The city has pulled back on its plans to hand a building over to a favored non-profit, who was set to make about a $1 million through a redevelopment project while long-term tenants are left holding the bag to pay off a $9.5 million mortgage, KCP has learned.
The 4-story, 23 unit building at 374-76 Prospect Place in Prospect Heights falls under the city’s Department of Housing Preservation and Development’s (HPD) Affordable Neighborhood Cooperative (ANCP) Program, in which the city selects qualified developers to rehabilitate distressed city-owned occupied multi-family properties.
The city chose the Bedford-Stuyvesant-based non-profit Bridge Street as the developer from a list of qualified developers with a history of doing such work, for the rehabilitation project.
Under the plan, which was expected to close this past Tuesday, Bridge Street was to get a low-interest city subsidized loan estimated to be over $9 million to redevelop the property, according to court papers the tenants filed to stop the transaction and get redress.
The tenants, who have managed the property themselves for over 30 years under the city’s Tenant Interim Lease (TIL) Program, which the city established since the 1970s and 80s, when the city was rife with slumlords and abandoned buildings, took the matter to Kings County Supreme Court on June 24.
“HPD said it planned to conduct a renovation costing nine million five hundred twelve thousand nine hundred and nineteen dollars ($9,512,919.00) and place that amount as a mortgage on the Building. Pursuant to the plan HPD announced at the Building, and contradicting the promises made to the Tenants Association through the TIL Program, the Building’s tenants would be responsible for paying off this mortgage and would have their rents increased from approximately two hundred and fifty dollars ($250.00) per month for a two bedroom apartment to approximately one thousand and twenty-six dollars ($1026.00) per month. In other words, the tenants’ payments would more than quadruple,” read the complaint filed on behalf of the tenants.
For their role in redeveloping the building, non-profits get a 10 percent fee of the total amount financed. In this case Bridge Street was to get about $1 million as a development fee. In the meantime they were to start collecting rent from the current tenants and use that money to relocate them elsewhere – often at other Bridge Street managed properties – at their current rent as well as to pay some maintenance fees.
But the tenants, who put in both sweat and financial equity for over 30 years including dealing with the neighborhood when it was rife with slumlords and abandoned buildings, and not million dollar condos, decided to fight the takeover in court.
The city responded with either a letter or an email to Tenant leader Ernesta Thomas, saying they have delayed or canceled the closing, according to sources.
Thomas did not return several phone calls and the city refused to comment on any ongoing litigation.
