The sale of Starrett City, a 5,881-unit affordable housing complex in Brooklyn, N.Y., is taking longer than expected.
A memorandum of understanding between owner Starrett City Associates and federal, state, and city agencies that laid out a framework to maintain affordability at Starrett was extended indefinitely on Friday as it was about to expire.
The sale of the complex is expected to be financed by hundreds of millions of dollars of bonds issued by the New York State Housing Finance Authority, which originally sold bonds to build the complex in the 1970s. The MOU itself was not changed, according to a spokesman for the U.S. Department of Housing and Urban Development.
"In this marketplace it's continuing to require a little more creativity, so the negotiation is taking a little longer than we would have thought," said Don Cogsville, chief executive officer of the Cogsville Group, a private equity firm that submitted a bid in a group with the Christian Cultural Center, the Housing Partnership Development Corp., Clarett Group, and Prudential Real Estate Investors, as well as with bankers at Credit Suisse and JPMorgan.
The owners received four final bids in September, two of which were rejected by the HUD, one of the agencies that must approve the deal. Each bidding group has a 501(c)(3) organization attached to it for which the bonds would be issued.
Federal and state agencies blocked a $1.3 billion bid last year on the grounds that it threatened the affordability of the complex. The dollar amounts of the two remaining bids have not been released but are expected to be between $600 million and $1 billion.
The other bid under consideration was submitted by the Metropolitan Council on Jewish Poverty, which teamed up with Westbrook Partners, a real estate investment firm, and Citi.
William Rapfogel, Met Council's executive director, said in an e-mail that there were no new developments and that the owner had not asked them to raise their bid.
"We're trying to ensure that we can maintain affordable housing for those who need it, and as this decision affects the 14,000 residents of Starrett City," he said.
A spokesman for Recap Advisors LLC, which is managing the sale for the owners, said negotiations were continuing.
