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NEW YORK CITY-The sale of Starrett City, to Clipper Equity LLC for $1.3 billion, is running up against strong opposition from both resident and government officials. On Monday, Sen. Charles Schumer took steps to block the completion of the sale, saying the Department of Housing and Urban Development has the ability to do so. Schumer petitioned HUD to reject the transaction.

Opposition to the sale hinges on the affordability of the complex, which is known as the largest federally subsidized housing complex in the US. Composed of some 46 buildings on 140 acres, Starrett City has traditionally been a place for middle- to low-income families. It is estimated that 14,000 people live in the complex’s 5,881 apartments.

“Anyone who pays $221,000 per apartment pays off the balance of a $243-million mortgage and willingly accepts an additional $8 million a year in property taxes is going to need to charge top dollar for these units,” Schumer says. “Experts across the board agree: it will be impossible for someone paying this price not to convert the units into high-price rentals or ritzy condominiums. Without question, a sale at this price will change the character of Starrett forever.”

Beyond the $1.3 billion for the complex, Clipper Equity plans to remove Starrett City from the Mitchell Lama program by paying the remaining $243.6-million mortgage. The Mitchell Lama program, which was created in 1955, is meant to create and maintain middle-income housing in New York by low-interest mortgage loans and real property tax exemptions. Schumer says, “Withdrawing from the Mitchell Lama program would not only put thousands of tenants at risk, but it would also raise the new owners’ taxes to $12 million a year from $3.7 million.”

Another area of contention involves Clipper Equity’s past. The company owns more than 4,700 apartments in 71 buildings throughout New York City and according to the New York City Department of Housing Preservation and Development the company has more than 8,700 outstanding maintenance code violations.

Almost immediately after the deal was made public, city council speaker Christine Quinn voiced her concerns. “We are very concerned about the track record [Clipper] and the individuals associated with it have on other Brooklyn housing projects, where they have accumulated almost 8,800 open housing violations, including over 1,000 that are considered hazardous.”

Despite the sale being New York based Schumer says HUD can step in and will do so. “According to HUD, property owners benefiting from federal subsidies must demonstrate that they are responsible individuals acting in the public interest,” he says. “HUD has the further obligation to investigate the prospective buyers other property holdings to assess their ability to manage a large and complex development. Based on Clipper Equity’s record of thousands of violations and its lack of plan to ensure Starrett City’s affordability, it is well within the jurisdiction of HUD to reject the deal.”

A total of seven bids came in to purchase the property, which was put on the market at the end of November. The lowest bid was $600 million and the closest bid to Clipper’s was $500 million less. Despite the high acquisition price, both buyer and seller spoke of keeping the complex affordable.

Disque Deane, the leader of seller Starrett City Associates, said in a statement issued just after the sale was made public, “We have dedicated our selves to running a pristine, affordable complex for working New York families since l975. So we are pleased that the new owners plan to continue running Starrett City as an affordable development.”

New owner David Bisticer, a principal with Clipper, echoed Deane’s words. “We are delighted to have purchased this attractive, desirable development that Disque Deane maintained so well, and we are committed to preserving long-term affordability.”

But government officials and residents alike say Clipper has yet to demonstrate how it plans to keep the apartments affordable to the residents who currently call the area home. Mayor Michael Bloomberg, a big proponent of affordable housing, addressed the issue last week in his weekly radio address. He said the sale of Starrett City is much more problematic than the earlier sale of Stuyvesant Town and Peter Cooper Village, which sold for $5.4 billion in October. “Stuyvesant had a good landlord; has a good landlord. Starrett City’s very different. Starrett City is something where the group buying it has a history of lots of violations. That’s worrisome,” the mayor said. He went on to say that from what is known now, the sale is “problematic.”

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