Welfare No More: Another Roosevelt Island Co-op Privitizes

Roosevelt Island was once known as Welfare Island. Although they shook the unfortunate the name back in 1973, it looks like the community is taking another step to break from it’s subsidized past, The Wall Street Journal reports.

Many of the highrises on Roosevelt Island were built as  affordable housing, under the Mitchell-Lama program. In recent years, some of the co-ops have left the program, resulting in a steep price increases that pay off for tenants but make the units unaffordable. The Rivercross co-op, however, has announced a plan that in theory satisfies all parties.

In the case of the 365-unit Rivercross co-op, the board of the 38-year-old building has created a framework that will initially cap the sale price of 80% of the units at $500 per square foot.

Of that $500, the building will take a “transfer fees” of $150, which will allow it to subsidize the remaining 20% of units in the building, keeping prices near Mitchell-Lama levels.

In theory, everyone should be happy: residents keep paying relatively low rents and the building gets out of the beleaguered Mitchell-Lama program, allowing more funds to be freed for much-needed renovations. Not everyone is convinced, though.

Rivercross took out a $50 million dollar mortgage which will be used, among other things, to pay for the building’s $15 million facelift. Current residents feel they have to agree to the pseudo-privatization to cover the loan.

But some residents expressed concern that the co-op plans on using the transfer fee to pay down the $50 million. Having already taken out the loan leaves them little choice but to go ahead with privatization, these people say.

It’s a free market, people. Get with the times, or go protest on Wall Street.

eknutsen@observer.com