City Hall inflated the value of the 21 buildings it bought off two notorious, politically-wired slumlords for $173 million by assuming they will generate far more rent than they’ll actually receive, documents released late Monday show.
The 2,000 page document dump came in response to a subpoena issued by City Comptroller Scott Stringer, a fierce critic of the purchase.
“It’s a shame that it took a subpoena from the Comptroller’s Office for the City to release what should have been public information about a multi-million dollar deal,” said Stringer spokeswoman Hazel Crampton-Hays.
City Hall bought the buildings — 17 in The Bronx and four in Brooklyn — from Jay and Stuart Podolsky, brothers who pled guilty of felonies from a tenant harassment scheme in the 1980s.
Mayor de Blasio has repeatedly argued the price was fair, considering the circumstances and a desire to avoid a legal fight.
“We attempted in negotiation with that threat on the table and what became clear was that the actual market price was higher than we would have liked it be; but that was the market price,” he said on NY1 last week.
However, the documents dumped cast new shadows on that claim.
De Blasio’s defense rests on the city’s most generous evaluation, which pegged the value of the buildings at $143 million.
The records show the Law Department appraisers arrived at that figure by assuming roughly half of the units would qualify for lucrative rents through a Department of Social Services program. That’s despite DSS having no plans to put clients in the buildings, officials acknowledged late Monday.
Instead, officials plan to use the 729 apartments for rent-stabilized housing. That usage cuts the buildings’ value to just $117 million.
At one 25-unit Bronx building, the Law Department’s appraisal assumes that DSS subsidized one-bedroom apartments will generate $1,637 a month in rent for 13 apartments.
The building’s 8 other one-bedroom apartments will fetch an average of just $991 a month under rent stabilization.
The DSS-rent boost means the building was estimated to be $4.1 million, instead of just $3.5 million.
That pattern repeats itself throughout the appraisals.
At a 20-unit building in Brooklyn the city purchased — the DSS rent subsidies increased the building’s appraised value from $4.1 million to $4.5 million.
The Podolskys began leasing the buildings in 2001 as part of the city’s controversial ‘cluster’ shelter program, buyout is part of the city’s plan to wind down the ‘cluster’ program.
However, the deal has come under intense scrutiny because of the price tag, Podolsky ownership and links to Brooklyn Democratic power broker Frank Carone — who represented the Podolskys in the deal and who has extensive access to the top levels of City Hall, emails show.
“We’re going to keep proceeding because at the end of the day, children and adults are getting permanent housing,” said DSS commissioner Steve Banks, defending the deal.
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