January 14, 2006

Sheldrake Deal on Westview in
Jeopardy Over Missed Payments
Lucido Meets With Tenant Group About Ownership Talks
by Dick Lutz

The Sheldrake Organization has missed two payments in its deal to acquire Westview. Its plan to lead the removal of the building from the Mitchell-Lama program by switching its mortgage to private hands may be at or near its end, according to sources.

Opher Pail, head of the Westview Tenants Committee that has been butting heads with Sheldrake over the privatization and resident-ownership question, told The WIRE on Thursday, "I’m very happy about it."

Pail and other committee members met in the City on Wednesday with Charles Lucido, whose company is still the owner of Westview along with a partner foundation.

Lucido responded to questions from The WIRE about the matter, saying, "The Sheldrake situation is not irreparably dead, but it looks like it is ending. It’s in Sheldrake’s hands to revive it." Meantime, he said, the missing of payments due in November and January means that his ownership group is able to discuss a resident-ownership plan with Westview tenants. Pail said, "We are looking forward to meeting with Chuck Lucido very soon again."

The Westview tenant organization had challenged plans to take the building out of Mitchell-Lama by pointing out that the Island master lease, under which New York State controls Roosevelt Island (which is City property), calls for specific proportions of housing affordability in Northtown Phase I (the "WIRE" buildings, consisting of Westview, Island House, Rivercross, and Eastwood) that would be distorted without a specific plan to preserve affordability.

Asked if the ownership group might now start working on a plan for resident ownership of Westview apartments, Lucido said, "That would be the natural route to take – to pursue a resident ownership plan. Westview has the Attorney General’s permission to negotiate with the owner, but [before that letter and while Sheldrake was in the lead] I could never enter into those discussions. In effect, [on Wednesday] I was giving them [the Westview tenant organization] an advance alert that this would be the time for us to talk. They are eager to discuss the possibilities." Lucido said an important next step is to prepare a comprehensive list of all the areas for discussion.

Meanwhile, Stuart Saft, the attorney representing Island House tenants in negotiations with Sheldrake told a meeting of residents on Wednesday night that, "The negotiations have been going the wrong way. Each time we have a conversation, the conversation is a little less acceptable to all of us. So as of the moment, we do not have an agreement with Sheldrake."

He continued, "The last thing they attempted to do was weaken the protection we had [already] negotiated for [non-buying] tenants, and I’ve taken the position that that’s unacceptable." He said that protection for renting residents must be negotiated first in such deals, because after a tenant ownership plan is worked out, incentives decrease for the owner to discuss such protections.

Saft told an audience of about 60 Island House tenants, "We know that the closing of the acquisition of the property [by Sheldrake] was put off until after the end of the year, and has been put off again. We don’t feel it’s necessary to chase after Sheldrake in order to make a deal if the deal is not an acceptable one. They know that we have alternative courses of action and we know there are alternative courses. The [tenant’s] board and I have negotiated in good faith, but we still don’t have something we feel is acceptable to bring back to the tenants. We’re just not there yet."

Charles Lucido, who also heads the consortium that owns Island House, told The WIRE that Sheldrake’s failure to meet payment schedules for Westview does not affect Island House directly, though "the situations are similar." He said his arrangements with Sheldrake involve separate contracts – a separate set of terms for each building.

Saft presented few specifics in the Island House meeting. In fact, he ended his formal presentation by saying, "I think I’ve been sufficiently vague for one evening." He had explained that, in a public forum, he didn’t want to reveal anything that might adversely affect negotiations. He said that on the tenants’ behalf, he is holding off on assisting Sheldrake in any discussions with the Roosevelt Island Operating Corporation (the Board of which must approve any extension of a ground lease for buildings on the Island). "If you were a pessimist or paranoid you might think that it’s possible that part of the negotiation had to do with getting our cooperation in negotiations with various State agencies, but that was not something we were prepared to do until we had a signed agreement that was acceptable to the tenants."