Stuyvesant Town—Peter Cooper Village Michael Nagle/Bloomberg via Getty Images

In 2015, New York City gave the new owners of the Stuyvesant Town–Peter Cooper Village housing complex $220 million worth of subsidies in exchange for keeping 5,000 apartments rent-regulated for twenty years, in the single largest affordable housing deal in city history. Today, the Independent Budget Office released an analysis of the agreement, which concludes that the de Blasio administration’s outlay of cash bought a lot less than it promised.

Blackstone Property Advisors bought the 110-building, 11,227-apartment complex for $5.45 billion in October 2015, five years after its previous owners lost it to foreclosure. Amid worries that the new owners would seek to convert the middle-class enclave to luxury housing, the de Blasio administration agreed to waive the $76 million mortgage recording tax on the sale and arranged a $144 million loan that will effectively be forgiven. In exchange, Blackstone committed to keeping 5,000 apartments in the complex affordable until 2035. If the units’ rent-stabilized tenants moved out, the apartments would be rented to tenants who qualified as “middle income” or “low income,” with rents limited to 30 percent of their income.

De Blasio declared the deal to be “an achievement that helps us ensure we can keep this a city for everyone.” But according to the IBO report, the majority of the apartments involved would have stayed affordable even if the city had kept its $220 million.

The catch is that Blackstone would have been required to keep apartments rent-stabilized regardless until their tenants moved out — and most would have stayed put for the bulk of the next two decades. Calculating the benefits in terms of “apartment-years,” for 5,000 units over twenty years, the IBO estimates that “64,000 of the apartment-years of affordability the de Blasio administration attributes to the agreement would have remained rent stabilized even without the deal. In other words, the deal can be credited with 36,000 apartment-years of additional affordability — not 100,000.” That means the city subsidies, instead of averaging around $185 a month for each apartment kept affordable, actually cost a bit more than $500 a month per apartment.

Additionally, only about 3,000 apartment-years, the IBO says, will go to “low-income” households, defined as up to $58,000 a year for a couple, or up to $1,450 a month in rent. About 27,000 will go to “middle-income” households (up to not quite $120,000 for a couple, or just under $3,000 a month in rent), while 6,000 will be in apartments that will remain rent-stabilized longer than they would have without the agreement.

The 2015 agreement was put in place to clean up the mess left after Tishman Speyer and BlackRock bought the complex in 2006 for $5.45 billion, the highest price ever paid for a U.S. residential property. That deal was an upscale version of “predatory equity,” meaning it would only be profitable if a substantial number of rent-stabilized tenants moved out and their apartments could be deregulated afterward. Tishman Speyer hired investigative companies to spy on tenants it suspected of illegally subletting, and at one point was refusing to renew 15 percent of tenants’ expiring leases, Stuy Town resident Marina Metalios wrote in Tenant/Inquilino in 2010. More than 4,300 apartments had been deregulated by 2009.

Stuy Town–PCV tenants, however, threw a wrench in the gears. They argued that any deregulation was illegal, because the complex was receiving J-51 tax breaks specifically intended to help landlords improve rent-stabilized apartments. In the 2009 Roberts v. Tishman Speyer case, the Court of Appeals, the state’s highest court, ruled in their favor. The buildings went into foreclosure three months later.

That left a complex situation in which new rents had to be calculated for the thousands of apartments the court returned to rent stabilization. The 2015 deal protects some of those roughly 5,800 tenants from having to pay the full market rate even after the buildings’ J-51 benefits expire in 2020.

However, the agreement will probably protect less than a quarter of them, the IBO says. In theory, it limits rent increases for those apartments to 5 percent a year for the first five years after 2020 — but to qualify, the apartment has to have been deregulated before 2009 and subsequently reregulated in 2011, and it still must be occupied by the same tenant in 2020. The IBO estimates that only about 1,400 apartments are currently eligible.

Many of the apartments’ reregulated legal rents were set higher than the actual market rate, the report says — the median in 2015 was $4,800 — leaving more than 80 percent of their tenants paying discounted “preferential rents,” with a median of $3,500. More than 900 of the 1,400 tenants eligible for protection are paying preferential rents, so when the J-51 benefits expire, there will be no legal impediments to them getting whacked with rent increases that the IBO estimates will average $820 a month.

It is difficult to compare the bang for the buck of agreements the city makes to preserve affordable apartments, IBO deputy director George Sweeting says, because by definition, they “tend to be sort of one-off deals.” But the report notes that many other preservation programs under the mayor’s affordable housing plan limit rents for at least thirty years, not twenty. That includes the similar deal at Riverton Square in Harlem, which, like Stuy Town–PCV, was built by the MetLife insurance company just after World War II, purchased by a predatory-equity owner during the Aughts’ housing bubble, and foreclosed on during the Great Recession.

(The mayor’s office did not respond to a Voice request for comment by press time.)

UPDATE: The de Blasio administration has angrily criticized the report, saying it underestimated the likelihood that the new owner would have increased turnover by pushing out rent-stabilized tenants and converting their apartments to luxury units.

“Rent regulation is not the shield the IBO is purporting it to be,” Department of Housing Preservation and Development commissioner Maria Torres-Springer said in a statement. “We were not prepared to leave a single below-market unit on the table when we had an opportunity to protect all 5,000 below-market units. Our intervention offers far greater protections to the tenants in those units and guarantees that those units will remain affordable and serve low- and middle-income residents upon turnover.” The mayor’s office said the agreement secured $505 million worth of affordability, more than twice its $220 million cost.

“The IBO analysis brazenly overlooks a key fact: Without the agreement’s guarantees, a new landlord would have had massive market incentives to keep deregulating affordable units,” Susan Steinberg, president of the Stuyvesant Town–Peter Cooper Village Tenants Association, said in a statement released by the mayor’s office. “Our neighbors have seen that movie before, and it was a disaster for our community and for the city. It’s hard to take the IBO report seriously without proper acknowledgment of that fact.”