NEWYORK | Homes and grrom. | Community Renewal ANDREW M. CUOMO. RUTHANNE VISNAUSKAS Governor Commissioner!CEO December 21, 2017 Dan Robinson Knickerbocker Village, Inc. Knickerbocker Village Mezzanine Corp. 10 Montoe Street New York, New York 10002 Re: Knickerbocker Village, Inc. Dear Mr. Robinson: 1 am writing regarding complaints to my office conceming meetings between Knickerbocker Village, Inc. (“KVI") and groups of tenants about a possible cooperative or condominium conversion of KVI. DHCR recently met with representatives of the Knickerbocker Village Tenants’ Association (*KVTA”) and their advisors, who expressed similar concerns about these meetings to the Division, For the reasons explained below, I am hereby directing you to cease and desist in holding any further such meetings at this time and to provide a prompt written response to the questions raised below. DHCR has been informed that “meets and greets” occurred with selected groups of tenants and representatives of the owners. While you had previously notified HCR about these meetings, certain aspects of where and how the meetings were organized, as well as the type of representations that may have been made, concern us. For instance, it is our understanding that the initial meetings were held in off-site restaurants and that at least some of those meetings had occurred exclusively with tenants of Asian descent. Also, while subsequent meetings were held in Knickerbocker Village buildings, the KVTA was not informed of these meetings. In addition, we understand that tenants were told that the conversion process to cooperative or condominium ownership was imminent, and they were asked if they were interested in ownership. Additionally, tenants may have been asked to sign a form indicating if they were interested in a cooperative conversion. Finally, it was reported that there were discussions regarding how to dissolve the duly established KVTA. ‘The subject matter of these meetings and their focus on cooperative conversion is troubling as well. We have previously informed you that, in view of prior litigation and DHCR’s missionto promote affordable housing, DHCR is unwilling to consider a conversion of more than 1,000 units of affordable rental housing in lower Manhattan to private cooperative ownership. Nevertheless, we have met with you a number of times in order to discuss affordable rental preservation options which might be acceptable to all stakeholders. Under Article IV of Private Housing Finance Law, DHCR must approve any change in ownership, corporate structure, and financing for KVI, together with any waivers requested. As no such approvals have been granted to date, it would appear that any statements to the effect that a conversion process is imminent are based on material misrepresentations of your discussions with DHCR. DHCR has consulted with the Attorney General’s office, and we are also concerned that you may be violating the Martin Act and the Attorney General regulations governing the marketing and sale of real estate security interests. Sponsors of real estate securities may only engage in the advertising, marketing, and sales of real estate securities after an offering plan has been accepted for filing by the Attorney General. You have engaged in conversations with tenants regarding conversion to cooperative or condominium ownership without an accepted offering plan filed with the Attorney General’s office, and depending on the substance of your conversations, your statements may have violated the Martin Act and relevant regulations. DHCR is also concemed that DHCR regulations may imminently be violated or have already been violated. Thus, DHCR is requesting clarification with respect to the following: Is management continuing to schedule meetings with groups of tenants regarding possible cooperative or condominium conversion? If so, how often? © Are these meetings advertised and open to all residents or limited to select groups? If the latter, what is the basis for determining which residents are invited? © What is being discussed at these meetings with regards to the conversions, including the process and risks of homeownership? Has management made representation that the conversion process is imminent or solicited tenant sentiment regarding a possible conversion? © Has management conducted any formal or informal discussions with the KVTA? Although DHCR’s Regulation governing tenants’ associations, 9 NYCRR § 1727- 6.3, requires owners to meet regularly with a recognized tenants’ association to discuss matters of concern, the KVTA has informed DHCR that they have been largely excluded from this process.‘As your supervising agency, DHCR hereby directs you to cease and desist in holding any further such meetings and to provide my office with a written response to the above inquiries promptly. Sincerely, ALU Mark Colén Deputy Commissioner Ce: KVTA Steering Committee Co-Chairs James Capalino, Principal, Capalino & Co. Michael Grinthal, Urban Justice Center