Just after CM Hudson announced agreement on upzoning, $14M sale of 1034-1042 Atlantic filed, suggesting large upside. Despite testimony, developer did not own parcel as of March 8 Council hearing.

See collected coverage of M-CROWN rezonings: click here.

Shortly after Council Member Crystal Hudson on April 12 announced an agreement regarding two pending requests for rezonings on Atlantic Avenue, the developer of 1034-1042 Atlantic, EMP Capital, sprung into action, with a construction permit filed as well as belated disclosures about the sale of the parcels.

And those disclosures suggest:

1. that principal Elie Pariente got a very good deal on the rezoning, since the value of the buildable square feet, even with a new requirement for 35% affordability, surely exceeds the $14 million price he paid
2. Pariente was not candid with Hudson when questioned at a City Council subcommittee hearing, on 3/8/22

Hudson asked, as shown in the exchange below, "So Mr. Pariente, can I just ask how long you've owned this property on Atlantic Avenue?"

"The equivalent of two years," Pariente said.

"And did you purchase the property with the intent to develop a residential building?" Hudson continued.

"Yes," replied Pariente.

  

But there was no record of any purchase in ACRIS, the city's property database. The parcel is west of Classon Avenue on the south side of Atlantic Avenue, and extends, in part to Pacific Street.

Elie Pariente at Council hearing

Pariente, like other witnesses, had affirmed (as shown in the screenshot at right) to "tell the truth, the whole truth, and nothing but the truth" in their testimony and in responses to questions.

The next evening, I queried Pariente by email about the absence of any sale record and was told "Yes I do own the property outright but not sure why you can’t see it on Acris. I can ask for a copy of the deed or some form of proof from our title company if necessary."

So I asked for the document, noting that it should be public, and that the question was not merely his ownership but the value of the transaction. I got no response.

Incentive for obfuscation

It's plausible that Pariente didn't want anyone to know the sale price, since that might be compared to the value of the upzoning, and could have influenced negotiators like Hudson to ask for even more than the 35% affordability and $100,000 (from each of the developers) to support anti-displacement services that she announced.  

Based on previous, post-rezoning transactions in the area, I estimated that the value of the requested bulk for 1034-1042 Atlantic was between $29 million and $50 million--then decreased somewhat, given that, as of then, an agreement for deeper affordability, with 20% of the lowest-income units.

Today, that decrease would be larger, given the negotiated 35% affordability, including 15% of the lowest-income units. But it still looks like a very good deal.

From ACRIS; click to enlarge

Document finally filed

After Hudson's announcement at around 2 pm on April 12, the sale document (below) finally was recorded/filed in the city's ACRIS database at 5:20 pm, indicating the $14 million sale price, as shown in the screenshot at right.

The document indicates that, while the contract date was 12/9/19, well before Pariente began pursuing the rezoning, the sale date was officially 3/9/22, the day after the hearing. (The document was prepared more than two weeks later, on 3/25/22.)

That suggests that, as of the 3/8/22 hearing, Pariente's statement that his ownership was "the equivalent of two years" really meant "in contract for two years." Of course, sale contracts aren't the same as ownership.

Part of 1034-1042 Atlantic site, from EAS

Yes, his statement a day later to me that he did own the property was technically accurate, since the deed had been signed that day by the seller and by him.

(I queried Pariente yesterday about the timing of the filings, as well as his statement at the Council hearing, but didn't hear back.)

Also filed at the same time was a mortgage (bottom) for $2.5 million, also dated 3/9/22 and prepared 3/25/22. Pariente, curiously, had signed the document on 1/11/22.

Even if sale documents are usually filed by the seller, the paired filing of the mortgage document with the deed suggests to me that Pariente did not want that information to be publicly viewable before the rezoning was pinned down.

Update: When Pariente signed the contract 12/9/19, that was just a few weeks after the 1010 Pacific property had been sold for a huge profit.

Note: no sale has been recorded for the parcels behind the other project that gained a rezoning last week: 870-888 Atlantic Avenue, between Vanderbilt and Underhill avenues. The developer, Yoel Teitelbaum, told Hudson 3/8/22 that he had an agreement to purchase the property by 1/7/23, but could consummate the deal before then.

Construction filings for 1034-1042 Atlantic

1034-1042 Atlantic/Archimaera

Also, as first reported by YIMBY 4/16/22, EMP Capital filed construction permits for 1034-1042 Atlantic: Job# B00715375 Filing# I1. Presumably their goal is to get the foundation in the ground by June 15, the deadline to qualify for the current 421-a tax exemption.

The 17-story, 175 foot building would have 213,850 total square feet (including underground) and 172,790 zoning square feet. The permit, as of now, indicates 193 total units, but, according to the city's Zoning Application Portal, would have 210 units:

A private applicant, EMP Capital Group, seeks a zoning map amendment, a zoning text amendment, and zoning special permit in Community District 8, Brooklyn to facilitate the development of a 17-story mixed-use building containing approximately 210 DUs (52-63 MIH), approximately 2,580 sf of community facility floor area, and 11,900 sf of commercial floor area to a total of 172,800 sf (7.2 FAR).

(Note that, according to Hudson's statement last week about 35% affordability and 150 affordable units, I did the math to estimate 428 total units: 228 at 870-888 Atlantic and 200 at 1034-1042 Atlantic. But she might have been was rounding off, and there could be 438 total units, with 153 affordable.)

The new permit application contains this surprising statement (screenshot at right) from the architect:

Per my phone conversation with Rami Bitar, please have this application assigned to Plan Examiner - Sean Linehan since he is the examiner for 563 Sackett Street (B00665570-I1) and these buildings are identical. As well, both projects are by the same Architect - Jeremy Zuidema. Thanks in advance!

Identical? YIMBY reported 2/6/22, 563 Sackett Street is a 135-foot, 12-story building in Gowanus, as indicated in DOB NOW, Job# B00665570 Filing# S1. That said, projects can change.