Effort To Sell Starrett City Is Down To Single Bidder



– December 20, 2008 –

The owners of Starrett City, the sprawling low- and moderate-income housing complex on Jamaica Bay in Brooklyn, are negotiating with the finalist in the bidding to buy the property: a group that includes the Christian Cultural Center, the Cogsville Group, the Clarett Group and the nonprofit Housing Partnership Development Corporation.

It does not mean that a deal will be struck in what has become a closely watched two-year effort to sell the 5,881 apartments in 46 towers at Starrett City, the nation’s largest federally subsidized housing development.

But the owners of the 140-acre complex, Starrett City Associates, did eliminate the only other rival, a group led by Westbrook Partners and the New York City Central Labor Council, which had offered just under $600 million on Thursday. The owners then opened talks with the second group, whose bid was as high as $700 million, real estate executives involved in the negotiations said.

“This is positive movement in a difficult environment,” said Donald Cogsville, president of the Cogsville Group. “It’s a unique opportunity to preserve affordable housing at what is already a model community.”

Starrett City, which sits between East New York and Canarsie, has its own shopping center, post office, power plant, synagogue and churches.

The Christian Cultural Center, a frequent stop for New York politicians on the campaign trail, is a large evangelical church next to Starrett City. The Clarett and Cogsville Groups are developers and would be involved with the shopping center and any developments on the property in the future.

Martin J. McLaughlin, a spokesman for Starrett City Associates, said that the company would be sitting down with the Cogsville partners “to discuss their bid.”

Frank Marino, a spokesman for Westbrook Partners, acknowledged Friday that the group was out of the running. He said it had a reasonable proposal that “gave the current owners a significant profit and also ensures that the property remains affordable in perpetuity.”

Last year, city, state and federal officials, along with tenant groups, blocked the owners’ attempt to sell Starrett City for $1.3 billion to a real estate investor, David Bistricer. They said that a high price tag for the complex would force the new owner to remove existing residents in favor of higher-paying tenants to make a profit.

The debate over the sale took place during a real estate boom that drove rents skyward and reduced the city’s supply of affordable housing for poor and working-class residents.

Earlier this year, Starrett City Associates began a second effort to sell the complex, after signing an agreement with Senator Charles E. Schumer, Democrat of New York, and state and city housing officials ensuring that the sprawling development remained a haven for working and middle-class families.

If a deal is struck, it would amount to a rarity in a gloomy period for the real estate market. The boom has come to a screeching halt, with layoffs, falling rents and lenders’ reluctance to finance any real estate projects. But Starrett City could be the exception, primarily because the rents there are close to market rate and effectively guaranteed by government subsidies. Still, the owners may ultimately decide that they are not getting enough money.


Posted in The Cogsville Group News