6 years ago

Frank Farance • 4 days ago Regardless of the numerous times Sherie Helstien and I have disagreed, I read her statement and there is some truth to what she says. Yes, I am fully aware that Matt and Sherie have opposed this deal, but there are important truths in what Sherie says, and they should be communicated to the tenancy and to officials. FIRST, RIOC LIES The lying from Susan Rosenthal, Jaci Flug, and other RIOC executives continues on a regular basis ... think of the end of the RI Youth Program where Susan and Jaci just flat-out lied about their lack of awareness that it would end suddenly (there were well aware, weeks in advance). And then add it the fact that everything David Kramer wants gets express-approved on short notice ... RIOC operates in an arbitrary, capricious, and illegal way. Also, there is a hidden agenda within RIOC: spending as much money now so they don't hit the RAA (Revenue Allocation Agreement) point where extra RIOC income will pay back the billion dollars of debt and liability, which we will have to address soon, and will cause our operating costs (in buildings maintenance/rent) to go up, and everyone will look back at circa 2018 an ask: why was RIOC spending wildly? Uh, because they are misleading the community on its finances. So when you see $6.1 million spend on a tram elevator that goes two floors and compare that with the approx $2-3 million replacing the eight 20-story elevators in Island House and Westview, you'll see RIOC wasting an OBSCENE amount of money. According to RIOC President Susan Rosenthal, the ground lease payments were only worked out for the first 30 years (to approx 2048) but not the balance. THIS IS A FLAT OUT LIE. Attached is the March 19, 2018 90-Day Notice Letter under the Public Authorities Law for Westview (see attached). In this letter, it describes: - "This explanatory statement is being provided at least 90 days prior to the disposal of property by negotiation" - "The disposition at issue concerns a proposed modification and extension of an existing ground lease ..." - "[the partnership] has agreed to create and implement a program to maintain Westview as an affordable housing complex through conversion ..." - "pursuant to a thirty-year affordability plan approved by New York State Homes and Community Renewal" - "In exchange for the affordability-based conversion, RIOC intents to grant the partnership an extension of the expiration date of the existing Ground Lease from January 31, 2028 through December 22, 2068" - "the proposed modification and extension of the existing Ground Lease provides for below-market ground rent payable to RIOC ..." - "the ground rent for the extended term will start at $325,000 per annum, with 10% escalations every five years thereafter" - "The below-market ground rent was negotiated in exchange for the Partnership not exiting the Mitchell-Lama program at market and agreeing instead to implement the Affordability Plan." - "As a result of this agreement, Westview will maintain affordable housing — at least 55% of the 361 units - for an additional 30 years. RIOC supports affordable housing as part of its mission and statutory purpose." It's clear that the ground lease terms have been described for the "extended" period to 2068, including the 20-ish years beyond the affordability plan. According to David Stone's article "Rosenthal now says there was no agreement, but her claim is hard to square with the flow of events". Of course it is lie, attached is a copy of the agreement. RIOC COMMITS FRAUD BY REVEALING THE PAL LETTER DOESN'T DESCRIBE THE WHOLE DEAL If the PAL letter (attached) describes the "four corners" of the transaction, then there can be no hidden transaction upon which this deal is dependent upon ... that is fraud. What RIOC has been trying to get is: Getting Hirschhorn to *pay* RIOC to stay in their offices at 591 ... not RIOC pay it's landlord for space, RIOC wants the opposite: the landlord to pay the tenant (RIOC) for the space. This is backward, corrupt, and EVERYTHING THE PUBLIC ACCOUNTABILITY ACT sought to prevent with these kinds of corrupt deals. (Ditto for Southtown 8 and 9 with H-R.) SHERIE HELSTIEN MIGHT BE RIGHT According to David Stone quoting Sherie Helstien: Helstien: "Generally, there was a question about the WV ground lease THIRTY YEARS from now... There was no pulling or cancelling of the current deal." Essentially, Sherie's statement is correct: (1) there was a question about 30 years from now, and (2) there was no pulling or cancelling of the current deal. There is a third component: the 591 office space. If RIOC were a pulling the current deal, then RIOC would have been withdrawing its March 19, 2018 90-day notice letter, which (to my knowledge) RIOC has not withdrawn. Yes, there was a question that Rosenthal addressed about 30+ years, but this is already addressed in the March 19, 2018 letter (i.e., yes, ground lease payments are defined beyond the 30 years until 2068). For Rosenthal to question whether or not ground rents have been defined is an INCOMPETENT understanding of the agreement, of course they have been defined and reviewed by the State people. WHAT ROSENTHAL IS DOING IS CREATING A DELAYING TACTIC SO SHE CAN GET A SIDE DEAL (e.g., Hirschhorn-the-landlord to pay RIOC-the-tenant for the 591 office space), this is fraudulent, corrupt, and illegal behavior by RIOC. SEAWRIGHT MIGHT BE WRONG, POSSIBLE CONFLICT OF INTEREST Assemblymember Seawright might have a conflict of interest with respect to the Westview deal. Now I'm not saying an illegal conflict of interest, but a practical one in representing her constituents. The part that Westview tenants and Hirschhorn don't see is: the RIOC Board has 7 expired or vacant board positions. Furthermore, Seawright is working *against transparency* by not letting us know who is being nominated - this happens because Seawright seems to be susceptible to some Island residents ("The Roosevelt Island Whisperers") and, thus, this isn't an open process. Everyone should be paying attention to the NY Senate Finance Committee. I don't know why the Assemblymember is not revealing who the nominations are. So getting the Governor to support your 7 RIOC Board member nominations is asking a "favor" from the Governor, you can't also be simultaneously complaining about RIOC dragging their feet on your other constituents, like Westview. THAT'S THE CONFLICT OF INTEREST THAT WESTVIEW TENANTS SUFFER. The problem is: waiting until the RIOC nominations are done will run out the clock for the Westview deal. WHY IS THIS URGENT? (HINT: RIOC IS CLUELESS ABOUT THESE DEALS) Because interest rates go up, tenants will have larger mortgage costs. Considering that Westview tenants have had decades of Income Verification, they won't be able to suddenly increase their incomes for the benefits of lenders ... and because these deals limit outsider purchases at insider prices, getting someone to co-sign the mortgage (to boast the collective income) is impractical/thorny. How does this affect the deal? Let's say your rent (housing costs) is $2000 and with maintenance and mortgage payments your housing costs increase to $2400 (that's 20% more). With mostly-interest payments, they would be very sensitive to interest rate hikes. So your housing costs might go up to (say) $2800 (that's 40% more than present housing costs, e.g., a point or two interest can add $400/month). At that point, you might be unable to get a mortgage with your present income (which you can't really increase). As a building, rather than having 55% subscription (tenants that purchase), the increase in interest rates definitely affect the subscription rate. If, the subscription rate is 30-40%, then the privatization transaction doesn't make sense for the owner. Thus, the owner can walk away from this privatization deal. The part that RIOC doesn't understand is: there is a very real possibility that the owner can walk away, and there is good business reason to do so. For example, the owner can quickly convert the building to market rate (if RIOC doesn't grant the ground lease extension) and the owner has a viable business plan for market rate, which would cause virtually all the tenants to leave, and the owner can sell the building to corporate/institutional entities, e.g., H-R, Cornell, MSKCC, and so on. Thus, RIOC thinks they have forever to complete this transaction and, in fact, this needs to be completed very very very quickly ... not 3-6 months from now. Really, you can thank Susan Rosenthal for screwing up this deal and attempting something fraudulent: a side deal, and she doesn't care about the residents and preserving affordable housing. For Westview tenants, you'll need to expose Rosenthal's fraud and improper actions. Also, in a practical sense, right now Seawright (and maybe Serrano) aren't your best advocates because of a conflict of interest (meanwhile, demand to know who they are putting up for RIOC Board nominees). My sense is that the NYS Authorities Budget Office (ABO) is your best choice because they are interested in the kinds of fraud that happens in Public Authorities, like the kind that Susan Rosenthal advocates when she purports that there is no agreement ... send the ABO a copy of the agreement and ask why Susan Rosenthal is dragging her feet. Frank Farance