Impending IPN Sale Stirs Tenant Fears By Ronald Drenger Fear spread quickly through Independence Plaza last month with the news that IPN’s owners had reached a tentative deal to sell the three-building residential complex on Greenwich Street. Tenants worry that their rents, now strictly regulated through a government housing program, are poised to skyrocket beyond their reach.   The prospective buyer is Laurence Gluck, principal of Stellar Management, who owns a variety of commercial and residential properties in Manhattan, including at least two apartment complexes that he withdrew from government housing programs after purchasing them in 2000. Gluck informed Neil Fabricant, president of IPN’s tenant association, in a Sept. 3 phone call that he was under contract to buy IPN from the Cohn family, which controls Duane Street Associates, the complex’s owner. At a Sept. 12 meeting with the tenant association’s executive board, Gluck said that he intends to pull IPN out of the state Mitchell-Lama program, which keeps rents below market levels. According to Fabricant, Gluck said he wanted to protect “poor” tenants, but at the same time “made it clear that he intends to get all the rents as close to real market value as the law will allow.” “It’s scary because we don’t know who this person is,” said Wendy Most, a 17 year tenant. “We’re dealing with a landlord and landlords want to make money. They don’t really care about tenants.” IPN’s tenant association plans to hold a meeting on Oct. 16 at 7 p.m. at the Tribeca Performing Arts Theater in Borough of Manhattan Community College to discuss the prospective sale and buyout. The Mitchell-Lama program, begun in the 1950’s, encouraged the construction of affordable housing by offering developers tax breaks and low mortgage rates in exchange for a cap on profits and below-market rents tied to incomes. But an owner can withdraw, or “buy out,” of the program after 20 years, either keeping apartments as rentals or converting them to condominiums or co-ops. IPN had an additional time requirement but became eligible in January to be removed from the program. Approximately 3,500 tenants live in 1,330 apartments in IPN’s three 39-story towers, with a large population of seniors on fixed incomes who are particularly worried about the possibility of being forced from their homes or losing government rent subsidies. Gluck did not return several phone calls seeking comment. Harold Cohn, managing partner of Duane Street Associates could not be reached, and his nephew, Harvey Cohn, manager of Hudson River Management, which runs IPN, also did not return phone calls. But William Wagner, a real estate broker who is a longtime consultant for the Cohns and who brokered the deal, called back on Gluck’s behalf. “There will be rent increases for people that can afford it,” Wagner said. “But Mr. Gluck is not looking to throw people out or hurt moderate income people or elderly people.” Low-income tenants, he said “will be well protected and will probably stay with their current rents.” “There are a load of government programs for low-income tenants that will be examined prior to coming out of the [Mitchell-Lama] program,” he said, but declined to give specifics. Carol Abrams, a spokeswoman for the city’s Department of Housing Preservation and Development (HPD), the oversight agency for many of the city’s Mitchell-Lama developments, said many low-income tenants might be entitled to government rental assistance after a buyout. Wagner said the rent increases would be roughly equivalent to those negotiated last year at Waterside Plaza, where tenants had challenged the effort by the owner, Richard Ravitch, to buy out of Mitchell-Lama. In exchange for property tax breaks, Ravitch agreed in the buyout settlement to cap rent increases for existing tenants at 9 percent the first two years and 7.5 percent every year after that. Fabricant has called that settlement “a bad deal.” IPN’s sale must be approved by HPD and the federal Department of Housing and Urban Development. Last month, HPD was reviewing the proposed change of ownership, but there is no deadline for a decision, Abrams said. If the sale is approved, Gluck must get HPD’s approval for a buyout, which requires at least a six-month review. Wagner estimated that Gluck would assume title to IPN in the early or middle part of next year and that the buyout will take up to two years. At some other city Mitchell-Lamas, buyouts have been stalled for even longer by tenants’ legal challenges. “I don’t anticipate litigation,” said Wagner. “If the tenants want to sit down on an amicable basis, Mr. Gluck is ready to work with them.” He said Gluck would meet with tenants during HPD’s review of the sale. The tenant association is rounding up political support. Fabricant met last month with City Councilman Alan Gerson and city officials and planned futher discussions. Gerson said in an interview that he was talking to the Mayor’s office, HPD and other agencies about devising a government-supported deal that would give the Cohns fair market value for IPN, equivalent to what Gluck is offering, while preserving affordable rents. Such a package could involve tax credits, loan guarantees, grants, subsidies or bonds. One option, Gerson said, is “a tenant-led buyout, which in effect would transition IPN from a Mitchell-Lama rental to the equivalent of a Mitchell-Lama co-op.” He hopes a deal could be funded in part by the Lower Manhattan Development Corporation, which is overseeing the redevelopment of the World Trade Center site and the Downtown area. Earlier this year, the Cohns rebuffed the tenant association’s request to negotiate a similar arrangement. But Gerson thinks a deal is possible. “I’m very encouraged by commitments expressed by Mayor Bloomberg’s office and the LMDC to the preservation of affordable housing, and I can’t imagine how that commitment would not translate into preserving one of the biggest complexes near Ground Zero.” Wagner was skeptical that a package could be put together quickly enough, and said Cohn and Gluck were unlikley to scrap their deal anyway. “Mr. Cohn is under contractual obligation to convey title upon approval of the sale,” he said. “Mr. Gluck wants the property and he’s not likely to walk away. He put in an enormous amount of work and time to get financing in place and made commitments, and you don’t just throw that to the wind.” Two years ago, Gluck bought Phillipse Towers, a three-building, 546-unit state Mitchell-Lama development in Yonkers, and withdrew it from the program. The complex was managed by the Cohns, who had previously owned it. Tenants there also feared rent hikes, said Beverly Brown, the tenant association president, but the complex, built in the 1960’s, fell under rent stabilization protection. After the buyout, whatever existing tenants were paying under Mitchell-Lama, including surcharges, became their base rents. New tenants are charged market rates. Gluck and Joseph Chetrit of the Chetrit Group also bought Park West Village on the Upper West Side from Helmsley-Spear for $122 million in 2000. That complex, which opened in 1961, also became rent stabilized after the owners freed it from government regulations similar to Mitchell-Lama’s. But tenants there have been on a rent strike since April, complaining of poor building conditions, particularly chronically broken elevators, and neglect by the new landlords. They were close to a settlement last month. “We’re convinced, though we can’t prove, that when they bought the property their intention was to get as many existing tenants out as possible,” said Vivian Dee, president of the tenant association. “They make minor improvements to vacant apartments to get the rent over two thousand dollars so they’re no longer rent-stabilized.” In addition, 21 new tenants have filed rent overcharge complaints with the state against the owners, she said. Under state law, developments that are withdrawn from Mitchell-Lama become rent-stabilized if they were built and opened for occupancy before Jan. 1, 1974. Construction of IPN was completed after that date, and Wagner said the complex will not fall under rent stabilization after a buyout. But Fabricant said the tenants may be able to make a case that occupied apartments should be rent stabilized. “It’s going to be an issue that will only be resolved through litigation, if it comes to that, because there are some unclear legal issues.” In any case, he added, “We’re getting ready to fight.”