by Dick Lutz

Eastwood is going private.

The owner is moving to restructure both the building's financing and its tenant subsidies. The year-long process began last week with a formal notice sent to the State Division of Housing and Community Renewal (DHCR) and the Federal Department of Housing and Urban Development (HUD).

Aaron Silberman, President of Roosevelt Island Housing Management Corporation (RIHMC), called the plan a "win-win" in a Tuesday conversation with The WIRE.

RIHMC has scheduled a meeting for Eastwood residents for Wednesday (September 29) at 6:30, in the Chapel of the Good Shepherd, as a general-information session. Additional informational sessions are planned over the next year, and there's a phone number to call with questions: 212-206-2475.

Under the plan, Section 8 enhanced vouchers will replace current subsidies for the 870 apartments whose tenants qualify. In another 130 apartments, tenants who currently have no subsidies will experience rent increases similar to those for the City's rent-stabilized apartments, according to Silberman.

"This is a well-thought-out plan which will be a win-win situation for the residents, the Island, and the government agencies. It will enhance the quality of life for the residents of Eastwood," Silberman said. He said the General Manager of RIHMC, Doryne Isley, will lead the privatization effort, along with residents.

Earlier in the week, Isley also described the plan as a "win-win."

"Subsidized tenants will pay either their current rent or 30% of their income, whichever is greater," Silberman said in describing the financial structure for those living in the 870 subsidized units, "and the enhanced vouchers will pay the difference between that amount and market rate. Hence, [there will be] no rent increase [to the tenant]." Market rent is determined through "comparables" - the cost of similar housing. On Roosevelt Island, the market rate rents paid at Manhattan Park are likely to provide the "comps."

"The other 130 apartments, whose residents may not qualify for the enhanced voucher, will receive rent increases which will somewhat resemble rent stabilization increases," Silberman said. He added that recent increases on stabilized apartments have been 4 to 6 percent.

"This is an exciting opportunity to rejuvenate this 30-year-old building," Silberman said. "Millions will be invested for capital improvements and apartment renovations, security enhancements, maintaining the affordability for all the residents of Eastwood, and providing new subsidies to qualifying residents who don't currently receive a subsidy." He said improvements would affect the building's common areas like lobbies, but also would extend to individual apartments.

Silberman was eager to point out that the plan is important to the future of the building. "If a plan is not developed, in about ten years the Federal Section 236 contract will expire. Astronomical rent increases would be required, and most residents could find themselves displaced without any alternative program of assistance." He said that making the change now can insure continuing occupancy by current residents.

DHCR now has up to six months to respond to the notice. "HUD will set aside the funds for the enhanced vouchers" during that period, Silberman said. "We will have various notices and meetings." He explained that a contract administrator will be appointed by HUD (it could be DHCR), with responsibility for handling applications for the enhanced vouchers. That's likely to take place in about six months, according to Silberman. The enhanced vouchers are often called "sticky vouchers" because they travel with the tenant - tenants can change housing and retain their subsidies.

Over the past few months, RIHMC has been relocating some residents, "staging the building" to insure tenants qualify for HUD's enhanced vouchers. Some tenants are being required to move into smaller apartments.

"We will have many meetings simply to provide information," Silberman said. "We expect to continue to work very closely with the tenants association and the various government agencies to insure that the needs of Eastwood are entertained under this plan. The objective is to enhance the quality of life for the residents of Eastwood."

Asked about RIOC's role, Silberman said, "We have not had any discussions with the Roosevelt Island Operating Corporation. Financing is in place utilizing the current ground lease." That ground lease expires in 2032. This is different from privatization efforts under way at Westview and Island House, where the owner must get a ground-lease extension from RIOC, and face a possible increase.

The restructuring of the building will give its owners a gradual long-term increase in value. When apartments are vacated, they will generally rent at market rate. Rent increases will respond to the market. With improvements, market value will increase.

However, Silberman added, "The objective of the plan is that not one family finds itself being displaced or moving. I want to make sure that is quite clear. The focus is not on any kind of turnover. The focus has been on the residents who are in place. Our plan is all based upon the residents that are here. We are not envisioning anything outside that box. There have been no projections about people moving out. We would believe that, with the type of investment to be made in the complex, people will continue to find the Island one of the best destinations in the City, and that, with the millions of dollars being invested, Eastwood will be the housing of choice."

Silberman said the series of meetings planned to inform residents, starting with Wednesday evening's session at the Chapel, are intended to set their minds at ease. "The greatest fear that residents find themselves with is the fear of substantial rent increases. We wish to immediately provide a statement, thus providing some comfort zone to residents, that they will not find themselves being displaced by dramatic rent increases.

"The plan has two major points - the rejuvenation of Eastwood, and to provide and insure the continued affordability for the residents. The plan meets those two goals."

Silberman said that at the end of the one-year period that started last week, "as far as residents are concerned, it should be transparent, and plans will then be initiated and developed for enhancements in various areas." He said enhancements might include new windows, lobby areas, appliances, flooring. "Each apartment will be inspected, and repairs and improvements will be made."

The mortgage restructuring for Eastwood will involve paying off a $50 million State loan, but Silberman said additional amounts will go toward capital improvements. With some units going at market rate, he said, "There will be additional funds available to maintain the property at an extremely high standard."

As for the future, Silberman had this to say: "Over the last few years, we've finally started to see some true economic changes occurring, and by the time all the processes are over, I think the Island will look very different and much more exciting as an Island. I've been involved with the Island for the last 16 years, and there's been a lot of traction these last number of years and I see an acceleration of positive economic change, and I believe it is a very good thing for the Island."