Friday, June 25, 2010
Beautiful ex- Metropolitan Life properties, going broke
LOOKING AHEAD by Wally Dobelis
The recent news of the failure of Metropolitan Life’s last of a series of attempts to create socially beneficial mass urban renewal projects that would benefit the residence starved post WWII families and provide a good revenue stream for the insurance reserves makes one reflect on the old saws of Josef Stalin, that you cannot make an omelet without breaking eggs, and Oscar Wilde, that no good deed goes unpunished. The owners of the Parkmerced apartment complex in San Francisco will default on their $550 mortgage in a few months,
Stuyvesant Town was not the first urban renewal project inspired by Mayor Fiorello LaGuardia (1933-45) and completed by Met Life under President Frederick Hudson Ecker (1867-1964). Met planned Parkchester in 1938 when they purchased the 129 acres of a former Christian Brothers home and school for wayward boys, and turned it into 12,271 dwelling units in four blocks of seven to thirteen story buildings, including a major shopping center of over 100 stores, among them the first Macy’s branch outside of Herald Square, also a movie complex, a bowling alley and four major restaurants. Initially planned for middle class tenants, it was opened up by anti-discrimination lawsuits, and eventually turned multi-racial. In 1968 the Met sold it to the Helmsley-Spears organization, for $80 million; it was partially converted to condominiums.
The story of ST/PCV is well known here. The former Gas House District between 14th and 27th Streets to the River, named for the gas tanks emitting noxious odors over n the entire East Side it was a slum area and the home of the notorious Gas House Gang, Partially cleaned up in early 1900s, it became one of the renewal targets of Commissioner Robert Moses. Properties were condemned, inhabitants displaced elsewhere and churches, residential and commercial buildings razed About 80 acres were turned into the parkland development site of SP/PCV with 11,227 dwelling units in 110 high risers, loosely spaced on a maintained park property, an open-air luxury unheard of in tight Manhattan. It was originally made available for WWII veterans and FBI agents. The development started in 1943 and first tenants moved in August 1, 1947 (Town and Village, the first newspaper to serve this small sub city, came soon thereafter and has uninterruptedly maintained its service since then).
Since inception, Met has had to answer to problems of discrimination (now largely settled) and rent control.
The current form of rent control and rent maintenance, originally started in NYC after WWI, has been mainly powered by laws passed in 1943, with administration transferred to state government in 1950. The SY/PCV Tenants Association has been a powerful resource in maintaining tenant protection legislation in NYS.
Following the ST/PCV success, Met Life in the 1940s developed Riverton Houses in Harlem, 1,200 units, nearly all rent controlled, which they sold to Lawrence Gluck of Stellar Management and the Rockpoint Group in 2006. Since rentals did not pay, Gluck soon refinanced $250 million, refurbishing elevators, lobbies and gardens, and took some of the money as profits, hoping to convert much of the property, now luxury rated, to market rate rentals. They only succeeded with 10% conversions, and Riverton has been in foreclosure since March 2010 after defaulting on the $250 million in loans
Also in 2006, the ST/PCV property was bought by Tishman Speyer Realty and Black-Rock Properties for $5.4 billion, the largest purchase ever of a single-property holding... The Tishman group also had a business plan to convert many apartments to market rate, and to make them luxurious by modernizing the access areas, adding shiny community lounges and new plantings, but it did not work. There was also the problem of 4,350 illegal rent decontrol cases in buildings constructed with tax relief. The Tishman group in 2009 was unable to meet its debt obligations, and the property is in foreclosure, with a SY/PCV TA based unit strongly contending for an opportunity to purchase their homes’ complex.
The Parkmerced apartment complex is a 3,200 rent-stabilized unit development, largest such in the SF area, built in the 1944-52period. with 11 buildings of 13 stories and 1.683 apartments; also 1538 two-story townhouses. It was sold to the Helmsley group for $40 million in 1970 and ended with the Stellar/Rockport investors in 2004. They are defaulting on a $550 million in senior debt and $52 in secondary loans, much of it held by Calpers, the huge California civil service employee union pension trust. Calpers also held $500 in ST/PCV debt.
All these Met-developed properties were deemed to be risk free winners by conservative investors, and their defaults are causing huge stress in the pension trust market, sources of pensions for government retirees.
Governments nationwide have mismanaged their employee pensions and pension trust funds. Now we get news from all over, NYCPD included, how cops, firemen and others with retirements available after 20 years of service have managed to pile up overtime in final years to drive up the average pay, retiring in their early forties with pensions higher than their actual fulltime pay, This is not Greece, fellow citizens, this is our own New York City, and Detroit, historic homes of the trade union movement
Meanwhile in 2010 all states and many municipalities in the US are exceeding their mandated budgets for the current year by $300 billion, of which New York State’s deficit makes up $7.4 billion, causing teacher layoffs, work-week shortenings and closings of government offices, This whole tragedy is a lot more serious than the “sameold sameold” NYS legislature’s disfunctionality that we have taken for granted in the past years, with the state surviving by governments cashing fake savings on programs, and the sale/leaseback of government buildings. There’s real trouble in River City, and beyond.
Wally thanks NYTimes and internet sources
The recent news of the failure of Metropolitan Life’s last of a series of attempts to create socially beneficial mass urban renewal projects that would benefit the residence starved post WWII families and provide a good revenue stream for the insurance reserves makes one reflect on the old saws of Josef Stalin, that you cannot make an omelet without breaking eggs, and Oscar Wilde, that no good deed goes unpunished. The owners of the Parkmerced apartment complex in San Francisco will default on their $550 mortgage in a few months,
Stuyvesant Town was not the first urban renewal project inspired by Mayor Fiorello LaGuardia (1933-45) and completed by Met Life under President Frederick Hudson Ecker (1867-1964). Met planned Parkchester in 1938 when they purchased the 129 acres of a former Christian Brothers home and school for wayward boys, and turned it into 12,271 dwelling units in four blocks of seven to thirteen story buildings, including a major shopping center of over 100 stores, among them the first Macy’s branch outside of Herald Square, also a movie complex, a bowling alley and four major restaurants. Initially planned for middle class tenants, it was opened up by anti-discrimination lawsuits, and eventually turned multi-racial. In 1968 the Met sold it to the Helmsley-Spears organization, for $80 million; it was partially converted to condominiums.
The story of ST/PCV is well known here. The former Gas House District between 14th and 27th Streets to the River, named for the gas tanks emitting noxious odors over n the entire East Side it was a slum area and the home of the notorious Gas House Gang, Partially cleaned up in early 1900s, it became one of the renewal targets of Commissioner Robert Moses. Properties were condemned, inhabitants displaced elsewhere and churches, residential and commercial buildings razed About 80 acres were turned into the parkland development site of SP/PCV with 11,227 dwelling units in 110 high risers, loosely spaced on a maintained park property, an open-air luxury unheard of in tight Manhattan. It was originally made available for WWII veterans and FBI agents. The development started in 1943 and first tenants moved in August 1, 1947 (Town and Village, the first newspaper to serve this small sub city, came soon thereafter and has uninterruptedly maintained its service since then).
Since inception, Met has had to answer to problems of discrimination (now largely settled) and rent control.
The current form of rent control and rent maintenance, originally started in NYC after WWI, has been mainly powered by laws passed in 1943, with administration transferred to state government in 1950. The SY/PCV Tenants Association has been a powerful resource in maintaining tenant protection legislation in NYS.
Following the ST/PCV success, Met Life in the 1940s developed Riverton Houses in Harlem, 1,200 units, nearly all rent controlled, which they sold to Lawrence Gluck of Stellar Management and the Rockpoint Group in 2006. Since rentals did not pay, Gluck soon refinanced $250 million, refurbishing elevators, lobbies and gardens, and took some of the money as profits, hoping to convert much of the property, now luxury rated, to market rate rentals. They only succeeded with 10% conversions, and Riverton has been in foreclosure since March 2010 after defaulting on the $250 million in loans
Also in 2006, the ST/PCV property was bought by Tishman Speyer Realty and Black-Rock Properties for $5.4 billion, the largest purchase ever of a single-property holding... The Tishman group also had a business plan to convert many apartments to market rate, and to make them luxurious by modernizing the access areas, adding shiny community lounges and new plantings, but it did not work. There was also the problem of 4,350 illegal rent decontrol cases in buildings constructed with tax relief. The Tishman group in 2009 was unable to meet its debt obligations, and the property is in foreclosure, with a SY/PCV TA based unit strongly contending for an opportunity to purchase their homes’ complex.
The Parkmerced apartment complex is a 3,200 rent-stabilized unit development, largest such in the SF area, built in the 1944-52period. with 11 buildings of 13 stories and 1.683 apartments; also 1538 two-story townhouses. It was sold to the Helmsley group for $40 million in 1970 and ended with the Stellar/Rockport investors in 2004. They are defaulting on a $550 million in senior debt and $52 in secondary loans, much of it held by Calpers, the huge California civil service employee union pension trust. Calpers also held $500 in ST/PCV debt.
All these Met-developed properties were deemed to be risk free winners by conservative investors, and their defaults are causing huge stress in the pension trust market, sources of pensions for government retirees.
Governments nationwide have mismanaged their employee pensions and pension trust funds. Now we get news from all over, NYCPD included, how cops, firemen and others with retirements available after 20 years of service have managed to pile up overtime in final years to drive up the average pay, retiring in their early forties with pensions higher than their actual fulltime pay, This is not Greece, fellow citizens, this is our own New York City, and Detroit, historic homes of the trade union movement
Meanwhile in 2010 all states and many municipalities in the US are exceeding their mandated budgets for the current year by $300 billion, of which New York State’s deficit makes up $7.4 billion, causing teacher layoffs, work-week shortenings and closings of government offices, This whole tragedy is a lot more serious than the “sameold sameold” NYS legislature’s disfunctionality that we have taken for granted in the past years, with the state surviving by governments cashing fake savings on programs, and the sale/leaseback of government buildings. There’s real trouble in River City, and beyond.
Wally thanks NYTimes and internet sources
# posted by Wally Dobelis @ 11:25 AM 
