New state legislation aims to combat predatory equity

Local elected officials introduced joint legislation on Sunday targeting the practice of predatory equity.

State Sen. Brad Hoylman, Assemblymember Harvey Epstein and various tenants and advocates were present at a press conference outside the office of Westminster Management, a Kushner Companies subsidiary, on 12th Street between Avenue A and Avenue B. There, they discussed the legislation, which directs the New York State Department of Finanical Services (DFS) to collect data on financial institutions that lend to property owners with the intent to displace current tenants.

Per the announcement:

Specifically, the bill requires DFS to investigate the role financial institutions play in encouraging anti-tenant practices by notorious landlords like Jared Kushner, Steve Croman and Raphael Toledano.

Similar to the subprime mortgage crisis of 2008, lax underwriting standards and a general lack of transparency have allowed speculators and real estate agents to secure outsized mortgages with very little discretion and oversight. Owners use these loans to make purchases based on unrealistic projections of rising rents, and in turn have difficulty paying the mortgages.

Building owners — anxious to recoup on their hefty investments — often resort to abusive and exploitative tactics to drive rent-regulated tenants out. These abusive practices, known as predatory equity, are best-exemplified by figures like Steve Croman and Jared Kushner.

In the fall of 2015, after the Daily News reported that the state was investigating Toledano for tenant harassment at 444 E. 13th St., he received two loans totaling $124 million from private equity firm Madison Realty Capital to buy and renovate a 16-building East Village portfolio.

Per The Real Deal in an article last July:

The leverage on the deal — which clocked in at 128 percent compared to the typical 50 to 65 percent on a New York City multifamily deal — raises questions about how culpable lenders are in perpetuating harassment. In short, are they turning a blind eye when their borrowers too-aggressively push to turn rent-stabilized apartments into luxury units?

Pressured to generate income from the buildings to pay off his loans, Toledano reportedly attempted widespread buyouts. And many of the tenants at the buildings accused him of harassment.

"No longer can we allow landlords like Kushner, Croman and Toledano to force our neighbors out of their homes in order to make a quick buck," Hoylman said in a statement. "We demand that New York State investigate the practice of predatory equity so we can take the necessary steps to protect rent regulated tenants from harassment and eviction."



Said the recently elected Epstein: "This legislation will bring us closer to stopping the practice of predatory equity before it starts the cycle of tenant harassment and displacement that has become all too familiar in our city. Bad actor landlords and scheming financiers should take note: your days of destabilizing our neighborhoods with your shady business practices are numbered."

Croman was released from jail on Friday after serving eight months of a year-long sentence for fraud.

Previously on EV Grieve:
Report: Raphael Toledano files for Chapter 11; $145 million deal for EV portfolio is off the table

Raphael Toledano tenants take to Midtown streets to speak out against their landlord and his lenders

Final date set for Clayworks Pottery on 9th Street

Last month, Helaine Sorgen announced that she was closing Clayworks Pottery after 44 years at 332 E. Ninth St. between First Avenue and Second Avenue.

"My building has been bought by a predatory landlord who will not renew my lease," she said at the time. "It's been over a two-year fight, and the time has come to close up shop." (You can read her closing letter here.)

At the time, she was unsure of her closing date — some time around Sept. 15.

Sorgen provided an update on Facebook this past weekend:

"I am sad to report that my court ordered last day at Clayworks will be September 30th. However, the exorbitant amount of money judgment levied against me doesn't quite make up for the extra week. Still, it gives me the opportunity to see many of you again and share memories and say goodbye. I look forward to seeing you all before Clayworks closes forever."

Jeremiah Moss interview Sorgen for a post that you can find here.

Storefront photo from 2009 via Facebook

Saying goodbye to Clayworks Pottery after 44 years on 9th Street

[Storefront photo from 2009 via Facebook]

Late last week, Helaine Sorgen made official what had been a poorly kept secret among her customers — Clayworks Pottery is closing after 44 years at 332 E. Ninth St. between First Avenue and Second Avenue.

The upcoming closing has nothing to do with, say, a decline in business.

"My building has been bought by a predatory landlord who will not renew my lease," she said. "It's been over a two-year fight, and the time has come to close up shop."

She shared with me a copy of her goodbye letter to the community. (The letter is displayed on the front window of the shop.)

Her last day will be around Sept. 15.

---

Well, it’s been quite a ride. When Clayworks opened in the EV in Jan, 1974, it was like an outpost of civilization. Empty stores were everywhere. Clayworks was the kind of unique, individual store that helped build this neighborhood into the desirable commodity it is today. Through four decades, I have been able to watch the EV grow and change from my window. It has been the finest front row seat I could ask for.

Clayworks survived everything the mad universe pitched at it — Hurricane Sandy, blizzards, The Great Recession, swastikas painted across the storefront, the front window being intentionally blown out, water main breaks, ceiling caves, the crack epidemic, and of course 9/11, all come to mind, plus the usual personal real-life challenges. Clayworks has always held its own, with great thanks to the support of this neighborhood and my loyal clientele.

That is, until the recent and well documented invasion of the EV by predatory landlords and perfidious financiers. You see, Clayworks now occupies real estate deemed too valuable to allow it to stay. The new building owner and the plethora of shell companies he hides behind wants me out, and this is a war that I cannot win. I have spent the past 2 years fighting. I am tired and my time is up. Let me be clear — this is not the story of an unsuccessful store hanging on for dear life. This is the intentional stomping out of yet another mom and pop store by predatory real estate weasels. We small businesses are a family. Every store whose light goes out is a small death among us, another cross in the graveyard. There, we are legion.

Clayworks is as much a part of the EV as the EV is a part of Clayworks. I live here. My heart lives here. The EV is my neighborhood, my community. I want to see thrive. I know there are 2 camps of thought in the EV currently. There are those who want to keep the wild, fierce, gritty, creative, independent EV spirit. There are others who want less edge and attitude and more sameness — tamer, user friendly stores, plus bars and restaurants that are trendy and cater more to the on-demand desires of a new generation. Why can’t we have a balanced mix here is the question.

I believe, if protected and supported by the City, it would be possible to have both — to support change, and yet maintain the unique identity that many of us treasure. But the Small Business Jobs Survival Act languishes in the purgatory of the City Council. Some form of this legislation, which supports small businesses the way other more enlightened cities do, has been moldering in the CC since Miriam Friedlander’s time. Politicians wave it around to get votes, but as soon as they are elected, it goes back into the junk drawer.

Now, we hear there is a movement to form a small-business-only region, and a protective registry for legacy businesses that have been around for 35 years or more. Well, that would be Clayworks, but, ironically, it’s too late for me.

I am not opposed to change but frankly, what is going on here is full-scale rape and pillage. So folks, it’s up to you. You vote with your ballot and you vote with your dollar. The kind of neighborhood and community you want to see is in your hands. If it matters, and it should, then be mindful. Exercise your right to vote and your right to make some noise.

It has been an incredible privilege to have been able to earn a living being a potter in the EV. I’ve always hoped that in a small way, Clayworks helped to make the world a better place, one mug at a time. I want to thank, sincerely and gratefully, every person who laid down their hard earned bucks to buy my work and support me. In my 44 years here, I have gotten to know many of you personally and my life has been greatly enriched by your company.

Everyone who came into this store, who shared their stories and lives, wove a fabric that connected us together, warp and woof, a tapestry of community and friendship. We made magic happen here. That’s really what it’s all about.

My last day will be sometime around Sept. 15. Whatever work I have left is all that there’s gonna be, so if you’ve been looking at something and can’t make up your mind, don’t wait too long! I will pack and store the rest with the intention of starting an online store (anyone out there who can help me set it up?). Or call me- I’ll meet you at the Veselka, you bring the $$$ and I’ll bring the goods!

With sadness and love,
Helaine Sorgen/Clayworks

P.S.

A special shout out of love for Santo and Margaret at The Source, who have generously supplied me with great quantities of packing boxes. Also to GOLES, which has helped so many here to organize and fight back. And to Cooper Square, especially SaMi Chester, who works tirelessly for EV tenants, and has been more than generous in sharing support and information and encouragement in my battle, even though commercial tenants are not really his purview.

And to 9th Street, the best little block in the EV and my home for 44 wonderful years!

Previously on EV Grieve:
29-year-old Gallery Vernon is closing on East 9th Street

Tenant advocacy group names the city's worst landlords; Icon and Steve Croman in top 10

[Image from Thursday via @ANHDNYC]

Some familiar names to East Village residents made the list of Stabilizing NYC's "10 worst predatory equity landlords" in NYC, which the housing group announced Thursday on the steps of City Hall:

1) All Year Management
2) Coney Realty Group
3) David David
4) Icon Realty Management
5) INK Property Group
6) Madison Realty Capital/Silverstone Property Group
7) Steven Croman
8) R.A. Cohen & Associates
9) Ved Parkash
10) ZARA Realty Holding Corp

Per a news release:

"All the landlords on the list reportedly force tenants to live in horrendous and, often, dangerous conditions. Their unscrupulous and often illegal practices impact the entire city.

“We will be targeting these landlords to help tenants fight back against the predatory practices that put their homes at risk,” said Keriann Pauls, a staff attorney with the Community Development Project at the Urban Justice Center. “Predatory equity landlords are jeopardizing tenant safety and housing stability throughout the city.”

And...

Recently, the New York City Council has introduced legislation useful to lawyers and organizers in this struggle against predatory equity, including the Predatory Equity Watch List. With additional resources, Stabilizing NYC is working with the city council to enforce these new laws against predatory equity landlords.

"Landlords who act in bad faith in order to kick out tenants to make a profit and flip buildings should pay attention: we’re developing tools that will protect tenants and their homes, and disallow landlords from beefing up their pockets through illegal actions,” said Councilmember Ritchie Torres. “I’m proud to be working with CAPE and Stabilizing NYC on legislation to confront the problem of predatory equity that seeks to destroy affordable housing and communities."

Residents, tenant-rights organizations and local elected officials have accused Icon Realty, who owns multiple East Village buildings, of displacing rent-regulated tenants with frivolous lawsuits and exposing them to hazardous health and safety threats.

Madison Realty Capital/Silverstone Property Group is now managing Raphael Toledano's East Village portfolio.

Last Tuesday, Attorney General Eric T. Schneiderman announced the guilty plea of Croman. Under the terms of his plea, Croman would serve one year of jail time on Rikers and pay a $5 million tax settlement. Croman's real-estate empire includes 47 buildings with 617 units in the East Village — more than any other than any other landlord in this neighborhood.

Stabilizing NYC — a coalition of 15 grassroots, neighborhood-based organizations, a citywide legal service provider and a citywide housing advocacy organization — formed in 2014. According to their website, the collation "works to combat tenant harassment and preserve affordable housing for the New Yorkers who need it most."

Previously on EV Grieve:
Tenants and local elected officials speak out against Icon Realty

A note for real-estate brokers on East 12th Street

[Click to enlarge image]

"The tenants of this building are not responsible for helping you get into the building or assist you with renting apartment... Therefore, it is unacceptable for you to ring random buzzers all night. It is disturbing to residents who have an expectation of being left along by strangers."

Photo by Dave on 7th.

Buyer beware

Spotted on East Eighth Street.

At 504-508 E. 12th Street: Buyers beware

Massey Knakal has 504 and 508 E. 12th St. listed for $15 million. According to the property description:

The subject properties are two contiguous 6-story, mixed-use, walk-up apartment buildings totaling approximately 30,900 square feet. The property has fifty-four (54) residential units above four (4) stores on the ground floor. Of the fifty-four (54) residential units, twenty-seven (27) are free market, twenty-five (24) are rent stabilized and three (3) are rent controlled. The property has four unit types: two (2) studios, eleven (11) one bedrooms, thirty-seven (37) two bedrooms and four (4) three bedrooms. The rent regulated apartments are renting for approximately $28/NSF or 37% of market. All of the free market apartments have been gut renovated featuring new hardwood floors, stainless steel appliances and granite countertops.

I'm not sure how long these have been here ... if you look at the building, between Avenue A and Avenue B, there are yellow posters (six in total) on display in several windows.



To help you read it:



I know some of the backstory here about the landlord(s), though not enough to feel comfortable writing about... If you have something to add about the addresses/landlord(s), please feel free to share more in the comments.