When David Beat Goliath: The Stuy Town Story –And What It Means in Today’s New York
In his forthcoming book Saving Stuyvesant Town (Three Hills -Cornell University Press), former New York City Councilman (and Stuyvesant Town native) Garodnick writes about the 2006-15 campaign he helped lead to preserve a stubbornly middle-class enclave on Manhattan’s East Side. Urban Matters asked him to relate that tale to the challenges facing pandemic-era New Yorkers.
Urban Matters: In a decisive sense, residents of Stuyvesant Town were saved when your team proved in court that rent stabilization covered far more of their homes than the developer who had bought them, intending to empty and flip them at market rate rents, at first believed.
Fast forward to 2021, and new possible threats to low- and middle-income renters, like predatory purchase of pandemic-stressed properties. Are existing legal protections sufficient?
Daniel Garodnick: Unfortunately, tenants are always vulnerable to predatory acts by landlords seeking to displace them and make a quick buck by jacking up rents. That said – in the case of tenants with rent protections, the landscape is very different today than during the years we were fighting to save Stuyvesant Town. Most importantly, in 2019 New York State legislators changed the law to make rent stabilization permanent in New York, which means that it will not be challenged and weakened by the real estate lobby every time it comes up for a renewal. Also, legislators eliminated key tools that gave landlords incentives to try to push rent-stabilized tenants out of their apartments. The most important loophole they closed was vacancy deregulation, which allowed landlords to deregulate apartments when a tenant left (or died), creating strong incentives for landlords to push tenants out.
UM: Mayors Michael Bloomberg and Bill de Blasio each had ambitious affordable housing plans. Your City Council tenure overlapped theirs. What do you think each achieved? What could the mayor we elect this year learn from what they accomplished, and didn’t?
Garodnick: The Bloomberg Administration made significant strides in affordable housing by connecting re-zonings to inclusionary housing. Simply put, it gave developers an opportunity to earn more development rights if they included affordable housing in their projects. Because it was voluntary, it had limitations – but it was a significant step forward. The de Blasio Administration and City Council (in a change I was proud to vote for) made it mandatory, but still, only in areas subject to re-zonings. The next mayor will have to build on those successes and use tools to push for affordable units at a variety of levels.
Some mayoral candidates are proposing "universal affordable housing," which would require 25 percent of housing in any new development with 10 or more units to be affordable, regardless of whether there is a rezoning contemplated. Such concepts are bold, but would likely face legal challenges on Constitutional grounds. Other proposals have been more general, including expanding rental subsidies at the local, State, and Federal level. All candidates are critiquing the “lack-of-affordability” of our affordable housing programs, and demanding that when the City offers subsidies, the units need to be affordable to the most vulnerable New Yorkers. They’re correct to push for deeper discounts in affordable housing programs. But I would caution: The Stuy Town story reminds us we need affordability at all levels – including the middle class.
Saving Stuyvesant Town shows that a mayor can demand affordable housing protections in private real estate transactions even where no City program (or rezoning) is at play. I hope the next mayor – whoever it is – uses their voice and muscle in support of creating and preserving affordable housing, even where the City does not have a formal role.
UM: A veritable Who’s Who of high-powered developers, bankers, lobbyists, lawyers, and publicists parades through Saving Stuyvesant Town. You lived this story; what did you learn, and what surprised you, about the extent, and limits, of their influence?
Garodnick: When Met Life sold Stuy Town in 2006, I was surprised by the speed of the transaction to Tishman Speyer and BlackRock. The entire sale of a $5.4 billion asset – home to 30,000 people, with 11,200 units – took a mere three months. The purchase of a single studio apartment ordinarily takes about that same amount of time.
Over the years, a colorful cast of characters showed up to try to compete with, or partner with, the tenants. Stuy Town was an important trophy that lots of people had their eyes on: hedge fund billionaire Bill Ackman, coop converter Gerald Guterman, most of the city's biggest real estate developers, and even the People’s Republic of China! I was shocked by the lengths that they would go to move the deal in their favor – whether through directly attacking the tenants or private arm-twisting, if they thought it would work.
I was also encouraged by the fact that important institutions like the law firm Paul, Weiss and giant restructuring advisors Moelis & Company stepped up to represent the middle-class residents in Stuy Town who really needed their help.
Ultimately, I was both surprised and pleased that – over the course of a decade – the tenants were able to create leverage where they truly had none, and demand that their interests be protected. We created an outsized political influence that could not be ignored.
UM: Such David vs. Goliath battles over zoning and development are staples of New York City life. Lobbying rules; public campaign financing; public land use review procedures: these and other reforms are meant to level the playing field in these fights. Do they?
Garodnick: Yes, they do. But that does not eliminate the influence of big business in New York City, which can always be felt. When they have the ability to spend endless sums to hire public relations professionals who can influence press coverage, to pay for grassroots organizing, to send out mailings to support their own position and to pressure elected officials, to hire lobbyists to push their interests, or to raise funds for or against political candidates (even indirectly), they will always have an outsized influence in the debate.
UM: While you were on the City Council you also played a leading role in rezoning East Midtown, with the idea of creating more, and more modern, commercial space in a better-planned business district. But given the pandemic slump in office space and likely long-term trend toward remote working, will a bigger, better East Midtown ever happen? Are properties there going to go residential instead?
Garodnick: People are social creatures and want to get back to in-person work, as soon as they perceive it as safe. One might be tempted to try to change this into a residential district, but that would be a mistake. All evidence suggests East Midtown will continue to develop and flourish as a commercial district that generates 10 percent of the city’s property tax revenues. East Midtown’s rezoning has been successful well beyond our imagination, because businesses are demanding Class A office space. That has not changed as a result of Covid-19. Plans were recently released for a new commercial building to replace the Grand Hyatt at 42nd Street and Lexington Avenue, for example. The pandemic slump is temporary – to the extent that it will impact commercial buildings, I expect it will relate to their design, safety mechanisms, technological features, and the easiest possible access to mass transit. All of those things are present with new commercial buildings in East Midtown.
UM: One last question about Stuy Town: Its mid-rise construction and generous open spaces are pretty unusual on the East Side. Especially when the urban planning mantra for creating affordable housing today is, build higher and higher, is Stuyvesant Town an anachronism? Or does it have relevance for the future?
Garodnick: Actually, Stuyvesant Town is an early example of building higher and higher to accommodate affordable housing. Remember, to accommodate the 12- story buildings of Stuy Town, Met Life demolished the low-rise tenement housing between 14th and 23rd Streets in the former “gashouse district” of the early 20th century. We continue to have a housing emergency in New York City because our vacancy rate is so low. We need to build more affordable housing, and that could very well mean allowing certain zoning sites to build higher to accomplish that goal – much as it was in the 1940s with Stuy Town.
Photo by Matias Campa