Kushner Cos and The Distressed Properties it Owns in Manhattan – Reason to Stick with What You Know

Debt, Conflict and Vacancy Imperil Kushners’ Times Square Dream

Jared Kushner’s family averted disaster last year when a Canadian asset manager swooped in to buy their skyscraper in midtown Manhattan, which had been hemorrhaging millions of dollars. Now they’re facing a similar crisis a few blocks away.

At the former New York Times building on West 43rd Street, a graying property in Times Square, the pattern is uncannily similar: Buy at a steep price, pile on too much debt, run up big losses, fight with tenants and flirt with default.

It’s the latest example of overreach for a family that built a fortune on suburban rental properties, only to have its urban ambitions stymied. Kushner Cos. bought the first six floors of the Times building for $296 million in 2015, envisioning a multifloor amusement park in the heart of Times Square. Four years later, a toxic brew of debt, conflict and vacancies has put their investment in jeopardy.

Bright signage for several touristy attractions is displayed outside Kushner's building in Times Square.
Tenants at the Kushner-owned property include a bowling alley, a guitar store and an ocean-themed exhibit.
 Photographer: Jeenah Moon/Bloomberg

Think of the building as a vertical mall with three-story neon signs beckoning tourists. There are tenants the Kushners inherited: a sprawling sushi restaurant, a below-ground Guitar Center store and a two-story bowling alley with thumping music. And ones they brought in—in the basement, National Geographic Encounter, an exhibit about oceans with humpback whales and sea lions cavorting on digital screens; on the second floor, Gulliver’s Gate, featuring detailed miniatures of the Colossus of Rhodes, the Empire State Building, Jerusalem’s Western Wall and other famous sites, complete with miniature trains and glowing skyscrapers.

The Kushners’ new tenants have a few things in common, including ticket prices exceeding $30, underwhelming crowds and financial trouble. The National Geographic exhibit has paid only partial rent since August, and the Kushners are looking for a new tenant. Gulliver’s Gate paid irregularly, prompting a legal battle that resulted in its rent being cut by almost half this year. Take a walk around the back of the building, and there’s a dusty unfinished space meant for a champagne bar. It never opened. Kushner Cos. has traded lawsuits with the proprietor, an operator of airport restaurants that is alleging fraud, claims the Kushners have denied.

A spokeswoman for the National Geographic exhibit confirmed that the attraction wasn’t paying full rent, but she declined to provide details. Gulliver’s Gate founder Michael Langer said he was “happy we were able to work together for an amicable agreement.” A spokesman for OHM Concession Group, which leased space for the champagne bar, didn’t respond to requests for comment.

Leased tenants at 229 West 43rd St. at time of 2016 loan

Current tenants

Rental income lower than projected in 2016

Currently empty

Office Condo

4th floor

Bowlmor Lanes

After trading lawsuits, got rent cut by nearly half

3rd floor

2nd floor

Gulliver’s Gate

Haru Sushi

Ground

floor

Los Tacos No. 1

American Market

by Todd English

Never moved in

Cellar

floor

Replaced by The Ribbon

Guy’s American Kitchen+Bar

National Geographic Ocean

Encounter

Hasn’t paid full rent since August 2018

Subcellar

floor

Guitar Center

Sources: Loan prospectus, Bloomberg research

The missteps have added up. Kushner Cos. assumed that all these tenants would be paying rent when it piled $370 million of loans onto the building in an October 2016 refinancing, most of it from Deutsche Bank AG. In March, the company defaulted on one high-interest chunk of its debt to other lenders, and the property has often run at a loss after accounting for loan payments, according to data compiled from disclosures to investors. While there’s always room for improvement, spaces for so-called experiential retailers require custom designs and can take years to fill.

The story of how the Kushner family purchased a Times Square building only to see it founder during an economic boom is one of zealous overconfidence and a passion for trophy properties, according to more than a dozen people interviewed by Bloomberg News. It’s also a tale of how the real estate market encourages excessive risk-taking, rewarding those who use steep leverage on speculative properties even as they pass potential losses to others. Most of the debt on the Times building has been transferred to investors – it’s their problem now. Meanwhile, Kushner Cos. allocated some of the loan to pay itself $59 million, according to public filings.

Wells Fargo & Co., which manages the loan, has placed it on a watchlist for troubled debt and taken control of the property’s accounts. At one point, the building also drew the attention of federal prosecutors. The U.S. attorney for the Eastern District of New York subpoenaed records about the refinancing in 2017. What investigators were looking for, whether the Kushners were a subject and if the matter is ongoing is unclear. Spokesmen for Deutsche Bank and Wells Fargo declined to comment, as did Jared Kushner’s attorney, Abbe Lowell. Representatives for Kushner Cos. didn’t respond to numerous requests for comment.

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Top: National Geographic’s exhibit, where the fish are digital. Bottom: The shoe-rental counter at Bowlmor Lanes.
Photographers: Bryan Bedder/Getty and Yeong-Ung Yang/The New York Times

The former Times building and Kushner Cos. were both struggling when they came together in 2015. The 18-story landmark with a mansard roof had been the newspaper’s headquarters for almost a century, until the company moved a few blocks away in 2007. That same year, Africa Israel Investments Ltd. bought the building at 229 West 43rd St. for $525 million and began searching for a way to repurpose it, exploring everything from luxury condos to a Disney-themed hotel. When those plans fizzled, the company, led by Russian-Israeli diamond merchant Lev Leviev, decided to sell part of the site as a retail complex.

The rapid growth of internet shopping made many real estate investors skeptical. But Charles Kushner, founder of the company that bears his name and father of now-presidential adviser Jared Kushner, was still bullish on retail when Leviev’s brokers pitched him. He had reason for his optimism. In 2011, as Kushner Cos. was straining under a mountain of debt at its 666 Fifth Ave. skyscraper, selling the building’s stores for $1 billion helped pay off some of it and buy time.

Four years later, 666 Fifth Ave. was again operating at a loss. The Kushners were supposed to have improved the property and raised rents. Instead, they had been shopping a plan to knock it down and build a glittering high-rise twice as tall with a five-story shopping center at its base.

The Kushners needed an infusion of cash, and the bottom six floors of the Times building offered a tantalizing opportunity. Tens of thousands of peoplewalk by daily. The building was about half leased, but if the family could fill it quickly and bolster its rent rolls, Kushner Cos. could refinance at a higher valuation, taking any gains as profit.

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Brooklyn Properties in Bankruptcy, Fraud and a Madoff-Style Property Ponzi Scheme – Clever Fraudsters

Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)

Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)

Amid fraud case, a bevy of Brooklyn properties end up in bankruptcy court

Nearly 20 limited liability companies for individual multifamily buildings that are linked to a federal fraud complaint are now bankrupt.

The filings late last month in a U.S. bankruptcy court in White Plains also relate to over a dozen foreclosure cases initiated by an affiliate of Maverick Real Estate Partners, which in court filings is seeking information on the identity of the owner behind the low-rise, residential properties, all of which are scattered throughout Brooklyn.

In April 2017, Israeli investors Jacob and Binyomin Schonberg, Binyomin Halpern and Raphael Barouch Elkaim alleged in a complaint filed in federal court in Brooklyn that Yechezkel Strulovich and Yechiel Oberlander defrauded them out of more than $20 millionin a scheme carried out “in the style of Bernie Madoff.”

Eleven properties that are now in Chapter 11 proceedings — located predominantly in the neighborhoods surrounding Williamsburg and Crown Heights — were also named as defendants in the fraud case against Strulovich and Oberlander. That case, which a judge dismissed in part and sent to arbitration in 2017, included more than 40 defendants, mostly LLCs that have not filed for bankruptcy.

GC Realty Advisors' David Goldwasser (Credit: LinkedIn)

The LLCs that are bankrupt and own the underlying Brooklyn properties all list David Goldwasser of GC Realty Advisors as their authorized signatory, according to court filings. GC Realty is described as a commercial real estate advisory firm, per its LinkedIn page, which notes that it is based in Boca Raton, Florida, and has offices in New York. The state’s Division of Corporations shows that GC Realty has an address in East Midwood, Brooklyn.

Goldwasser is also listed as a principal at FIA Capital Partners, which is also based out of Florida and New York, according to his apparent LinkedIn profile.

A message left with FIA was not returned by the time of this story. The firm specializes in acquiring distressed properties and portfolios, according to its website.

Questions over control

The series of bankruptcies filed in White Plains starting on May 20 show that all of the properties, which number at least 18, are also affiliated with 73 Empire Development LLC. The latter owns the ground lease on a roughly 30,000-square-foot development site — it’s currently a vacant one-story retail building — at 73 Empire Boulevard in Crown Heights.

Empire Development, which is one of the defendants in the fraud case against Strulovich and Oberlander, also filed for bankruptcy in February. The debtor’s plan, according to court records in White Plains, is to build a 58,000-square-foot, two-story retail property at 73 Empire Boulevard.

Maverick's David Aviram (Credit: LinkedIn)

But the connection between Goldwasser’s GC Realty, Empire Development and the 18 other bankrupt properties is not yet clear. Maverick, the debt fund led by David Aviram that buys distressed mortgages, wants some clarity on the matter.

A recent filing from the debtors claims that one of Maverick’s affiliates, Brooklyn Lender LLC, took on 13 notes and mortgages — totaling $36 million — on 26 properties that originated with Signature Bank. As a result of the Chapter 11 filings, Maverick wants a judge to allow a full examination into who controls the various debtors, pointing to Goldwasser’s name in court documents.

“To Brooklyn Lender’s knowledge, Goldwasser was not previously involved with the Debtors, and understanding his new role and responsibilities with respect to these Bankruptcy Cases and the Debtors’ management is of paramount importance,” Maverick said in a recent filing.

Maverick noted that when the Signature Bank loans were made, Strulovich maintained that he was the 100 percent sole member of the debtor entities. In the fraud case, however, he admitted this was not the case. In October 2017, Maverick’s Brooklyn Lender filed 14 foreclosure cases against the now bankrupt properties, alleging that the loans were in default, in part due to misrepresentations by their owners.

The petition made by Maverick in bankruptcy court now asserts that a further examination is needed to determine who actually owns the Brooklyn properties, citing a guilty plea by Goldwasser to defrauding two banks in the early 2000s. Goldwasser was sentenced to 27 months in federal prison — Federal Bureau of Prisons records show he was released in September 2005 — and ordered to pay $2.8 million in restitution. A judge also ordered that Goldwasser “is not to be employed in any position requiring fiduciary responsibilities.”

All of the debtors in the bankruptcy cases, except Empire Development, have opposed the motion by Brooklyn Lender, claiming that its parent Maverick has an “unspoken agenda” and that they are working on a plan that includes paying back Maverick. Lists of unsecured creditors in the various bankruptcy cases show that Brooklyn Lender is owed between $2.7 million and nearly $5 million, while the New York-based law firm Abrams Fensterman is owed a little more than $150,000.

Mark Frankel, an attorney with New York’s Backenroth Frankel & Krinsky representing the debtors in bankruptcy proceedings, declined to comment, as did Maverick’s Aviram, which is being represented in bankruptcy court by Stroock & Stroock & Lavan. Strulovich and Oberlander could not be reached and their lawyers did not return requests for comment.

Unresolved fraud claims

In the fraud case against Strulovich and Oberlander, the defendants said that the money they received from the plaintiffs would be invested in Brooklyn properties that they would buy, develop and rent out, with returns on those investments coming in six to seven months. The plaintiffs also would receive 45 percent of the profits from the multifamily purchases.

But plaintiffs claimed that Strulovich, Oberlander and other defendants inflated the value of that real estate and used their money to acquire and develop properties for their own personal benefit, pay off personal debts and support their “lavish lifestyles,” according to the civil complaint filed two years ago. The Brooklyn sites purchased with their funds were “left to languish, undeveloped and dilapidated,” alleged the plaintiffs.

“The entire process was nothing more than an elaborate fraud to personally enrich the individual defendants,” said their lawsuit.

Court filings in that litigation claim that Oberlander allegedly approached the plaintiffs in early 2012 about investing in a project with him and Strulovich at 908 Bergen Street in Crown Heights. Oberlander sent prospectuses for 19 properties between 2012 and 2014 that were meant to entice the plaintiffs into make more investments, they asserted in the dispute.

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“If you treat them nice, they treat you back nice” – the Expansion of Kiryas Joel into Mixed Neighborhoods

Quest for suburban lifestyle pushes Hasidic frontier farther from KJ

WOODBURY — Joseph Waldman was one of the first settlers in 1976 in a small enclave that would soon become the Village of Kiryas Joel, an upstate outpost for Satmar Hasidic families seeking a peaceful refuge from the congestion of Brooklyn.

Forty-three years later, Kiryas Joel is a densely populated community of 24,000 or more, and Waldman and his family have relocated again, this time to neighboring Woodbury.

Waldman and his wife, Sarah, bought a house last year on Schunnemunk Road in the Country Crossing development, following five of their daughters who already had moved to the same quiet neighborhood. He proudly showed a reporter the picturesque view of Schunnemunk Mountain from his kitchen during a recent visit, and recalled the sense of tranquility he enjoyed as a Satmar pioneer in rural Monroe decades ago.

“Moving here is exactly the same feeling that we had moving here from the city 43 years ago and building that new house,” Waldman said.

The Waldmans are part of a steady flow of Satmar families migrating to the towns abutting Kiryas Joel, where they can get a single-family house with a yard and privacy for the same price as a condo in the crowded village. The trend started in 2015 during a tense conflict over efforts to expand Kiryas Joel and has continued in its aftermath, with couples and investors from Kiryas Joel and Brooklyn now having bought hundreds of houses in Monroe, Blooming Grove and Woodbury over the last four years, according to Orange County property records.

The most striking example is South Blooming Grove, where at least 387 homes, or 44 percent of all single-family houses in the village, have changed hands. In neighboring Woodbury, Hasidic families have settled in neighborhoods like the Waldmans’, where about 70 homes have changed hands, and Woodbury Junction, where about 100 houses and lots have been sold since a Brooklyn developer bought the stalled 451-home project in 2016 and resumed construction.

New complexes are being built or planned in Monroe, Blooming Grove and Chester as well, like the 181-home Smith Farm project taking shape on a hill off Route 17M in Monroe. One proposal still under review, the 600-home Clovewood project, could bring as many as 3,800 new people to South Blooming Grove, more than doubling the population of 3,200.

The home buy-ups and new construction have extended the frontier for Orange County’s Satmar community, which for decades had lived strictly in Kiryas Joel and adjacent neighborhoods close to the synagogues, religious schools, kosher stores, ritual baths and wedding halls that anchor Hasidic life. Now, school buses roll through Worley Heights in South Blooming Grove to take children to Kiryas Joel’s yeshivas, and Orthodox boundary markers known as eruvs line streets in Woodbury.

For a fast-growing community with large families and a constant need for more housing, new opportunities abound.

The suburban migration from Kiryas Joel represents a cultural shift for the Satmar Hasidim and raises new considerations for the towns experiencing or facing that influx. Though the transition has been ordinary in some respects, as routine as one family moving in to replace another, it has also triggered sporadic conflicts over development plans, eruvs and other issues, and has stoked anxiety among some about the future power of growing Hasidic voting blocs.

A ‘KJ without borders’

One late spring night in Kiryas Joel in 2015, attorney Steven Barshov took the microphone in the ballroom of a girls’ school to make his case to a crowd of about 600, Hasidic and non-Hasidic alike, about why it made sense for Kiryas Joel to annex 507 acres from the Town of Monroe. Barshov, representing the property owners who had petitioned for that border change, talked about the scarcity of building space in the Hasidic village and posed a leading question about its future population growth.

“So where are the people to go?” he asked. “Would you prefer that they be spread all around Orange County, which is -”

“Yes!” annexation opponents in the audience roared back before he could finish.

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De Blasio, Construction Money, the Kingmaker, a Donor Pool and a Presidential Bid [NYT Opinon]

De Blasio May Want to Be President. What Do His Donors Want?

His fund-raising for a possible White House bid raises ethical questions, again.

New York City Mayor Bill de Blasio’s flirtation with a White House run has generated virtually no interest among voters. One national poll in March found he was the only Democratic candidate with a net negative approval rating, though fewer than half of those polled had any opinion of him at all.

But his potential candidacy has caught the attention of people who do business with the city. They’ve been donating to the mayor’s presidential political action committee, the federal Fairness PAC, his latest vehicle for raising money from powerful interests.

Mr. de Blasio’s lowly showing in the polls didn’t, for example, dissuade John F. Fish, the chief executive of Suffolk Construction, a Boston-based company, from hosting a fund-raiser last month for the mayor’s PAC. Mr. Fish’s company is clearly hoping to expand its business in New York — Suffolk recently hired Shola Olatoye, who led the city’s public housing authority until last year — and may see an opportunity to win favor with a current mayor and future presidential candidate.

What’s disconcerting, however, is why Mr. de Blasio would welcome such donations, given the risk of even the appearance of impropriety, not to mention the fact that his fund-raising has raised ethical and legal questions since he first ran for mayor in 2013.

A donor to his first mayoral campaign pleaded guilty to bribing him to get favorable lease terms for a Queens restaurant. Federal prosecutors indicated that they didn’t charge the mayor because the Supreme Court had recently narrowed the scope of what could be considered corruption.

A donor to one of the nonprofits the mayor has used to advance his liberal agenda and raise his profile pleaded guilty to charges involving bribery after receiving special access to Mr. de Blasio and city officials.

The city’s Department of Investigation found that the mayor violated conflict of interest rules by soliciting donations for his Campaign for One New York from people seeking favors from the city, as the news site The City recently revealed. (The rules would not apply to the presidential PAC.)

That’s not to mention the Manhattan district attorney’s announcement in 2017 that the mayor’s fund-raising for the Democratic campaign to win the State Senate in 2014 violated the “intent and spirit” of campaign finance laws by directing contributions meant for political committees toward specific candidates.

Fund-raising can taint City Hall by giving the appearance of pay-to-play, even if none is involved.

In 2015, the city lifted a deed restriction that allowed a Lower East Side nursing home that once served AIDS patients to be converted to condos. Among those who had pushed for the deed change was the lobbyist James Capalino, who steered $40,000 to Mr. de Blasio’s 2017 re-election campaign and $10,000 to the Campaign for One New York. Mr. Capalino has said that the client he worked for who sought the deed change fired him in 2014 after he was unsuccessful, and that he wasn’t involved in the issue afterward. City Comptroller Scott Stringer investigated the land deal and blamed it on mismanagement by city officials.

Mr. de Blasio, who is barred by term limits from seeking re-election, is using his federal Fairness PAC to pay for his travel to states like Iowa and Nevada, which will be important if he runs for president. Mr. de Blasio has said the group will not accept contributions from anyone in a database of those doing business with New York City, a stricter standard than the federal rules the group must follow.

 

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17 Properties, $173M Price Tag, $43-$200M Appraisals, Property Owners Controlling Process – Profiteering from Homelessness

Appraisers question process NYC used to value properties before shelling out $173 million to shady landlords

Appraisers question process NYC used to value properties before shelling out $173 million to shady landlords

Mayor de Blasio’s release of hundreds of pages of appraisal documents used in the city’s controversial $173 million purchase of 17 properties from two shady landlords has raised more questions than it has answered, appraisers who reviewed the records said.

The biggest irregularity, they said, is that BBG Inc., the appraiser hired by former owners Jay and Stuart Podolsky, submitted an unsigned, “restricted” draft estimate intended only for the client, not the buyer. But the buyer, the city in this case, received a copy of that appraisal.

“It’s inappropriate to use it, especially if you know someone other than the owner might have to rely on your report,” said Michael Vargas, president of the Vanderbilt Appraisal Company. He said the use of draft and “restricted” appraisals is frowned upon in the industry because it gives a client the ability to influence an appraisal.

“It’s a way for the client, the property owner, to control the process,” Vargas said. “It’s kind of like talking to the client and asking him, ‘Let me know if I should change the value to your liking.’”

Paula Konikoff, a lawyer and expert on appraisal standards, said the city should not have accepted an appraisal from the sellers without a signature because it carries little weight as an estimate. “Frankly, they should know better,” she said. “Why didn’t they bother to get the signed document?”

Eight appraisal estimates of the properties offered widely divergent assessments of their worth. One, conducted by the city Department of Housing Preservation and Development, set the total value at $49 million. Another, commissioned by the city Law Department and conducted by Metropolitan Valuation Services, estimated the value of the properties was $143 million. A third, conducted by the Podolsky firm of choice, BBG Inc., was done by appraiser Joel Leitner, who worked for BBG at the time and put the value at $200 million.

 

City Department of Finance tax records list the total value of the 17 properties at just over $40 million. City tax levies are based on that number. If the properties were worth millions more, as some of the appraisals suggest, it means the city may have taxed the owners too little for years. If the true value of the properties is around $49 million, as one appraisal suggested, the city paid far too much for them..

De Blasio spokeswoman Jaclyn Rothenberg said the broad difference exists because the “valuations prepared by our independent appraiser were based on different assumptions than those used by DOF to annually assess all real property in the city.”

“DOF follows state law in valuing property and its assessments are based on current use. The independent appraisers valued the properties for acquisition purposes,” she said.

Even Leitner described it as “unusual” for anyone but the client to have a copy of such a draft appraisal.

“If my client asked me to give it to the city, I would have said no because it’s unsigned,” Leitner told the Daily News. “That should not be affecting the sales price,” he said, referring to the unsigned appraisal.

The Podolskys have a history of real estate woes in New York City. In 1986, they pleaded guilty to more than two dozen felonies in connection with their real estate holdings in Manhattan. They also allegedly covered up extensive fraud involved in acquiring the properties they are now selling to the city, several sources have told The News.

 

Last month, the city said it had finalized the deal to buy the 17 properties in the Bronx and Brooklyn used to house the homeless for $173 million. The city plans to convert the “cluster-site” apartments to permanent affordable housing.

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Homelessness in NY, Real Estate Enterprises and Sweetheart Deals and The Money that Owns NY Politics

De Blasio and Cuomo are failures on homelessness, report says

De Blasio and Cuomo are failures on homelessness, report says

Homelessness in New York City is projected to increase by 5,000 people in 2022 — 7,500 more than Mayor de Blasio predicted when he outlined his plan to tackle the problem in 2017, a new report from the Coalition for the Homeless revealed.

The report — the findings of which the Daily News obtained Monday — projects the spike unless de Blasio “immediately changes course” by increasing the number of apartments set aside for the homeless by 30,000.The Coalition, which plans to release its report Tuesday, slammed both de Blasio and Gov. Cuomo, giving both failing grades in four categories.

De Blasio got an F for his inability to create more housing. Cuomo received failing grades for his performance on housing vouchers, homelessness prevention and cost-shifting practices that the Coalition claims hurt the city.

“The mayor currently has a completely inadequate plan to address homelessness,” Coalition policy director Giselle Routhier said.

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In the city’s 2017 Turning the Tide on Homelessness report, de Blasio administration officials predicted the shelter population would dip by 2,500 by 2022.

But according to Routhier and the Coalition, that isn’t happening unless the city creates more permanent affordable housing, more quickly. Routhier would like to see 24,000 new apartments created through new construction and 6,000 added through preservation efforts.

“With this simple change, the city can provide thousands of homeless men, women, and children with safe, clean, and stable homes,” she said.

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De Blasio recently made a move to add more permanent affordable housing to the mix when it purchased 17 properties used as “cluster” site homeless shelters from notorious landlords Jay and Stuart Podolsky for $173 million. The two pleaded guilty to dozens of felonies in 1986 in relation to their Manhattan real estate holdings. They hired Frank Carone, a de Blasio donor and friend, to shepherd their most recent deal with the city to the finish line..

While technically adding permanent affordable housing to the market and potentially improving the lives of tenants, the units will house many of the same homeless people they housed when classified as shelters.

The Coalition did not spare Cuomo in its assessment either, taking him to task for not increasing the money it puts toward housing vouchers and failing to come up with a better plan to house people leaving prison.

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Rezoning Projects by the Books in Crown Heights, Hardly… Judge Halts Project

Arrested development: Judge halts controversial Crown Heights project amid legal battle

A Kings County Supreme Court judge slapped a controversial mixed-use development with a temporary restraining order on April 17, after local anti-gentrification advocates claimed the developer used every trick in the book to avoid having to preform a state-mandated environmental-review process, while the city let them get away with it to pave the way for more affordable housing.

We fought the Department of City Planning, and watched our elected officials allow the developer to lie on their applications, so they did not have to be held accountable for creating the largest residential complexes in Brooklyn,” said Alicia Boyd, founder of anti-gentrification group Movement to Protect the People.

The city awarded developers Cornell Realty and Carmel Partners the rights to build two 16-story towers near Franklin Avenue and the Brooklyn Botanic Garden at 40 Crown St. and 931 Carroll St. following a rezoning process that capped off with a December Council vote, where Crown Heights Majority Leader Laurie Cumbo wielded her key vote as the area’s representative to green-light the project, in exchange for the developer’s promise to expand the project’s affordable-housing component from 140 to 258 units.

But Boyd’s suit — which names the Department of City Planning and Cumbo as co-defendants, in addition to Cornell — alleges that the developers lied on re-zoning and building documents to underplay the scope of their proposed mixed-use project, misstating the amount of new residential units included in the development and ignoring vast swaths of affected land in a preliminary assessment of the project.

And fudging the numbers allowed the developers to illegally circumvent a much more thorough environmental review of the project, which the advocates claim would have demonstrated a serious strain on local sewers, roads, and schools as a result of the towers and the influx of new Crown Heights residents they would attract.

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