The Real Deal New York

Fine’s not-so-fine year

Rising-star affordable housing developer Peter Fine moves forward despite investigation and critics

February 01, 2010
By David Jones

Peter Fine
Peter Fine

No one could blame Peter Fine if he expected the past year to be easy — even amid the market turmoil. Widely regarded as one of the city’s top affordable housing developers, Fine started last year as the darling of the entertainment world, as the unlikely coproducer of a Tony Award-winning musical.

With close ties to President Obama’s new urban development guru, he was also more politically connected than ever.

However, while his Broadway show, “In the Heights,” has enjoyed continued success, Fine’s political connections and real estate career have taken a beating over the past year.

Last March, the Daily News reported that his White House ally, former Bronx borough president Adolfo Carrión, took thousands of dollars in campaign cash from Fine, the cofounder of Atlantic Development Group, and from others connected to a megaproject the firm built in the Bronx, Boricua Village. Carrión, meanwhile, recommended that the project get approval.

And a month later, investigators from the city Department of Investigation and the Manhattan district attorney’s office raided the Soho offices of Atlantic Development, reportedly part of an ongoing investigation of the firm’s possible use of cash to influence various projects.

Fine declined to comment when contacted by The Real Deal. Diane Struzzi, a spokesperson for the city Department of Investigation, would only confirm that there is an ongoing probe into the firm.

And his legal tanglings do not end there.

Paper chase

One of Atlantic Development Group's controversial projects

During the boom, Atlantic Development generated millions of dollars in revenue by selling the rights to 421-a tax certificates to developers Larry Silverstein and Joseph Moinian — a common exchange between affordable housing and luxury developers. Silverstein and Moinian, in turn, used the certificates to offset the expenses tied to luxury high-rise apartment buildings.

However, when the market crashed and the luxury developers could no longer finish their projects, things got ugly.

In April, Atlantic filed separate lawsuits against the Moinian Group and Silverstein Properties in New York State Supreme Court, alleging the companies defaulted on their payments when they failed to obtain financing for their projects.

Back in 2008, Moinian entered an agreement to buy nearly 232,000 square feet of air rights from Atlantic Development for $40 million, with plans to use them for a luxury tower at 605 West 42nd Street. Fine planned to use the proceeds to develop his company’s proposed Harborview Terrace affordable housing project at 513 West 55th Street.

In its complaint, Atlantic claimed that Moinian deposited $3 million in down payments, but reneged on an agreement to provide a $20.5 million letter of credit that it had promised.

However, in court documents, Moinian attorney Stephen Meister denied the allegations, and alleged that Fine never closed the deal to buy the site he was planning to build on.

“They’re looking to affect a forfeiture of a sizable deposit of $3 million over something they had no ability to ever sell to Moinian,” Meister told The Real Deal.

Silverstein also entered an agreement to buy certificates from Atlantic for its Four Seasons hotel condo tower at 99 Church Street, according to the complaint. Atlantic planned to use the proceeds from that sale to fund the construction of another affordable housing project in the Bronx.

Adam Silverstein, Atlantic Development’s attorney (and no relation to the developer), wrote in the complaint that when Silverstein Properties was unable to finance the Four Seasons project it “decided to renege on its written agreements, thereby depriving Atlantic of a significant source of funding for its construction of affordable housing in the South Bronx.”

Silverstein denied the allegations. In a recent interview, Dara McQuillan, a spokesperson for Silverstein Properties, told The Real Deal that the Four Seasons project remained in limbo due to a lack of financing. Both the Moinian and Silverstein suits are still wending their way through court.

Social skills

There was a time when it seemed that every move Fine made was right on the money.

The son of a New York City cabdriver, Fine grew up in a Queens public housing development, attended public schools and graduated from New York University. He became a social worker in 1990, working with the Metropolitan Council on Jewish Poverty and later the Educational Alliance.

In 1991, Fine left the Alliance to launch his own firm, Fine Consulting and Development, where he helped build residential facilities for the elderly, people with AIDS and the mentally ill.

Along with Marc Altheim, who previously worked as chief executive of the Housing Enterprise for the Less Privileged of New York, Fine founded Atlantic Development in 1995, growing the firm into one of the biggest developers of affordable housing in New York. It has created 6,500 units across the city, and a total of more than $1.5 billion in residential, retail, commercial and community facilities.

Fine was recognized by both of his former employers even after leaving for real estate. In 2006, the Alliance recognized him for work he did on a homeless outreach program. And a year later, the Council named him “Builder of the Year.”

“Atlantic Development and Peter played a very important role in helping us expand our senior housing,” said William Rapfogel, CEO of the council.

The organization partnered with Atlantic on a couple of affordable housing projects for seniors, including a 119-unit all-studio building on West 61st Street that opened in 2006, and a 49-unit building at 385 Third Avenue, which opened in 2008.

Rapfogel isn’t the only one with praise for Fine. Carol Lambert, executive director of the Settlement Housing Fund, a Manhattan-based nonprofit affordable housing developer, said Fine turned Atlantic Development into a “prolific” developer of affordable housing.

“They had some very good people working there,” said Lambert.

Fine’s political and affordable housing connections have given him a toehold in non-real estate circles, too. His friendship with political consultant Luis Miranda, who had been involved in affordable housing issues, led to his debut as a Broadway producer. Miranda’s son, Lin Manuel Miranda, launched “In the Heights” as an off-Broadway production. Fine eventually helped bring it to Broadway, where it won a Tony for best musical.

However, while Fine’s star was rising in both the affordable housing and arts circles, he was also growing more controversial.

Critical response

2 Cooper Square, a new market-rate building underway.

Critics have charged that Fine used his political connections to develop new properties and convince politicians to turn a blind eye to the use of undocumented construction workers.

They have also argued that Atlantic often paid lip service to providing truly affordable housing for working-class families, while quietly milking the 421-a program to generate profits.

“They are using the minimum standards they can squeeze out of affordable housing,” said an affordable housing advocate who asked not to be identified.

Indeed, Fine’s company has gotten entangled in some very public battles over affordable housing projects in Midtown, where he sought government approval in 2005 to build senior citizen projects. That year, Fine asked the state Housing Finance Agency to issue $41 million in tax-exempt bonds to help finance buildings at 385 Third Avenue and 250 East 60th Street.

Critics argued against the proposals, saying Fine exploited nonunion labor and inflated the need for subsidies.

Meanwhile, his reputation for exploiting immigrant labor has drawn ire from community activists.

“In terms of housing, his reputation is onerous,” said Desiree Pilgrim-Hunter, a critic of the Boricua Village project, which opened last year. The project includes 750 middle- and low-income apartments, the 120,000-square-foot flagship site of the new Boricua College, 40,000 square feet of retail space and underground parking for 175 vehicles.

In 2008, housing advocates marched from Yankee Stadium to Boricua Village to protest conditions on the construction site.

“Workers were getting injured because of the lack of safety controls at the [Boricua Village] site,” Pilgrim-Hunter said.

Despite those difficulties, Fine has many supporters and continues to find success as his company expands into market-rate development.

“I’ve dealt with Atlantic and thought they were professionals,” said David Simone, first vice president at Massey Knakal. “I think what they’ve done [there] is great for the neighborhood and great for the Bronx.”

At the Costas Kondylis-designed 33 West End Avenue, a 211-unit building that includes luxury rentals, subsidized housing for seniors and retail, residential brokerage Cantor Pecorella, which is marketing the building, has filled the property with renters.

“It’s been a wonderful working relationship,” said Jim Cantor, a principal at Cantor Pecorella.

The firm is working on a couple of new projects with Fine, including a 144-unit market-rate building at 2 Cooper Square and a luxury rental on the High Line called Port 10, at 303 Tenth Avenue. The building will offer subsidized housing under the city’s 80/20 program, and also include 69 market-rate apartments.

But even with those projects underway, the investigation still looms.