The following article by Richard Steier from The Chief is being republished in full with permission of the author.
By RICHARD STEIER
HUCKLEBERRY FINN HE’S NOT: Mayor de Blasio may feel like he’s lighting out for the territory every time he spends a weekend on the presidential campaign trail, but his continuing to accept political contributions from those with ties to notorious developers bruises his image as a reformer and suggests he’s a machine pol in progressive garb. State Sen. John Liu, a 2013 mayoral rival, said Mr. de Blasio had sought abolition of an admissions test for specialized high schools because that was easier than improving education in black and Latino neighborhoods.
Call me a cynic, but lately every time I hear Mayor de Blasio launch into his spiel about how there’s plenty of money in this city/country/world but “it’s just in the wrong hands,” I can’t help but think of the Podolsky brothers.
That would be Stuart and Jay, the offspring of Zenek Podolsky. The father launched the family real-estate business with crude-but-chilling simplicity: during the mid-1980s he paid a gang to use intimidation and harassment tactics to clear out buildings under rent control and rent stabilization so he could jack up rents.
When then-Manhattan District Attorney Robert Morgenthau announced seven indictments of unscrupulous landlords in the fall of 1984, including Stuart and Jay along with their father, he stated, “The planned alternative for tenants who refused to move called for the conspirators to bully, burglarize and menace those tenants and to ransack, burglarize and flood their residences.”
Zenek Podolsky got off with a brief prison sentence, buying leniency by handing over three Upper West Side buildings to the Coalition for the Homeless and testifying against the former head of the Taxi and Limousine Commissioner, Jay Turoff, about a scheme involving the sale of electronic taxi meters.
Kids Refined Methods
Stuart and Jay Podolsky got off with virtually no jail time. Andrew Rice, who reported on the Podolsky brothers’ operations early this decade for New York Magazine, found that they stopped emptying buildings by moving drug addicts, prostitutes and strong-arm men into vacant apartments to make longtime tenants’ lives miserable in favor of operating buildings where half the units offered shelter for the homeless under city contracts.
Ownership wasn’t in their names; they used shell companies that listed their lawyer’s name and that of Alan Lapes, who managed the properties for them. The New York Times, following up on a couple of Daily News articles, reported earlier this month that the city began contracting with the Podolsky companies for buildings for its cluster-site program for the homeless in 2001—the final year of Mayor Rudy Giuliani’s administration. Over a five-year period beginning in July 2013, the Department of Homeless Services paid those companies $189 million for use of cluster-site apartments and single-room occupancy buildings.
Mr. Rice in late 2013—as Mayor Michael Bloomberg was wrapping up his third term in office—reported in New York magazine that the Podolsky brothers did little to correct their properties’ serious deficiencies, and took extra steps to cover their tracks by having their building managers use fake names when speaking to tenants or DHS employees.
That would have seemed to be of interest to Bill de Blasio, who at the time the article was published was getting ready to succeed Mr. Bloomberg and had pledged to reform what he called the city’s “disastrous and broken homelessness policy.”
His tenant-rights advocacy during his time as Public Advocate was burnished by the fact that his office annually published a list of the city’s worst landlords, adopting a tradition begun decades earlier by the late Jack Newfield as an investigative reporter for the Village Voice.
Yet once he took office, the city continued doing business with the Podolsky brothers. Mr. Rice had been told by DHS employees that the Bloomberg administration worked with them because it needed beds and couldn’t be that choosy about the suppliers. The need grew dramatically once Mr. Bloomberg ended a policy of allowing the homeless to jump to the head of the line for Federal Section 8 housing vouchers, which Patrick Markee of the Coalition for the Homeless told New York was “literally the biggest policy mistake of the Bloomberg administration” and a major factor in the explosion of families who were homeless.
Yet nothing really changed once Mr. de Blasio took office, other than his suddenly being the person forced to talk about the lack of progress in dealing with a “disastrous and broken homelessness policy.”
Meet the ‘New Sheriff’
And then on Jan. 10, during the same State of the City address in which he lamented that there was too much money in the hands of the wrong people, the Mayor signed an executive order establishing the Mayor’s Office to Protect Tenants.
“The city’s worst landlords will have a new sheriff to fear,” he declared. “When a landlord tries to push out a tenant by making their home unlivable, a team of inspectors and law-enforcement agents will be on the ground in time to stop it. We’ll use every tool we have: we’ll fine the landlords, we’ll penalize the landlords. But if the fines and penalties don’t cut it, we will seize their buildings and we will put them in the hands of a community nonprofit that will treat tenants with the kind of respect that they deserve.”
Ten days later, however, Michael Gartland reported in the Daily News that the city’s plan to convert 500 cluster-site apartments in Brooklyn and The Bronx into affordable housing hinged on acquiring 17 buildings “controlled by the notorious Podolsky family.”
It stated that the Wall Street Journal had recently reported the brothers were under investigation for possible tax evasion.
The story noted that the Mayor had returned a $4,950 political contribution from Alan Lapes—the property manager used by the Podolsky brothers—but kept more than $10,000 in contributions bundled through the late Robert Hess, who after serving as Mr. Bloomberg’s Homeless Services Commissioner had formed a non-profit, Housing Solutions USA, that was tied to the Podolsky’s.
In response to the story, the Mayor announced that the deal was being placed on “pause.”
Less than two months later, however, Mr. Gartland reported that the deal was nearing a conclusion. The biggest news was that the price-tag for the purchase of the 17 buildings, initially reported to be between $40 million and $60 million, had zoomed to $173 million, with the city financing the purchase and then having non-profit groups take over day-to-day management of the properties.
$143M Wasn’t Enough
Mr. Gartland quoted an anonymous city official who attributed the jump in sale price to the Law Department’s seeking an appraisal from Metropolitan Valuation Services of the value of the 17 buildings, which came in at $143.1 million.
That jump in valuation wasn’t enough for the Podolsky brothers: they demanded $200 million. Rather than bring in another appraiser, as they were entitled to do to give them added leverage, city officials decided to virtually split the difference between the appraisal and the brothers’ demands. The deal has since been completed.
The city could have sought to seize the properties under eminent domain, but Social Services Commissioner Steven Banks, who distinguished himself as a lawyer for the homeless before joining city government, noted that could produce a lengthy court fight that would tie up the properties at a time when DHS sorely needed the additional beds.
Then The Times reported April 4 that the lawyer for the landlords in the discussions on the deal was Frank Carone, who also serves as counsel to the Brooklyn Democratic Party. Willie Neuman’s story stated that Mr. Carone and his wife had each made the maximum individual donation of $4,950 to Mr. de Blasio’s re-election campaign two years ago, and that the attorney had donated the maximum $5,000 to the Mayor’s Federal political-action committee, Fairness PAC, and helped solicit additional donors for the fund, which has covered the Mayor’s expenses in recent months for his travels to early-primary states as he considers a run for President.
Both the Mayor and Mr. Carone denied having discussed the Podolsky brothers deal. Mr. Carone told The Times in a statement that “I am proud to say I regularly support people from Brooklyn. So it should be of no astonishment why I am supporting our Brooklyn Mayor as he explores a run for President.”
No doubt if asked, the two men would deny they have had any conversations about a possible future run for office by the Mayor’s wife, Chirlane.
Then Mr. Gartland reported April 10 that Human Resources Administration Chief Contracting Officer Vincent Pullo a year ago demanded that a homeless-service provider in The Bronx sign an affidavit swearing that the nonprofit had no connection to the Podolsky brothers. Mr. Rice reported in New York more than five years ago that Housing Solutions had taken over contracts belonging to the nonprofit, Aguila Inc., and its CEO, Jenny Rivera, told The News April 8 that she was providing services to homeless families at Podolsky brothers properties and that the city knew this.
She said she was forced to sign the notarized affidavit when the city jeopardized her ability to pay her workers by withholding a requested loan. She sent a letter to the Mayor late last month stating, “Under duress, I was coerced into signing this affidavit even though the city knows full well that Aguila manages multiple buildings owned by the Podolsky’s.”
She received an April 8 response from Homeless Services Administrator Joslyn Carter calling the affidavits “standard representations of the relationship between the entities.”
But Ms. Rivera showed Mr. Gartland correspondence she had last year with Mr. Pullo in which she sent him a signed lease for the Podolsky buildings and he responded with an e-mail requesting an affidavit asserting that Aguila “has no affiliation with” the Podolsky Family (any and all members)” or Mr. Lapes, their property manager.
It seemed clear that the de Blasio administration was moving forward on the deal and wanted to have a document indicating that it was not doing business with the Podolsky brothers. There have been no reports of them having made political contributions to the Mayor or his PAC, but they have long been known for making business transactions in the maiden names of their wives.
The level of desperation felt by the administration to secure properties that could be used for affordable housing could be seen in a New York Post report last Thursday that noted the Podolsky buildings had hundreds of unresolved Housing Code violations of the sort associated with the most troubled Housing Authority developments, from vermin to peeling lead paint to broken locks. Among just four of those buildings—three in The Bronx, one in Brooklyn—there were 188 open violations cited by the Department of Housing Preservation and Development, with 30 of those classified as “immediately hazardous.”
The ‘Not the First’ Excuse
It’s true that the city’s extensive dealings with the Podolsky brothers, despite what Mr. Morgenthau 35 years ago described as a kind of terror campaign against their tenants, dated back two Mayors.
But a key component of Mr. de Blasio’s rationale for his first mayoral run in 2013 was that he would be more sensitive to the needs of the less-fortunate in the city, and less-solicitous of the wealthy, than both Mr. Giuliani and Mr. Bloomberg.
That has been true for his most-prominent campaign issue, improper stop-and-frisks by police, although sharp scaling-back of abuses began during Mr. Bloomberg’s final two years in office even before a Federal Judge ruled that the NYPD had been conducting the program in a way that violated the U.S. Constitution.
But the lead-paint contamination suffered by hundreds of children in Housing Authority apartments because of a four-year-plus stretch in which no inspections were conducted was treated by the Mayor as less a public-health concern than a political problem. He noted the Bloomberg administration didn’t do inspections in its final two years, and he kept HA Chair Shola Olatoye in her job even after it was revealed that she had lied to the U.S. Department of Housing and Urban Development in 2016 about inspections having been done. Even a subsequent lie before the City Council late in 2017 about the training given to the employees who eventually did the inspections did not prompt him to jettison her immediately; she hung on for two months after that misrepresentation came to light.
Six months later, she became vice president of business development for Suffolk Construction, a Boston-based contractor seeking to expand operations in New York.
It was an impressive landing for someone who had been tarnished both by the deteriorating conditions in some HA developments and her lies about efforts to correct them. Some of the mystery about her rebounding so well was dissipated when it was announced that a Boston fund-raiser for Mr. de Blasio’s PAC April 5 was being hosted by her boss, Suffolk CEO John Fish. Notwithstanding his claims that he’s a reformer, Mr. de Blasio has demonstrated more than a few times that the expressway to his good graces is paved with political contributions.
Dubious Schools Crusade