Co-op City considering privatization.

Residential brokers in the Bronx are keeping close tabs on Co-op City's plan to privatize the complex, which could mean thousands of apartment sales handled by private brokers.

"Even if half of those units came on the private market, it could mean a lot of new business for residential brokers," said broker Charles Brophy, of Charles Brophy Associates which has offices in the Riverdale section of the Bronx.

Residents of the complex are considering a plan that calls for the 34-year-old complex to exit the Mitchell-Lama program and come under private control. If the plan is adopted, residents who wish to move out of the complex could sell their units at fair market values.

This could be a boon to residential brokers in the Bronx, which would potentially handle the sales. Currently, sales are handled by Riverbay Corporation, the owners of the complex, under guidelines set forth in the Mitchell-Lama program, officials said.

Faced with the need to raise $430 million for repairs and debt for the 15,372-unit complex, Co-op City residents and officials have been considering ways to raise money, including refinancing and privatization, for several years.

Built in 1968 under the Mitchell-Lama program, Coop City has 35 residential towers, seven schools and three retail centers on more than 300 acres. In 1999, Marion Scott Real Estate Inc. became the first outside firm's in Co-op City's history to serve as property managers. Marion Scott is overseeing the privatization efforts -- and would stay on as property managers if its contract was renewed - but would not serve as brokers for the sale of units if the complex is privatized, officials said.

Under state regulations, privatizing Co-op City would require two affirmative votes from residents. On April 24, residents will take the first of those votes. If it passes, complex representatives will be allowed to explore a plan that calls for exiting the Mitchell-Lama program and raising millions by selling units at market rates.

A second vote, which must be approved by two-thirds of the community's shareholders, would be required to adopt any plans drafted after the April 24 vote.

"If we get the approval to explore the issue, we will get to work in drafting a privatization plan," said Herbert Freedman, of Marion Scott.

Under the plan, the Riverbay Corporation would receive a transfer fee of one-third of the gross sale amount of an apartment. Apartment sellers would get the remaining two-thirds.

With an estimated 1,076 apartments that would be expected to become vacant within a year of privatization, the complex would raise $27 million. This figure is based on apartments selling for an average of $75,000 per apartment (or $15,000 per room.)

Selling units in the private market could also prove to be beneficial to residents. When the complex opened, residents paid $500 per room to buy a unit. That figure has since risen to $1,950 per room, officials said.

Virginia Gallaher, a real estate professional who serves on Community Board 10 which governs the area where Co-op City is located, said she favored plans to privatize the complex.

"From an economic point of view, it would probably be in the best interest of residents and others involved," said Gallagher.

She was optimistic about prospective sales in the private market, citing the numerous amenities that can be found in Co-op City such as schools and the Bay Plaza shopping center.

"From every apartment you have an-amazing view," Gallagher said. "It's a lovely neighborhood and a great place to bring up a family."