Volume 19 • Issue 9 | July 14- - 20, 2006

Give me a subsidy and a rent hike, landlord says

By Ronda Kaysen

The owners of an affordable housing complex on the Lower East Side would like to raise tenants’ rents, despite a $5 million federal grant they received in the wake of 9/11 to keep rent affordable.

The owners of Knickerbocker Village, a 1,589-unit housing complex that sits in the triangle between the Manhattan and Brooklyn Bridges, made their case at a public hearing on Tuesday to raise rent for the complex’s 4,000 tenants. Tenants and the New York State Division of Housing and Community Renewal, the agency that oversees the property, expected to hear testimony for a proposal to raise rent by $29.37 per room, or $103 a month for a one-bedroom apartment, to pay for $2 million in capital improvements.

But the request had changed dramatically.

On June 30, Cherry Green Management, the complex’s owners, received official word that they had been awarded $5 million to fund capital improvements, part of $50 million in 9/11 redevelopment funds set aside for affordable housing. The governor, the mayor and the Lower Manhattan Development Corporation publicly announced the grant last year, but Cherry Green has never tapped the funds.

Less than a day before the D.H.C.R. hearing to consider the rent increase, Cherry Green submitted a revised proposal — accounting for the $5 million — that increased capital improvements to $3 million and called for a rent increase of $12.27 per room, or $43 a month for a one-bedroom apartment.

“It is an insult, it is unconscionable for the management to say that there is any need for a rent increase,” City Councilmember Alan Gerson said at the hearing. “It is bad faith not only to the tenants, but to the taxpayers of New York City.”

Gerson helped secure the money for Knickerbocker in a move to spread the $50 million in Community Development Block Grants over several Lower Manhattan projects rather than reserving it all for a single new development on the West Side. “This was part of our affordable housing strategy,” Gerson said.

Knickerbocker Village was built in 1934 as an affordable housing complex protected under Article IV, a precursor to Mitchell-Lama, a middle income-housing program. Cherry Green took steps earlier this year to remove the complex from the rent protection program entirely, an effort that is being challenged by the tenants.

Cherry Green insists the $5 million grant is not the windfall it appears to be. The money comes with a hefty 40 percent tax, Cherry Green accountant Russell Kranzler testified, and the tax payments cannot come out of the grant money itself. So, if Cherry Green spends the $5 million in a single year, for example, they would need to deliver $2 million in taxes from their own coffers.

“The grant is phantom income, you’re not receiving cash for it,” Kranzler testified. “Every time you draw down those funds, you’ve got to pay the taxes. Where are you going to get those funds from?”

Hundreds of Knickerbocker tenants — many of them elderly and infirm — turned out at the hearing at Millennium High School on July 11, along with Gerson, New York State Assembly Speaker Sheldon Silver and State Senator Martin Connor. The tenants filled the assembly room, spilling out into the hallway. Many in the audience fanned themselves as the air conditioners failed on the sweltering July morning.

“You’re in your last years and you think you’re going to have affordable housing — forget it,” Knickerbocker tenant Marie Meyer, 78, told Downtown Express. Meyer has lived at Knickerbocker for 47 years. She retired from her job as an A.T.&T. supervisor a year ago and now lives on her pension and Social Security. Sitting in the third row, she was flanked by her neighbors — a woman clutching a cane who had lived in the 12-building complex for 51 years and an 81-year-old woman named Theresa, who leaned on a cane as well and had lived at Knicerkbocker since Dec. 7, 1955.

“You go to Pathmark and everything is more expensive and unfortunately we have to eat,” said Theresa, who declined to give her last name. If her rent, which is close to $700 a month, does increase, “I’ll be losing weight.”

Knickerbocker has a large Chinese population — 68 percent of the tenants are Chinese — and translators speaking in two Chinese dialects translated portions of the hearing.

The rent increase “is too much for me, I don’t have any money,” said a 66-year-old Chinese woman who declined to give her name, fearing retribution from building management. A 30-year resident of Knickerbocker, she pays $651 a month for her apartment. “There’s no place to move,” she said.

“It’s not fair, they increase too much,” said Saling Leung, a 40-year-old Chinese woman standing in the back of the room. “I live alone, I cannot afford this.”

The tenants would like to see the L.M.D.C. grant used to stave off a rent increase entirely. “We think it should be reduced beyond the $12, probably $0,” tenant lawyer Jacques Rose told Downtown Express.

It is unclear if that will happen. D.H.C.R. oversees the property and will ultimately approve or deny the rent increase. The agency had proposed a $25.58 per room increase in response to Cherry Green’s earlier $29.37 proposal. But since Cherry Green has now presented revised financial statements, D.H.C.R. could reconsider its proposal.

“This is just another factor that we will assess in making a determination,” said D.H.C.R. spokesperson Dan Irizarry. “To the extent that this process is not finalized, it’s not unusual that other factors would come in that have to be weighed.”

Kurt Seidman, the D.H.C.R. lawyer moderating the hearing, adjourned until July 25 so tenant lawyers could review the changes to Cherry Green’s proposal.



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