Gary Barnett site has one problem: the Podolsky brothers
Notorious landlords are holdouts at Extell assemblage on Upper East Side
Gary Barnett is one deal away from a blank canvas. But it could be a tough one.
The developer known for painstakingly piecing together sites for towering projects has been putting together an assemblage on First Avenue since 2014. The L-shaped site, between East 85th and East 86th streets, consists of nine lots for which Barnett’s Extell Development paid more than $77 million, plus an easement and air rights that cost nearly $5 million.
But there’s a fly in the ointment: a mid-block building owned by the Podolsky brothers.
Stuart and Jay Podolsky are no ordinary holdouts. The longtime multifamily landlords got five years’ probation in the 1980s for hiring “vacaters” to force tenants from their buildings. Through their company, Amsterdam Hospitality Group, the brothers then bought apartments to house the homeless in the city’s cluster-site program, notorious for paying high sums for run-down units.
In 2019, the brothers cut an eye-popping deal with the city, selling it 17 cluster-site buildings for $173 million despite allegedly allowing them to deteriorate and being investigated for possible financial crimes by federal prosecutors at the time. The de Blasio administration, determined to phase out cluster sites, said the hefty payment was the best way to upgrade the units for use as affordable housing.
But unlike the mayor, Barnett has yet to bend to meet the Podolskys’ terms.
Their property at 1645 First Avenue is smack in the middle of Barnett’s 28,775-square-foot site. The four-story, 6,000-square-foot building used to be a family homeless shelter known as Gracie or Gracey Inn.
A recent visit found the structure vacant. Signage for a Bronx Parent Housing Network soup kitchen remains, though debris and boards block the entrance and a handwritten sign on one door announces “Closed.” Windows on the upper levels are boarded up. The nonprofit, itself rocked by scandal this year, did not respond to a request for comment.
Barnett said he has made the Podolskys generous offers for their building.
“We offered them at least five times what it’s worth,” the developer said.
Requests for comment sent to the Podolskys directly and through previously known representatives went unanswered.
Barnett said the holdout building will not slow down his project, though he wouldn’t elaborate on his plans.
“We’ve given up on them and we’re moving on,” he said.
Extell has filed the final round of demolition plans for its remaining buildings on the block. No plans have been filed for what the developer aims to construct.
Extell could build nearly 400,000 square feet, according to an analysis by Envelope City, if the developer uses the city’s Inclusionary Housing program, which offers bonus floor area in exchange for building permanently affordable housing on site or elsewhere.
But Eldad Gothelf, director of zoning services at Envelope City, noted that with the Podolskys’ lot in the way, the developer would “almost certainly have to develop this in two separate buildings.”