A key clause in the federal government’s subsidy of Starrett City could lead to rent spikes at the country’s largest public housing complex if a sale to Rockpoint Group and Brooksville Company is approved, two politicians believe.
Sen. Chuck Schumer and Rep. Hakeem Jeffries sent a letter to Housing and Urban Development Secretary Ben Carson concerning a section of HUD’s agreement with the owners that enables them to collect 10 percent of the housing complex’s value in equity annually, the New York Daily News reported.
Today, the equity amount tallies about $6 million to $7 million, but if the planned sale of $850 million goes through, Schumer and Jeffries say that estimated distribution could be much higher: about $40 million annually.
The politicians say Rockpoint and Brooksville would be pressured to raise rents at the 5,881-unit complex, which was built by Disque Deane in the 1970s.
“We doubt there is a way to grow the distribution by such a large amount without increasing rents,” they wrote, calling it “imperative that HUD understand the buyer’s intention with regard to this distribution.”
In 2008, Schumer and other politicians raised concerns that a sale to David Bistricer for $1.3 billion would lead to rent spikes, which led federal regulators to block the deal.
New York State Homes and Community Renewal and HUD would have to approve the $850 million sale to Rockpoint and Brooksville.
The sale could be complicated by a lawsuit by the stepchildren of Deane’s widow Carol, who claim the bid is too low. President Trump is one of about 100 limited partners with no managerial role in Starrett City. He stands to make about $14 million if the sale goes through.
In late September, The Real Deal examined the convoluted affordability provisions at the complex and detailed how the development was quietly shopped. [NYDN] — James Kleimann