L+M Buys Knickerbocker Village on Lower East Side for $85 Million

L+M Fund Management has bought the 1,600-unit Knickerbocker Village affordable housing complex after years of battling some tenants over the sale.

The L+M Development Partners affiliate purchased 10-20 Monroe Street from Stellar Management for $84.6 million, according to property records. The developer agreed to spend $50 million to fix up the aging, 1.4 million-square-foot complex in Two Bridges.

All the apartments will remain affordable under the state’s Article IV program, a precursor to Mitchell-Lama, an L+M spokesperson said.

The deal had been stymied in 2022 by dissenting tenants who sued the state Division of Homes and Community Renewal, which signed off on the deal. The suit, which alleged that a new pricing plan would incentivize L+M to replace residents with higher-paying renters, was dismissed in October.

Christina Zhang, a co-chair for the Knickerbocker Village Tenant Association, said the group negotiated for more than a year with L+M and the state agency to keep rents affordable. Under an agreement with the previous owner, rents at the 12-building complex are frozen until 2025. After that, increases for existing tenants are capped at 2.5 percent annually.

L+M will fill units that become vacant at one of three price tiers based on incoming tenants’ income. Rents will be affordable to households earning, on average, 80 percent of the area median income.

“We’ve been hearing for several months that the sale will be finalized,” Zhang said. “I think we’re relieved that we’re no longer in limbo that it’s finally gone through.”

According to L+M, existing residents will be shielded from large and unpredictable rent increases and future costs for capital improvements will not be passed down to tenants. The developer also got 397 Section 8 federal rental vouchers from the New York City Housing Authority for tenants, solidifying future revenue for the new owner and helping to fund the capital improvements.

“We are looking forward to working closely with all Knickerbocker Village residents and local elected officials to ensure a smooth transition and critically needed rent stability for many years to come,” L+M’s spokesperson said.

A spokesperson for Homes and Community Renewal said, “HCR negotiated a robust preservation plan for Knickerbocker Village that provides for extensive tenant protections and will preserve Knickerbocker Village as a permanently affordable development.”

A lawyer for the tenants did not immediately respond to requests for comment.