Monday, February 02, 2015

Nearly all condemnees in project footprint have left; state moves toward residential eviction; evidence suggests low-ball home valuation

Three houses slated for demolition, though departure
of condemnees in houses at left and center unresolved
Nearly all the condemnees remaining in seven properties in the Atlantic Yards/Pacific Park footprint have left or have agreed to leave, months after the state formally took title to their property.

But not quite all, and that made for some heated exchanges at a hearing last Thursday, 1/28/15, in front of Justice Wayne Saitta, the Kings County judge who oversees condemnation.

The judge gave one longtime homeowner another month to negotiate an exit, even as the state has suggested he consider "comparable" properties a good distance away, in Bedford-Stuyvesant and Crown Heights.

But the absence of another former homeowner meant Saitta issued a "writ of assistance" requested by the state to evict condemnees by the end of February.

Barring a settlement or extension in that case, Saitta's decision sets up some unsavory optics: a sheriff could be used to remove a family with a new baby to help a private developer owned mainly by the Shanghai government build a market-rate tower, albeit with a school.

With eminent domain already approved, Saitta in September conveyed ownership the seven properties--which involved eleven separate owners/leaseholders--to Empire State Development (ESD). All are located east of Sixth Avenue, either along Atlantic Avenue or on the 100-foot strip from Dean Street to Pacific Street.

The only remaining properties in the project footprint not yet condemned are those at Site 5, bounded by Flatbush and Fourth avenues and Pacific Street, currently home to P.C. Richard and the very busy sportswear store Modell's, and slated someday to be the site of a 250-foot tower.

Deadline for possession February?

In court, ESD lawyer Charles Webb told Saitta that "we were able to resolve eight" of the eleven extant cases, but needed the hammer of the law to resolve the rest. "Unfortunately, the construction of the development will create an issue if we don't get possession," said the lawyer, of the firm Berger & Webb.

Exactly how much is open to question, since the state has clearly backed off what it suggested were firm deadlines.

In an affirmation filed with the court, Webb wrote that it was necessary to get vacant possession of certain properties on Block 1128--between Dean and Pacific east of Sixth--by February because the 100-foot-wide site will be the location of the B15 tower. It will include some 330 market-rate apartments and a 100,000 square-foot public elementary and intermediate school in the base.

The school is necessary to mitigate a "Severe Adverse Impact triggered by the introduction of the new residential population in the area," Webb wrote, citing the June 2014 Second Amended Memorandum of Environmental Commitments agreed to by developer Forest City Ratner and its affiliates, and now inherited by Greenland Forest City Partners, which is owned 70% by the Shanghai government-owned Greenland Group.

The building housing Atlantic Wool, on Pacific Street;
photo via Google Maps
Given the requirements for planning by the School Construction Authority, Webb wrote,  the "school could open for the 2018 school year only if ESD gains control of the site by February 2015."

Then again, in court, he announced that Atlantic Wool, a fabric wholesale business at Sixth Avenue and Pacific Street--which had previously resisted signing an agreement to vacate--had agreed to leave by March 31. That suggests flex in the deadline.

(In 2010, Forest City's MaryAnne Gilmartin said that all buildings on the southeast block, destined for construction staging and surface parking, needed to be demolished. Still, they wound up keeping one building for offices.)

Similarly, Webb said that vacant possession of buildings on Atlantic Avenue east of Sixth was necessary because of the complex demolition process needed to prepare for the construction of a new Vanderbilt Yard. Vacant possession in February would presage demolition approvals around July, beginning a year-long process.

"This will leave only approximately 15 months, in an already tightly compressed schedule with minimal float time, to perform the remaining tasks to substantially construct the Yard, including constructing the footings and foundations for the future platform and buildings above the Yard," he wrote. "Any failure to obtain vacant possession by February 2015 will create a real risk that this schedule will not be met."

Storage Mart is emptied, but Sprint's cell phone towers
will remain through the end of April
Again there's some flex in the schedule. The one remaining occupant, Sprint, operates cell phone towers at 718-728 Atlantic Avenue, a building previously owned by Storage Mart. (Those renting at Storage Mart had until 12/18/14 to remove their storage.)

Sprint last Thursday agreed to vacate the portion that it occupies at the end of April, and allow access to the property for pre-demolition inspections, while the state agreed to waive use and occupancy fees, according to attorney Joshua Rikon.

One eviction coming?

"It is always my desire not to bring a writ of assistance," Webb said. "Hopefully, we can work it out today... but I'm not hopeful."

Indeed, one set of condemnees were not present or represented in court. Webb detailed correspondence sent to the residents of 491 Dean Street (the house at left in photo at top), Vincent Camporeale and Ioana Sarbu, saying they hadn't responded to the state, which had requested they leave by a now-passed deadline and told them the developer offered to pay their rent and permit them to return to the project. (Sarbu told me last night that she is in discussions with her attorney about the matter.)

The couple just had a baby and Sarbu's mother and brother, according to documents in the case, have apparently moved to the lower duplex of the house, which was previously rented out. (Sarbu said her mother is temporarily helping with the six-week-old baby.)

"Their only comment to Cornerstone," Webb said, citing the state's relocation consultant, "is they're going to stay as long as they can." (Sarbu said that statement was taken out of context.)

Saitta agreed to grant a writ of assistance as of Feb. 28. Whether that means the sheriff will evict the residents is another question. The courts sometimes do give more time, and the deadline may prompt negotiations and other assistance aimed to ease relocation.

A response in court

Jerry Campbell outside court.
Photo: Norman Oder
The state faced more resistance from Jerry Campbell, a lawyer whose family, immigrants from Barbados, has owned two houses on Dean Street for some 60 years.

"We have a long, one-sided history with Mr. Campbell," said Webb, citing a history of Campbell's non-responses to communications from his firm and Cornerstone.

"Mr. Campbell doesn't even live at the property," Webb charged indicating it had been listed on rental web sites. Campbell, representing himself in court, said he did live there.

No one clarified whether and when certain parts of the four-story building have rented out. (Campbell currently controls only the center house, while the other is subject to legal dispute among family members.)

"I wish to cooperate. My objective remains the same: to be put in the same position," Campbell told the judge, saying he wanted to own a house in Prospect Heights near public transportation.

Distinguishing himself from other property owners in Atlantic Yards negotiations who were newcomers, he said, "There's no money you can give me to buy my legacy. I just want a house." (He moved from the counsel table more than once to quiet his three-year-old son, who was with him in court.)

In a monologue from the 2010 play In the Footprint, Campbell reported he was treated condescendingly by Forest City Ratner, which pressured him to sell at a time and price they preferred. "Why then are you giving me a value for my house based on comparable sales for houses when you’re actually buying the land?" he reported telling Forest City executive Jim Stuckey. "And if you’re buying the land to build a skyscraper, then the value of my house today has nothing to do with what you ought to pay me.” That was the end of the conversation.

Getting comparable value?

Campbell said that Cornerstone proposed alternative properties that simply aren't comparable, given their location.  Of the 19 houses suggested, 13 were in Bedford-Stuyvesant and four in Crown Heights, with the sale prices--based on my look at court documents--averaging $1.66 million.

(Cornerstone, as The Real Deal reported in 2009, is publicity shy, and periodically criticized for offering relocation assistance of minimal quality.)

A letter from Berger & Webb in the court file set out a conundrum: "Whenever feasible, replacement housing alternatives will be provided in the project neighborhood. However, to the extent market forces fail to provide affordable alternatives in the Project neighborhood, ESD will provide listings of alternatives in other similar or better areas."

It's odd that "market forces" are blamed for failing to provide a condemnee with comparable property. First, the market is being bypassed via eminent domain and the state's override of zoning, which allow Greenland Forest City to build a tower far larger than Campbell or any other property owner could do on their own..

Secondly, shouldn't "market forces"--assuming the house is valued comparably with others in the neighborhood--yield a payment sufficient to purchase a similar house?

Saittia reminded Campbell that a condemnee typically gets advance payment for part of the home's value, and a trial or settlement later sets that value. That can take several years, but the condemnee does get 9% interest.

"What do I do for five or six years?" Campbell asked, indicating reluctance to go through that process. He suggested, instead, that the state and Forest City help him exchange his house for another one in Prospect Heights. (Webb noted there's a $700,000 lien on the house, something Campbell said he could pay off.)

Campbell also took aim at the larger issues around Atlantic Yards/Pacific Park, what I call the Culture of Cheating. He brought up of concessions to the developer, including a below-appraisal price for the rail yard, and extended deadlines to pay. He contended--as I've suggested--that school helps soften the notion of eminent domain, especially for a building that will have all market-rate apartments.

Not much progress

At Saitta's suggestion, Campbell and representatives of ESD and Forest City exited the courtroom to talk. Not much progress was made.

Back on the record before Saitta, Webb indicated that the state couldn't get involved in a house swap. "What we are willing to do is negotiate so he can get some money." The lawyer asked for a "backup date" by which Campbell had to leave.

Campbell seized on the "some money" colloquialism--which Webb had delivered rather offhandedly--as a signal of disdain. "As I said before, they can give me 'some money,'" Campbell declared. But the law was not supposed to disadvantage him. "I will get 'some money,'" he said, "but $1.5 million won't buy you a house in this neighborhood."

Campbell pointed out how a speculator bought an empty garage on Pacific Street in 2003, and turned it into a $3 million payout in 2006. He also noted that Daniel Goldstein, owner of a condo on the site of the planned arena, was paid $3 million to leave in 2010.

"Your honor, we're willing to negotiate a fair price," Webb said. The judge told Campbell he couldn't order a swap: "If you don't agree with the amount of money, we'll have a trial."

Saitta requested that the parties return on Feb. 26 if no settlement is reached. Campbell and Webb agreed to schedule a visit by an appraiser, and Campbell said he'd file additional papers.

Addendum: Atlantic Wool press release

From a 2/3/15 press release headlined Sanchez & Polovetsky, PLLC Negotiates Agreement in Atlantic Yards Eminent Domain Proceeding, Saving Brooklyn Business Over $200,000 With Extra 30 Days To Relocate:
Sanchez & Polovetsky, PLLC, a leading eminent domain law firm in New York City, successfully negotiated a beneficial Vacate Agreement for its client, Atlantic Wool Co. Inc., (“Atlantic Wool”), a condemnee in the Atlantic Yards/Barclays Center Eminent Domain Proceedings. The Vacate Agreement helps to save Atlantic Wool’s business by relieving the company from its obligation to pay the New York State Empire Development Corporation (the “ESD”) approximately $200,000 in unpaid back rent, and by securing an additional 30-day extension of time for Atlantic Wool to relocate. For many years, Atlantic Wool, through its President Aaron J. Piller, has successfully operated its textiles business at 666 Pacific Avenue, Brooklyn, NY a/k/a 25-27 6th Avenue, Brooklyn, NY 11217 (the “building”). Mr. Piller is a well-respected business owner in his Brooklyn community.
...According to Court records, last Thursday January 29, 2015, Sanchez & Polovetsky partner Jennifer Polovetsky, Esq. appeared on behalf of Atlantic Wool in Part 89 of the Brooklyn Supreme Court, in the case of Atlantic Yards Phase 2A, Index No. 12195/14. Polovetsky orally read the terms of the Vacate Agreement that the firm had negotiated on its client's behalf onto the record before Justice Wayne P. Saitta...
As shown by the terms of the Vacate Agreement with annexed stipulation on file with the Kings County Clerk's Office under Index No. 12195/14, Sanchez & Polovetsky, PLLC's client Atlantic will be able to stay in the building where it runs its business until March 31, 2015-a full month longer than the other tenants being evicted by the ESD; and Atlantic Wool will not have to pay a penny in use and occupancy rent.
“Not only does the agreement we negotiated save our client close to $200,000 in use and occupancy rent, but it allows our client an extra month to relocate its business from the 25,000 square foot plus Brooklyn warehouse where it has operated its textiles business for many years,” says Polovetsky.

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