City overvalued Podolsky portfolio by $26M, uncovered docs show

Administration used generous appraisal to justify $173M price tag

TRD New York /
Apr.April 17, 2019 06:30 PM
Comptroller Scott Stringer and Mayor Bill de Blasio with 710 East 243rd Street in the Bronx (Credit: Getty Images and Google Maps)

Comptroller Scott Stringer and Mayor Bill de Blasio with 710 East 243rd Street in the Bronx (Credit: Getty Images and Google Maps)

The city’s $173 million purchase of 21 buildings from the Podolsky brothers has attracted scrutiny because of the sellers’ past, their political connections and the price tag itself. A late Monday document dump is poking even more holes in the official version of events.

According to 2,000 pages of documents subpoenaed by City Comptroller Scott Stringer, City Hall overvalued the buildings by $26 million using faulty rent assumptions, the New York Post reported.

“It’s a shame that it took a subpoena from the Comptroller’s Office for the City to release what should have been public information about a multimillion dollar deal,” a Stringer spokesperson told the Post. Stringer has been a prominent critic of the deal.

The $173 million the city paid for the “cluster sites” was already a considerable markup from their official valuation of $143 million. City officials say the price rose during the course of negotiations, and Mayor de Blasio has argued that the threat of a legal battle justified the increase.

The newly released documents make even $143 million look overly generous. They show that Law Department appraisers assumed that about half of the units would qualify for higher rents through a Department of Social Services program, although no such plans are actually in place.

In one 25-unit Bronx building, for example, the Law Department’s appraisal calculated that 13 DSS-subsidized apartments would pull in $1,637 per month in rent. The eight rent-stabilized units generate just $991 per month.

The portfolio’s total value, assuming that all 729 apartments are used for rent-stabilized housing, comes out to $117 million instead.

The city briefly halted plans to buy the Podolsky portfolio in January, when it emerged that their firm was under federal investigation for possible financial crimes. The brothers have a reputation as slumlords, having pleaded guilty to a tenant harassment scheme in the 1980s.

The deal also raised eyebrows due to the fact that the Podolskys’ lawyer in the deal, Frank Carone, is a longtime de Blasio ally and fundraiser. Furthermore, the Post reported last week that 17 of the 21 buildings have “immediately hazardous” housing code violations. [NYP]Kevin Sun

Related Articles

Zillow CEO Rich Barton (Credit: iStock)

Zillow and Opendoor aren’t making much on home-flipping

This week, the State Department of Taxation and Finance issued a new memo that notably made no mention of condos. (Credit: iStock)

Regulators quietly change stance on condos in LLC law

Realogy CEO Ryan Schneider (Credit: iStock)

Realogy’s plan to stop the iBuyers from gaining a foothold in Chicago

Daily Digest Thursday

Worker killed at Lam Group construction site, Uber signs WTC lease: Daily digest

Developers are offering to pay the increased mansion and transfer taxes to give them an edge in a difficult market. (Credit: iStock)

Amid slow sales, developers give buyers a break on mansion taxes

Triplemint’s David Walker and John Scipione with Hoboken, New Jersey (Credit: iStock)

Triplemint expands to New Jersey

Brokerage firms are strategizing ways to make up losses after the cost of application fees was capped at $20. (Credit: iStock)

Brokerages on rental application fee cap: “It hurts”

Alex Rodriguez (Photos by Guerin Blask)

A-Rod is coming for NYC and SoFla real estate