Council Member Dinowitz on Tracy Towers loan history and accrued interest
Dinowitz details Tracy Towers' $40.7M loan from 1971 accruing $106.2M in interest by 2012, and asks HPD to clarify the debt history. Julie Walpert explains a withdrawn federal subsidy led to the interest accrual, and HPD/HDC deferred payments to protect tenants.
Okay, I want to talk about capital needs.
I mean, brief history of Tracy Towers.
Tell me if any of this is off base.
This is according to financial documents for Tracy Towers.
In 19, it was 1971.
It was built with a $40.7 million loan.
It was a low interest, no interest loan.
That was part of the Michelin program.
And by 2012, Tracy owed the principal and an additional $106.2 million in interest.
Is that inaccurate?
I mean, I'll have to look more deeply into the existing debt on Tracy Towers.
So he's deferring and accruing.
So when the development was first being developed, there was supposed to be a federal subsidy that would bring down the interest rate.
And prior to occupancy, that subsidy was withdrawn.
So, you know, again, that predates me.
I've been here forever, but it still predates me.
I guess not forever.
But the question is still, it started with a $40.7 million loan, and by 2012, there was $106.2 million
interest on that loan, plus the principal.
Right, yeah.
So the program that Julie was referring to subsidized the interest rate or the interest rate payments, is that right?
And without that subsidy, that is the result.
Over the course, so it sounds like over the course of 50 years, HPD did nothing to try to lower those interest payments, didn't do anything to pay off the principal, and now residents today are paying the price.
I mean, I wouldn't agree with that statement, Julie.
That's why I'm asking you to please clarify the history.
And this is going to be my last because I'll come back for a second round, if that's okay, because I know there's a ton of other people.
If we had addressed those arrears, it would have been on the tenants to address those arrears.
And so what HPD and HGC work together to balloon those arrears, put them aside, not require any payment on them, and it will just remain affordable for 50 years at this point.
But it was actually done that way to protect the tenants so that they wouldn't have rent increases to pay the debt service.
Okay, I'm going to follow up on this later, but we have a ton of other people.
Thank you so much, Chair, for the opportunity.
Thank you.