Riverbay President Al Shapiro announced that Co-op City has officially concluded an historic $480 million financing agreement with New York Community Bank that will provide enough funding to rebuild the community.
     Perhaps even more important, Shapiro stated, the historic agreement frees Co-op City from the State of New York’s Housing Finance Agency (HFA), though the community will remain in the Mitchell-Lama housing program.
     “I look at this as a semi-amicable divorce,” Shapiro said. “We are now free of HFA and can determine our own future. Now we, as a Board, must act as responsible adults in terms of fiduciary responsibility, and at last we can begin making repairs here.”
     Shapiro stated that the successful closing of the loan with New York Community Bank will enable Co-op City to move forward on a number of required Capital Projects, including such items as elevator modernization, window replacement, brick and balcony repairs, and garages.
     “Because of this loan and a new influx of money, we still have time to complete a lot of repair work on both Garage 2 and 7 before the end of the year,” Shapiro said. “Without this financing, everything would have remained at a standstill. 
     “This was all made possible because of one word – ‘options’,” Shapiro continued. “When the agreement with HFA didn’t work out, we decided to explore other options, including that of a financing with a private lender, such as New York Community Bank.”
     The Board voted overwhelmingly Monday night in favor of a resolution, proposed by First Vice President Iris Herskowitz Baez, to approve borrowing the $480 million from New York Community Bank.
Voting in favor of the resolution, in addition to Baez, the chairperson of the HFA Committee, were Directors Tom Barrett, Saul Weber, and Alonzo Newton, who all seconded the resolution, and Shapiro, Octavio Cruz, Denise Grant, Nels Grumer, Marie Heath, Othelia Jones, Leticia Morales, and Craig Williams.
     “I want to thank Al and Iris and the entire HFA Committee and all the Board members that supported them,” Weber said. “With all our support, staying together united, holding our ground and refusing to budge, we were able to win.”
     Director Tony Illis abstained, as did DHCR representative John Marcucilli, while Director Cleve Taylor recused himself from the vote.
     Under the terms of the refinancing loan, RiverBay will receive $240 million for capital improvements, as well as the elimination of more than $150 million in “alleged” arrearages that HFA claimed Co-op City owed as payment for expenses already incurred and for future repairs.
     Now, Co-op City will pay only $11 million and the question of arrearages will be eliminated. Also, RiverBay will no longer be required to pay a $702,000 annual fee to HFA.
     “We will finally be able to do what’s necessary to make our community whole again,” said Baez, “and we will be able to do what’s necessary without having to raise our carrying charges to a point where our community would no longer be considered ‘affordable’ housing.”
     Proposed carrying charge increases will remain the same as those that were approved by 85% of residents voting in a March referendum to accept an HFA refinancing proposal. There will be a 4.5% carrying charge increase on April 1, 2005; a 4% increase on April 1, 2006; and a 1.5% increase on April 1, 2007.
     Baez publicly thanked the members of the HFA Committee for the tremendous job its members did, especially over the past year. She said that in forming the committee, she specially sought out individuals who were knowledgeable and had prior experience dealing with the state in the past negotiations. 
     “It’s an incredible event,” said Charles Rosen, a member of the HFA Committee. “We struck against the state, we fought against the state, we negotiated with the state, we sued the state, and finally we are now rid of the state.”
     HFA Committee member Harriet Jeffries, who was previously involved as a Board member negotiating the 1992 Workout Agreement which led to the replacement of the Ric-Wil system, echoed Rosen’s sentiments about achieving freedom from the state finance agency.
     “This is a very historic moment and now we really have the opportunity to be masters of our own destiny and we really have the opportunity to make this community the way it should have been in 1965,” Jeffries said.
     Other members of the HFA Committee were Rev. Calvin Owens, Gretchen Hazell, Ron Caesar, Bernie Cylich, and Directors Newman and Grumer, as well as Shapiro.
     Negotiations to make the agreement possible went right down to the wire, as Shapiro, Caesar, Herb Freedman of Marion Scott Real Estate, and Assemblyman Stephen Kaufman met with HFA representatives at the state agency’s Manhattan headquarters.
     “We had to close before October 1st or face economic default,” Shapiro said. “The pressure was on and we were able to come up with a deal which includes enough funds to pay off HFA, while leaving us enough money to rebuild Co-op City and enhance the quality of life here.”
     The stumbling block holding up the mortgage agreement with New York Community Bank was the question of “alleged” arrearages that Co-op City owed HFA. HFA was requesting that Co-op City pay $22 million to wipe out the “alleged” $57 million that it claimed Co-op City owed.
     Shapiro, supported by the HFA Committee and the majority of the Board, refused to accept HFA’s position on “alleged” arrearages, claiming that it was unjustified. Shapiro also stated that in good conscience, he could not agree to pay HFA $22 million when much of that money could be used for repairs in Co-op City.
     “That’s why I originally became involved in this, because there was no way that Co-op City should have had to pay those bogus $157 million in arrearages, and I’m happy to say I kept my promise,” Shapiro said, praising Kaufman for initially convincing HFA to eliminate $100 million in arrearages in its initial refinancing proposal.
     “I consider this a mutually acceptable divorce between parties that had long-standing disputes,” said Kaufman, who spearheaded the initial negotiations with HFA after Co-op City garages were ordered closed last year. “Now, the two parties have separated and Co-op City can now go with independence to rebuild itself and be the community that we all want it to be.”
     As a result of the negotiations, HFA agreed to allow Co-op City to wipe out the last of $57 million in “alleged” arrearages by paying $11 million to the state. Co-op City also agreed to remain within the Mitchell-Lama for seven years, and if two-thirds of the shareholders decide to opt out before that time, Co-op City would have to pay an additional $7 million.
     “First of all and the thing uppermost in my mind was to get an agreement,” Newton said. “Certainly, I’m thankful. There were lots of ups and downs and this and that's, but I believe we should now move on with
fiduciary responsibility to rebuild Co-op City. We must step up to our responsibly on behalf of the shareholders.”
     This week’s closing comes after a four-year effort to negotiate a resolution to all outstanding issues with the State and its housing finance arm, which came to an abrupt and unexpected halt when State officials changed the terms of the agreement approved by shareholders in the March referendum.
     “This is a great new day for Co-op City; everybody involved deserves a great deal of credit,” said Stuart Saft, an attorney representing RiverBay. “The Board and the HFA Committee worked very hard and this is an incredible deal with a very good interest rate and fewer restrictions.
     “We no longer have arrearages and we are free of our obligations to the state HFA,” Saft continued. “October 1st marks a great, brand new day for all of Co-op City.”
     In conclusion, Shapiro said, “I felt that we kept moving two steps forward and one step back during these negotiations. It’s finally done and I can’t believe it. Now, we have the chance to do what’s right for this community.”