“Quintessential New York location! Spectacular sunset views!” The Web site for Ramscale Productions tantalizes wedding planners with photos of its 3,500 sq. ft. penthouse and 1,000 sq. ft. terrace. How thrilling to have a wedding party in a gorgeous penthouse loft in the hottest neighborhood in town! The artist residents of Westbeth are not so thrilled, however, because they have been subsidizing Ramscale’s bargain-basement commercial rent for going on forty years. While the artists face staggering rent increases to pay more than $10 million in hurricane damage repairs and a major façade restoration, the Ramscale tenants sublet their space for as much as $10,000 a day.
For artists, a low-to-modest income is a requirement for admission, but no such restrictions apply to commercial tenants. Given the extraordinary circumstances, would it not be prudent to assess these leaseholders to help pay the repair bills? Apparently, this question is not even being asked.
Westbeth Board Sues the Attorney General
From its inception in 1970 the revenue from artist residents has far exceeded that of the commercial tenants, and for decades the Westbeth Board of Directors’ excuse has been the undesirability of the neighborhood. Although this excuse is no longer valid, the current Board refuses to reveal information about the current commercial rent roll. In fact, Executive Director Steven Neil has told the Westbeth Artist Residents Council (WARC) they do not have the right to receive any details about Westbeth’s finances.
In 2013, an attorney for an ad hoc subcommittee of WARC filed a Freedom of Information Act letter with the New York State Attorney General, requesting the financial records Westbeth had filed with their office. The AG was preparing them for release when the Board sued the Attorney General to prevent it. This legal stonewalling continues. Why is the Board going to such lengths to keep its finances a secret?
Westbeth Is a Public Charitable Trust in Perpetuity
Although the Board refuses to provide information about its current finances, an exhaustive survey of its commercial space conducted in 1985 can be used as a benchmark for current commercial rents. At that time Westbeth was in arrears on its mortgage, and an earlier Board had sponsored a co-op conversion plan as “the only way” to prevent a HUD foreclosure. A group of residents [disclosure: this writer was one of them] retained attorney Gustave Harrow to explore an alternative.
Harrow was a professor of legal ethics and art law at NYU who had recently retired from the State Attorney General’s Bureau of Charities and Trusts. At his initial meeting with the resident artists, they learned for the first time that Westbeth was a public charitable trust with special protections under the law that prohibited a co-op conversion. Its charter as a public trust also provided penalties for trustees who wasted or benefitted from Westbeth’s assets, and its mission mandated that artists’ rents be kept low by deriving a third or more of the rent revenue from its 100,000 square feet of commercial space.
In preparing his alternative to the co-op plan, Harrow did an analysis of ninety commercial leases and was shocked to find “an inexplicable failure of prudent management…with repercussions to this day.” Prime locations on the 12th floor and penthouse of the main building had been “extraordinarily undervalued.” The most egregious “sweetheart” lease was for the Ramscale penthouse, locked in for ten years at $4.20 a sq. ft. As the tenants were also living there illegally, without the necessary Certificate of Occupancy, Harrow could find “no apparent reason why this lease was not being challenged.”
The good news was that the Ramscale lease was one of eighty that would soon expire. Harrow then submitted a “forbearance agreement” that showed how three-year, “extremely prudent” commercial rent increases would resolve not only Westbeth’s current crisis but also ensure a future of “robust fiscal health.” His plan was accepted by the Attorney General, HUD, the NEA, and other relevant government agencies. Whether it was implemented is another question.
Will Westbeth Be the Next St. Vincents?
There are indications that not much has changed: Ramscale is still here, making a killing off Westbeth’s assets. One of the new commercial tenants is the son of a former Board president, occupying an office in first-floor, river-view space. Articles published in the New York Post and Real Estate News in March 2014 quote an agent hired by the Westbeth Board to broker 70,000 square feet of newly renovated commercial space. “Rents will be substantially below market. We could provide someone with a 49-year lease, and they could almost have ownership of a large block of space, with a dedicated entrance.” It seems that history is repeating itself: long leases, low rents, with “repercussions to this day.”
Will Westbeth share the fate of St. Vincent’s—a sudden collapse of a venerable nonprofit institution after years of a Board’s assurance that everything was in order? WARC president George Cominskie does not believe Westbeth is in the same situation, but he notes a similarity. “The Westbeth Board says we should trust their decisions, but if it is not transparent on fiscal and policy items, how do we really know we are not in the same situation? Past Boards took us to the brink of bankruptcy, twice, and we want to make sure it doesn’t happen again.”
Catherine Revland is a journalist and historian who has lived in the West Village since 1979.