Mayor Bill de Blasio “paused” a deal with the notorious Podolsky brothers to acquire 17 “cluster site” homeless apartment buildings on Friday, as reports emerged that the landlords were under federal investigation for possible financial crimes.
According to the New York Daily News, the deal is a key part of the de Blasio administration’s plan to convert nearly 500 cluster sites into affordable housing. If the city paid market rate as the plan stipulated, it likely would have paid the Podoslksy’s between $40 million and $60 million, according to the Daily News.
The city is “putting this deal on pause to conduct additional appropriate due diligence,” a de Blasio spokesperson said.
The Wall Street Journal reported on Friday that federal prosecutors in Manhattan are investigating whether Jay and Stuart Podolsky’s company hid money in attorney escrow accounts in order to evade taxes.
The brothers served five years probation for grand larceny and coercion in the 1980s, when the Manhattan District Attorney’s office found that the family had hired “professional vacaters” to bring in “drug addicts, prostitutes, thieves and other criminals” to force tenants to flee their properties.
Their late father Zenek Podolsky was also sentenced to three months in lockup.
More recently, the brothers’ company, Amsterdam Hospitality Group, has received tens of millions of city dollars over the last five years to house the homeless in Manhattan hotels such as the Aladdin Hotel, the Apollo Hotel and the Ellington Hotel.
The city is currently working to phase out the troublesome “cluster site” program entirely by 2021. Started under the Giuliani administration, the program houses homeless individuals in privately-owned apartments which are paid for by the city.
De Blasio’s Turning the Tide on Homelessness initiative, announced in February 2017, also seeks to phase out rooms rented in some 80 hotels by 2023, and to establish 90 new facilities built specifically as shelters.
Though the deal was announced in December, the city had kept the landlord’s identity and the location of the properties secret, arguing that making more information public could derail the deal.
Sources told the Daily News that four of the properties are located in Brooklyn, and the rest are in the Bronx. All properties are owned by shell companies linked to David Satnick, the brothers’ attorney. [NYDN] — Kevin Sun