Garodnick’s Saga of Urban Change

His book “Saving Stuyvesant Town” is a case study of how the iconic residential community became “the new poster child for predatory equity”

| 25 Apr 2021 | 03:48

New York will be a great place, an observant New Yorker once said, if they ever get it finished.

Daniel R. Garodnick, president and CEO of the Riverside Park Conservancy, captures why our final completion date will always be sometime in the future.

It isn’t just that there will always be something new to build. It is that what we build remains a work in progress as the city constantly changes around it.

Garodnick’s case study is one of New York’s iconic residential communities, Stuyvesant Town and its companion, Peter Cooper Village. They were built by Metropolitan Life, the insurer, as housing for the generation that returned from World War II, desperate in a housing-starved city to find decent homes for their expanding families.

MetLife was eager to house them, for a reasonable profit, so long as they were white and met the test of an adequate middle-income. In a static city in a static economy, the completion of Stuyvesant Town and Peter Cooper Village in the late 1940’s might have been the happy ending to the story.

But as is clear from the title of Garodnick’s new book, “Saving Stuyvesant Town,” the completion of Stuyvesant Town and Peter Cooper Village was just the beginning of this saga of urban change, the forces that drive that change, and what residents can do not so much to resist change as to manage it.

Larger Economic Forces

At one level this is just an outsized version of the classic New York story of greedy landlord exploiting hard-pressed tenants. But without belaboring the point, Garodnick captures the larger economic forces that transformed an un-fancy, middle class housing project into the urban equivalent of a Klondike stake where great riches were waiting to be extracted.

He calls this extractive capitalism “predatory.” But the label is not nearly as compelling as his description of his own education in what was happening to this community he had grown up in and, by this point, represented in the City Council.

MetLife, perceived as a benevolent landlord, decides to cash out in the boom years of the early 2000’s. They sell Stuyvesant Town and Peter Cooper Village to the well-know New York realtor, Tishman Speyer for the extraordinary sum of $5.4 billion, most of it borrowed (“Other People’s Money” was the name of real estate reporter Charles Bagli’s book about the deal).

Tishman Speyer swiftly made clear how they planned to repay that money, unfurling banners declaring “luxury rentals” to a community that positively prided itself on being solidly, even boringly, middle class.

“I did not fully appreciate what the structure of the deal would force them to do to current residents,” Garodnick acknowledges. “I wanted to believe that well-respected New York institutional players would not resort to doing bad things to New Yorkers. I was wrong.”

His City Council office began getting calls from tenants horrified that Tishman Speyer was trying to force them out, and thus evade state rent restrictions, by claiming they actually lived somewhere else.

“Stuy Town was about to become the new poster child for predatory equity.”

Happy Part

Tishman Speyer paid so much and borrowed so much that this would likely have ended badly even in good times. But when the bottom fell out of the economy in 2008, Tishman Speyer’s plan to extract big revenue increases collapsed and the company lost control of the property to creditors.

Which, believe it or not, is where the happy part of Garodnick’s story starts.

If the villain of his tale is unconstrained capitalism, the hero is what these days would be called stakeholder capitalism, as represented by the Tenants Association of Stuyvesant Town and Peter Cooper Village.

One of the challenges of stakeholder capitalism is that it is harder to identify who should be acknowledged as a stake holder and what their rightful claims might be as compared to an investor who puts a dollar in and wants a dollar-plus out (so much of what you think about capitalism comes down to how big that “plus” is).

The Tenants Association and their principal advocate, Council Member Garodnick, offer a simple answer to the stakeholder conundrum: Declare your claim and don’t back off. By doing this they forced a shift from ownership that wanted maximum return swiftly to a “patient capital” that was willing to work with residents over the long haul to preserve the character of the community and the affordability of the apartments.

Interestingly, finding this patient capital — in the form of the investment group Blackstone — required what could be called patient politics, a commodity even scarcer than cheap housing in New York. Nearly a decade elapsed from the original sale to Tishman Speyer by MetLIfe to the later purchase by Blackstone — a period that roughly coincided with Garodnick’s tenure in the City Council.

Pushing Specific Proposals

This tenure has given him an insight that explains why so much of our politics seems so consistently shallow.

He came to office just as MetLife peddled the property. “It was obvious to me that it would have been easier to simply say no to MetLife in protest, rather than to champion a certain goal. With anger and hostility, my constituents would surely have cheered my fighting spirit, and win or lose, I would bear no responsibility for the result.”

Every voter knows politicians who have done that, and, frankly, carries some culpability every time we vote for one of them.

“Saying yes to anything, on the other hand — and certainly by proposing something myself — would mean that I’d own the outcome and be responsible for any problems that might emerge later,” Garodnick explained.

Which he did anyway, allying himself with the Tenants Association and pushing specific proposals for creating condominiums and preserving at least part of the complex for middle income renters.

The condominiums never happened but Blackstone has pledged to preserve affordable apartments. It will be some time before we know how well that worked out. Blackstone said it wants to own Stuy Town and Peter Cooper Village as long as MetLife did, which is to say more than half a century.

In the meantime, Garodnick is already out of elected office. Interestingly for such an East Side kid, he now runs the Riverside Park Conservancy, which helps maintain Riverside Park, including the newest portions created as part of restraining another Manhattan developer, this one named Donald J. Trump.

“Our story serves as a blueprint for other communities on the brink,” Garodnick says today of the Stuyvesant Town fight. “We deserved a seat at the table – and while in reality we had very little leverage, we created leverage that helped us to deliver the largest housing preservation win in NYC’s history.”

“I wanted to believe that well-respected New York institutional players would not resort to doing bad things to New Yorkers. I was wrong.” Daniel R. Garodnick