New York's Cooperative and Condominium Community
It’s a first for New York City. The West Village Houses began life as an affordable Mitchell-Lama rental complex in the 1970s, then converted into an affordable Housing Development Fund Corporation (HDFC) co-op in 2006. On Monday, the co-op’s shareholders took the unprecedented step of moving the property to its third incarnation: as a market-rate co-op.
“As a first-generation member of West Village Houses, it is exciting to see the transformation of the community I have always called home,” says Maggie Pisacane, president of the West Village Houses co-op board. “I am excited to help lead my community into this exciting next chapter.”
West Village Houses is a 42-building, 418-unit complex in Greenwich Village. When the rental tenants banded together to purchase their homes and form a cooperative in 2006, they agreed to operate as an affordable HDFC for 12 years. In return, the co-op received reduced property taxes as well as a forbearance on paying back the full balance of the original landlord’s mortgage to the city. The tenants also agreed to limit the purchase prices on resales. As a part of the original conversion, a majority of the original tenants were able to buy their apartments for $125,000 to $350,000. After Monday’s closing of the deal to move to market rate, the value of those apartments, kept low by the cap on resale prices, is expected to soar.
In 2018, after the tax exemption and resale restrictions expired, the board engaged the law firm Nixon Peabody to assist with preparing a reconstitution plan. Nixon Peabody’s team was led by partner Erica Buckley and counsel Ruben Ravago, who secured the necessary city and state approvals and conducted more than a dozen workshops with shareholders. When the board presented the firm’s reconstitution plan to shareholders in October 2019, more than 90% voted in favor of going to market-rale sales.
“This was definitely one of the most complicated transactions I’ve worked on in my career,” says Buckley, a former chief of the Real Estate Finance Bureau in the New York Attorney General’s office. “We basically had to do everything from scratch because there was no precedent. To top it off, we finalized major aspects of the transaction during the pandemic. Before the quarantine, we were meeting with shareholders in person eight hours a day. When the quarantine took effect, we rolled up our sleeves, adapted, and went virtual. At one point, we had to have over 900 shareholder documents notarized – socially distanced, of course – all in one day.”
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