Feds Halt Major Housing Sale
March 2, 2007 — -- The federal housing secretary halted the proposed $1.3 billion sale of Brooklyn's Starrett City -- the nation's largest federally subsidized apartment complex -- to a firm with a history of housing violations.
Alphonso Jackson, secretary of the U.S. Department of Housing and Urban Developments, said the purchase of the 5,881-unit complex by Clipper Equity would have put its mainly low- and middle-income residents at risk of losing their homes and way of life. HUD could block the purchase because about 90 percent of Starrett City's residents receive federal rent subsidies.
"This is one of the model housing programs in the country," Jackson said. "We cannot stand by and watch the story dissipate, watch as churches and synagogues are razed, replaced by new high-rise buildings."
The proposed sale comes during a historic residential real estate boom in New York City that has made it difficult for many to afford the rising costs of low- and middle-income housing. Last year Stuyvesant Town and Peter Cooper Village -- two subsidized housing complexes in Manhattan -- sold for $5.4 billion. Some residents there now face rent increases of more than 30 percent.
Even though it is half as large as those complexes, Starrett City has its own shopping center, schools, churches, synagogues, power plant and armed security force.Most tenants pay between $200 and $400 a month for the federally subsidized apartments and live on annual gross incomes of about $20,000 to $40,000.
Sen. Charles Schumer (D-N.Y.), Attorney General Andrew Cuomo -- a former HUD secretary -- and Rep. Edolphus Towns (D-N.Y.) pressured Jackson to void the sale to Clipper, because they feared the lofty sale price would drive up unit costs.
Clipper Equity, led by New York landlord David Bistricer, agreed to purchase Starrett City for $500 million more than the next lowest bidder, which could have raised the average unit cost from $90,000 to $200,000, according to Schumer.
Schumer said he is concerned that transactions like the proposed purchase of Starrett City will make New York City a place for the very rich and the very poor.
