1. How can a charity that worked with a big chunk of public funding, run up 1 BILLION DOLLARS IN DEBT that rendered it insolvent and incapable of fulfilling the public duty we paid them to deliver with our taxes? From Crain's:
   

   The bankruptcy documents for Saint Vincent Catholic Medical Centers list many reasons for its financial failure. Some of the financial travails are shared by all New York City hospitals. But others were clearly the result of poor decisions by SVCMC's leadership.

   The documents trace the roots of the current bankruptcy to the previous one. The system's leadership signed off on a reorganization plan in August 2007 that was unworkable.

   “Despite a long Chapter 11 process,” writes chief restructuring officer Mark Toney in his affidavit, SVCMC “emerged from Chapter 11 with a complex capital structure consisting of various layers of secured debt, as well as substantial unsecured liabilities, totaling over $1 billion.”

   But SVCMC filed for bankruptcy protection in July 2005 with $1.1 billion in liabilities—the same amount as when it emerged. Why did the board and management sign off on such a plan, SVCMC critics have long wondered.

   Even after it had restructured, SVCMC couldn't pay off $1 billion in post-bankruptcy debt from its ongoing operations. The new bankruptcy filing on Wednesday states that its “operating revenues have remained relatively constant.” It had operating losses of $43 million in 2008 and $64 million in 2009. St. Vincent's Hospital itself generated $81 million in losses in 2008 and $107 million in 2009.

2. Why weren't the state and city comptrollers on the ass of the Catholic Church back in 2005 when the hospital first declared bankruptcy for such a staggering amoung of money?


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It is good to elect, in this case, a councilman that has a completely different outlook on the same problem.

To this blogdiva and Eyore stan, the strategic foreclosure of Stuyvesant-Town & Peter Cooper is a sign of the coming affordable housing apocalypse. Yesterday on a quick conversation with Garodnick and his staff, I got a completely different outlook.

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Tishman-Speyers is walking away from the 56 residential buildings, 11,250 apartments, and over 25,000 residents that live in the properties it bought for $5.4 billion in 2006. Yes, they are walking away as in handing the keys to whomever and bidding adieu.

Strategic defaults are nothing new. Billionaires do it all the time. The issue here is that companies like Tishman-Speyer get to walk away from bad deals; whereas the regular family with a hefty mortgage and lost equity is made to believe they have a moral obligation to continue funding what is a bad financial proposition that no corporation would ever honor themselves. Which is why I absolutely agree with the tone of Michael Corkery's Tishman Speyer’s “Jingle Mail” on Stuyvesant Town outrage over at, of all places, the Wall Street Journal:

Where is the outrage?

[...]

Real-estate developer Tishman Speyer is handing control of the Manhattan apartment complex Stuyvesant Town and Peter Cooper Village to lenders that backed the $5.4 billion acquisition. With the massive property underwater and Tishman having put only $112 million of its own money into the deal, it makes more sense for the Speyers to walk away from the apartments.

Like residential home owners, Tishman Speyer Group calculated that it could take decades to regain the equity lost on its property.

Similarly, Tishman Speyer has calculated that complicated tenant laws in the New York could prevent the company from profiting on the development for many years. (The company’s strategy depended on being able to evict lower paying tenants and replace them with young professionals.)

Yet while residential homeowners are being attacked for not making good on their mortgages, Tishman Speyer has so far avoided such criticism.

As a Stuyvesant Town tenant I am not shocked with this bit of news. From years there had been rumors that Tishman-Speyers, which has helped New York University amass its real estate empire, was going to buy the place. Of course, the rumors started when MetLife entered into a housing agreement with the univeristy and literally slumlorded apartments into hipster fire hazards. Actually, it was thanks to New York University's business that MetLife and Tishman-Speyer got away with illegally vacating and renting at market prices rent-controlled apartments; especially in Stuyvesant Town (where we snarkily renamed the place NYU's dormtown)

Rent laws prevent Tishman-Speyer or any new owners to evict us, but it still feels surreally insecure to be in the middle of one of the biggest real estate failures in the history of the Unites States. Stuyvesant-Town & Peter Cooper were the third largest real estate sales in this country. It goes to show that when it comes to affordable housing for the grey collar working and middle classes of New York City, you cannot leave it to the vagaries of the mythical "free market". And this is why Tishman-Speyers epic failure is Michael Bloomberg's failure as well.

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Joy and I live in a neighborhood where real estate prices are relatively stable. They go up in good times but don't go down so much in bad times. But the Bush Recession has hit our neighborhood even if not as hard as many neighborhoods. Some people in our building have had to move out because of job insecurity, new children, etc. Yet we have noticed that for the first time since we moved here, sales have been very, very slow. Generally when an apartment hits the market in our building, it goes within a few weeks. But these days they often are on the market for months.

One of the signs I saw of an ailing economy was when open houses in our building went from crowded affairs with flocks of people coming in and out eager to see an apartment, to lonely affairs for the real estate agents, leaving them with time on their hands to chat in between the occasional looker who left without making an offer. Asking any of these real estate agents how it was going, "SLOW!" was always the emphatic response. And they would have a demoralized look on their face as if "SLOW" didn't even begin to convey how bad the market was.  read more »

From a press release, via email, comes this:

The 12-person unit will investigate deed fraud, mortgage fraud, predatory lending and other real estate-related fraud that has become increasingly prevalent in our current economic crisis.[...]

Many other initiatives have been created recently in order to either prevent victimization or to provide funding for refinancing. While many of these efforts have been worthwhile, none provide for the criminal sanctions necessary to deter would-be criminals. Missing from these initiatives has been a dedicated prosecutorial unit. Prosecutions can result in jail sentences for the offenders and restitution for the victims.

As Senator Schumer said last week, "The Real Estate Fraud Unit is just what Brooklyn needs during the ongoing economic and housing crises."

The money for the new unit will come from a two-year $875,000 earmark - quick, someone call the republicans - inserted in the budget by Senator Schumer.

Brooklyn is apparently the only borough with a dedicated unit on real estate fraud.