Skip to main content

Featured Post

Atlantic Yards/Pacific Park infographics: what's built/what's coming/what's missing, who's responsible, + project FAQ/timeline (pinned post)

When faced with tough questions (MWBEs, union jobs, ROI), developers behind pending rezonings get evasive. One doesn't own the property yet. The other says he does, but won't prove it.

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

To pursue a spot rezoning, such as the two pending 17-story (or maybe 15-story) projects at 870-888 Atlantic Ave, and 1034-1042 Atlantic Ave., is hardly a simple job for a developer: they have to assemble the land, hire lawyers and architects, and complete an expensive Environmental Assessment Statement.

To get through the city's Uniform Land Use Review Process (ULURP), they have to get advisory votes from the Community Board and Borough President, and approvals from the City Planning Commission and then the City Council.

Orig. 1034-1042 Atlantic /Archimaera
The developers of both projects--who share the same architect and land use lawyer--have cooperated with Community Board 8 leaders, agreeing to downsize their original plans somewhat and to commit to the deeply affordable option under the city's Mandatory Inclusionary Housing. 

So that has been claimed as getting the board's support--though, as I described, the resolution followed a complex set of votes and cascading preferences.

Few tough questions

However beguiling the architectural designs and cooperative the developers seem--and that's clearly in their interest, to achieve new bulk worth tens of millions of dollars--they've rarely faced tough questions. 

Hudson at Council hearing
So it's worth focusing on the few times they've faced skepticism. Indeed, at CB 8 meetings and at a recent City Council subcommittee hearing, both developers (and their team) were evasive when faced with basic questions about their business practices, such as use of MWBE contractors or union jobs during construction.

In response to 35th District Council Member Crystal Hudson, Yoel Teitelbaum (Y&T Development), the developer behind 870-888 Atlantic, acknowledged he doesn't even own the property that he's seeking to rezone. 

And while Elie Pariente (EMP Capital), the developer behind 1034-1042 Atlantic, says he owns the property, no confirmation appears in city records, and he would not provide evidence when queried.

A valuable strategy

EMP Capital's website, while not mentioning any Brooklyn projects, hints at the spot rezoning strategy with an opening quote for real-estate investor David Waronker, "Buy Real Estate in areas where the path exists and buy more real estate where there is no path, but you can create your own." 

That path surely includes a rezoning. As I wrote, the owner of 1010 Pacific Street, after that rezoning, in 2019 sold the property for nearly 2.4 times what had been paid four years earlier. 

Previous properties in the M-CROWN, post-rezoning, have been valued--see explanation-- between $170 and $291 per buildable square foot. The 870-888 Atlantic and 1034-1042 Atlantic projects, according to proposed revisions, would have 170,000 square feet and 172,000 square feet, respectively, and contain 206 and 200 apartments.

(Update: they'd have 228 and 210 apartments.)

That suggests--before adjustments--that the properties, post-rezoning would be worth between $29 million and $50 million. That value should be lowered, however, because these properties, unlike the previous ones, have 20% of the units at deep affordability and more job-creating space.

What about ROI?

At CB 8's 10/7/21 Land Use Committee meeting, then Chair Ethel Tyus, posed a basic question to Teitelbaum's team: "What is your expected ROI [return on investment] on this this effort?"
Lobel at Council hearing

"I don't know because I'm not the developer," responded architect Nick Liberis. "I haven't even seen the pro forma," the projection of costs and revenues.

"What's your expected ROI, Mr. Lobel," Tyus followed up with project attorney Richard Lobel.

He dodged the question with a word salad. "Sure. I'm happy to talk about this because we do talk about this with the City as well, when we're deciding what we should be asking for," Lobel said. "And the conversation around that is that we're not really afraid to to say that this is going to be mixed in this building, with both affordable and market-rate units. There are people who come to the city who come from, you know, places like Ohio, who do not qualify for 40%-60% AMI [Area Median Income] and this building provides a chance for them to move here as well."

Orig. 870-888 Atlantic Ave./Archimaera
Lobel said he could defer to Teitelbaum, "in case he knows... offhand with the ROI is." He didn't. 

Teitelbaum, whose firm has no web site, was something of a cipher, not appearing on camera or even speaking (as far I can tell) at CB 8 meetings, letting his land use counsel and architect to do the talking.

At a subsequent meeting 10/11/21, Tyus followed up: “Would you care to share your anticipated ROI?”

“I asked Yoel about that," Lobel replied. "He said that, while he’s worked out the financial implications of Option 3 [affordability], he hasn’t really worked out an ROI, so allow me please to go back to him." No response was announced.

Calculating ROI without ownership

Well, any ROI calculation would have to factor in Teitelbaum's investment, and that, we recently learned, is a mystery.

Though a Department of City Planning staffer, introducing the 870-888 Atlantic project to the City Planning Commission 9/20/21, said the development site was "all under applicant ownership," that's not so, as Hudson elicited.

At the Council's Subcommittee on Zoning and Franchises hearing 3/8/22, Hudson asked Teitelbaum, who was finally on camera, "How long have you owned the property on Atlantic Avenue?"

Attorney Lobel took the question: "So I can talk about that. Yoel can always weigh in. Yoel's currently in contract to purchase the property."

"When do we think that's going to be finalized?" Hudson asked.

Teitelbaum at Council hearing
"I'm not sure if there's a closing has been scheduled yet," Lobel said, before Teitelbaum clarified, "Yeah, there is a closing date, January 7 of 2023. That's in around nine months." 

"So you'll be you will assume ownership of the property January of next year?" Hudson asked.

"Correct," Teitelbaum responded. "I mean, it might be even earlier, but that's the latest day that we can close on the property."

"So who currently owns the property?" Hudson asked. (She got no answer, but the two parcels have been owned by Odyssey Realty since 1996,  city records show, as in the screenshots at right.)

"And is the sale of the property contingent upon a rezoning?" Hudson asked.

"No, the purchase is not contingent," Teitelbaum said. "I'm in contract hard on the property. So I have to close when the time comes."

That's interesting because presumably the sale price is based, at least in part, on the upside of a rezoning, which would make the property immensely more valuable. Surely some would prudently put in a contingency.

"Just as an aside," lawyer Lobel interjected, "pursuant to the city charter, you actually don't have to own a property in order to rezone it, as a legal matter. As long as you're a taxpaying entity in the city of New York, you're able to rezone a property. So here the application comports with the charter and with law. It's just that Yoel won’t assume ownership until January."

"Copy," responded Hudson. "So if this project is not approved, you will you continue on with the purchase of the property?"

"Yes," said Teitelbaum.

"And what would you do with it afterwards," she asked, "if the project isn’t approved?"

"I'll continue to rent it to any future tenants," he said. "Right now the property is vacant pretty much."

What about 1034-1042 Atlantic?

At CB 8, Tyus did not ask developer Pariente about ROI, but did tell committee members "you will hear from one of the--the best applicant that has come before this community board, who's been supportive and sensitive and smart and just wonderful."

By the standards of past rezonings in the M-CROWN district, Pariente does stand out. Unlike two other owners, he hasn't flipped the first property he got rezoned, the Grand Pacific rezoning, at 979-985 Pacific Street. 

For that project, in exchange for a significant boost in bulk over CB 8's M-CROWN guidelines, he agreed to devote 25% of ground-floor space to job-creating uses. He agreed--and Council Member Laurie Cumbo ensured--to only consider Option 1 under Mandatory Inclusionary Housing, CB 8's then-preferred goal. 

And he signed what CB 8 called a "Community Benefits Agreement" to memorialize the promise, including a restrictive declaration filed with the city, governing any future owner. 

But his ROI is just as questionable.

Though a Department of City Planning staffer, introducing the 1034-1042 Atlantic Ave. project to the City Planning Commission 9/20/21, also said the development site was "all under applicant ownership," that's hard to pin down.

Pariente at Council hearing
At the Council subcommittee hearing, Hudson asked, "So Mr. Pariente, can I just ask how long you've owned this property on Atlantic Avenue?"

"The equivalent of two years," Pariente said.

He confirmed, in response to follow-up questions, that he bought the property to develop a residential building and, were the application not approved, it would probably be used as storage space.

But there's no record of any purchase in ACRIS, the city's property database. Records show that the property has been owned since 1999 by Gold Star "A" Realty, which acquired the property in 1999 for an unspecified sum, and got a $380,000 mortgage, according to the screenshots at right.

I queried Pariente by email about the discrepancy 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."

I followed up, noting that the question was not merely his ownership but the value of the transaction. I got no response.

My query to the NYC Department of Finance about the rules regarding filing, though it got an initial response, also ran aground.

(Update: if "[e]very single communication from a city agency.... must be approved by City Hall, Mayor Eric Adams has instructed administration staff," Politico reported 4/4/22, we may be waiting a while.)

MWBE hiring: "Black and brown" subcontractors?

During the Council Subcommittee hearing, Hudson said, "Do you have a plan in place to ensure local hiring and MWBE participation during construction and by MWBE, I specifically mean locally owned Black and brown subcontractors."

Yes, said Pariente, noting that he had earlier told Subcommittee Chair Kevin Riley that, on the Pacific Grand project, they are 25% to a third "MWBE trade and subcontractors. We absolutely intend on doing the same for this project. And as a matter of fact, one of them is signed on to testify on the project later."

Hudson had to leave the virtual hearing to attend a different committee hearing. So, moments later, Hudson missed the MWBE subcontractor signed up to speak: a Hasidic woman from Borough Park, Blima Perlstein, whose company Perfect Enterprises qualifies as Women-Owned Business Enterprise,

Perlstein managed her own word salad, conflating the notion of "women" and "minority." "My company is Perfect Enterprises. I'm a minority women’s-owned city-certified constructor, construction business company," she said. "I've been working with Mr. Elie at his Pacific Street project right now.... I'm doing the entire envelope of the building."

"So I just have the nicest things to say about these people," she said. "Their goal is to help the community, to help the local businesses, to help us, the minority businesses out there that struggle, you know, sometimes to get work, especially as a woman, I'm always the underdog in the construction field." 

Indeed, she might be an underdog, but Hudson's query had been evaded.

At another point in the hearing, Hudson asked the same question regarding 870-888 Atlantic: "Do you have a plan in place to ensure local hiring and MWBE participation during construction and specifically locally owned Black and brown subcontractors?"

Lobel said that Teitelbaum had executed a letter of consent to retain Brooklyn-based contractors and subcontractors, especially local business enterprises and MWBE, no less 20% but with a goal of 25%. That of course doesn't keep them from fulfilling the letter, but not the spirit, of the law.

Map by Kaja Kühl; rezonings in light blue are pending; apartment counts, from Environmental Assessment Statement filings, include full areas rezoned, not just promised projects

(The M-CROWN acronym refers to "Manufacturing, Commercial, Residential Opportunity for a Working Neighborhood," but it is rarely explained in CB 8 presentations.)

Union jobs

Hudson also asked Pariente about union jobs during construction at 1034-1042 Atlantic.

"Yeah, I mean, that's that's the GC [general contractor] usually really does the hiring," Pariente said. "We're obviously not at that stage yet. But yeah, probably, I mean, inevitably, some of the, a decent chunk of the trades would be union."

He didn't say anything, though, about his track record at the Grand Pacific project, nor respond to my query asking for details. 

Of course, union wages are higher, so that's why construction unions show up to cheerlead for development projects (like Atlantic Yards/Pacific Park) where they expect work. The only union testifying regarding these projects has been 32BJ, the Service Employees International Union, which represents building service workers.

Hudson asked about union jobs during construction at 870-888 Atlantic.

"I don't think that the general contractor has been selected," Lobel said. "And I know that, well, there is going to be union involvement"--he changed the subject to after the building opens--"particularly in terms of 32BJ, that there's no specific designs right now, as far as, you know, whether union contracting would be used by the GC."

An untested--and previously unquestioned--developer

Hudson posed a question to Teitelbaum that somehow hadn't been asked. "We don't know, much about your track record in terms of development," she asked. "So do you have experience in developing a building of this scale?"

Teitelbaum said he was born in Israel but moved here when he was 2 years old and "I'm 37 now. And I've seen a lot of growth in Brooklyn in the past years. I've gotten into real estate since 2009. I've built a lot of smaller size of developments the past 10 years. The last two, three years, I've grown a lot. I own actually a big development site in Jersey City. We're building now 55 units. This is one of our next biggest projects that we're working on. And I feel very strongly and comfortable—if this gets approved, this building will be up in the next three years."

Sure, confidence is key to developer success, but it does not a track record make. 

"And in all of your experience, have you been through a rezoning prior to this one?" Hudson asked.

"No, this is my first one," Teitelbaum said.