W.V. Houses demo a no-go…for now; But co-op going market rate

BY LINCOLN ANDERSON | Updated Wed., March 14, 11:45 p.m.: The threat of a crop of new high-rise towers — possibly gleaming and garish — being constructed on the site of the current West Village Houses seems to have passed — at least for the near future.

Last November, Madison Equities proposed to buy the entire complex of 42 nondescript low-scale brick buildings, raze it and then rebuild it with a mix of market-rate and affordable housing. The West Village Houses are located just outside the landmarked Greenwich Village Historic District and so are not protected against wholesale demolition.

With their sheer brown brick walls, the utilitarian West Village Houses — seen here on Washington St. south of Wesbeth Artists Housing — probably won’t ever win any architecture awards. Photo by Tequila Minsky

According to a board member, Madison’s offer was unsolicited. However, the co-op’s board reportedly subsequently spent $300,000 exploring the plan’s feasibility.

Yet, while the rebuilding scenario is now off the table — or “never was on the table,” as one co-op board member claimed this week — on Fri., March 9, the West Village Houses did, in fact, begin the process of transitioning from an affordable residential co-op to a market-rate one. The historic housing development, the creation of which Jane Jacobs actively supported, officially lost its tax-exempt status last Friday, while a cap on the resale values of its apartments also was lifted.

But a restriction on income levels of incoming co-op buyers and incoming renters does still remain in effect. Income is restricted to 165 percent of area media income (A.M.I.) for the New York City metropolitan area.

Can start cashing in

Nevertheless, several dozen co-op owners of the 420-unit complex can start cashing in, and big time — immediately — and sell off their coveted Village pads for the highest dollar. That’s because waivers are available for a total of 76 apartments that would allow these units to be sold to buyers of any income level.

Fifty of these waivers are available to shareholders on a first-come-first-served basis; 16 waivers are reserved for use by the co-op board; and 10 are available for use by shareholders on an emergency basis, such as in the event of a death, imprisonment and so forth. In order to get a waiver, a shareholder must show a sale contract.

Attorney Jack Lester was recently retained by Shareholders for the Preservation of West Village Houses, a group of co-op owners vehemently opposed to the Madison plan.

“Sale caps came off today,” he told The Villager on March 9. “There is still a low-income requirement to buy [except for units with waivers.]”

Most important for the West Village Houses, which are home to 1,000 residents — as well as for the surrounding Village community, as a whole — the shocking proposal floated by Madison Equities this past fall to buy the entire 42-building affordable housing complex and redevelop it seems kaput. In fact, realistically, it’s unlikely that the Madison Equities plan or a similar one would ever get off the ground due to the housing complex’s proprietary lease, which not only requires two-thirds of the shareholders to approve such a sale, but, more important, that any buyer of a West Village Houses unit sign an affidavit pledging his or her intent to actually live there.

‘Keep owner occupancy’

Lester noted that on March 8, the co-op board issued a letter to shareholders stating that “owner occupancy” should be maintained at the complex.

The board’s letter also stated that the Madison plan “is not under consideration.”

Under the Madison scheme, the current residents would have had to leave their homes to allow the existing five-story walk-up buildings to be razed, then would have been able to return to new units once the place was rebuilt.

A photo taken from Westbeth Artists Housing, the affordable artists housing complex to the north, shows the low scale of the West Village Houses, especially in contrast to taller surrounding buildings, like Julian Schnabel’s pink-colored Palazzo Chupi, at right. Westbeth residents and artist / filmmaker Schnabel likely will be pleased to hear that their views and light won’t be blocked any time soon, now that a massive redevelopment project proposed on the West Village Houses site appears to be illegal under the complex’s proprietary lease. Photo by A.L.

The West Village Houses are now officially starting the process of dissolution and reconstitution, which could take around nine months to complete, according to a board member. Basically, that means converting from an HDFC (Housing Development Fund Corporation) co-op to a normal co-op. As an H.D.F.C., the development received an exemption from city property taxes in return for accepting restrictions on selling and renting of its apartments.

“It’s now an interim period between dissolution and reconstitution,” Lester noted.

The state Department of Law will play a role in the complicated process — which will include removing the income restriction — he said. After reconstitution, the complex will continue to be affordable for those who are already living there, including the renters, according to Lester.

Property tax spike

As a result of the end of the tax exemption, the co-op’s tax bill will now shoot up from $500,000 annually to $3 million annually, according to a board member.

Lester added that Shareholders for the Preservation of West Village Houses recently circulated cards to gauge shareholders’ position on the Madison offer, and as of two weeks ago, according to returned cards, about 30 percent of shareholders opposed the demolition plan. Speaking last week, Lester said he was confident the proportion of opposition would soon surpass one-third, which would mean the plan would not fly, since approval by two-thirds of shareholders would be needed.

Beyond that, however, he said, the proprietary lease of West Village Houses requires any buyer of a unit to live there, which would prohibit a purchase of all 420 units by a big company like Madison.

“In order to purchase a unit, you have to submit an affidavit that it’s your primary residence,” Lester explained. “So how could Madison Equities buy an apartment — because they’re not living there? That’s in the proprietary lease, Section 16(A)(7). It requires the purchaser or immediate family member to reside in the apartment.”

Lease can be changed

That clause of the proprietary lease could possibly be changed someday, he conceded — though, again, it would require a vote of support by two-thirds of the shareholders, which would appear unlikely, at least at this time. The soonest that such a vote could be taken would be after the co-op’s reconstitution process is completed, at which time the co-op’s regulatory agreement “will go out the window,” Lester noted.

Humbly designed entranceways at the West Village Houses. Photo by Tequila Minsky

Basically, when the West Village Houses became an affordable co-op in 2006, the New York City Council passed a special law — known as a regulatory agreement — that mandated owner occupancy at the development during the life of the “tax-abatement” period, which was slated to last for 12 years. The proprietary lease (every co-op requires a proprietary lease) mirrors that regulatory agreement.

On Mon., March 5, Lester told The Villager that he and members of S.P.W.V.H. had met the previous Friday with attorney Erica Buckley, of the law firm Nixon Peabody, who is representing the West Village Houses board during the dissolution-and-reconstitution process, and that she was in agreement that the proprietary lease’s stipulation of residency would make it impossible for Madison to buy the complex.

‘Everyone in agreement’

“It wasn’t a confrontational meeting,” Lester said. “It was a meeting where everyone was in agreement that that was the fact.”

Buckley did not return a call for comment for this article.

In turn, asked on Wed., March 7, by The Villager if the Madison plan was now officially off the table, Katy Bordonaro, a West Village Houses board member, downplayed the whole affair.

“There is nothing to take off the table,” she replied. “We received an unsolicited proposal from Madison, the details of which we shared with shareholders to meet our fiduciary responsibility. Nothing more has developed from that.”

Board’s ‘trial balloon’

Told of that, Lester retorted, “It sounds like there was something on the table and they’re backing away from it. They sent up a trial balloon and because of its unpopularity, they’re backing away from it based upon that. And yet, a lot of the board’s resources were spent on it — $300,000, yeah! What table was that put on?” he quipped.

The money was “specifically” spent on the Madison plan, he noted, quipping, “Maybe it wasn’t on a table — maybe it was on a chair or a stool of some sort.

“And it created a lot of anxiety,” the attorney added. “But it’s good to hear [the board] essentially put the kibosh on it. It’s an ongoing, fluid situation. The proprietary lease can only be changed by a two-thirds vote of the shareholders — the policy [that was] articulated by the board is to maintain it.”

Slam Post report

In early February, the West Village Houses board issued a letter to residents, saying that a recent New York Post article was “a completely false and inaccurate story…which insinuates the West Village Houses has some sort of deal to ‘demolish’ and redevelop the West Village Houses. THIS IS INHERENTLY AND COMPLETELY FALSE. There is absolutely no deal, arrangement or agreement for any sort, for any type of redevelopment with Madison Equities or any other developer.

“W.V.H. is solely focused on keeping the community affordable for residents and tenants when the upcoming tax abatement expires, through refinancing and other means as we have discussed at length,” the board wrote. “We have, in fact, paused all conversations with developers (in light of our more pressing concerns) more than a month ago and have actually refused meetings with Madison Equities for this very reason.

“Furthermore, Madison Equities’ actions [have] demonstrated cause for serious concern. IF and when we get to a place where we — together as a community — evaluate our long-term plans for our physical buildings, we would need to take these actions into consideration before we would ever think about Madison Equities as a development partner.”

Interested in October

However, in October of last year, the board sent out a “News From West Village Houses Board of Directors” letter to residents that seemed to show some interest in the Madison proposal, at least in general terms.

“We believe it is worth engaging the community in a discussion to evaluate it,” the board said at that time of Madison’s offer. “We believe that it provides a useful framework for thinking about our future.”

The board said it would make sense for the community to talk about “the general concept of redevelopment,” adding that they were, in fact, “soliciting additional proposals from other developers, as well.”

The no-frills West Village Houses predate the West Village’s more recent “starchitecture,” such as the sleek glass towers designed by Richard Meier at Perry and Charles Sts. on the Hudson River waterfront. Photo by Tequila Minsky

Specifically, the board noted, the advantages of Madison’s rebuilding plan included that West Village Houses’ mortgage would be paid off, buildings would have elevators installed, and there would be “higher ceilings” and “kitchens with new appliances.”

The Madison rebuilding plan would be “minimally disruptive,” the board’s letter actually claimed.

Many of the West Village Houses residents are now in the 60s and 70s, and Lester, who himself is 64, noted with a wry chuckle that people at that age might not exactly be so happy about having to move out of their homes for a period of years to allow a massive redevelopment project, before returning — hopefully, returning, that is.

No guarantees

“There’s no guarantee they would have been able to go back,” he said. “What happens if the corporation goes bankrupt? People could be left holding the bag. These would be private contracts, not government contracts. The only way they could be enforced is through litigation if there was a breach.”

Of the shareholders group that he represents, he said, “First and foremost, they’re in favor of stability. They don’t want people removed from their home.”

With their sheer walls and lack of adornment of any sort — a sort of “no style” style — the West Village Houses are, admittedly, not exactly stunning architecture. But location is everything, and they are also low scale, which allows the area to be light-filled and without the hemmed-in feeling of so much of Manhattan. In short, they are Village scale.

And, as Lester added, “It’s near the water. It’s Manhattan.”

‘Strike right balance’

Speaking last week, Bordonaro said, “The board’s top priority has been ensuring anyone who wants to stay can afford to do so and anyone relying on the ability to sell for their retirement can do so without limitation. There has been solid support from shareholders and elected officials for the plan we are forging for the short term, and we are confident we will be able to strike the right balance that works for all of our residents and the long-term sustainability of the community many of us have called home for decades.”

She added that getting through the dissolution-and-reconstitution process will be a major undertaking and the main focus for the better part of the next year.

Lester noted that the co-op’s board elections are coming up in June and that all seven sitting members are up for re-election.

W.V. Houses’ history

Completed in 1975, the West Village Houses stretch between Bank and Morton Sts. on the north and south and West and Washington Sts. on the west and east. They were built under the Mitchell-Lama affordable housing program.

Under Mayor Robert Wagner, the city initially had wanted to rebuild that swath of the Far West Village with high-rise towers. But legendary activist Jacobs and her allies fought off the plan and replaced it with the low-rise, affordable West Village Houses plan.

In 2002, the complex’s owner expressed interest in leaving the Mitchell-Lama program and taking it market rate. Under the Bloomberg administration, a deal was hashed out in 2006 under which the West Village Houses tenants could buy their apartments for $150,000, while those who did not want to buy or could not afford it financially — tenants in about 40 units — were allowed to continue to rent.

With the tax exemption set to expire on March 9, the de Blasio administration had been working on a plan that would have extended the tax-free status another 20 years, yet would have retained the cap on sale prices. The city’s Department of Housing Preservation and Development presented that plan last spring, but shareholders overwhelmingly opposed it due to the sale caps, and, as a result, West Village Houses rejected it.

Lester said the shareholders in the group he represents don’t want any restrictions on sale prices.

Garage stuck in neutral

West Village Houses also has another valuable piece of real estate: its garage at Perry and Greenwich Sts. In a recent vote, only about 60 percent of shareholders — just short of the required two-thirds — supported selling the garage, so the board cannot proceed with its sale at this moment. (Only about 80 percent of shareholders actually voted.) The garage is valued at around $63 million. Only nine West Village Houses members currently park there.

The co-op has an operator run the garage and collects revenue from it. Meanwhile, city residents are increasingly forgoing the use of personal cars for Ubers, Lyfts and Vias.

City Council Speaker Corey Johnson’s office has been keeping abreast of all the developments.

“We want to be supportive of people at West Village Houses,” said Erik Bottcher, Johnson’s chief of staff. “There’s a lot going on internally. There have been some proposals put out there. We stand ready to assist if people need us.”

G.V.S.H.P. concerned

Not surprisingly, the Greenwich Village Society for Historic Preservation had some serious concerns about the Madison Equities plan.

“The West Village Houses are the only realized design in which Jane Jacobs had a direct hand,” said Andrew Berman, G.V.S.H.P.’s executive director. “They reflect an important era of New York City’s development when West Village residents rose up and stopped Robert Moses’ demolition and ‘urban renewal’ plans and replaced them with contextual, infill design.

“While the ultimate West Village Houses design was a greatly modified and simplified version of what was originally planned, they nevertheless represent an important moment and turning point in the history of our city and urban design.

“Among our concerns,” Berman said, “are protecting the [West Village Houses] design and ensuring that the contextual neighborhood zoning that we fought for and secured for much of the Far West Village, including almost all of the West Village Houses, remains intact.

“We recognize that there are other issues that need to be considered, like the financial viability and affordability of the development, its resiliency and its accessibility. We are hopeful that all these issues can be addressed as the tax break for the development expires and the challenges it faces changes.”

Board 2 discussion

Sandy Russo, a member of Community Board 2 who lives near the West Village Houses, raised the alarm at the end of last month’s C.B. 2 full-board meeting that something needed to be done to stop the Madison rebuilding plan. During a brief board discussion that followed, one past chairperson of the board, David Gruber, urged that C.B. 2 stay out of the whole matter. But another past chairperson, Tobi Bergman, said they should get involved, citing the housing complex’s history and the involvement of Jacobs in its creation.

Current C.B. 2 Chairperson Terri Cude told Russo she thought it would be a good idea to hold a town hall at which information and views on the issue could be shared, though the board would not necessarily be looking to weigh in with an official position at this point.

As for Russo, she thinks West Village Houses should stay affordable.

“It was a pretty rough neighborhood before,” the longtime Village resident told The Villager. “But that was the deal they got — inexpensive with the idea this would remain an affordable-income project and not some Lotto ticket — it’s like, ‘Wee!’ Now we can make a killing!’”

‘Going up’ vs. uprooting

But one West Village Houses board member, speaking off the record, said, in some ways, the complex is no longer particularly well-suited for those living there. For example, some elevators would be nice, she noted.

“At West Village Houses the average age is 63,” she said. “In another 20 years, they’re going to be 83 in a fourth-floor walk-up. Many people here are self-employed, government workers, families with children. They haven’t been able to save buckets of money. If they want to sell at a price that helps them the next 20 or 30 years. … Other people want to stay.

“‘Make a killing’ — that’s pretty rough,” she said, referring to Russo’s comment. “Jane Jacobs was about the people. To us, that means the people who live there.”

However, Lester said elevators, for one, could be added without having to do a megadevelopment project.

“You can put in capital improvements without knocking the whole thing down,” he said. “A 63-year-old person may want elevators — but they don’t want to be uprooted for five years.”

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