Labor Has Pains In Learning Landlording

schuerman edott1h Labor Has Pains In Learning LandlordingIn the sweaty days of midsummer, labor union representatives were shuttling from Brooklyn to Manhattan to Washington, D.C., trying to put together a last-minute deal to buy Starrett City, the largest subsidized housing complex in the country. As the days ticked down until an Aug. 7 deadline, they had to convince both the controversial businessman who had won the right to buy the building, and the politicians, regulators and housing advocates who had been blocking the sale, to let the unions take over.

It soon became clear to the labor chiefs that they were getting nowhere. Convincing the bidder, David Bistricer of Clipper Equities, to sell the contract was not so much the problem, they said. Getting the opponents of the sale to drop their opposition was.

“We scared people there because they thought we were paying too much for it, and some of the community organizations out there felt our plan didn’t work for them,” said Ed Ott, the executive director of the New York City Central Labor Council, a coalition of 400 AFL-CIO locals representing 1.3 million members. “In the end, we stood down.”

The Starrett intervention will not be the last time that unions try to enter in the real estate market, Mr. Ott said, and it certainly wasn’t the first. But the council’s attempt here, as with Stuyvesant Town-Peter Cooper Village 10 months earlier, did show the difficulties labor is facing as it tries to take an aggressive role in keeping New York affordable to its members and other members of the middle class.

Unions have been building affordable housing in New York since the 1920’s, when the aim was to get their members out of dilapidated tenements by creating dozens of solid, unadorned mid-rises to be owned by the very people who lived in them. The Amalgamated houses, Penn South, Electchester, Co-op City—all were founded, at least in part, by unions. As the city itself fell on hard times, and some of these complexes met financial troubles, the interest in creating new housing waned.

In the 1960’s, national unions set up a fund, now called the AFL-CIO Housing Investment Trust, in which pension funds, including those run by unions, invest. Today worth $3.66 billion, it has financed 80,000 union-built homes around the country over the past 40 years, including 11,000 in the past six years in the five boroughs, according to Carol Nixon, director of the trust’s New York office.

And yet financing affordable housing is perhaps not the problem that it used to be, according to Brad Lander, the director of the Pratt Center for Community Development and an affordable housing advocate. That fact has left unions searching for the right role to play.

“I’m enthusiastic about the idea of them playing a political role in strengthening affordable housing policy and regulation, and in creating good jobs in New York,” he said. “But I don’t think that it’s capital that is going to make a difference.”

Mr. Ott admits readily that he faces a steep learning curve. The labor council’s first attempt to buy real estate came last fall. That was when Mr. Ott, a former policy director for the Central Labor Council who had not yet been confirmed as permanent executive director, learned from his housing director, Kevin Gallagher, that Stuyvesant Town and Peter Cooper Village, with their 11,200 units, were up for sale.

“I had lived in Stuyvesant Town at one point for 12 years,” Mr. Ott said. “I knew it would be a huge fight that would reinvigorate the whole debate over affordable housing.”

In three weeks, Mr. Ott said, the labor council put together a $4.5 billion bid with other investors, including the AFL-CIO’s Housing Investment Trust, and aligned itself with Stuyvesant Town’s tenants association, which had been trying to find a way to preserve the mixed-income nature of the complex.

“They both were willing to be participants in the bid and also gave us great credibility in the marketplace,” said City Council Member Dan Garodnick, a resident of Peter Cooper Village. “Knowing they were behind the effort made this more than just a ragtag group of tenants trying to do the impossible.”