After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies

City, state authorities last week indicated they would review landlord’s affordable housing agreement in light of vacancies

TRD New York /
Sep.September 06, 2019 03:24 PM
Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)

Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)

Blackstone Group is now renovating and leasing all vacant units at Stuyvesant Town-Peter Cooper Village, according to a spokesperson for the firm. The statement comes a week after authorities indicated they would review the landlord’s deal for the sprawling housing complex in light of revelations that the firm was keeping 20 to 50 rent-regulated apartments vacant.

According to a source close to the firm’s thinking, Blackstone is in compliance with its regulatory agreement with the city “as it relates to maintaining 5,000 affordable apartments at Stuy Town,” and continues to lease “hundreds” of apartments a month at Stuy Town.

“We have spent the past several weeks working through how we can continue to improve vacant units so they are habitable and comfortable for residents. We are actively renting out vacant units,” the source said, adding that “no final decisions have been made.”
Blackstone, in partnership with Ivanhoe Cambridge, bought the 11,000-unit complex for $5.3 billion in 2015. In exchange for maintaining affordable units, the landlord received $220 million in city financing, including a $144 million interest-free loan, $77 million in mortgage tax waivers and the ability to sell air rights for the complex. It was touted as a landmark housing affordability agreement, which a later report from the Independent Budget Office cast doubt on.

Blackstone spokesperson Jennifer Friedman reiterated the company’s pride in their record at Stuy Town, and stressed that the changes to the rent law have caused it to “make some difficult choices and scale back certain investments. But still, she said the firm would be “renovating and leasing all vacant units.”

The month after Albany passed sweeping reforms to the state’s rent laws, Blackstone said it had halted major capital investments at the property in light of the changes.
The recent reforms to Major Capital Improvements and Individual Apartment Improvements severely limit the ability for landlords to pass the cost of renovating apartments on to rent-regulated tenants. In June, legislation lowered the cap on rent increases for MCIs from 6 percent to 2 percent, and from 15 percent to 2 percent statewide. The legislation also capped IAIs at $15,000, to be paid over 15 years.

Blackstone registered over a dozen top executives as lobbyists during the runup to the passage of the laws and spent more than $100,000 on lobbying including the omnibus rent package passed on June 14, according to public lobby disclosures. Executives from the global asset management firm also met behind closed doors with housing affordability advocates in May ahead of the changes to the rent law.

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