer starts the process of applying for a J51.

    If a J51 is not granted, or a developer backs out of the process, the units seem to remain on the registry during and afterward.  

    ...which provides very misleading information to tenants trying to ascertain whether they have RS housing, as well as policy wonks and reporters who use the database for how much "rent stabilized" housing has been lost/gained/preserved under a given administration.
  • edited October 2014
    http://www.dnainfo.com/new-york/20141020/crown-heights/officials-threaten-astoria-cove-project-over-brooklyn-rent-fight

    http://nypost.com/2014/10/20/city-officials-and-real-estate-company-battle-over-rent-hike/

    Note how none of articles (or the politicians) are stating the Alma is doing anything outside of their rights.

    The Post article (immediately above) states Alma agreed to pursue a J51 when it purchased the hospital. Actually, the city promised Alma it would support them in securing a J51. A big difference.

    As a result, the politicians are not lursuing legal action, and are instead trying to link these units to the Astoria Cove project.

    If Alma values what the city has to offer, it will give the city what it wants.

    BTW, the politicians might be being sloppy:

    There was one person who opened up the possibility of legal action between Alma and the City Council.

    Laurie Cumbo said that she would link her vote on Astoria Cove to Jewish Hospital. This would be sloppy since the Council should be voting on the issue at hand, and not penalizing any party for something that is unrelated to the vote at hand.

    This would allow Alma to sue the City Council.

    There are situations when a politician can't state their motivation, and when you are actually going to be a voter on the issue, may be one of them.

    Note: I do not believe any of the other politicians that spoke on Sunday will be "voting" on the issue.
  • edited October 2014
    The mayor was reportedly asked about the complex at today's press conference, and stated that the city would work with Alma to see whether this can be resolved.

    So, it may be as simple as the city waiving its own rules re J51 time frame to complete, or as complicated as sweetening the deal.

    Also, if a developer must act as if they are RS while they have an open J51 application, they may have to give their tenants notice that they intend to not apply.

    ...Alma provided no such notice.

    This may buy the tenants time even if Alma does not wish to pursue a J51.
  • A few residents have started a petition.

    https://www.change.org/p/mayor-bill-de-blasio-stand-against-destabilization-of-our-homes#share

    To my knowledge, no one has found that Alma is under a legal obligation to keep them rent stabilized. Hence, the petition...
  • edited November 2014
    The residents might get an answer this week.

    My sense is that the city and Alma are in the final stage of negotiations over Astoria Cove this week, and that if the city does not force Alma to take a J51 for the Jewish Hospital Buildings during these negotiations, this deal is done.

    I.E . The complex continues to go market, and the city effectively states it is not going to take further efforts to stop it.

    http://ny.curbed.com/archives/2014/11/10/developer_city_locked_in_standoff_over_astoria_cove_proposal.php
  • edited November 2014
    Alma has agreed to have 27% of the units in Astoria be below market rate, and the matter is set to go before the City Council as early as Thursday.




    It does not appear that forcing Alma to take a J51 in Crown Heights is part of the deal.
  • edited November 2014
    Much to the consternation of those who can not afford rent increases above those set by the Rent Guidelines Board, the following "groups" of current tenants do not appear to be especially upset that Alma is now only offering market rate leases :

    a. Those who planned to move elsewhere in the next few years.

    b. Those who can afford the increase

    c. Those who believe that the increased rent will result in increased amenities (quicker repairs, an in house gym, a doorman, etc).
  • It would seem like there's still a large population within all the Alma buildings that does not fall into those three categories.

    How is Alma responding to them?

    What percentage of buildings in the area are rent-stabilized?