Union says state should investigate RXR’s general contractor

Ironworkers to ask HFA to deny $75M in bond financing for 810 Fulton

Dec.December 12, 2016 04:19 PM

One of the city’s largest ironworker unions wants Gov. Andrew Cuomo’s housing agency to deny $75 million in construction financing to Scott Rechler’s RXR Realty for its first apartment project in the city.

The development firm helmed by Rechler TRData LogoTINY, who previously served as a Cuomo appointee at the Port Authority of New York and New Jersey, is showing its “inexperience” as a residential developer by hiring a construction manager with a shoddy safety record, the hardhats claim in what’s shaping up to be a debate between union and non-union camps on a highly visible stage.

The 1,500-member-strong Metallic Lathers and Reinforcing Ironworkers Local 46 will ask the state Housing Finance Agency to reject RXR’s application for tax-exempt bond financing for its planned apartment development in Brooklyn until the agency can determine that the developer is “fully prepared” to safely oversee the project.

“RXR has recently plunged headfirst into the residential development market with new projects,” in Brooklyn, Long Island and Westchester, reads testimony that Ironworkers’ business agent Terry Moore plans to read at the HFA’s hearing Monday evening in Midtown. “Inexperience may be causing RXR to mismanage the risks inherent to this segment of the real estate market. In particular, the company may not be placing enough importance on selecting construction managers with track records of high performance.”

RXR executive vice president Seth Pinsky said the developer is comfortable with the safety plans its general contractor, Broadway Construction Group, supplied for the project at 810 Fulton Street.

“I can’t say this strongly enough: Safety is our number 1 priority,” he said. “RXR’s development history is a significant one with an exemplary safety record and the management team of RXR itself has a long history of commercial and residential development that is also exemplary.”

“We look very carefully at the safety records of our development partners and make sure that we are comfortable with the plans they have for our projects,” Pinsky added. “Our track record speaks for itself.”

RXR is seeking $75 million in tax-exempt financing for its planned 363-unit apartment development at 810 Fulton Street on the border of Fort Greene and Clinton Hill in Brooklyn, its first in the five boroughs.

While the firm, which is mostly known as one of the city’s top-tier commercial landlords, has developed large-scale residential projects in places like Long Island, Baltimore and Connecticut, this will be its first in New York City. Given Rechler’s relationship with Cuomo, the standoff between the union and the open-shop GC promises to catch the governor’s eye.

The union claims that when RXR bought the leasehold at 810 Fulton from GFI Development, it also agreed to use GFI’s construction arm, Broadway, which appears to be an open-shop contractor. RXR confirmed it is using Broadway on the site, but declined to comment on any agreement with GFI. (The estate of Sol Goldman has the fee position on the property.)

The ironworkers say Broadway has a poor track record when it comes to safety. Most notably, the company is the general contractor at GFI’s hotel development site at 61 Bond Street in Downtown Brooklyn, where 43-year-old construction worker was killed in October when a shackle from a crane snapped overhead and fatally struck him in the head.

The city Department of Buildings determined operator error to be the cause of the fatal accident. A representative for Broadway Construction Group could not be immediately reached for comment.

Earlier this month, the DOB put a partial stop-work order on another Broadway project – GFI’s 5 Beekman Street – when debris fell off the building. The ironworkers local argues that these incidents present a problem not only to people on and around Broadway Construction’s work sites, but could also prove risky for HFA’s balance sheet.

“If the project were subsidized by HFA bonds, these kinds of subcontractors could create significant risk for the agency and purchasers of the bonds,” read the union rep’s testimony.

Pinsky said that the project at 810 Fulton is not just important for RXR, but “it’s also an important project for the city and state.”

“It’s going to provide new affordable housing in a neighborhood that’s short on it,” he said. “It’s going to transform a surface parking lot into an active site with jobs and new residences.”

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