Tuesday, April 29, 2008

Noted Debtor Veronica Hearst Sells Upper East Side Co-op 'at Top Price'

Noted Debtor Veronica Hearst Sells Upper East Side Co-op 'at Top Price'
by Max Abelson
April 29, 2008

The news this week that a building super was keeping mail-order baby chickens at his luxury U.N. Plaza condo wasn’t nearly as staggering as the news that a big-name widow had to sell her Fifth Avenue apartment to settle serious debts.

On Friday, The Observer’s Web site reported that Veronica Hearst, who married the late Randolph Hearst when he was in his 70s, after she was married to a Venezuelan leather goods mogul, would be selling off her co-op at 4 East 66th Street for around $30 million.

“It’s anticipated that the debts she’s incurred will be satisfied shortly,” a source said then, maybe referring to a reported $45 million she owes the lender New Stream Secured Capital. (The February foreclosure auction of her 52-room villa near Palm Beach, which sold for $22 million, helped, too.)

But at co-op buildings like Ms. Hearst’s, where deals are done in cash—without mortgages—and owners are often supposed to have maybe $100 million in liquid assets, fire sales simply don’t happen. “You find that people at River House are rather serious and not as exposed to the vicissitudes,” Ambassador Donald Blinken said last month about his co-op.

Even though the sale happened without an official listing, which means it might not have gotten full market price, Ms. Hearst’s neighbors don’t seem to be panicked. When The Observer called Lewis Sanders, chairman and CEO of AllianceBernstein and the co-op board’s president, his wife got on the phone.

“It’s a triple-A-plus building!” she said. “She has a gorgeous apartment and it’s sold at a top price. … And that’s all that can be said.”

Despite the board’s all-cash rule, New Stream comes up in co-op mortgage filings; a financing statement from September even says Ms. Hearst is indebted to a Georgia lender named Chapes-JPL. It isn’t clear if her co-op, or maybe jewelry, was taken as collateral. “Do you live in New York, Miami, Los Angeles, Las Vegas and need money fast?” its Web site says. “If so, Chapes-JPL will do loans for out-of-state customers.”

If Ms. Hearst had been forced to foreclose on her co-op shares, would any hoi polloi auction buyer have been able to move in? “A co-op board is not required to accept anybody,” said John Sicree, the building’s managing agent, who wouldn’t discuss Ms. Hearst.

It isn’t clear where the widow and her reported housemate, socialite daughter Fabiola Beracasa, will go in the meantime. “She’s decided to move to another residence,” said Ms. Sanders, who doesn’t know who the Hearst buyer will be. “You really don’t see people. This is like living in a building alone, as opposed to living with others,” she said. “Affluent people prefer that.”

Getty Images

Veronica Hearst.

Chicken coop in 100 UN Plaza

I'm speechless.

New York Post
April 29, 2008

There's fowl play going on in the basement of a tony East Side high-rise that dozens of diplos call home.

Building super John Hyranyaz, 62, has been mail-ordering batches of baby chickens - and secretly stashing them in what has become a wild-kingdom way station inside ritzy 100 United Nations Plaza, across from Trump Tower.

The animals stay put in their makeshift, subterranean pen of plywood and duct tape - unbeknownst to many tenants, who can shell out millions for their pads above - until Hyranyaz transports them to his farm in upstate Binghamton.

"I'm raising chickens because I plan to retire," the unabashed super told The Post yesterday. "The Post Office sends the chicks here. These are mail-order chicks."

Hyranyaz said he has ordered and housed other creatures at the 50-story condominium complex, too. "I got bunnies. I got chicks. I got geese. I live here. I get them all the time. I used to have a cat, but somebody stole it in the building," the super said.

He denied one tenant's claim that he has been raising the chicks here.

"Everyone sees them, so they think I'm raising them. I keep them in a box overnight, and then I take them to the farm," he said.

But Hyranyaz seemed to contradict himself on how long he keeps his peeps in the building's basement.

He said he received his most recent shipment "Thursday or Friday, and I'll be taking them to the farm."

Before speaking with Hyranyaz, a Post reporter was taken to the basement by a tenant to see the super's coop. More than 50 tiny, brown-and-white mottled chicks were chirping in the pen.

They were being kept warm by a small heat lamp, and a bag of chicken feed lay nearby.

Later, when asked about the chickens, Hyranyaz cried fowl.

"They were here for a few days, but they are not here [now]," he said.

He promised to take the reporter to the basement to see for himself - then disappeared and didn't answer his phone.

A Health Department spokeswoman said it was not illegal to keep chickens in the city, only roosters.

The pricey high-rise at East 40th Street and First Avenue was once home to such notables as Steve Florio, the now-deceased ex-CEO of Condé Nast Publications, and is a favorite among diplomats, given its prime location near the United Nations. Two-bedroom condos there are being advertised for up to $1.8 million.

"I'm speechless. My God, I don't know what to say," one resident said. "Are you sure you have the right address?"

SHELL SHOCK: Dozens of baby chickens were living...

yesterday in the basement apartment of super John Hyranyaz at glitzy 100 United Nations Plaza , where condos go for millions.

Monday, April 28, 2008

Sunday, April 27, 2008

Cars evicted from Apthorp parking garage

Don't let this happen at your building.

New York Post
April 27, 2008

Tenants are being forced out of the Upper West Side's famed Apthorp apartments - and now BMWs and Bentleys are, too.

More than 100 cars were evicted Monday night and moved to other parking lots after a city building inspector, responding to a complaint, issued violations for dangerous conditions in the complex's 117-space garage.

Owners, who fork over $680 a month or more for the indoor spaces, were told that their cars could be brought to them within an hour's notice and left waiting on the street in front of the garage, but they were not informed of exactly where their cars had been relocated.

"We pay more to park in the garage per month than some people pay to rent an apartment," said one car owner unhappy about the parking arrangement.

Gilbert Rodriguez, manager of The Apthorp, said repairs could take several weeks or longer. The city identified the problem as cracked concrete and a sagging floor slab.

The limestone building, which takes up an entire block from West End Avenue to Broadway between 78th and 79th streets, has been home to Al Pacino, Rosie O'Donnell and newsman Steve Kroft.

Ronald Blumer, co-chair of the tenants committee, estimated that about 50 of the building's 163 apartments were empty as the landlord has hiked rents for tenants without regulated apartments.

For some, balconies and terraces are storage spaces in the sky

This article gave me a few ideas. First, don't let your building's balconies/terraces get as ugly as the one pictured in Queens. They make your building look horrible. Do whatever you can to enforce your building's rules about outdoor aesthetics. If your building doesn't have these rules, create them. Beauty will increase everyone's property value. Second, if your building doesn't have these outdoor spaces, consider adding them. This could be as complex as adding balconies where there weren't any before, or as easy as converting existing roof setback spaces into terraces. Finally, though the article didn't touch on it, roof space is also valuable outdoor space. Consider converting your roof into a community space. Remove useless penetrations to create a wider open space with less objects for people to dodge, put a roof deck down (typically wood planks or paver stones), build a garden or other green space, or even sell portions of the spaces as private roof cabanas.

The New York Times
April 27, 2008
The High Life

IN the real estate market, outdoor space is gold. It’s expensive, it’s rare, and it can add enormous value to a home.

You would think then that people would not only want it, they would love it, use it, even flaunt it.

But New Yorkers have complex relationships with their outdoor spaces. At this time of year, as the weather grows warmer, their true feelings about those spaces are particularly manifest. Some residents are readying their flower boxes and painting their trellises, while other are doing what they always do — turning their backs on their balconies, which have become storage areas for things like rusty bikes and old doghouses.

It is difficult to give an average dollar value of outdoor space, because if it is a terrace, which is open to the sky and occupies a building’s setback, it’s worth more than a balcony, which is typically smaller and projects outward from the facade. But outdoor space is generally agreed to be worth about half as much per square foot as the square footage inside an apartment.

The yin and yang of emotions regarding outdoor space are on stark display at Penn South, a 10-building apartment complex in Chelsea, where Rick Strausser, a retired building maintenance manager, said the terrace off his apartment on 24th Street leaves him feeling like a millionaire.

“It makes you feel free,” he said recently, after he had pulled a small wooden table onto the modest terrace for his first outdoor breakfast of the spring season — Grape-Nuts cereal. “There’s a sense of letting go. I walk out on here and something is released.”

But in the same complex, his neighbor Vera Sampson has absolutely no desire for a terrace because she sees it as a magnet for dust and dirt. Although she initially had fierce terrace envy when she moved into the building 30 years ago and could not get an apartment with one, she quickly realized that they were places that not only need constant cleaning but are also potentially hazardous to the pets who shared her two-bedroom apartment.

“I didn’t want my cats to commit suicide,” said Ms. Sampson, a retired teacher who also has a service dog, Skippy, because of nerve damage that makes her prone to falling. For a dose of the outdoors, she spends time in the courtyard of the complex.

She’s not as unusual as one might think. A tour around the city shows some balconies and terraces piled with junk, an outdoor spare room in a city where every inch of space counts. Others are completely empty or perhaps hold only an ashtray. Some terraces and balconies are in places that are too windy, too hot, too noisy or too dirty.

The prospect of fixing up and maintaining a terrace or balcony, for some people, is just too time-consuming or expensive. As coveted as they are, these gateways to the outside world sometimes take their place alongside other things that seem desperately needed but are then taken for granted or ignored, like a fabulous bicycle or an expensive gym membership.

This can lead to what Karen DeMasco, who has a 250-square-foot terrace off her apartment in Prospect Heights, Brooklyn, calls “terrace guilt.” During the first few years she lived in her building, she never used the terrace. But once her daughter was old enough to play out there, she set out a playhouse and other toys. Now her neighbors without terraces stop by to enjoy hers.

Sherry Matays, a senior vice president at the Corcoran Group, has a terrace in her apartment on the Upper West Side but has not used it in 30 years — ever since her infant twins were out there in a playpen and dropped a toy onto the street. She was terrified that they could fall or that someone could get hurt from something they dropped.“I bolted it closed and that was it,” she said. “It’s never been part of our lives.”

And yet being a sales agent, she knows that a terrace adds value and helps an apartment keep its value, because of the scarcity of outdoor space.

Location is critical in real estate value, she said, but so are “features that you can’t put in — a terrace, a fireplace, protected views,” she said. “It’s not like spending more money for a chinchilla or a mink; they both lose their value when you walk out the door.”

Ms. Matays says that many buyers will begin their searches saying outdoor space is a must. “But people start to realize their expectations aren’t necessarily realistic,” she said. “Terraces are very expensive.”

But for those who can find and afford outdoor space, and who truly embrace it, terraces are a necessary and delicious escape from the urban landscape.

When Ray Bengen, a software engineer, was looking for an apartment to buy in 1988, he saw 407 lofts before he settled on his three-bedroom penthouse on 23rd Street between Eighth and Ninth Avenues. When he walked through the place and saw the 600-square-foot terrace, he said, “That’s it.”

He is now redoing the terrace, which looks more like a deck, with a wooden floor and a tool shed at one end. Even in the winter, he is out there. And at this time of year, he said, he hears singing in the morning from songbirds that nest in one of his trees. “It makes all the difference,” he said.

Ronald E. Goldberger, an executive vice president and principal of the brokerage firm Newmark Knight Frank, whose apartment on the Upper East Side has four terraces and sweeping views both north and south, finds poetry in watching the morning light and the sunsets.

“There’s a magic in it,” he said. “It’s spectacular, it’s relaxing and it’s invigorating at the same time.”

Having a terrace has kept the Sharp family from moving out of the city. When they wanted greater contact with nature, they decided that rather than moving — they had decided on Montclair, N.J. — they would create an elaborate backyard for their three young children on their 300-square-foot terrace on Dean Street in Prospect Heights, Brooklyn.

At first, Jonathan Sharp, a graphic designer and former art teacher, and his wife, Shannon, a senior vice president at Lehman Brothers, liked the idea of having a terrace in the apartment, which they bought five years ago. But because of its southern exposure and intense light, along with street noise and dust, being outside was not always comfortable. The couple would use camping chairs in the southwest corner of the deck to position themselves to see the sky and minimize the noise, and they would avoid being out there during the middle of the day.

But to get more use out of it, they bought an awning last year, put up mesh screens around the deck to block light and dust and decided to plant a garden of fruits, vegetables and herbs.

They grew corn that stood six feet tall, peppers, eggplant, strawberries, okra, pumpkins, beans and two varieties of tomato — beefsteak and cherry. On one of the first warm spring days this year, Mr. Sharp and his two older children, Julian, 5, and Naomi, 3, began pulling the dead plants out of their pots, sweeping the terrace and preparing to plant again.

He recently bought a microscope so he and the children can do science experiments with the soil and insects.

“It’s kept us in the city,” Mr. Sharp said.

“This is where gardening became essential,” he added, describing that fact as surprising, considering he spent part of his childhood in rural Ohio. “It’s kind of funny that I learned to garden in New York.”

Michael Falco for The New York Times

Rick Strausser and his grandson, Cole Zamora, plant flowers on the terrace of his Chelsea apartment.

Michael Falco for The New York Times

Amy Goldberger on her Upper East Side terrace.

Michael Falco for The New York Times

Ray Bengen,top, uses his terrace on 23rd Street all the time. But balconies along Roosevelt Avenue in Queens, above, appear to be used for storage.

Wednesday, April 23, 2008

Madonna buys UWS co-op after suing

A prudent co-op board wouldn't approve celebrity buyers to begin with. Who wants all of that publicity and paparazzi hanging around your building?

The Real Deal
April, 23, 2008
Author: Adam Pincus

Madonna paid $7 million for a seventh-floor co-op unit at 1 West 64th Street, closing on the deal April 7, according to city records posted today.

The board of the building, which faces Central Park, had originally barred her purchase of the seventh-floor unit, she charged in a lawsuit filed in December.

The 49-year-old singer alleged in court papers that the board of directors of the building's co-op board wrongfully blocked the sale, the Associated Press reported last year.

Madonna already owns a large apartment in the luxury building, which she moved into after being rejected in 1985 by the co-op at the San Remo, at Central Park West and 74th Street.

1 West 64th Street

Sunday, April 20, 2008

Storage space at 1 West 72nd Street fetches record $801,000

The New York Times
April 20, 2008
Big Deal
A Repository for the Rich

IT has no celebrity architect, no Poggenpohl cabinets, no Viking stoves, no awesome skyline views. In fact, it has only one small cellar window. But property records filed this month show that an $801,000 co-op sold at the Dakota, at 1 West 72nd Street facing Central Park, appears to have set a record as the highest-priced basement storage room in the annals of New York real estate.

The storage room is situated on a basement corridor and has a locked door, four bare walls, electricity and a half-bath, but is uninhabitable and costs more than the average price for a one-bedroom apartment in Manhattan last year.

But at the Dakota, basement storage spaces for those old papers, sleds, college textbooks, strollers and out-of-favor artwork are hard to find. When the word was circulating that a storage locker would be sold to the highest bidder among the building’s residents, there were bids from at least eight co-op owners, including a representative of Yoko Ono, who maintains a home in the building, according to a person briefed on the sale.

The winning bidder was John M. Angelo, a hedge fund manager and the chief executive of Angelo, Gordon & Company, and a member of the board of Sotheby’s. He has assembled several co-op units into a sprawling apartment on the second floor of the Dakota.

Last year, Mr. Angelo bought an additional modest one-bedroom apartment on the second floor for $3.25 million, according to city records. The sellers were Ann Godoff, the president and publisher of Penguin Press, and Annik LaFarge, until recently the publishing director of Bloomsbury USA.

Mr. Angelo bought his storage room from Juliana Curran Terian, the president and chief executive of the Rallye Group, an automobile dealership based in Rosyln, on Long Island. The company, which specializes in BMW, Mercedes, Lexus and Acura models, is the largest female-owned dealership in the country, according to its Web site.

In January, Ms. Terian sold her 11-room apartment on the second floor of the Dakota for $20.5 million (plus a 2 percent flip tax paid by the buyer). It has four bedrooms and a corner living room facing the park. The buyers were Philip L. Milstein, a scion of the Milstein real estate empire and a trustee at Columbia University, and his wife, Cheryl.

The original asking price was $25.5 million. But Ms. Terian decided to offer the storage locker and a maid’s room separately to other co-op owners. Closing documents for the maid’s room have not yet been filed.

The Dakota.

Saturday, April 19, 2008

Rooftop cabanas

April 19, 2008 / News / Not Just Nets / Carroll Gardens–Cobble Hill
Walentas to keep ‘cabanas’
By Mike McLaughlin
The Brooklyn Paper

The developer of hotly contested Atlantic Avenue apartments has won permission to finish his building with possible rooftop cabanas, despite concerns of local preservationists that it skirts height limits in the Cobble Hill historic district.

DUMBO kingpin David Walentas’s apartments were given the green light by city agencies that had looked into the project after opponents complained that rooftop structures that Walentas called “bulkheads” are actually residential cabanas that would violate the neighborhood’s 50-foot limit on new construction.

Jed Walentas, David’s son and partner in Two Trees Management, said the company was doing nothing wrong at the building, which is the residential portion of a project that will put Trader Joe’s next door in the landmark Independence Bank building at the corner of Court Street.

“Everything has been approved by the Department of Buildings and the Landmarks Preservation Commission,” Jed Walentas said. “The building fully conforms to all zoning and ordinances.”

Both city agencies confirmed Walentas’s opinion.

The project has been at the center of a firestorm since the Walentases originally asked the city for permission to build a six-story building.

That permission was denied, but now critics say Two Trees is using a loophole in the historic district law that allows mechanical bulkheads above the 50-foot limit. Such bulkheads can not be residential, the law says.

“Each [top floor] apartment has a staircase in its living room up to a ‘bulkhead’ with enough room for a workspace on the sixth floor,” said Jeff Strabone of the Cobble Hill Association.

“That’s residential space and it extends to 60 feet,” Strabone added, vowing, “We’re not going to stop until he knocks them down.”

For now, they’re going up, much like private rooftop structures on other Two Trees projects around town.

Prices went through the roof for trendy cabanas at a Walentas project in DUMBO at 70 Washington St. last year, where one sold for over $325,000.

The lure of big bucks like that for developers makes it easy to privatize rooftops in luxury buildings, that had once been common space for apartment dwellers.

©2008 The Brooklyn Paper

Tuesday, April 8, 2008

Top Co-ops Amid Dismal Economy: No Fear, Still Loathing

The New York Observer
by Max Abelson
April 8, 2008
This article was published in the April 14, 2008, edition of The New York Observer.

When the economy disintegrates and Manhattan bursts into flames, the board of the block-long co-op 765/775 Park Avenue will still be begging the day help and dog walkers to take the service elevator; the co-op board members at 820 Fifth will still be turning away unsatisfactory multibillionaires like Ron Perelman and Steve Wynn; and Ambassador Donald Blinken’s living room at the iron-gated River House will still have five Mark Rothkos.

The city’s most epically exclusive co-ops are the last bastions of old, over-proper, clubby, nice-nosed, perfectly heeled New York. They have values and they’re sticking to them—despite, or maybe because of, the city’s creeping anxiety.

“It’s a special island in the midst of Manhattan,” Mr. Blinken, a co-founder of E. M. Warburg, Pincus & Co, said about his co-op, where he was a board member before becoming President Clinton’s emissary to Hungary.

At Upper East Side buildings like his, where the buyers have tiptop society credentials to go with their immense wealth, a board’s standards are a protective sheath. “I would think that the people at River House, they’re certainly not flash-by-night, recent zillionaires in the last two years. They’re people who have been comfortable,” Mr. Blinken said, “and I don’t think current economic problems on Wall Street will have any impact on River House, will make any difference at all.”

Impenetrability means invincibility. “You find that people at River House are rather serious and not as exposed to the vicissitudes,” he said.

The meticulous, monogram-shirted, Virginia-born broker Edward Lee Cave said the best buildings want buyers with three times the apartment price in liquid assets. “It’s never been more important than today,” he said. “I’ll tell you why! They don’t want you going belly up, they don’t want you, your fabulous company—Bear Stearns, excuse me—all of a sudden going face down, and you have to sell apartments and you can’t pay your maintenance,” Mr. Cave said. “The current crunch doesn’t affect them at all.”

Impenetrability also means whiteness. Most of the godliest co-ops, like 820 Fifth, have exactly zero people of color. “I don’t recall ever hearing of any,” said financier H. Fred Krimendahl II, an 820 board member and a past president of the Philharmonic. “But if Tiger Woods wanted to live here, we’d be happy to talk to him.”

Considering that good co-ops loathe celebrities, Mr. Woods probably wouldn’t get very far at 820 Fifth. But to be fair, there aren’t many minorities applying to these buildings in the first place, although the late Reginald Lewis bought at 834 Fifth, Mr. Krimendahl’s old building. “If a Reg Lewis came along,” he said, “we would certainly entertain that possibility.”

“I don’t have turn-downs, thank God and pray to God,” said another broker, A. Laurance Kaiser IV. “You know before you show who can get into what building. You’re very frank with your own customer.”

When asked to describe the co-op 19 East 72nd, probably the hardest building off Fifth and Park Avenue, one top broker said: “You wouldn’t bring in a rap singer into 19 East 72nd Street—just as you wouldn’t take 19 East 72nd into some rap building. They’re divergent cultures.”

A board president around the corner brought up rappers, too, but said they’d be turned away from his building because of sensitivity about publicity, not skin: Richard Nixon, after all, got chased from that East 72nd castle (afterward, he asked Mr. Cave for help).

EXPOSURE IS SO despised back at River House, Ambassador Blinken’s co-op, that brokers can’t use the building’s name in listings. That fear of hype made things hard on Gloria Vanderbilt, Diane Keaton and Joan Crawford, who all got turned away.

And consider Chicago producer Marty Richards, who first put his $22.7 million duplex there on the market with Brown Harris Stevens’ Kathy Sloane eight years ago. Two weeks ago, the Post reported that the listing had gone to contract, naming fashion-show mogul Elyse Kroll as the buyer. The board probably didn’t appreciate the leak—or the news that Ms. Sloane was under investigation in Albany for tax evasion.

So, of course, the Kroll deal fell through, and the broker no longer has the listing. “I asked Marty to take me off because I’m going to be traveling with my husband,” the broker told The Observer, “and Marty does really need to sell.”

East River neighbor One Sutton Place South might be even more difficult. For 27 years, the board was led by Betty Sherrill, a Louisiana-accented interior decorator. (In the right Southampton store, you might find a hibiscus and butterfly chinoiserie print named after her.)

As she explained to the writer Steven Gaines, silently gay designer Bill Blass got in—he wrote her a letter “saying he would never embarrass us”—but fellow designer Arnold Scaasi didn’t, because he lived with his partner.

But Ms. Sherrill stepped down in 1999. “If she had rules that were arbitrary, and I’m not saying she did, they’re not relevant to the building anymore,” Mr. Cave said, “because she’s not president of the building.”

The same goes for shipping magnate Donald Rynne, who told his successor at 740 Park: “You have to protect our building. Keep it Christian,” according to a colossal 2005 biography of the building. Mr. Rynne’s old place is no longer considered impossible, thanks to a board with new additions like Blackstone’s Steve Schwarzman and Steve Mnuchin.

One block up, at the double-wide 765/775 Park, the board has kept its aristocratic foibles. “Well, we’ve tried to have the day help use the service elevator,” a source there said. “Dog walkers tie up the passenger elevator. Most housekeepers and so on use the front, but that has been a problem for board members over the years.” Then the source sighed. “Everyone’s just decided this is the way modern life is.”

The building’s president, an ophthalmologist, has been on the board for 30 years. “Boards that tend not to turn over tend to be the most arrogant,” said the director of Stribling Private Brokerage, Kirk Henckels, though he wasn’t referring to any particular co-op. “And that just simply follows the axiom of, ‘Absolute power corrupts absolutely.’”

While 765/775 Park has a lot of units to go around, 960 Fifth was built with just 19 apartments. “They’re a building that really likes to have somebody that they know,” Mr. Henckels said. “It’s a very friendly group in there.”

The building has a lesser twin attached to its back, called 3 East 77th Street. Even though the apartments are smaller, it’s a potent co-op: When Emily Frick, the widow of Dr. Henry Clay Frick II, bought a petite apartment there in 2006, a listing broker from Corcoran told The Observer that several potential buyers “were not board-qualified, socially, to buy the apartment.”

When asked what one needed to do to get in, the broker said, “In my opinion, rub shoulders with the du Ponts or Kennedys.” It wasn’t a joke: Ms. Frick had previously been married to a du Pont.

The old Phipps family literally built One Sutton for their friends and family, but heiress Cynthia Phipps’ mark was made at 720 Park. “She was the head of the board for many years, and she was difficult,” said the doyenne broker Alice Mason. “She was quite social and quite rich, and she preferred people who were social and rich.”

Phipps, a thoroughbred horse breeder, died last October from injuries suffered in a fire at her home. (The 720 Park board took out a Times death notice calling her a “loyal friend, fellow dog walker, kindest of neighbors.”) The head of the table is now reportedly taken by Barnes & Noble chairman and CEO Len Riggio, but Phipps’ ideals live on: “That’s really an establishment building,” Ms. Mason said. “Everyone in that world knows who everybody is.”

BUT ESTABLISHMENT DOESN'T mean old money. At 2 East 67th Street, the persnickety board is ruled by Arthur Carter, the son of an I.R.S. agent, who made a fortune buying and selling water utilities, shopping centers and sheet-metal companies. He also founded The Observer.

(How does extremely new money fare? “First arrivals like the Russians, I don’t think they can get in, they’re too new,” Ms. Mason said. “A lot of them just arrived in the last 10 years, five years.”)

“We call it the billionaires building,” said Eddie Gardner, whose stepfather Paul Manheim, a Lehman partner, was once 2 East 67th’s president. Manheim drank cognac with the elevator men and begged off on turning buyers down, Mr. Gardner said. On the other hand, Mr. Carter (or fellow board member Leonard Lauder) is not known for a soft touch: “I think he’s very easy—with people he knows,” Ms. Mason said.

“A broker would never bring anyone to these buildings that nobody in the building was familiar with,” a board member at one of the best Park Avenue buildings said.

According to the lawyer Richard Siegler, who counsels the co-op boards of 960 Fifth and 720 Park, among others, social discrimination is entirely legal. “Let’s suppose that you know somebody on the board who belongs to a certain country club in Westchester, and the applicant belongs to the same club. Wouldn’t you think, as the seller, that the board is more likely to accept the person? I don’t think that’s illegal, I just think that’s an inducement to accept one over the other.”

“It’s got a campus-like feeling, an oasis,” Mr. Blinken said about his beloved River House. He brushed aside the idea that a recession would change anything there—after all, River House survived the depressed 30’s, though its apartments nearly got carved up. “Somehow or another, it maintained a category of people who could afford to live there,” he said. “And maintain the standards.”

Property Shark

820 Fifth Avenue; 960 Fifth Avenue; 2 East 67th Street; One Sutton Place South; 765/775 Park Avenue; River House; 720 Park Avenue; 19 East 72nd Street; 740 Park Avenue.

Upper West Side Couple Settles Suit Over a Neighbor’s Smoke

The New York Times
April 8, 2008

The war over secondhand smoke at the Ansonia has ended.

A couple at the Ansonia, a historic Upper West Side apartment building, who had sued a neighbor over her wafting cigarette smoke have agreed to settle their lawsuit, one of the plaintiffs said on Monday.

The plaintiffs — Jonathan Selbin and his wife, Jenny, both lawyers — had sued their fourth-floor neighbor, Galila Huff, claiming that smoke seeping from her condo into the common hallway was jeopardizing the health of the Selbins’ young son.

Mr. Selbin confirmed the settlement and said Ms. Huff had agreed to take steps to minimize the spread of her smoke. After news of the suit was reported in February, the manufacturer of an air-cleaning system came forward to offer free equipment to Ms. Huff and the Selbins.

“She agreed to use the donated air filters and a smokeless ashtray, which is all we ever asked her to do,” Mr. Selbin said in an e-mail message. “Period.”

In the lawsuit, Mr. Selbin, who honed his skills taking on major corporations, charged that Ms. Huff’s constant smoking made the hallway smell like a casino. Ms. Huff, in turn, accused the Selbins of overreacting and of treating her like a monster. She declined to comment on the settlement on Monday.

The couple had also accused Ms. Huff, the owner of Caffe La Fenice, an Italian restaurant, of encouraging her Chihuahua to urinate on their son’s stroller in retaliation for their complaints.

Mr. Selbin indicated on Monday that the publicity surrounding the lawsuit had not been pleasant. “I am confident you will find a way to make us look like terrible people all over again for insisting on such an onerous thing,” he said in the e-mail message.

After the lawsuit was filed, a company called Aerus, formerly known as Electrolux, offered to install — at no charge — an air filtration system that, the company said, would remediate the smoke.

Joseph P. Urso, the chief executive of Aerus, said on Monday that he believed that the filtering system was instrumental to reaching a settlement.

Thursday, April 3, 2008

Neighbor, pass the croissants

The Real Deal
March, 31, 2008
Author: Marc Ferris

Welcome to the concierge age, which has brought hotel-style services like wake-up calls and reservation booking to upscale residential buildings. Now another hotel perk is spreading: the fancy breakfast.

While breakfast has been around for awhile — luxury buildings in New York began offering the meals a few years back — more residential buildings including rentals are offering them, some to members of their health clubs.

Michael Fazio, co-partner of Abigail Michaels Concierge, which provides concierge services at high-end buildings throughout the city including Sheffield57 and the Avery on the Upper West Side, said breakfasts are typically Continental-style: a buffet of baked goods, yogurt, fresh fruit and beverages.

Some buildings offer to-go meals packaged in bags with the building's insignia printed on the side. A number of condos and rentals go all out with omelet and waffle stations on weekends.

American Leisure, which runs health clubs at residential buildings, added breakfast to its club offerings. Steve Kass, the founder and CEO, said American Leisure provides breakfast through its clubs at around 70 high- end buildings in the city, including the Biltmore on 47th Street and Eighth Avenue, Tower 31 on West 31st Street, the Mark on East 77th Street, 37 Wall Street and 170 East End Avenue.

In condos with health clubs, residents are automatically members, so everyone shoulders the cost of breakfast while health clubs at rentals generally require a membership fee.

At Tower 31, a rental, breakfast is served in the 31 Club, where the annual fee to join is $750. Club 5 at the Biltmore serves 125 to 150 people every day, said Kass.

"The joke is that a typical single person has a quart of sour milk and a container of stale Chinese food in their refrigerators," he said. "So we try to make breakfast fun, interesting and fast by rotating offerings from well-known local vendors" like Bouchon Bakery and Amy's Bread.

The club also has a demo kitchen, where it holds weekend cooking programs for residents.

At 31 Club, around 75 percent of tenants eat at a communal table, Kass said.

A convivial dorm-style breakfast is held at the 550-unit Orion condo on West 42nd Street, which is known for encouraging group activities. Breakfast is served on the 29th floor with extra seating on the 30th floor, said Raizy Haas at Extell Development.

Haas said breakfast is a new frontier for high-end Manhattan buildings. She said her vendor, Penmark Realty, now plans to expand its breakfast offerings beyond the Orion.

The next step for Extell and American Leisure is to install kitchens in buildings and prepare individual meals for condo owners. Kass' new project, which he could not name, will offer the equivalent of room service for all meals.

At Ariel East, on Broadway and between 99th and 100th streets, Extell will offer a simple daily breakfast menu to residents, who will check off items that they would like to have delivered to their units.

"Andy Warhol once said that in 25 years, everyone would be living in a hotel," said Abigail Newman, co-partner at Abigail Michaels Concierge. "He should have gone into real estate, because that is exactly what's happening."

Tuesday, April 1, 2008

Condominiums vs. Cooperatives

ABA's Probate & Property Magazine, March/April 2008
Keeping Current - Property

Condominiums vs. Cooperatives. Condominiums are an increasingly popular form of common interest homeownership in the United States today. Although cooperatives have older historical roots here, they are dominant today mainly in just one U.S. location— New York City. In The Condominium versus Cooperative Puzzle: An Empirical Analysis of Housing in New York City, 36 J. Legal. Stud. 275 (2007), Michael H. Schill, Ioan Voicu, and Jonathan Miller set out to understand why the cooperative form of home ownership has thrived in New York City for so long, despite the apparent economic advantages of the condominium form. The authors initially postulate that condominium units should be more valuable than cooperative units because they reduce unit owner risk by concentrating mortgage, maintenance, and property tax obligations on each individual unit owner, rather than requiring unit owners to share risk created by the blanket mortgage and other obligations affecting the entire cooperative property. In addition, the authors suggest that the ability of cooperative associations to screen prospective new unit owners for financial creditworthiness and to impose limitations on subletting, along with the prospect of unit owners’ increased responsibility for cooperative management, should reduce demand for cooperatives and thus make them less valuable than condominiums even though cooperatives provide some countervailing advantages. The focal point of the article is the authors’ application of a complex regression analysis to a data set of approximately 100,000 sales of cooperative and condominium units over an 18-year period (1984–2002) in New York City. The result, according to the authors, is that “the typical” condominium unit is worth about 8.8% more than the “typical” cooperative unit, although one market segment exhibited the opposite effect on value. In cooperatives that prohibit buyers from financing the purchase of units, the condominium premium disappears and turns into a 25.4% cooperative premium. If condominiums have greater market value, what accounts for the continued dominance of cooperatives in New York? One explanation is the greater potential of the cooperative form to allow unit owners to engage in forms of social exclusion. Two other explanations, particularly relevant for buildings occupied by less affluent residents, are that (1) relatively high transaction costs associated with converting from the cooperative form to the condominium form can consume a substantial part of the condominium premium and (2) costs of collective decision making (collective action problems) can be insurmountable, particularly in urban communities with heterogeneous populations. Thus, the authors conclude that it may be a long time before condominiums, despite their apparent economic advantages, replace cooperatives as the dominant common interest homeownership form in New York City.

Dear condo owner: pay up

The Real Deal
April 01, 2008
Author: Annika Mengisen

In a city filled with selective co-op boards, condos have carved out their own niche by offering buyers an easier avenue into the real estate market.

But as the housing market sputters, condo buildings are increasingly seeing residents fall behind on their payments of common charges — a stark reminder that condo boards don't exercise the same level of financial stringency that co-ops do.

Analysts aren't quite alarmed by the trend yet, but even a small rise in fee delinquencies is noteworthy.

Bruce Cholst, a partner at Rosen & Livingston who specializes in co-op and condo law, said he has seen an increase in the volume and frequency of warning letters sent to condo owners for fee delinquency over the past six months. He said many of those owners heed the warnings, but end up back in arrears a couple months later.

Others interviewed said some condos are asking for common charges several months in advance as delinquent owners refinance. They also warned that more condo owners could fall behind as adjustable-rate mortgages reset to higher rates.

While nobody is predicting that condo buyers will suddenly shift to co-ops, buyers are starting to think more about condos as a higher-risk product, said Noah Rosenblatt, vice president at Halstead Property and publisher of UrbanDigs.com.

Learning curve

For all of the fuss about how difficult co-ops make it to pass muster, they have stood as a bulwark against the mortgage meltdown. The same can't be said for condos, where buyers have paid little or no money for down payments (during the boom years, some buyers secured 110 percent financing).

"You're going to have pockets of distress because of the severe credit crisis," Rosenblatt said, referring to condo owners falling behind on their monthly common charge payments.

Still, Rosenblatt and others cautioned that the increased number of condo fee defaults could be just a temporary blip and should not be used to gauge the overall health of New York City real estate.

Marc Luxemberg, a lawyer and president of the Council of New York Cooperatives and Condominiums, said the newer condos are still on steep learning curves when it comes to dealing with operating costs, which have been steadily on the rise. Some condo owners, he said, cannot, or will not, pay rising common charges.

"One of the tendencies [of condo owners] is not to raise charges and not look ahead," Luxemberg said.

Luxemberg predicted, however, that owners will become more farsighted, and fee delinquencies will go down with time.

Cholst, the attorney, said new condos face steep hikes early on because developers are "notorious for understating the amount of commons charges, because they don't want that to scare people away."

Compounding matters is that some residents are having more difficulty absorbing common-charge increases because their incomes are often not increasing at the same rate, said Cholst.

Co-op boards, by comparison, are known for being diligent about vetting prospective buyers to ensure that they can handle those increases.

Still, the real debate, Cholst said, is not condos versus co-ops, but renting versus owning. He predicted that interest rates and the availability of credit will influence would-be buyers more than increasing carrying charges.

The transition from renting to owning can itself cause problems.

New owners sometimes carry over their renter's mentality and withhold their maintenance fee if they believe problems at their apartment are being ignored, said Robert Ferrara, a senior property manager at Anker Management Corp.

"They might say, 'My roof is leaking; the board did nothing to repair it, so I'm withholding my common charges,'" he said. "Doing that in a condo obviously does not work, especially in a smaller condo, where you can really run into a problem."

Domino effect

When condo owners do default on common charges, the domino effect is very real. Condo boards see a shortfall in the building's operating budget, the building's owners become subject to more frequent and unpredictable fee assessments, and improvement projects can get shelved.

The impact of delinquent owners is much more severe for smaller condo buildings, which can see double-digit increases in carrying charges to cover shortfalls, said Cholst. A single owner at a six-unit condo, for example, would contribute almost 17 percent of the building's budget and could wreak havoc on his or her neighbors with a default, he said.

Lax enforcement of bylaws can leave a building crumbling and operating in the red. That's what happened several years ago to a prewar condo called Lido Hall at Central Park North and Seventh Avenue after seven of its 35 owners went into arrears, said Monica Rivera-Mindt, president of the building's board.

The condo faced mounting physical problems and had no money to pay a lawyer, but found one willing to work for no money upfront.

"These are people who could've paid, but historically, nobody had dealt with the problem, so the building was in dire straits," Mindt said.

After starting foreclosure proceedings, all seven delinquent owners paid up the hundreds of thousands of dollars they collectively owed, along with interest and legal fees, and none were forced out of their homes, Mindt said. Now the condo stays on top of problem owners and has built up a reserve fund.

Big luxury buildings, however, have a larger buffer. They often choose to forego bad publicity and quietly send stern, but often less effective, warning letters.

Changing standards

While fee delinquencies alone are unlikely to cause a spike in foreclosures, they have been prompting condo boards to scrutinize owners' finances more carefully.

Because of their relative inability to exclude prospective purchasers, condos are more vulnerable than co-ops to marginal purchasers and, in turn, to possible defaults, experts said.

"I see some condos starting to request additional information or documents [from buyers]," said Michael Motelson, a New York attorney and president of Dome Property Management, which manages more than 100 condo buildings in the New York metropolitan area.

And boards can amend their bylaws to be more aggressive. Motelson warned that they need to consult an attorney to ensure they don't go too far.

The best legal remedy condos have against fee delinquencies is the threat of foreclosure, attorneys said.

Unlike co-ops, condos in New York State get second dibs — banks get first — when it comes to divvying up the proceeds of foreclosure sales, but lawyers said that the property doesn't actually have to be foreclosed upon in order to recoup back payments.

Condo boards are also often hesitant to actually begin expensive and lengthy foreclosure actions against their neighbors, especially when the bank can foreclose and get most of the proceeds anyway, Motelson said.

Cholst said the threat of foreclosure is more effective than a lawsuit, which essentially "stops the clock" on arrears. Payments that are missed after a suit is filed can't be added onto the suit later.

Bigger buildings have another formidable weapon, Cholst said: They can yank a delinquent owner's rights to use luxury amenities. That strategy might have worked at the Downtown Club Condominium at 20 West Street, which had nine of its 289 owners in arrears in December, according to a New York Post report.

To avoid foreclosure or pricey assessments when owners are delinquent in paying their fees, condos should have three times the entire building's monthly carrying charges in a reserve fund, said Cholst.

While foreclosure numbers in the five boroughs have almost tripled since 2006, the number of foreclosures caused by fee delinquencies is negligible, said Jessica Davis, president and publisher of NYForeclosures.com.

Davis said most of the city's foreclosures, which take place in the outer boroughs, are a direct result of mortgage defaults, not condo fee defaults. But now that the issue of condo defaults has become prevalent, she said that "when people are buying into a building, they might ask how many units are not paying maintenance."

Frank Rathbun, a spokesperson for the Community Associations Institute, said condo boards should get to the bottom of late payments as soon as they notice them.

But he said boards are generally "compassionate" toward their fellow owners, unless of course those who are making late payments are simultaneously spending money on plasma TVs and other fancy objects. "That's another thing," he said.