CITY CLEANS HIM OUT
Harlem bizman loses millions in eminent domain fight
Damon Bae, owner of Fancy Cleaners in Harlem, is losing his business and land to the city via eminent domain after a 10-year court battle.
NEW YORK CITY is using eminent domain to take an East Harlem businessman to the cleaners.
Damon Bae, whose family success story embodies the American Dream, is about to lose the shirt off his back — after a 12-year battle with the city for control of his dry cleaning enterprise.
Fancy Cleaners, a 6,000-square-foot facility at the corner of 126th St. and Third Ave., was supposed to be the cornerstone of a family empire built by a Korean couple who came to the U.S. in 1981, bringing their tailoring skills with them along with two young children and endless ambition.
But an eminent domain claim filed by the city in 2008 and enforced — after years of legal challenges — in March 2017 means Bae’s family no longer owns its premier property.
Now Fancy Cleaners has nowhere to go, and the whole enterprise will likely shutter, said Bae, 42, who runs the business created through decades of hard work by his immigrant parents.
“The city has offered my family about 30 cents on the dollar on the market value for what our three lots are worth — that’s not enough to buy anything comparable in East Harlem today,” Bae said. “The city’s working so hard to meet the developer’s time line; meanwhile, we’re trying to stay in business.”
The city said it would pay the Bae family $3.5 million for the lot holding Fancy Cleaners when it took the property title through eminent domain in the spring, Bae said.
The asking price for a similar 5,000-square-foot lot about five blocks south of Fancy Cleaners’ current location is $11 million, Bae said.
“It’s like you own a Mercedes-Benz, and someone offers to reimburse you for the price of a Hyundai Sonata,” the frustrated co-owner said.
The city has also fought having to pay Bae for the fixtures in the Fancy plant and its machinery, too — valued at well over $2 million, he said.
The Law Department did eventually offer Bae $615,000 for the fixtures — but nothing for the machinery, he said.
Yet even as the city put the $615,000 on the table, its lawyers also asserted they had the right to try to reclaim the money at a future date, according to Bae.
On top of that, Bae got hit with a staggering rent bill: $30,000 a month, for every month since April that Fancy Cleaners has stayed in the building the family once owned.
“The city stood in front of a judge (and) said they would pay us $615,000 for the fixtures. Once out of court, we’re suddenly told they are taking $320,000 for back rent,” Bae said.
Even if the family could find an affordable lot to buy, the business can’t move overnight, Bae said. It would take months to set up the right water lines and get permits for his heavy, chemical-laden machines.
At the same time, Bae has to keep the East Harlem facility running to make money.
“We can’t just shut down to move — how will we keep the business afloat and serve our customers?” he asked.
The logistics have forced Bae to confront a grim reality: The family company may be no more.
“We are being run out of business. The city is just squeezing us dry. It’s like dealing with the Mafia . . . and we are so tired of fighting,” he said.
Bae’s family saga began in 2003, when his parents bought three vacant lots along a bleak stretch of undeveloped East Harlem land. The parcels stood in a 150-block urban renewal zone approved in 1968 — but the privately owned lots were carved out of the footprint, records show.
The titles came back clear, Bae noted.
The city owned most of the other lots — and did nothing to develop them. The Bae family tried to buy several more, but the city rejected their offers and let them sit empty and derelict, Bae said.
The Bae family used their corner lot as a processing facility for Fancy Cleaners, owned by Bae and his father.
Ideally situated near a network of highways and the FDR Drive, and two blocks from the subway, it functions as home base for Fancy Cleaner’s network of fast and affordable dry cleaning storefronts around Manhattan. All the clothes travel to East Harlem for treatment — even hand-stitching by 78-year-old tailor Juan Medina — and can be returned to clients that same day.
“We had a lot of grand ideas and plans when we came here. We hoped to turn the plant into a dry cleaning academy to teach people from the neighborhood the skills needed to work in the trade,” Bae said.
All that remains now of that dream is a forlorn sign on Fancy’s awning that says “Dry Cleaning Academy.”
In 2005, the Bloomberg administration signaled its intent to snatch up all the lots inside a two-block spread from 125th to 127th Sts. between Third and Second Aves. — including those held by private owners.
The city argued the area was “blighted” and should be condemned so a big developer could use the 6 acres to build the $700 million East Harlem Media Entertainment and Cultural Center.
Bae, along with the other halfdozen small-business owners in the zone, chafed at the “blighted” description, noting that their companies were all viable.
The only “blight” was in the vacant lots the city allowed to sit empty, Bae and the others argued in court as they challenged the land grab.
In 2011, a reluctant Appeals Court panel agreed with the city.
Justice James Catterson wrote that the city’s description of the lots as blighted “was nothing but a canard to aid in the transfer of private property to a city developer.”
Yet the Appeals Court was unable to oppose the land grab, Catterson noted, due to recent rulings restricting its oversight of eminent domain cases.
Even as the courts failed Bae and the other business owners, there appeared to be salvation in the 2008 economic recession: The developer went bust, and the project stalled.
“We had hope the city would consider taking us out of the renewal zone,” Bae said. “They could have easily built around us.”
That didn’t happen — and when Mayor de Blasio took office, the push to develop the East Harlem area took off again.
By then, the Bae family was already feeling the financial strains of their precarious position.
For one thing, they struggled to pay their taxes on the two vacant lots, which underwent steep increases as they fought the city’s eminent domain claim.
From 2003, when each lot was taxed at approximately $2,400 a year, the taxes rose to over $18,000 each in 2011. Every year after that, the taxes jumped again, until by 2014 Bae was shelling out roughly $70,000 for each lot, and by 2015, nearly $80,000 each.
“It was insane — the taxes on our vacant lots were far more than the taxes for the lot where we had an actual business,” he said.
But to not pay would mean the city could take the properties through a tax lien — and the family wasn’t ready to give up.