Volume 19 Issue 53 | May 18 -24, 2007
Southbridge privatizers win control of the board
By Josh Rogers
Residents of Southbridge Towers in favor of privatizing the middle class housing complex won control of the board of directors May 1.
The new board then elected Wally Dimson, one of the leaders of Southbridge Rights, as its new president. In one sense the privatization group had nothing to lose in the election since no one who favors leaving the Mitchell-Lama rent protections was up for reelection on the board, but had Southbridge Rights not picked up seats, it would have been a clear signal that their effort to win full ownership rights of their apartments would have been in trouble.
Residents elected four of the groups five member-slate to the 15-member board. John Fratta, who was president of the Seaport complexs board before the election, was the only candidate who opposes privatization to be elected and he got the fewest votes of the winners. Fratta was on vacation and could not be reached for comment.
Dimson said the effort to leave Mitchell-Lama will continue. We still think its in everyones best interests to be given the equity they are legally entitled to, he said. It wont adversely affect maintenance.
Southbridge residents own the 1651-apartment complex but they are not entitled to sell their apartments on the open market. If residents leave Mitchell-Lama they will be able to use their apartments for equity loans, reverse mortgages, to pass on to heirs or to sell.
Opponents argue that the added real estate taxes and the 20 percent flip tax first-time sellers would have to pay would offset any gains residents would get with their new asset. Southbridge commissioned a study last year that concluded that apartments ranged in value from $300,000 to $1 million.
Board members are considering another vote in October on whether to proceed with a more detailed study, known as a red herring. If half the apartments vote to do the study, it will be presented to the state attorney general for review once complete. If approved by the A.G., Southbridge would take a final vote in which two thirds of the apartments would have to vote yes in order to leave Mitchell-Lama.
Victor Papa, a board member who opposes privatization, said the vote only shows people want more information about a change. Support for a study is not support for privatization, he said. Residents may not vote to do the study if they decide it is too expensive, he added.
Papa said since last years study, hes spoken to about two dozen people who are less in favor of leaving the state program because they wont be able to find a comparable Manhattan apartment if they sell. When residents see the value of their apartment, he says theyve told him: So what? Where am I going?
Jared Brown, a board member and the founder of Southbridge Rights, said everyone will be better off if they go private, but any skeptics will have an opt-out clause that will be tied to inflation or Rent Stabilization so they will be able to afford to stay.
He said Southbridge cant continue as a middle class complex under Mitchell-Lama because the income limits are so low that teachers and police officers are no longer eligible to move in.
You have to lie or cheat to get in here now if youre middle class, he said.
The winning board members were Ronald Guggenheim, Edward Kang, Betsy Nebel-Schainholz, John Ost and John Fratta.