Volume 17 • Issue 20 | October 08 - 14, 2004

Leaders bullish on Gateway rent deal prospects

By Ronda Kaysen

Negotiations between the Gateway Plaza landlord, the Lefrak Organization, and the Gateway Plaza Tenants’ Association may be picking up steam — with a nudge from Community Board 1 – as the June expiration date for rent-stabilized leases fast approaches.

Community Board 1’s Battery Park City committee – comprised primarily of Gateway Plaza tenants who could not vote on the issue – drafted a resolution at its Oct. 5 meeting urging a speedy resolution to what has become a lengthy negotiation process. State Assembly Speaker Sheldon Silver negotiated a five-year rent stabilized lease extension with the LeFrak family more than a year ago, but when the family’s patriarch, Sam LeFrak, died in April 2003, all negotiations ceased while his estate was settled. Now, as the June expiration date looms, the tenants’ association is eager to seal the deal – and make plans for a more permanent affordable housing solution for the largest housing complex in Battery Park City. With more than 1,700 units in the six-building complex, Gateway Plaza houses close to half of the population of Battery Park City.

“Tenants are concerned and they want some certainty that the extension is going to be put into place,” said Jeff Galloway, a member of the tenants’ association executive board and the Battery Park City committee member who drafted the resolution.

Galloway is confident the agreement will be honored. The proposed resolution merely reflects a desire to keep the Lefrak Organization abreast of the community’s position. “It’s appropriate to remind the landlord that we care about this – as a community we care about this,” he said.

Built in 1982, Gateway Plaza has always been a rent-stabilized, market-rate apartment complex. Some new tenants pay as much as $4,000 a month for their units, while older tenants pay closer to $2,500 a month for two-bedroom apartments. All apartments — under the current lease agreement — are rent-stabilized. When the leases begin to expire at the end of June, Lefrak (if the organization has not entered into a new rental agreement) will be free to charge market rate for all units.

“Stabilization has the effect of not only stabilizing rent, but stabilizing neighborhoods,” said Galloway. If the rents soar, Galloway worries that many of the families and long-term residents will leave the neighborhood for more affordable housing. Because of the immense size of Gateway, an exodus from Gateway could have a dramatic impact on the Battery Park Community as a whole. “The kind of tenants that market-rate apartments attract tends to be young professionals, not families.”

A Lefrak executive said the firm would not comment.

“Gateway Plaza is the most stable development in our community,” said Judy Rapfogel, Speaker Silver’s chief of staff. “We want it to continue to be that.”

Using his power at the state’s Public Authority Control Board, the speaker convinced the LeFrak family to agree to guidelines similar to rent stabilization so that the owners could refinance their debt. The P.A.C.B.-regulated Battery Park City Authority manages the financial arrangement with Lefrak Organization. In early 2003, Silver negotiated an extension obligating the LeFraks to agree to rent stabilization increases until 2009 in exchange for P.A.C.B. approval for a debt refinancing. And then, in April, Sam LeFrak died, effectively bringing all negotiations to a standstill.

Despite the seeming inaction on the part of the LeFrak family, Rapfogel is confident a deal will be arranged – at least for the next five years. “[The LeFrak family] has continued to assure us that they want to live by the agreement,” she said.

Not all parties rest assured that a deal will be reached. “I don’t think you can hang your hat on the current negotiations,” said Tom Goodkind, a Battery Park City committee member and Gateway Plaza resident. Fearing an agreement will not be reached and that rents will soar, Goodkind said he would consider leaving the neighborhood and perhaps Manhattan entirely. “Long term residents should expect the worst,” he said.

Even if a five-year rent stabilization agreement is reached, the long-term future of Gateway Plaza is still uncertain. The C.B. 1 resolution calls for a permanent solution, but nothing is currently on the table. In 1995, Lefrak signed a 10-year lease extension. The five-year proposal is a marked move away from a long-term commitment. “We obviously wanted more, Lefrak obviously wanted less,” said Galloway. “But Silver’s office believed this was a fair deal and the best deal for a short-term solution.” Galloway suggested a permanent rent-stabilization lease or a co-op conversion as two possible permanent solutions for Gateway.

Rapfogel is hesitant to raise expectations that negotiations for a long-term agreement are realistic. “We’d love for a permanent solution, but we need to first finish what we’re working on now,” she said.


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