On Development and Related Things

With Stuyvesant Town, you guys bid for it [in 2006].
We did. We were not in the same atmosphere as the winning bidders.

Even with a lower bid, do you think you would be regretting it or wincing if you had won?

The business plan that we had was very different than the one the current owners have. And, look, there’s a big element of this that’s just the market. … Obviously, you’re seeing the results of a lot of leverage in this case, and ultimately, I think if you look at this, there’s an opportunity here to potentially restructure the overall deal to create something that will be better maybe in the long run for everybody.

I think you can restructure and allow for certain units to be recycled and used for workforce housing and affordable, and you can have a community that’s diverse. That’s a good thing. … But at this point, it’s a private deal; it’s in private hands.

Would you consider it if it went on the market again?
We look at a lot of deals. We looked at it the first time; I’m sure we would look at it.

Why didn’t you guys look at Williamsburg or downtown Brooklyn after the city rezoned them in 2005? A lot of the city’s developers flocked there.

We looked at certain places like Williamsburg, and we said that the land prices, the escalation, the value increase over a very short period of time just didn’t make sense. … We were worried about oversupply. And at the cost basis where land was trading, we didn’t think the numbers made sense.

Was that a good decision?

It looks like it was. … When things are priced correctly in Manhattan and the five boroughs, a product gets absorbed. We have a vibrant community and people want to live here, and things will get reset and the product will get absorbed, and I think there are a lot of markets in the country you can’t say that about.

With that said, you invested in another emerging market in the city—the West Side.
It’s hard to be super-optimistic about what’s going on, but at the same time, we believe long term in New York, and you have to have a long-term view with projects like that.

Are you actually ready to sign on the dotted line [to develop over the West Side rail yards]?

Stephen’s taken issue with real estate taxes being too high. Is that really the case in New York?
We believe that the real estate tax system has to be overhauled. It has to be studied. … The increase in real estate taxes for commercial properties has been significant, … and believe it or not, the burden is being passed on to the renter. The renter is paying, at this point, one-third of their rent is going to real estate taxes.

The commercial renter?

The residential tenant.

What’s the solution?
The overall system has to be looked at. A renter is paying one-third of their rent in taxes, yet the owner is not paying the same amount of taxes, and we actually don’t really understand why that exists. We’ve asked the question, and we hope the city continues to not only study it but look at making some changes.

It’s probably a difficult time politically to get a change through, given that the city has a lot of budget gaps coming up.
Politically, I would think that the city and the state would care about the renter, and would not want a system that was unfair … and didn’t really deal with a rental building any different than homeownership.

If it were that easy, why wouldn’t REBNY be able to partner with tenant groups, who definitely are loud and have political sway?

That’s not really what REBNY does. I think it’s important that we make sure the issues are brought up, and studied and hopefully dealt with by the administration. REBNY’s not looking to go on a campaign with tenant groups.

On Development and Related Things