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February 26, 2008
Another Rent-Stabilized Notch in Dermot's Belt
After we put up a post last week about tenant complaints regarding the Dermot Company, a reader wrote in to say that Dermot had just assumed management of her rent-stabilized building, 301 Cumberland Street (below). As shown in the map above, Dermot now owns, manages, has developed, or plans to develop quite a lot of properties in or near Fort Greene and Clinton Hill. (It’s worth noting that Dermot’s purchase of 301 Cumberland hasn’t been recorded in city records, and it’s possible the firm is simply managing the building.) Dermot’s most high-profile project to date has been taking the Williamsburgh Savings Bank Tower condo, but the company is also involved with two other big redevelopment projects: the conversion of the Queens Family Courthouse in Jamaica into a mixed-use development and the rehabilitation of the Battery Maritime Building. Aside from development, however, the firm is now concentrating a lot of energy on buying rent-stabilized buildings. In 2006, Dermot entered into a joint venture with Principal Real Estate Investors; the JV’s goal is to spend $300 million buying rent-stabilized apartments in New York City, and that seems to include quite a number of buildings in Fort Greene and Clinton Hill.
Rent-stabilized tenants in Fort Greene/Clinton Hill have been complaining about Dermot’s actions as a landlord since last fall, and there have been other negative reports about Dermot's conduct. Consumerist had a series of posts about how the company’s mismanagement of an Inwood building has included not fixing serious maintenance issues—like, say, getting the heat to work on the coldest day of the year. Dermot told us, however, that it’s in no way a slumlord—quite the opposite, in fact. There were more than 650 HPD violations on six of the Brooklyn properties it bought over the past 14 months, and HPD has removed around 435 of those violations since Dermot took charge. “Dermot’s goals in acquiring these buildings were to correct these conditions and provide quality housing,” the firm said in a statement. “To achieve these goals, Dermot has spent over $1,500,000 and is scheduled to spend an additional $500,000 in common area improvements (elevators, roofs, boilers, entry doors, intercoms, lighting, landscaping). In addition to the projects carried out in the common areas, Dermot also completed over 1,100 work orders in apartments and expended over $200,000 for repairs.” We suspect we have not heard the last of this conflict.
Tenants Charge Dermot Company With Harassment [Brownstoner]
To the West to Make a Fortune and Back to Make Another [The Sun]
Boroughs Battle it Out [TRD]
Brooklyn Tenants Band Together To Keep Housing Affordable [NY1]
$300 Million Joint Venture Focused on New York City Real Estate Market [Principal]
Stuck With Dermot Management, A Modern-Day Slumlord [Consumerist]
Photo by Scott Bintner for PropertyShark
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Comments
What's the point of all this? Is Dermot snatching up these buildings at steep discounts because of the stabiliztion status with plans to connivingly remove tenants and jack up the rents? Or is it some kind of agreement they have with the city to maintain affordable housing, which they apparently do to minimal cut-corner standards, in exchange for development privileges?
Posted by: guest at February 26, 2008 10:57 AM
The point is very simple -
you buy rent-stabilized apartment buildings at the market price (market price in multi-families is abased on the rent roll).
You invest millions of dollars in Major Capital Improvements on the overall building and on apartments as they become vacant.
You are then legally (and rightfully) can raise the rents under the law (1/40th the cost of MCI on vacancy and 1/84th the cost of building-wide MCI) FYI - existing tenants CANNOT have their rents raised by MCI more than 6% a year
While this is going on you have to deal with the tenants who think they should get something for nothing and bitch, moan and fight the LEGAL MCI rent increases and who think nothing of making the most obscene (and often false) allegations against a LL who is operating within the (pro-tenant) law and also preserving the historic buildings that we all love so much.
You also try to collect the rent from the deadbeat tenants who had beaten down the previous owner and had come to get used to paying rent every few months (or not at all) and working over the court system and who think nothing of making the most obscene (and often false) allegations against a LL who is operating within the (pro-tenant) law and also preserving the historic buildings that we all love so much.
In the end - if you are lucky - you have a LEGALLY raised RR (and maybe make some $), a nicer building for all the tenants (new and old alike), and you have gotten rid of those tenants who make life miserable for their neighbors as well as those who think paying rent is an optional activity (not surprising these are usually the same people).
If you are unlucky you get caught up in a public battle where your reputation is sullied when all you are trying to do is provide people a nice place to live as well as make some money (no more then is legally allowed btw).
Look there are some horrible LLs (and tenants) but the above scenario happens all the time, and places like Brownstoner just contribute to the deterioration of NYC real estate (and its high cost) by perpetuating these unfair attacks against the good LL without doing ANY investigation.
Posted by: guest at February 26, 2008 11:39 AM
Those are all fair points, 11:39. At the core of the problem, in our opinion, is the perverse disincentive that rent regulation creates for owners to (not) invest in their properties. We've got no way of knowing the particular details of this case so we just tried to report the news about 301 and present both sides of the issue.
Posted by: brownstoner at February 26, 2008 12:45 PM
Brownstoner - "News" would/used-to/should indicate a dispassionate reporting of the facts in a quasi-neutral manner - if you think reporting the news involves simply repeating the slanderous accusations of "slumlord", "harrasment", etc... along with Dermots denials then I assume you went to the NY Times school of journalism.
Did you even research Dermots claims regarding the removal of violations (you can do that from your bed-via the internet)?? Wouldnt your independent verification of this fact be the least you could do to "present the facts"
Do you not recognize how illogical it would be to yell and scream out of one side of your mouth in favor of preservation of older structures and for decent housing and then on the other side of your mouth blindly repeat (potentially) false claims against a LL trying to provide just that - simply because a bunch of tenants do not want to pay ANY more rent - under any circumstances.
Tenants are protected under some pretty severe price controls - if you want to preserve decent housing and historic structures - a site like Brownstoner should be CHAMPIONING a LL who operating under the law is trying to do that (assuming that is what Dermont is doing). Yes it may mean some modest (legal) rent hikes - (all profit isnt 'evil').
If you don't know the details either way, then don't post about it until you do - otherwise your snarky headlines and unsubstantiated claims serve the EXACT OPPOSITE effect that you claim Brownstoner stands for.
Posted by: guest at February 26, 2008 1:37 PM
Gabby placed a call to Dermot yesterday for further comment but they didn't get back to her...
Posted by: brownstoner at February 26, 2008 2:32 PM
"Gabby placed a call to Dermot yesterday for further comment but they didn't get back to her..."
is this supposed to constitute research?
Posted by: guest at February 26, 2008 3:07 PM
Personally I'd take the comparison to "NY Times school [of journalism]" as high praise indeed.
Posted by: cmu at February 26, 2008 4:05 PM
In fairness to Brownstoner, the post does not make a value judgement about McDermot, but simply reports the company's recent actions. In fact, the post makes it a point to boldface the fact that McDermot has removed the majority of HPD violations. I think it's a balanced post overall.
Posted by: guest at February 26, 2008 4:14 PM
No Brownstoner boldfaced Dermots CLAIM to have removed the violations - but Brownstoner failed to confirm if it was true (which would go along way to demonstrating what is really going on here)
Brownstoner also included the accusations of "slumlord" - which really is just name calling and slanderous (if unsubstantiated) - put in commentary such as - "—like, say, getting the heat to work on the coldest day of the year." and included it under a snarky headline that leaves no doubt what the slant of the article is.
If this is balanced reporting - you must have gone to the Fox News School of Journalism.
Look Brownstoner can editorialize however he wants - freedom of speech and all - but I am certainly going to point out the hypocrisy of attacking (even if in a subtle "news" piece) a LL who may very well be preserving and improving the housing stock and living conditions in some great old buildings - while claiming that he is someone who is committed to this goal.
Posted by: guest at February 26, 2008 5:03 PM
Irate Guest at 5.03 - I read this post as an endorsement of Dermot and somewhat dismissive of the complaints. This is not a dispassionate news sight in any event. For the record, I think this is a great development as it will hopefully ensure the maintenance of some lovely buildings and represents, hopefully, a long term investment in those buildings - and higher property values long term.
Posted by: guest at February 26, 2008 5:38 PM
"If this is balanced reporting - you must have gone to the Fox News School of Journalism."
Actually, I graduated as a journalism major (Long Island University) and have made a very good living at it for about 25 years. And I stand by my comments.
Posted by: guest at February 26, 2008 6:06 PM
Kick the trash out, then come to Bed-Stuy and clean things up around here.
Posted by: guest at February 26, 2008 6:32 PM
can this Dermot character stay away from Park Slope please?
Posted by: guest at February 27, 2008 9:17 AM
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