With owner foreclosing, trouble for apartments

From her sixth-floor studio apartment on York Street’s University Towers, Suha Gursey enjoys the best of both worlds at what some call a focal intersection of town and gown relations.

The widow of a former Yale physics professor, Gursey, 76, lives between the Yale Repertory Theater, where she sees plays, and the medical center, where she sees doctors for her arthritis. In the elevator, she befriends both the New Haven residents and Yale students, including the Medical School students to whom she brings goodies during exam time.

“The reason I chose this building with my husband was that we could live in a civilized, pleasant manner until we die,” Gursey said. “Then I lost my husband after he retired from Yale and I’m here alone. I just counted on being here a long, long time.”

But soon, Gursey and the other residents of the building’s 238 apartments, including many Yale students, may be left with no place to call home.

Last month, J.P. Morgan Investment Services, the company that holds the $4.1 million mortgage on University Towers, filed to liquidate the cooperative building, two years after the building’s co-op board filed for Chapter 11 bankruptcy.

If Federal Bankruptcy Court Judge Albert S. Dabrowski rules in favor of the liquidation after a May 3 hearing, the building will be auctioned off, individual shareholders will lose their shares, and they will be left with whatever money remains after creditors and legal fees are paid.

Residents who currently own their apartments would likely be able to continue living in the building even under a new ownership — but at what many fear would be prohibitively high rates for the building’s primarily elderly population.

“It’s difficult for folks like that to move, in addition to which many have their own net worth tied up with their apartments,” said George Goldberger, treasurer of the co-op board and a New York resident. “We find this an unfortunate, unacceptable outcome.”

Under new ownership, lease tenants in nearly three-quarters of the units, many of whom are students at the University or the Medical School, might face higher rents or possibly eviction.

Tenant shareholders, meanwhile, have proposed their own plan for the building, which involves obtaining a new mortgage to pay off their loans from J.P. Morgan and to complete necessary repairs without giving up the building’s status as a co-op.

J.P. Morgan officials declined to comment, since the case is in litigation.

But one source said the company is negotiating with the co-op board behind the scenes to work out an arrangement that would minimized disruptions.

Board members did not acknowledge any such negotiations, however.

Beyond the current legal issues and maintenance woes, residents say the building represents an important intersection of town and gown.

“This building is a place where the town and gown interact,” said Amy Vandersall GRD ’65, who serves as secretary of the co-op board. “A lot of people from Yale and a lot of people who have nothing to do with Yale are here, and I think that is tremendous.”

Built in 1959 as part of an urban renewal program, University Towers could use its own facelift, with necessary repairs estimated between $5 million and $13 million, co-op board members said.

For the last few months, the building has been surrounded by a chain link fence, meant to keep pedestrians safe from the chunks of concrete which occasionally fall from the balconies. The structure’s heat is supplied by a boiler kept in a truck behind the building, since the original boiler recently broke. Residents also noted problems in plumbing, roofing and loose balcony railings.

“In general, the building’s falling apart,” said resident David Croke ’02, who plans to live in University Towers next year as well. “Our heaters don’t really work and there’s no water pressure. But it’s dirt cheap.”

Although individual students tend to live in the building for only a year or two, board members noted that changes in management or ownership will affect short-term residents as well.

“Renters don’t figure into it, but if the building is auctioned off it would immediately be subjected to a rent schedule that in the Morgan plan is probably much steeper than what they currently pay for apartments,” Vandersall said.

Low property values have contributed to the building’s financial woes, with prices for apartments declining since the early 1990s, Vandersall said.

Co-op board members added that results of a pending lawsuit against the building’s former management company may improve their chances of obtaining a second mortgage. The lawsuit alleges that the management company unfairly profited from the board by requiring the co-op to lease the bottom two floors of the building to medical practices, lowering property values.

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