BLAZ ‘WASTED’ $173M
Stringer renews attack on housing deal amid virus crisis
Mayor de Blasio and his social services commissioner are under renewed fire for shelling out more than $173 million to two slumlords last year for the purchase of homeless housing.
City Comptroller Scott Stringer put de Blasio and social services honcho Steven Banks on the hot seat in a sternly worded letter signaling the conclusion of a monthslong probe into the deal.
In a letter to Banks dated Friday, Stringer signaled that he’s referring his findings to the city Department of Investigation.
Stringer said the real estate deal, in retrospect, is particularly egregious given that the city is now bracing for severe financial austerity in the face of the coronavirus crisis.
“In light of where our city is financially now, I’m sure people are shaking their heads that it was more important for the city to bail out landlords than small businesses and other hardworking New Yorkers,” he said.
“How do you tell families that are desperately in need of affordable housing that the city can’t provide for you because we wasted millions on this bad deal?”
Stringer opened his investigation after the Daily News reported that the city relied on multiple appraisals to arrive at its purchase price for the 17 buildings owned by brothers Jay and Stuart Podolsky. Those appraisals ranged from a $49 million estimate carried out by the city Department of Housing Preservation and Development to a $200 million appraisal commissioned by a firm hired by the Podolskys.
The attorney representing the Podolskys in the deal was Frank Carone, a politically plugged-in lawyer for the Brooklyn Democratic Party with close ties to de Blasio. The mayor got mortgages on his Park Slope homes from a bank founded by another Podolsky brother, Abraham. Carone also worked for the bank.
After The News revealed those connections last August, George Arzt, a spokesman for Carone and Jay and Stuart Podolsky, said Carone hasn’t had anything to do with the bank since 2008.
“He does not know, nor did he ever know anything about any mortgage the mayor may have received, nor did Jay or Stuart Podolsky,” Arzt said at the time.
In his 10-page letter to Commissioner Banks, Stringer questioned why the city undercut its bargaining position by signaling it might pursue eminent domain to acquire the properties, exposing “itself to the risk of being deliberately overcharged.”
The prospect of invoking eminent domain also meant the properties would be appraised based on their “highest and best use” rather than other methods that would have resulted in lower estimates.
Stringer found through examining city records tied to the deal that in August 2016 “the sellers’ representatives” floated the idea of using the properties as homeless shelters. In November 2016, the city threatened to take them through eminent domain.
Stringer also called out Banks for relying on a “restricted” appraisal commissioned by the Podolskys that backed a higher price for the properties.
“By definition, a restricted appraisal is not intended for use by anyone other than the client for whom it is commissioned,” Stringer noted in the letter. “The city provided no rationale to support its departure from the industry standard limiting the use of restricted appraisals.”
The city also “did not properly account for the actual conditions of the properties when determining their value and arriving at a financing amount,” his report found.
De Blasio’s press office did not immediately respond to a request for comment.
Stringer cited one of the appraisals acknowledging how the city-hired appraiser, Metropolitan Valuation Services, “did not gain access to individual units or otherwise examine the interiors of the properties.”
“Our investigation,” Stringer concluded, “found significant weaknesses, missteps and mistakes.”