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Manhattan Plaza Tenant Turmoil

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In 1977, when the now-defunct New York Board of Estimate approved plans for a "limited-profit housing company" called Manhattan Plaza, the entertainment industry hailed the decision, since it guaranteed that 70% of the apartments would house performing artists meeting certain criteria, such as income levels.

Nearly 30 years later, Back Stage has learned that Manhattan Plaza tenants are facing a new owner of their 1,527-unit, two-building complex, and have multiple reasons to be concerned. There are some issues stemming back to the first days of the building's tenancy, such as the fact that, according to the Manhattan Plaza Residents Alliance (MPRA), at no time have a full 70% of the units actually been occupied by performing artists.

There are also more complicated issues—like the growing possibility that rents could rise dramatically throughout the complex. In addition to many actors, through the years Manhattan Plaza has housed everyone from "Seinfeld" co-creator Larry David to Grammy Award winner Alicia Keys.

Alliance President Susan Johann, a noted art and commercial photographer, told Back Stage that the fight to reach 70% started when Aquarius Management, the original owner, "siphoned off 168 apartments for its own use" as soon as the building began to accept tenants. According to documents provided to Back Stage, the mandated demographics for Manhattan Plaza are 70% performing artists, 15% elderly, and 15% community residents "residing in substandard housing." By removing 168 apartments from the roster, "1,359 apartments are left, 70% filled with performing artists. So it's really 70% of 90%, if you will—those 168 apartments have always been reserved for whoever the management felt like putting there."

Johann acknowledges that the struggle to reach a genuine 70% figure has outlasted mayors, borough presidents, and scores of elected officials, and that tenants' actions were forcefully thwarted by Aquarius through the years. But now that Manhattan Plaza is under new ownership, she says, the fight will only intensify.

The MPRA formed earlier this year after news broke in The New York Times that the complex was being sold to the Related Companies, a 32-year-old real estate conglomerate that develops, finances, and manages government-assisted rental apartments. The Related Companies is the third-largest owner of multifamily rental apartments in the country. Other than the usual apprehensions any tenants might have regarding a new landlord, the manner in which the sale was announced and communicated to the residents, Johann says, was disturbing.

"We had no warning, and then there was a January 13 article in The New York Times saying the Related Companies bought it—it turns out they were in secret negotiations for a year. Well, Manhattan Plaza is supposedly a public-private partnership; the federal government has spent $430 million over the last 20 years [in subsidies] for this $90 million building." The alliance's website, www.manhattanplazaresidents.org, states that at a Jan. 24 meeting officially telling the tenants about the sale, "verbal guarantees were given that nothing would change.…" Johann disputes those assurances.

"For one thing, the Related Companies immediately decided to jack up rents to push out the businesses that have made Manhattan Plaza their home for years. The florist, the smoke shop, the deli—they won't allow any new leases. And for what—another Starbucks?"

More worrisome is the Related Companies' intention to enter into the "Mark Up to Market" program operated by the Department of Housing and Urban Development (HUD). Currently, Manhattan Plaza is part of HUD's Section 8 program—federal subsidies that help keep rents at below-market rates. "Mark Up to Market," Johann says, "gets the government to pay the difference between what we now pay and up-to-market rents."

Entering into the program requires the filing of a rent comparability study, which essentially argues that the fair market rates of the dwellings are higher than the combined total of current rents and subsidies. A copy of the study, obtained by Back Stage, may prove eye-opening to Manhattan Plaza renters. At market rates, a 425-square-foot studio is fair-market-priced at $1,700 a month. A 975-square-foot one-bedroom is $2,850; a 1,275-square-foot two-bedroom is $4,200—that is, as the study says, if tenants "were not receiving rental subsidies and rents were not restricted by HUD or other government agencies."

Is it only for higher profits that the Related Companies wants to enter into the program? The alliance's website says: "[The Related Companies' chairman and CEO] Steve Ross is a financial partner of Deputy Mayor Dan Doctoroff, the man behind the push for a West Side stadium for the Jets, a corridor of office skyscrapers, the expansion of the Javits Center, and the 2012 Olympics." Sensing that Midtown West property values could rise should any of these projects happen, "key players" of the Related Companies held a March 9 tenants meeting to discuss entering into the HUD program and made it "clear through remarks by both HUD officials and [the landlord] that Related's willingness to maintain Section 8 at Manhattan Plaza was contingent upon implementation" of the program. That could, in effect, "raise the ceiling rents of Section 8 tenants," and that would mean "huge increases in rent for a number of tenants."

Two phone calls to the Related Companies by Back Stage yielded mixed results. The first went to a general mailbox and was unreturned. Upon the second call, a receptionist said that Howard Rubenstein Associates, a public relations firm, handled press inquiries for the Related Companies, CEO Stephen M. Ross, and Manhattan Plaza. A subsequent call to Howard Rubenstein Associates was pending at press time.

Residents Ready to Rumble

In April, the MPRA retained the services of a lawyer, Jack L. Lester, who issued a memo to the tenants of Manhattan Plaza. "I have been retained…to research and investigate the legal rights of all Manhattan Plaza tenants as a result of the new Owners' announced plans to alter your rent structure," it reads. "If necessary, I am authorized by the MPRA to pursue available legal remedies…. MPRA will seek full statutory compliance by all parties involved in rent proceedings."

And on June 14, the MPRA issued a letter to a list of elected officials, including Mayor Michael Bloomberg, New York State Attorney General Eliot Spitzer, U.S. Sens. Charles Schumer and Hillary Clinton, and City Councilwoman Christine Quinn.

The letter reveals that the problem is not so much that Aquarius Management "defrauded taxpayers by allocating 168 apartments at Manhattan Plaza to friends and associates" but that "[the] Related Companies has purchased Manhattan Plaza and intends to continue the practice."

Johann says the MPRA will continue to "object to the Related Companies getting into this program and to holding 168 apartments like some secret list. There are performing artists, musicians, and stagehands who have applied and stayed on the list for years and haven't gotten in. There are people who don't fall strictly within the income guidelines and don't get in. But these real estate people get to put whomever they want into 168 apartments? After all these years, what do we have here? What do they want, a class-action suit?

"It's like we have a village in a great big village, and we're a tiny portion of it making noise," she concludes. "On the other side, you have developers that are powerful and politicians that are powerful who receive campaign contributions. Steve Ross is one—he put together the deal for the AOL Time Warner building. You're talking about a major wheeler-dealer. So we can make enough noise to stay here and make sure that rents don't 'Mark Up to Market.' But we're going to lose the flavor of the neighborhood."

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