Feds urged to reject plan to sell troubled Chinatown building for low-income seniors
(CNN) — The Federal Reserve’s board unanimously rejected a controversial proposal Tuesday to sell the site of a Chinatown senior housing complex for low-income seniors on the condition that the building be redeveloped for other uses.
The proposal by the Fed was submitted to it by the Federal Deposit Insurance Corporation, which oversees the nation’s top-rated bank, to sell the building at 798 West Grand Street to the FDIC over objections by several Chinatown businesspeople and the city’s planning commission.
The FDIC had proposed in March that the building be sold to private buyers under terms laid out in a letter from the bank’s president, who wrote the Fed and promised it that once the building ceased to be used as senior housing, the bank would purchase it as part of “a broader program to assist in the redevelopment of existing buildings in downtown Manhattan, including the redevelopment of older buildings in Chinatown and other neighborhoods.”
But there was little consensus among the FDIC board on the merits of the proposal, which was a first for the Federal Reserve board.
The FDIC and the FDIC’s chief counsel, Stephen G. Kohn, argued to the board that the FDIC’s proposal was different from other proposals it had examined in the past. The FDIC argued that the FDIC was not proposing to sell the building to the FDIC because it wanted to redevelop the building itself, and that the proposed redevelopment was a different kind of redevelopment than what the FDIC had in mind. Kohn did not address the FDIC’s argument directly, saying only that a new approach to redevelopment would have been the best way to sell the building.
After two hours of discussion, the Federal Reserve board voted 6-1 not to approve the FDIC’s proposal, and to reject the proposal on the grounds that the FDIC had failed to show that the bank had made a sincere effort to redevelop the building without demolishing it first.
“Without the FDIC’s commitment to this project, we are at a loss as to how to proceed,” Federal Reserve Board Governor Daniel Tarullo said. The FDIC’s Kohn, who voted in favor of the proposal, said that the FDIC had made a commitment to redevelop the building and had not. “FDIC has no confidence in its ability to do so,” he said.
Kohn said the FDIC had failed