Red flags raised about union report card on Moinian

Build up NYC seen as targeting developer with "F" grade for using nonunion workers
By Hiten Samtani | February 12, 2013 06:00PM

A report card commissioned by a new union advocacy organization that gave the Moinian Group’s operations an “F” has several flaws and seems to unsystematically target the developer for its penchant for hiring nonunion workers.

In its report, Build up NYC, a coalition of labor groups including 32BJ SEIU, the Hotel Trades Union, and the Building and Construction Trades Council of Greater New York, excoriated the Moinian Group for a laundry list of alleged failings at its buildings, as well as a poor record of worker relations.

Though the allegations galvanized a rally last week of union workers and politicians — who took Moinian to task for what City Council Speaker Christine Quinn described as “the race to the bottom” — others are questioning the validity of the union’s efforts.

Two prominent real estate attorneys noted that the report carries a clear conflict of interest, as it was commissioned by a union interest group and targets a developer who is known to hire nonunion workers for his projects.

“It’s like a rat rating the trap,” said Adam Leitman Bailey, the principal at the eponymous law firm Adam Leitman Bailey PC.

Jay Neveloff, a real estate partner at law firm Kramer Levin Naftalis & Frankel, said that “it’s clear to me they already have a bias. They’re jumping to conclusions.”

The report card, first reported by the New York Observer and subsequently covered on The Real Deal, was designed by the New York City-based consulting firm Locker Associates on behalf of Build up NYC. It rates the Moinian Group, which is headed by Joseph Moinian, in five categories, namely tenant relations, safety, financial stability, vendor relations and good jobs. Specifically, the report accused Moinian of diverting funds, improperly maintaining buildings, defaulting on loans, violating safety rules and keeping poor vendor relations.

A key shortcoming of the report, affirmed by the attorneys, is that it suffers from a lack of benchmarks. For example, though the Moinian Group received an “F” on all five categories, there is no indication of what constitutes an “F,” or guidelines for how a developer would receive a particular letter grade.

“We don’t have an A, B or C at this point,” said Dave Hancock, a senior associate at Locker. “We really were focusing on somebody we thought was an especially irresponsible developer.”

“You have to establish criteria,” said Gary LaBarbera, president of Build up NYC and the Building and Construction Trades Council. “You now know what an ‘F’ is, and that’s the Moinian Group.”

The data for the report came from a combination of field research and public records, including building violations and lawsuits, Hancock said, but he was unable to provide numbers on how many people the researchers interviewed. Though this is its first public report card, Locker has previously done several projects on behalf of union groups, including a trends analysis of the construction industry for the Building and Construction Trades Council.

The report card chastised Moinian for work conditions at his development sites, claiming that contractors were underpaid and unskilled, and did not receive affordable health care and other benefits. The report’s release was followed by last Wednesday’s rally that Build up NYC organized outside City Hall.

Along with Speaker Quinn, the rally — which drew crowds in the 100s — attracted several prominent politicians, among them City Comptroller John Liu, State Senators Daniel Squadron and James Sanders, and City Council members Vincent Gentile and Elizabeth Crowley. “The American Dream is not to work your whole life in dangerous conditions with low wages and no benefits,” Liu said, in his address to the rally.

The trend of unsafe and unfair practices, Quinn said, “has got to stop, and it begins with bad actors stepping up to play the game right.”

Joseph Moinian’s failing grade, LaBarbera said, could be partly attributed to his track record of hiring nonunion employees. “We believe that union is the vehicle through which you can achieve health, safety, good wages and retirement security. We make no bones about that.”

Jessica Ramos, a spokeswoman for Build up NYC, said the report’s release and the rally coincided with the launch campaign of Build up NYC, which began operations in December 2012.

Bailey, who admitted he is no fan of Moinian and has sued him for mismanagement of 90 Washington Street, a 397-unit rental building in the Financial District, said he was impressed by “the creative persuasion by which a union forces developers to do things. It’s usually below-the-belt harassment stuff.”

As a result of the report, Joseph Moinian reached out to Speaker Quinn’s office as well as to a third party and indicated that he’d be willing to parley, according to LaBarbera.  “What we want is to have dialogue,” LaBarbera said. “This third party asked me, ‘Would you be willing to sit down with Moinian?’ and I said, ‘Absolutely.’”

Moinian, whose recent projects include a 1,000-foot, 1.7 million-square-foot tower at Hudson Yards, was recently sued by residents of 1 West Street, a 500-unit rental building in the Financial District, for an allegedly inadequate response to damage from Hurricane Sandy. Many other Moinian Group projects have received stop work orders in recent years, as The Real Deal previously reported, though this is certainly not unique to the developer.

Kramer Levin’s Neveloff said that it was a “certainty that most, if not all, buildings have violations,” some of which reflect conditions that have been remediated.

“I’m not minimizing the importance of violations,” he said. “I’m commenting on the notion that it’s a major industry in New York to get violations removed once they have been logged.”

A prominent city developer who declined to be named said that it was impossible to avoid violations on large development sites. What a developer could and should do, he said, is to ensure that these violations are addressed in an adequate and timely manner.