By Heather Murray
Several months after a developer told its nonprofit tenants in the sprawling Archive Building that their rents would skyrocket by as much as 500 percent, City Council Speaker Christine Quinn’s Office and city and state agencies discovered that developer Rockrose Corporation couldn’t legally raise the tenants’ rent without the state’s consent.
Although the state owns the property, it entered into a 99-year lease with Rockrose Corporation in 1982, allowing the developer to convert the full-square-block building into 479 market-rate apartments and retail space. The lease also required the developer to set aside 54,000 square feet for nonprofit space to be rented at $4 a square foot.
Ed Gold, a veteran member of Community Board 2 and a former chairperson of the board’s Archives Committee, said he recalls the discussions with Rockrose to convert space in the building for nonprofit use.
“Rockrose was not thrilled to make it available to anybody,” he said. “We had some protracted discussions on how to charge the nonprofit organizations and how they were going to fix up the basement. Eventually, they came around. The agreement was to charge nonprofits something below the current market value for the rental,” Gold said. At the time, the market value there was $5 a square foot, and $4 was decided upon as a reasonable rate.
“That lasted for 20 years and the rate expired last fall, at which time Rockrose said to the nonprofits, it would give them 20 percent off the current market value of the space — which jacked up the price 500 percent,” Gold said.
C.B. 2 Chairperson Brad Hoylman said Rockrose approached the community board last fall asking it to participate in setting new rents for the nonprofits.
“Initially, we agreed,” Hoylman said. But then the board realized that the rent increase would force several of the eight tenants to move out.
“We knew a market increase was not feasible,” Hoylman said. C.B. 2 reached out to the council speaker’s office and other officials, triggering the effort that led to the salvation of the theaters and community service organizations in the Archive Building.
“It’s word to the wise that as a community board it’s important that you work cooperatively with your elective officials, because in this instance they really did save the day,” he said.
The Archive Building, at Greenwich and Christopher Sts., at night.
The new agreement brokered with Rockrose allows for nonprofits’ rents to go up by 3 percent per year when their leases come up for renewal, and the largest tenant “would pay a bit more rent in addition,” said Janel Patterson, a spokesperson for the city’s Economic Development Corporation.
“This agreement is a textbook example of what the public and private sector can accomplish when they work together cooperatively,” said Seth Pinsky, E.D.C. president. “In conjunction with our partners at the speaker’s office, the Empire State Development Corporation and Rockrose, as well as the tenants, we have now ensured that this space will continue to be available at a low cost to small arts, community and healthcare organizations, while simultaneously producing another revenue stream to fund historic preservation citywide.”
Kori Schneider, executive director of the Interborough Repertory Theater, one of the theaters in the Archive Building, called the last few months “really scary. They basically wanted to triple our rent, which would have put us out of business,” she said.
Schneider added that Rockrose was attempting to cut deals with different tenants, which she felt was unfair.
“The state really fought for our existence,” she said. “I’m happy that this system finally worked for the arts and that we didn’t get kicked out at a time when so many theaters in New York City are being closed.”
Interborough Repertory has been in the building for more than 12 years and has seven years left in its lease.
Robert Mooney, managing director of the Wings Theatre Company, estimated that his Off-Off Broadway theater would have to move to the outer reaches of the outer boroughs to find another home at only $4 a square foot. Such a location would be far from both subways and the theater’s target audience.
“We would have had to fold if we had to move,” he said. “Our audience base is very much a Village and Chelsea audience.”
Mooney said that ever since he learned about the potential rent increase last June, it’s been an all-out effort to stay.
“It’s been an incredible fight to get recognition for our point of view,” he said. “The original proposal would have driven out all of us immediately.”
Mooney said he was relieved to hear that Wings could stay in its home of 20 years. The company, like most nonprofit theaters, already struggles to make ends meet.
“We operate at a deficit,” he said bluntly, adding that they have no salaried employees other than Actors’ Equity actors and certain artists. Mooney works as a volunteer and so does his artistic director.
Jeffrey Lependorf, executive director of the Council of Literary Magazines and Presses, said moving out of the building “would have been a tragedy.”
He said he and his neighbors had never seen the building’s original lease, which he described as “very complex” and around 1,000 pages long, until the suggested rent increase came up.
Every month since October — when the rent hike was originally going to go into effect, before Quinn and government agencies got involved — Lependorf has received a rent notice with a warning that his organization was in arrears.
“It was a scary sword over us,” he said.
Lependorf added that in the current economic climate, it’s difficult to ask donors for money.
“Keeping a roof over our heads is not the most charitable reason for someone to donate to us,” he noted.
Lependorf has many memories of working in the Archive Building, perhaps the most vivid being his first day on the job. It was 9/11 and he spent half of it huddled under furniture with some of his employees.
E.S.D.C. spokesman Warner Johnston said, “The state was really pleased that we could work with the landlord and the City Council to find a solution for the tenants there.”
Johnston added that although Rockr-ose is responsible for leasing to nonprofits, “E.S.D.C. is the only one allowed to raise the rents.”
Quinn called the original agreement made between the developer and the state back in 1982 “very unusual.” For example, under the lease, some of Rockrose’s profits each year must go into a fund for historic preservation.
Called the Historic Properties Fund, this money is controlled by the New York Landmarks Conservancy, an organization dedicated to saving and reusing landmark buildings. The money from Rockrose is used to provide low-interest loans for historic preservation, and is the nation’s largest revolving loan fund used for that purpose.
The agreement came about under unique circumstances described in Sharon Zurkin’s 1989 book “Loft Living: Culture and Capital in Urban Change.” The Archive Building was formerly used as a warehouse by the federal General Services Administration until 1974, when G.S.A. opted to move its archives to New Jersey. G.S.A. then designated the building as surplus property. The then-recently formed New York Landmarks Conservancy jumped at the chance to preserve and reuse the building, and worked with the Mayor’s Office to make that happen. G.S.A. turned the property over, free of charge, to the city, which then planned to lease the building to the conservancy.
Under the agreement, a developer would pay a percentage of profits to the conservancy, profits which would then be used to establish the revolving fund for landmarks.
The first deal fell through and the New York State Urban Development Corporation, now called the Empire State Development Corporation, was brought into the deal to lease the property to another developer. Community Board 2, which had fought hard to get affordable housing in the building — but lost — was given a one-time gift of $600,000 for neighborhood preservation. It was also due to C.B. 2’s efforts that the nonprofit space was set aside there, Zurkin said in her book.
The board gradually disbursed the $600,000 to local nonprofit organizations, until the account was depleted several years ago.
A 1986 New York Times article reported that the conservancy would receive $4.8 million over the span of 10 years through the deal, as well as 8 percent of the building’s gross commercial rent for the life of the lease.
“It is a counter to any interest a landlord would have in raising rents just to make money,” Quinn pointed out.
Of the agreement’s key goals of prohibiting excessive rent increases and funding historic preservation, the council speaker said, “It would be great to be able to replicate all over the city.” But, she added that in today’s expensive real-estate market, it would likely be difficult to come to agreements such as this.
“This is a model that certainly facilitated a tremendous victory” for tenants, Quinn said.
A Rockrose Corporation representative did not return calls for comment by press time.
