Was There a Deal? Depends On Who You Talk To

Did RIOC renege on Westview, throwing affordability into jeopardy?

Updated 1 year ago David Stone
Irony at a troubled Westview
Irony at a troubled Westview
© David Stone / Roosevelt Island Daily
With transparency at RIOC sharing qualities similar to those of a double-brick wall, it's difficult to tell if it's  incompetence, political posturing, real estate profiteering or something else to blame. What we do know is that RIOC, without public explanation and behind closed doors, trash-canned a deal agreed on after more than a year in negotiation. Time's now running out for preserving a last chance at affordability.

After more than a year of sometimes rancorous discussions between RIOC President/CEO Susan Rosenthal and Westview sponsor representative David Hirschhorn, the Division of Housing and Community Renewal, RIOC's Albany overseer, asserted itself, handing down terms of an agreement considered fair to all concern that would lead to removing Westview from Mitchell-Lama, making possible an affordability plan consistent with one approved by tenants in 2016.

What happened?

DHCR invited Westview's Task Force to a meeting with State Assembly Member Rebecca Seawright in April. Seawright's staff had been instrumental in shepherding residents through complexities of the Mitchell-Lama exit process, making the session appropriate for her Upper East Side location.

DHCR's representative told the Task Force that an agreement was in place. DHCR oversees RIOC on behalf of Governor Cuomo, and the agency's leader, RuthAnne Visnauskas, is Chair of RIOC's Board, although she delegates to Alex Valella for meetings. 

And it was good news for Roosevelt Island.

Where Eastview, now Roosevelt Landings, failed to manage a useful affordability plan, leading to marijuana saturated corridors navigated by a steady stream of Airbnb-style guests and short term transients, and Rivercross thumbed its collective nose at affordability in favor of windfall profits, Westview was set to join Island House in securing the sort of affordability standards originally central to the community's development.

At a practical level, Hirschhorn and Rosenthal worked out the details for getting necessary Board approval, which was considered a formality. The deal was explained as so solid, Hirschhorn agreed to let RIOC stay on at 591 Main Street in wait of a formal agreement, although their lease expired in April.

And it made practical sense. A simple majority of the Board was all that was necessary to get DHCR's term sheet approved, and because Rosenthal was assured of yes votes from the two State Board Members, Visnauskas and Budget Director Robert Mujica, all she needed was a single affirmative from resident Board Members, now dwindled down to three - David Kraut, Howard Polivy and Michael Shinozaki - after the resignations of Margie Smith and Fay Christian.

The likelihood of a unanimous rebellion against their chief executive and their Board Chair by the resident Members, who serve at the pleasure of the Governor, was considered next to none. It hadn't happened before, even when they were ramrodded into approving Southtown buildings 8 and 9, without anything resembling sufficient review.

But the good news was short lived, and the impossible suddenly became possible.

At a meeting of RIOC's Real Estate Development Advisory Committee (REDAC), called into executive session that forced all outside observers, including Hirschhorn, to leave the room, Visnauskas and Rosenthal failed to sell the deal. No one present has opened up about what went wrong.

Broadening the mystery and frustration, a deal for updating Rivercross's ground lease under similar terms sailed through the same meeting and went on to get full Board approval.

REDAC now includes all the remaining resident Board Members. None reside in Westview, leaving the complex without a voice or an ear. Why they chose to put affordability on the brink of disaster is unknown and, it's easy to argue, unfair to tenants who've been left dangling since approving the affordability exit a year and a half ago.

Those who are talking are circumspect.

Unable to speak openly about negotiations in progress, Rosenthal bluntly told The Daily, "There are terms that were not (and never have been) agreed upon." 

Hirschhorn expressed "surprise" at Rosenthal's claim.

Neither DHCR, Assembly Member Seawright nor the Westview Task Force responded immediately to requests for comment. 

Where do things stand right now?

In short, the Westview affordability plan is in serious jeopardy. 

Following the failure to get REDAC approval for going forward, Rosenthal shocked Hirschhorn with an unanticipated demand for higher ground lease payments than what they'd agreed on, just weeks before. The terms set out by DHCR and acknowledged all around were not, in her view now, final.

A counter proposal was submitted to RIOC last week. Indications are that it's the Westview sponsor's final offer and for good reason.

After seeing the failure of what was taken to be a rock solid, good faith agreement that the full Board would vote on in May, Hirschhorn and the investors he represents have been backed into a corner. A financing arrangement established to facilitate the transfer to affordability expires in mid-July. It will not be renewed or extended.

Trust in negotiating with RIOC in has been severely eroded.

The Westview family questions why Rivercross appears to have received preferential treatment, even though they disdained affordability in favor of tenant profits when exiting Mitchell-Lama.

They are also puzzled over how swiftly Hudson got approval for ground lease adjustments that opened up construction on Southtown buildings 8 and 9. Discussions for that deal began after Westview tenants approved the affordability plan, and it was approved in a rush, without proper review, months ago.

No one outside RIOC's Board knows why Westview is being treated differently and, in the tenants' and sponsor's view, poorly. And unless the disagreement ends up in litigation, which now looms as a real possibility, we may never find out.

 

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