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A herd of white elephants waits around

October 25, 2007
By Cody Lyon

Like a plaster wedding cake gathering dust in a bakery display case, the tiered Beaux-Arts mansion at 8 East 62nd Street languished on the market for seven years before going into contract this May for its most recent asking price, $35 million.

It was a long wait for the pedigreed property, just steps from Herm s. The six-floor, 23-room limestone home was built in 1902 by John Duncan, the architect of Grant’s Tomb. In 1992, the mansion was purchased for $3.2 million by architect Emilio Ambasz, but was put back on the market in 2000. Prospective buyers looked at the place — Madonna checked it out in March — then passed.

If there was a waiting room for extremely pricey properties on the market, the Duncan mansion would have had some company among the city’s most high-profile homes. While many luxury properties in Manhattan are selling very well, a subset of super-high-end homes can sit on the market longer for several reasons. Many are “white elephants.” Some are simply overpriced; in other cases, the rich don’t feel the need to sell right away and can afford to hold out for the price they feel is right.

For example, the Milbank mansion at 14-16 East 67th Street, made famous by a recent owner, Penthouse publisher Bob Guccione, has been sitting for over a year. In May, the New York Post reported that the broker for the listing, Corcoran Group agent Leighton Candler, had quit, seemingly out of frustration with current owner Laurus Funds, which was hanging on to the $59 million price tag.

Brown Harris Stevens broker Paula Del Nunzio picked up the listing in May for the 22,000-square-foot property. She wouldn’t comment on how often it is being shown, but she said “as the largest and most expensive mansion on the market, it gets a lot of attention,” thanks to its width and “utter grand scale.”

Del Nunzio said identifying potential buyers of these ultra-luxe properties requires a different skill set than brokering other listings — just because someone is interested doesn’t mean they get in the door. “Our job is to make sure buyers are qualified,” she said.

Then there’s the $35 million, 12,000-square-foot, 13-bedroom house built for sugar tycoon Thomas Howell in 1920. Located at 601-603 Park Avenue, it has been on and off the market since 1989. It is being marketed by Dolly Lenz at Prudential Douglas Elliman. Finally, there’s the most expensive of them all, the $70 million penthouse at the Pierre Hotel at 795 Fifth Avenue, on the market since 2004 and listed with Brown Harris Stevens’ Elizabeth Lee Sample and Brenda Powers.

In the very wealthiest sector of the Manhattan real estate market, finding the right buyer often wins out over any sense of urgency to sell. Yet the fact that some properties sit on the market for years, waiting for the right buyer, seems to strain the bounds of reason.

“The right buyer is someone who is very rich and has great taste,” said Lisa Simonsen, a broker at Corcoran who also worked with the $59 million Milbank mansion until recently. She calls that particular property one of the “most fabulous, magnificent houses ever.” But in spite of what she says was a lot of hard work, the house has yet to meet a buyer who has the deep pockets to pay for it.

White elephants that spend a year or more on the market are clearly in a class of their own, even when compared to other luxury properties. According to data from Miller Samuel, properties in the luxury market (representing the top 10 percent of all Manhattan condo and co-op sales with an average price of nearly $5 million) spent 128 days on the market in the second quarter. That’s down one day from the average in the first quarter and down 22 days from the year-ago quarter.

By comparison, for the overall market in Manhattan, the figure for average days on the market in the second quarter was 117, two weeks faster than last quarter and four weeks faster than the same period last year.

Currently, there are around 45 co-ops, condos and townhouses listed in Manhattan at over $20 million, representing 0.78 percent of available residential listings in the borough. They include 15 townhouses, 14 co-ops and 16 condos, according to Jonathan Miller, president of appraisal firm Miller Samuel.

The majority of the over-$20-million listings, 69 percent, are located on the East Side. Downtown follows with 20 percent, and the West Side is a distant third with 11 percent. On average, these properties have spent 209 days on the market.

Among these listings, 38 percent saw price increases, while another 38 percent held steady. Only 24 percent saw a reduction in price.

“Every time there’s a sale at a certain price range, it helps establish what that current value is for a similar property,” said Hall Willkie, president of Brown Harris Stevens. Willkie noted that when a penthouse at the Time Warner Center sold for $42.5 million in 2003, it created a new plateau in the very-high-end market.

It appears that some sellers believe you can always get what you want.

“Some exuberantly priced property sellers believe they can hold out and eventually get the price they want,” said George Van der Ploeg, a senior vice president at Prudential Douglas Elliman.

Kirk Henckels, executive vice president and director at Stribling Private Brokerage, added that in this segment of the real estate community, one rarely has sellers who are desperate to get rid of a co-op, townhouse or condominium.

“A lot of times these are global people. They have residences all over the world,” said Henckels, adding that the available liquidity — not just in New York, but on the global scale — allows for greater flexibility, but it can also contribute to greater languishing time.

Van der Ploeg noted that there simply aren’t that many buyers out there who can be matched with the small pool of very-high-end properties that are available.

Lee Summers, a senior vice president at Sotheby’s International and one of the brokers who handled the Duncan mansion contract, says that in the end, patience often pays off.

“The very-high-end properties may sit for a while, but they will get the full asking price if they have a good product,” said Summers.

Thanks to a weakened dollar, potential buyers from foreign countries see some of Manhattan’s priciest properties as a good buy.

“In the currency market, the dollar continues to decline in value against the euro and the pound, so high-end buyers from Britain, Italy, Ireland and Germany keep coming to the New York market,” noted Pablo Montes, vice president at the Corcoran Group.

But even though a buyer may have the necessary means to purchase one of New York’s priciest properties, other obstacles — like a picky co-op board — can stand in the way of a buyer’s desires, according to one broker who offers the Pierre penthouse as an example.

“At the Pierre, there is one person controlling the board, and all of us in the brokerage community know that,” said Jacky Teplitzky, an executive vice president with Prudential Douglas Elliman.

Teplitzky said that even a multibillionaire who is seriously interested in the “most wow apartment” can find himself being held up by a fussy co-op board, and this will ultimately result in the property sitting on the market.

“You have to find that one person,” she said.

Teplitzky and other brokers point out that very-high-end property owners will often exercise greater discretion when they decide to sell. This could be because the seller doesn’t want family or friends to know about their intentions.

“You have to do it hush-hush, so you can’t go to other brokers; instead, I have to go to my Rolodex and seek out prospective buyers quietly,” she said.

But “people can’t buy what they don’t know about,” said Henckels, who added that in particular, prewar co-ops (of which there is already a limited supply), usually appear on the market very quietly.

Henckels himself exercised discretion in describing two properties available at the moment in the Manhattan market for “let’s just say $60 million.”

Brown Harris Stevens’ Willkie concurred. “Some of the most desirable homes are many that you don’t know about,” he said. “They shy away from publicity, they don’t want it, so they are not really known to the public.”

An oft-repeated scenario is the property owner who might want to play the market with a wait-and-see attitude. They will sell, but only if they can get the number they want.

“There might be an owner who says, ‘I love my apartment. I bought it for $10 million, but if you can sell it for $50 million, I’ll consider selling,’” said Teplitzky.

Teplitzky said that most brokers understand when this game is being played. From the get-go, they sign an exclusive, not for just six months, but for a full year, because a sale will surely take longer to come to fruition.

“We want to make sure time is on our side,” she said.


Written by codylyonreporter

February 13, 2012 at 3:11 am


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Back in the Day

by Cody Lyon  Apr 26 2010
A New Yorker’s reflection of an earlier time in Manhattan, back when nightclubs were more than $300 bottles of vodka and when restaurants weren’t part of chains. Now, those were fun times.
Explore more stories and interactives that deconstruct how the nation lives, works and plays.Read More
Empire Diner

The Empire Diner, in the Chelsea neighborhood of Manhattan, is closing after more than 30 years in business.
Image: jpchan on Flickr

Agroup of people are out cocktailing at one of Gotham’s countless bars, when suddenly, someone let’s out a loud “New York is so much fun!” Chances are the person doing the shouting is either young, new to the city, or simply here on vacation.

Invariably, you’ll see someone at another table (or possibly someone else in the same group) offering an eye roll, a chortle, or just a sigh. This, they’re suggesting, is nothing. New York City used to be much, much more fun a decade or two ago. There was a time in New York City when spontaneity permeated the air. Fun, or for that matter danger, lurked just around the next corner. Sometimes the two were one in the same.

These were the days when an artist, actor or writer could find a $500 studio apartment on the far reaches of Manhattan, like Alphabet City or the Lower East Side. Today, these are the neighborhoods New York magazine calls the most livable in Manhattan. And that studio now costs $2,000 a month, if you’re lucky enough to find it.

What I’m really talking about is New York City before Rudolph Giuliani became mayor in 1994 and made it his mission to install a series of quality-of-life laws upon the city. These measures eliminated spontaneous window washing by scary squeegee men on 9th Avenue, forced the X-rated shops along 8th Avenue to shut down, and increased the police presence throughout the city.

Before Giuliani, a sense of organized chaos ruled the street. Times Square was a risky-yet-thrilling proposition and the “Disneyfication” of 42nd Street had yet to take place. Manhattan was first and foremost a playground for adults, which meant that for the over-21 crowd, fun came out at night.

Everyone knows about Studio 54—that celebrity-driven, cocaine-fueled super club. That venue spawned others that didn’t seep into the general consciousness but were highly popular with New Yorkers. Clubs like Tunnel, Palladium, Limelight and Club USA, each with their own people at the door who would pick out and choose among the eager crowds who got in and who didn’t. They were looking out for those who were beautiful, striking, important, or who might add some freakish character to the cocktail of madness once inside.

Today, club owners are catering to those who can drop a few hundred dollars for a bottle of vodka and a collection of mixers. Or they’re finding other uses for the real estate. Studio 54 long ago became a legitimate Broadway theater. Palladium was torn down and became a New York University dorm. Limelight, a club set in an old Episcopalian church that opened in 1983 and became a symbol for Giuliani’s crackdown on nightlife, this spring is becoming the Limelight Marketplace, a mini-mall for artisans.

The clubs and bars are also dealing with a 21st Century reality their predecessors couldn’t fathom: a smoking ban. Earlier this month, police showed up at Manhattan’s last mega club, the Club M2 Ultralounge in Chelsea, with “nusiance abatement” papers ordering its temporary shutdown. Mind you, the police said that over the years they’d witnessed drug dealing and violence in the spot, but news reports also pointed to a rift between the club and the city over the nightspot’s flagrant violation of the city’s 2002 anti-smoking laws. The club reopened—a weekend without business cost it $250,000, according to a spokesman—only to be raided againby police as it was about to kickoff the NFL’s official draft party last week. This time, authorities said security was an issue.

But it’s not just the club scene that has changed. What passes for fun in New York—and how someone finds it—is a different game in 2010. Forget about looking online, or checking an iPhone to find party dresses, shoes, or illegal substances. A decade or so ago, the best bet for finding anything was experiential shopping, the discovery of new neighborhoods replete with their own smell, vibe and look.

The East Village with its edgy selection of combat boots and black leather motorcycle jackets found at Trash and Vaudeville on St. Marks Place was a universe away from the well-to-do shopping for fresh vegetables at the gourmet Fairway Market on the Upper West Side, where an affection for designer wool and loafers ruled the streets. Neighborhoods like Chelsea, home to a gay leather bar called Rawhide, or Tribeca, with its chic Odeon restaurant that drew artists and Wall Street brokers alike, were uniquely New York. They weren’t chains. They were run by local business people who had dreams of tapping into the city’s zeitgeist to strike it big.

Both the Rawhide and Odeon remain, largely unchanged by time. But with each passing day, it seems another story surfaces of some Manhattan institution’s closing, relocation or flat out shutting down due to the old adage of high rents. For example, after 34 years, “the hippest diner on Earth” will serve its last chicken fried steak on May 16. After negotiations with the landlord fell through, the Empire Diner, a 24-hour retro looking rail car diner where many club goers had a sobering breakfast, is calling it quits.

Entire neighborhoods where avenues and streets were dotted by Mom and Pop stores with names like Bright Food Shop or Food Bar, all festooning local flavor, have disappeared, replaced by more widely known names like Subway, Chipotle or another bank branch of Chase or HSBC.

But enough of this complaining. New York’s bars and restaurants remain packed, the shopping is still the best in the nation, the streets are vibrant (and much safer they than used to be). Truth be told, that person among the group of drinking friends who shouts about how fun New York is will probably be the one doing the sighing or glancing or complaining of their own in ten or twenty years, provided they stick around. I’ll drink to that.

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Gotham laments closure of popular Meatpacking District eatery

by Cody Lyon
EDGE Contributor
Wednesday Jul 2

On the Wednesday evening before Gay Pride weekend in the city, the Meatpacking District was alive with activity. Finely dressed pedestrians made their way along cobblestone streets while window shoppers admired the latest fashions in freshly sandblasted buildings. All the while, sounds of laughter, conversation and clinking glass from Pastis and other polished restaurants filled the air.

But deep in the heart of this exclusive neighborhood, on Gansevoort Street, a pair of lone rainbow flags crowned the green awning at Restaurant Florent. Albeit crowded, the air of sadness over the popular eatery’s closure consumed all who entered.

“He [owner Florent Morellet] is so overwhelmed right now,” a busy hostess said after EDGE asked her about the possibility of speaking to him. “You know we only have a few days left.”

The paint on the window told the whole story.

“Serving 24 hours until the bitter “sweet” end on June 29,” it read.

After 23 years of serving countless steak frites, muscles and Boudin Noire in an area more known for beef racks, leather daddy’s, transgender prostitutes, club kids and Hogs and Heffers, the modern landmark 24 hour French diner that served the fashionable alongside the “freaky” has closed its doors. News reports account Morellet signed a lease for $6,000 in 1995. The landlord reportedly sought to increase the rent to around $700,000 per year-or $58,000 per month-this past year. And Morellet was left with little choice but to close shop after a period of unsuccessful negotiation.

Skyrocketing rents in the Meatpacking District are certainly nothing new, but Florent regular Scott Woodward, a long-time downtown resident and branding executive, was among those who expressed sadness.

“Raising the rent six times the current monthly rent is crazy,” he said as he pointed to the gentrification that has transformed the once seedy neighborhood. “Just what we need, another Stella McCartney boutique.”

In addition to a lack of good eats, Florent’s closure has left some angry. The Meatpacking District was once seen by many LGBT New Yorkers as a creative enclave, but some seem resigned to what they see as part of an ongoing trend in a city where charm, mystery and character often succumb to market forced controlled by corporate and other moneyed interests.

Antoine Maisini opened Eastern Bloc in the East Village two years ago with two fellow bartenders. The France native was quick to note the increasingly difficulty in getting any sort of service industry business off the ground in Manhattan.

“You have to have multi-million dollar backing to start almost anywhere in the borough,” Maisini said.

He added he feels most new bars; restaurants and clubs that open in the city have a more of a polished corporate feel to potentially avoid the same market forces that appeared to spark Florent’s closure. And among the many who mourn the loss of the Meatpacking District mainstay, there is even deeper sadness and resignation over the cultural change they contend it represents.

Promoter and artist John Lovett co-hosted the weekly “Pork” party at the Lure each week in the 1990s. He agreed that rising real estate values limited nightlife innovation, business and even art itself in Manhattan.

“There’s so much pressure about money, you can’t build anything interesting or daring,” Lovett said as he recalled walking around the Meatpacking District in full leather regalia in broad daylight during the heyday of the Lure, the Spike and Jackie 60’s. “The radical-ness of New York has sort of disappeared.”

“The underbelly is gone, the excitement is gone, the diva at the velvet rope is gone, all replaced by the bottle publicist in stilettos or bad wedgies and an empire waist trapeze dress in that awful print.”

Morellet’s decision to open his restaurant when and where he did was radical in its own right. The rumblings of change began to take hold on the “radical” area bounded by 14th Street to the north, Gansevoort Street to the south, the West Side Highway to the west and Ninth Avenue to the east in the late 1990s. And with the demise of the meatpackers, a hunger by investors for new opportunities coupled with a Manhattan real estate boom quickly decreased the days of the seedier and “mysterious” ambience of the Meatpacking District.

“Florent and Pastis are perfect juxtapositions,” writer and performer Idris Mignot, a former Florent server and bartender during a period in the 1990s, said. “Florent… created a mood, a feeling and a place while Pastis… [is] the bigger, stronger ’Johnny come lately’ that exudes all that is new and pseudo-fabulous.”

He continued to lament what he described as not only the disappearance of the grit and rough edge of the Meatpacking District, but the noticeable change of the “old school” downtown scene.

“The underbelly is gone, the excitement is gone, the diva at the velvet rope is gone, all replaced by the bottle publicist in stilettos or bad wedgies and an empire waist trapeze dress in that awful print,” Mignot said with a hearty laugh. “Florent symbolizes a time when you didn’t know what to expect. You didn’t know what was around the next corner.”

Regardless of Florent’s physical demise, countless memories and fond-often outrageous recollections that are uniquely New York will remain alive for the ages.

Clara Huange was among those who frequented the eatery. She was an art director at POZ Magazine, and she quipped the restaurant was her staff’s cafeteria.

“I had a romance with Florent during the entire time I worked at the magazine” Huange said as she recalled the mussels and frites, veggie burgers, egg Sophie and steak and eggs.

Writer and actor Nora Burns, who participated in Florent’s closing performances over the past few months, Denial, Depression and Acceptance, said she loved going there after a night out at Jackie 60, Clit Club or Mars. She left New York in 2002, but she told EDGE “Florent still feels like home.”

Mignot shared his own stories. He recalled a last minute costume design for his bartending shift during the annual Bastille Day celebration, a bygone street fair Morellet himself organized. Mignot based his design on the blood sausage menu item served alongside apples and onions.

“When I got to Florent in a skimpy black bathing suit, I fashioned a necklace out of apples and onions,” he said. “I called myself Booty Noir.”

Another waiter wore croissants as pig tails. Mignot said the staff-and their zany fashion antics-were half the reason people came to dine. He further noted the graveyard shift, from midnight until 8 a.m., was the most fun and spontaneous time to be in Florent. And Mignot credits Morellet with encouraging his staff’s outrageous and creative nature.

Another former patron, DJ Larry Tee, recalled a life and death incident late one night while dining at Florent with friends who were visiting from Amsterdam. He was trying to impress them and suddenly began to choke on a piece of Florent’s famous steak that became stuck in his windpipe.

“It didn’t take me but a second to remember that being alive is much better than being cool, and someone gave me a rib thrust, sending that piece of meat flying, I caught it,” he said.

Sherry Vine also shared the good times she and her friends had at Florent-especially every Tuesday night after a night at Jackie 60.

“Florent was always so generous and supportive of the queens,” she told EDGE in an e-mail from Estonia. “Bastille Day was where I met Joey Arias and invited [him] to perform at Bardo. Sadly, there’s just no place left in Manhattan for freaks and artists.”


Cody Lyon is a New York freelance writer whose work has appeared in a number of national daily newspapers and New York weeklies. Lyon also writes a political opinion blog at


Written by codylyonreporter

February 7, 2012 at 1:57 am

Posted in Uncategorized

Midtown Buildings-MTA Doomsday Plans-New York Real Estate Dynasties and Town houses Come to Austin

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MTA Nears ‘Doomsday;’ Still No Albany Action | April 30, 2009

By Cody Lyon


NEW YORK CITY-If Albany fails to reach a workable solution to close the Metropolitan Transportation Authority’s budget gap over the next few days, the daily commutes for eight million New Yorkers will become more expensive, and the time it takes to get from point A to B, will increase markedly. In addition to decreased rail service, several bus routes will disappear on weekends and evenings while others disappear entirely. In fact, if a new funding mechanism does not see consensus at the state capital, the city that never sleeps may eventually see a complete shutdown of the transit system during late evening hours, under a “beyond doomsday” scenario MTA outlined on Wednesday after revealing that its deficit is even wider than originally forecast.

Fallout from what the MTA calls its “doomsday” plan has begun to spur outrage among city residents. On Tuesday afternoon, transit advocates came together with concerned citizens in Manhattan’s Union Square, raising their voices against the proposed cuts. One speaker, 76-year-old resident Carl Van Putten of Hunts Point, shouted “where I live, we’re not talking about inconvenience, we’re talking about survival.” Speakers at the event, largely organized on social networking site Facebook, sought to persuade attendees that New York City’s economic backbone is its transit system and without it, the entire city suffers unimaginable trauma.

“I think it’s a big myth that’s been around for around 50 years that New York is somehow not a mass transit town,” Wiley Norvell, communications director for the group Transportation Alternatives, told as trains rumbled underneath during another rush hour at the Union Square subway hub.

According to the MTA, a plethora of service cuts will be phased in over the next few weeks and months. The cuts began Thursday, as the traditional seasonal Long Island Rail Road service to Belmont Park was eliminated. But perhaps the true reality of the crisis will begin to settle in on May 31–when fare hikes of up to 29% are set to start on the subways and buses, with LIRR and Metro-North following suit the next day.

Then, June 28, train service cuts begin on a set of subway lines that reads like an elementary school chalkboard. The A, D, E F G N, Q and R lines will all see significant service reductions that day. Meanwhile, a list over two pages long details bus routes that will be either sharply reduced or eliminated entirely cutting off entire neighborhoods from the transit network.

“The people who will lose out the most on these cuts are people from Brooklyn, Queens and the Bronx who when they lose their neighborhood bus lines lose their public transit altogether,” Norvell told

Blame has largely centered on members of the state Senate who have made their opposition to bridge tolls widely known. Norvell makes no qualms about it, saying it was the Senate that was essentially blocking the proposed plan constructed by former MTA chairman Richard Ravitch’s commission. Speaking to what he called the shared pain contained in the Ravitch proposal, Norvell says the plan is the only way the state can raise $2 billion in a politically expedient way.

Introduced last December, the Ravitch plan would have instituted a payroll tax in the 12 counties served by the MTA, implemented a $5 toll on East River and Harlem River bridges and increased fares on the subways moderately. The plan called for a transfer ownership of the East and Harlem River bridges from the city to the MTA, a process that Ravitch described in 2008 as “very complicated.”

Despite complications associated with the transfers, Gov. David Paterson strongly supported the plan, as did regional leaders including Assembly Speaker Sheldon Silver. “The speaker was supportive and is strongly supportive of the underlying concept behind the Ravitch Plan which is that all of those who benefit from the public transit system should share in its cost,” a spokesman for Silver tells

The spokesman stresses that the people who benefit from the MTA aren’t just its actual users, but also businesses and motorists who benefit indirectly, as with drivers who enjoy less congested roadways. “The speaker often talks about the last transit strike, when it took up to three hours to travel from Brooklyn into Manhattan,” he says.

MTA leadership, including executive director Elliot Sander, endorsed the plan, saying it was fair and offered both a lifeline for continued operation, but also a means to continue progressing capital improvements and opening windows to future infrastructural improvement and expansion. But opposition to the bridge tolls stood in the way leading Silver to introduce a compromise plan, reducing the bridge-crossing fee to $2 from $5.

However, some Ravitch plan opponents says it was not opposition to bridge tolls per se, but instead what they call yet another fiscally irresponsible mechanism for raising much needed revenue. “Senate Majority Leader Malcom Smith’s opposition to bridge tolls is not politically motivated,” a Smith spokesman tells “If the MTA assumes ownership of the bridges to collect tolls, they actually assume ownership of four of the oldest suspension bridges in the country. Over the course or the next few years, it’s very likely, to almost certain, those bridges will incur significant costs for maintenance, upkeep and general deterioration. He adds that those costs would be passed on to straphangers.

Nonetheless, the severity of the crisis required the Senate to introduce its own plan, which did away with bridge tolls. The most recent Senate version being touted by Smith would include a tax on rental cars, fees on drivers’ licenses and a $1 per drop-off fee on taxi drivers–with the exception of livery cabs.

Smith’s spokesman says that contrary to critics, including state comptroller Thomas DiNapoli, the numbers in the Senate plan unequivocally add up. However, he adds that Sen. Smith is open to discussing improvements on the Senate legislation.

“We understand that we have to come together to clean up this mess we inherited, and the senator is confident that over the course of the next week, we’ll be able to do just that,” Smith’s spokesman tells, adding that “the MTA has displayed years of gross mismanagement and fiscal irresponsibility.”

Silver’s office says there are a number of ideas on the table, and as of Thursday, conversations continue. “If there’s a plan in the Senate that has the 32 votes to pass, it’s something the speaker is going to look at,” says the spokesman for Silver.

The most vocal opponents to the bridge toll aspect proposed in the Ravitch plan have been state Senators Karl Krueger of Brooklyn’s district 27, Rueben Diaz of the Bronx’s district 32 and Pedro Espada from the Bronx’s district 33. On March 26, Espada insisted to that it was the need for increased financial transparency and accountability that the MTA needed to show the State Senate. Saying his district hadn’t seen real capital improvements in its subway lines, Espada said the MTA needed to present an actual capital plan to the legislature before the Senate would approve any revenue streams.

However, alluding to automobile commuters, Espada said the MTA rescue must not have a disproportionate impact on any single group of constituents in his district, as well as throughout the city and Westchester, Nassau and Suffolk Counties. As reported on April 21, of the 77,284 residents of Espada’s district who commute daily, 54,348 take public transit while only 22,936 drive an automobile.

Toll controversies aside, the MTA’s doomsday budget was in great part related to the effects of what has turned into a severe economic recession, more specifically the transit agency’s dependence on a volatile real estate market’s revenue and taxes. “Month to month revenue the MTA takes in from real estate taxes and other sources of revenue fluctuate quite a bit,” an MTA spokesman tells

He adds “those taxes are sensitive to the health of the regional economy, the worldwide and global economy really.” The spokesman tells that the MTA had forecast some reduction from real estate taxes, but the magnitude in the drop “has been beyond what we had forecast.”

According to data provided by the MTA, around 8.75% of the agency’s budget needs are met by real estate taxes. When broken down, a complex myriad of collection and distribution methods emerge. The tax formula is composed of two major components: the urban tax and the mortgage recording tax.

Urban taxes consist of two taxes applied to certain commercial real property transactions and commercial mortgage recordings within New York City. Tax receipts are available only for transit purposes in New York City with 90% of the receipts earmarked for New York City Transit general operations and 6% used for the partial reimbursement of NYCT “para-transit cost.” The remaining 4% earmarked as subsidy for the New York City private buses; the city is currently utilizing these funds to reimburse MTA Bus expenses.

MRTs consist of two separate taxes on mortgages collected in the 12-county region served by the MTA. The first, MRT-1, is imposed on the borrower for recorded mortgages of real property, subject to certain exclusions, at the rate of 0.3% of the debt secured, raised from 0.25% in June 2005. Money collected from the MRT-1 must be applied, first, to meet MTA headquarters operating expenses and, second, to make deposits into the NYCT Account–55% of the remaining amount–and the Commuter Railroad account–45% of the remaining amount.

MRT-2 is imposed on the institutional lender of certain mortgages secured by real estate structures containing one to six dwelling units in the MTA’s service area at a rate of 0.25%. MRT-2 gets applied first by the MTA, transferring an amount in excess of $5 million each year to Dutchess, Orange and Rockland Counties based on a formula found on page II-29 in the MTA’s Preliminary budget. In 2007, this transfer was $32.9 million, says MTA’s spokesman. Second, MRT-2 money is used to pay MTA operating and capital costs, including debt service and debt service reserve requirements if any exist.

After US Attorney Action; Seized Piaget Building Could Go to Auction
December 6, 2009 Welcome REAL ESTATE | Email Preferences | Logoff
By Cody Lyon
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650 Fifth Ave.
NEW YORK CITY-On Nov. 12, officials from the US Attorney’s Office for the
Southern District of New York took legal steps to seize nonprofit Alavi
Foundation’s 60% ownership stake in the 36-story 650 Fifth Ave.
commercial office tower, known as the Piaget Building. The government
says Alavi Foundation, through a partnership with Assa Corp. called 650
Fifth Avenue Co., served as a front or shell-company, funneling revenue
from the Midtown building through Bank Melli of Iran, and then on to Iranian government officials.
It was a year ago in December 2008 that the Treasury Department designated 650 Fifth co-owner
Assa Corp. as “a front company” that had been created and controlled by Iran’s Bank Melli. Treasury
said Assa Corp.’s parent organization was Assa Company Ltd., which called the Channel Islands home
to its headquarters. Treasury noted that in 2007, Bank Melli had been designated as proliferators by
the United States and the European Union for its role in Iran’s nuclear and ballistic missile programs.
A source familiar with the latest government move tells that it’s important to
remember, that at this stage, only a forfeiture complaint has been filed for the two ownership entities
in the building. The source says that not until the conclusion of forfeiture proceedings, in favor of the
government, will any real property be seized. That same source says there are other potential
outcomes to the government efforts, including dismissal, summary judgment or settlement.
But, if the government does prevail and assumes ownership at the site, a number of scenarios are
possible, including a property auction by US marshals.
For its part, Alavi Foundation attorney John Winter tells his client is “disappointed in the
government’s actions. The foundation had been cooperating with the government for the better part
of a year, responding to various questions that the government had put to the foundation.” He adds,
“The foundation intends to litigate [these] matters, and expects to prevail in the end,” says Winter.
As for the government’s sense of timing, Winter says “we are not going to speculate as to the
government’s intentions, motives or timing.” However, as to the case’s eventual outcome, he says he
suspects the litigation will be “protracted.”
For now, business at 650 Fifth can go as it has for the past three decades, according to an official
statement from a spokeswoman at the US Attorney’s office who says “tenants and occupants remain
free to use the properties as they did before” the filing. She says there are “no allegations of any
wrongdoing on the part of any of these tenants or occupants.”
But it’s hard to ignore the government’s civil complaint, which paints a portrait of glaring deceit and
intrigue more worthy of a James Bond movie than a real estate website. Spokesmen for the Treasury
or Justice Department would not speak directly to the case, nor did they recall similar actions toward
a large commercial property, instead they referred back to the US Attorney’s office,
which declined to offer more details than those contained in the complaint. Further, most real estate
players were not willing to discuss any potential repercussions associated with the case.
But, perhaps more puzzling is the apparent late date for the current action, since if what officials
charge is true, a large commercial office tower in Midtown has been serving for 30 years as a cash
cow to a nation the United States considers hostile to its interests.
On April 7, 1980, the United States broke diplomatic relations with Iran. Over the years, relations
between the two have been further strained, most recently as Iran has been named as proliferators
of nuclear weaponry.
The complaint spells out in fine detail that since the revolution, the Mostazafan Foundation of New
York, and later the Alavi Foundation, acted “at the direction of, and provided services to, entities
owned an controlled by the Islamic Republic of Iran.” | Newsletters SEARCH ADVANCED
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owned an controlled by the Islamic Republic of Iran.”
It was the year following the Iranian revolution that the Islamic Republic of Iran established the
Bonyad Mostazafan, also known as Bonyad Mostasafan va Janbazan, That organization’s job was to
centralize and take possession of, and manage property expropriated by the revolutionary
government. According to the government complaint, the Bonyad Mostazafan sought to take control
of the former Shah’s property, including assets of the Pahlavi Foundation. According to the document,
the Bonyad Mostazafan reports directly to the Ayatollah.
Years earlier, in 1973, the Shah of Iran had established the Pahlavi Foundation, a not for profit
corporation under the laws of the State of New York to pursue charitable interests in the United
States. The complaint says that in the 1970s, Iran had loaned Pahlavi around $43 million to acquire
the rights to real estate and construct a commercial office building at 650 Fifth Avenue.
In 1989, the Iranian Government approved a partnership between the Mostazafan Foundation of New
York and Bank Melli to solve its IRS ‘tax problem.’ As part of a mutual agreement between the two,
the New York Foundation would agree to pay taxes, if the building was sold or transferred up to the
amount of $130 million. The complaint says “if the amount were more than $130 million, Bank Melli
Iran would pay the tax balance.”
The US Attorney alleges that Mostafazan foundation was eventually named Alavi Foundation and that
Alavi concealed Bank Melli’s control of Assa Corporation from its own counsel and from the New York
State Attorney General.
In 1989, an assistant Attorney General for New York State wrote to an attorney law firm acting as
outside counsel for the Alavi Foundation to confirm a conversation about the Alavi Foundation’s
proposed transfer of real property to the partnership.
Fast forward to 2008, when after a court-ordered search, federal agents found notes where Iranian
UN Ambassador Mohammad Khazee discussed commercial aspects of 650 Fifth with Alavi president
Farshi Jahedi. The two also talked about charitable activities associated with the Alavi Foundation.
The court papers say Khazee stated, “among other things, that it was necessary to increase the profit
from the building” at 650 Fifth.

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Back In The Game
by Cody Lyon

An article from the March/April 2009 edition of Real Estate New York

As the city’s commercial real estate market continues to soften, and tremendous leverage comes home to roost, many of New York’s old-line real estate families appear better positioned to weather the current economic tsunami. Family firms interviewed by Real Estate New York say that the years of experience in management, ownership, construction and development provide them with more secure positions as the city’s business and real estate community faces one of its toughest tests in a hundred years.

The names are synonymous with many of New York’s office towers, apartment buildings and even the entire sections of the city where families helped carve the face of the city’s five boroughs.  As Stanley Freundlich, managing partner at Berdon LLP CPAs and Advisors, says “they were extremely visionary in scoping out the New York City skyline.”

Freundlich, who joined the accounting firm in 1962, has served as an advisor to a number of real estate dynasties. Since 1917, Berdon has negotiated deals for countless developers, owners, operators and other investors in residential, commercial and mixed-use properties.

Nostalgia aside, Freundlich tells RENY that the past 10 years weren’t dominated by families but instead REITS and offshore funds.  He calls today’s market dangerous.  He says generational firms “weren’t doing the complicated syndicated deals but instead used their own money when acquiring properties, except for conservative mortgage financing.”

Over the past few years, deals were being hatched and funded by all manner of sources from pension plans to offshore money according to Freundlich.  New interests began to steamroll across entire swaths of the city, snatching up property along the way.  Hedge funds and investment bankers joined the game and as long as the money was made readily available, the buyers would pay increasingly exorbitant prices under the assumption that property value would double over the next 10 years.

“There were prices that made no sense,” Freundlich says, adding the assumptions buyers made were too aggressive. “In the past couple of years, the cap rate went as low as 3% to 4%,” meaning that if you used a 3% cap, “you were buying property at 33 times the cash flow.”

As Freundlich notes, the numbers weren’t there and the assumptions were unrealistic.  Individuals and groups rushed into highly leveraged deals that promised high returns, and they were often advised by third parties motivated by potential commissions and bonuses.

On the other hand, he says family firms trended toward more conservative assumptions, holding that inflation increases modestly, no more than 3% each year.

Increasingly, it appears the more cautious hands-on approach has paid off.  Unlike other entities, families have long-term vested interests in their companies and assets. “Our business model is that we manage the properties we own,” says J.J. Bistricer, executive vice president at Clipper Realty.  “All our rentals are managed in-house, by us.”

J.J is a third-generation Bistricer, following his grandfather who in 1952 founded the company, now led by parthers David Bistricer and Sam Levinson.  Currently, Clipper has a portfolio of around 6,000 residential and mixed-use projects throughout the metropolitan area.

Bistricer says banks don’t care that “you can’t justify your purchase price.  They’re saying what we underwrote you is the price, and now you have to pay up.”

For the most part, he says, Clipper avioded temptation that left some city portfolios worth less that the amount the last buyer paid for it.  “Real estate is very much in my family’s blood,” says Bistricer, who as a child found himself hanging out in the family office on weekends where he’d listen in on phone calls and do odds and ends.  There, he gained perspective, learned technique and developed abilities, adapting quickly to the company structure and business culture.

Today, he says the company is in good standing and that it hasn’t engaged in over-leveraging or over-valuating property.  “The properties we purchased many years ago are on very sound footing, and in many cases, free and clear,” Bistricer notes.

As an example, he says if a project like a new condo development doesn’t go the way people predict, Clipper explores other avenues like alternative revenue generation. “If we generate revenue in a different way beyond sales, perhaps as rental while at the same time marketing as condo, that sort of deflects the cost of operating a building that’s not 100% occupied,” he says.  “It’s all about being smart, prudent and watching the nature of your costs, and if you’re in construction, or management, making sure that nothing falls through the cracks.”

Falling through cracks is frowned upon by a number of generational firms.  Take the family firm whose founder was instrumental in developing New York’s fashion district.

Founded in 1909, when Samuel Kaufman moved his clothing business out of New York’s Lower East Side, the Kaufman Organization by the 1920s had become instrumental in the development of properties that became the Garment District of the West 30s in Manhattan.  Currently, Kaufman’s portfolio includes 40 properties with over five million square feet.

“We’ve taken a fairly conservative approach,” said Steve Kaufman, president of the 100-year-old firm.  He says that over the past 10 years, his family didn’t make permanent long-term acquisitions but did do some short-term buying and selling.  That, he says, is not our normal way of doing business,” but the company saw some opportunities and got involved.

For now, Kaufman says people are still searching for the bottom.  He says that those who can are looking for space but keep on shopping, ultimately unwilling to commit, because in the end, they want to pay less.

He says his company can do business with many of those bargin hunters because “we didn’t buy anything at the peak of the market that we’re now forced to rent at unattainable prices. We can rent for lower prices than other people, if we want to.”  In fact, he says, his company is willing to reach out to quality tenants.

“We’re prepared to be aggressive in our pricing,” Kaufman says adding that the company has never abandoned a real estate fundamentals philosophy.  “As owner of the company, I will do whatever is necessary to close deals, rent space and maintain our competitive edge in theis very difficult climate.”

Another family successfully managing the storm is headquartered north of the city in White Plains.  Founded in 1891 by Irish immigrant Daniel Houlihan, real estate and investment firm Houlihan Parnes counts fourth-generation James Houlihan Jr. among its principals.

Daughter Kelly Houlihan recently stepped aboard a few months ago.  She had studied education at New York University, thinking she would become a teacher, but, after a few summers interning in her family’s office, she now works in leasing.  Like her great-grandfather during the Great Depression, she’s learning that survival often demads aggressive approaches to business.

During the Depression, Daniel Houlihan actually increased the size of the family business by managing properties for the government agency that was a forerunner of the Federal Housing Administration.  Today, Kelly Houlihan says, “You can’t just sit around and wait for a broker or tenant to call you looking for space. You have to make phone calls, canvas,” and yes, “flyer.”

James Houlihan Jr. tells RENY that despite being a long-established generational business,  “You don’t get a free pass, there’s no exemption from the recession.”  To help weather this storm, Houlihan Parnes has taken on advisory work for lenders, hospitals, healthcare facilities and colleges. “We may not have looked at that work during the up economy, because we were too busy buying and selling.”

Houlihan worries this cycle is more severe than the past dives into negative territory that have since followed the Great Depression.  He calls those events singular, saying they don’t compare to this meltdown.

“You had an oversupply of money that pushed prices and leverages far too high,” says Houlihan.  “Now, we’re paying the piper for that.”

Comparing the current cascade to a freight train charging down the tracks, he says his company is doing what it can to manage, tightening belts and cutting overhead.  He says companies like his are analyzing every property and in some cases, making hard choices, like selling at a loss.  “That’s part of life,” he sighs.

But Houlihan stresses that the impact goes beyond the owner/developer.  He says that when you have a vibrant economy, construction jobs account for up to 25% of active employment.  Now, as those companies are squeezed, and credit facilities dry up, there are cases where survival comes into question.

One contractor withstanding the heavy weather is John Gallin & Son, a commercial interior construction management and contracting firm founded in 1886 and now in its fourth generation of family management.  Mark Varian, who joined the company in 1977, is the sixth member of the Gallin family to take the leadership helm, and says a Gallin is on every job the firm takes.

“There has not necessarily been a flight to quality, which we do bring, but a flight to reliability, a sense that the people they are hiring are actually going to be there the next day,” he says.

Varian says experience helps a business stay afloat, but he cautions that new projects have to be generated at least once every quarter. “If we didn’t write up a job within a three month period, we’d be out of business,” he says.

The company opted not to expand during boom periods. “Instead, we maintained what we have,” says Varian.  “We have experienced people who can adjust to heightened levels of activity.  While that can be a strain at times, to hire a whole group of people and then let them go when there’s a slowdown is not the way we do things.”

Speaking of vested family interests, Varian says, “If every one of us was here to make a quick buck and leave, well, that’d be a more boom-and-bust mentality.”

For its part, family-run Townhouse Realty is looking to buy non-performing loans, while maintaining a buy-and-hold philosophy with its property assets.  Founded in the midst of the Depression in 1933 by William Maidman, Townhouse acquires, develops and manages residential commercial, retail and mixed-use properties.  Mitchell Maidman, the present-day preseident and CEO, is optimistic about overcoming the current slowness.

“Our family has owned real estate in New York City for nearly 60 years,” he says, noting that the city’s real estate has “always risen back up even higher than it had been in the past.  As long as owners maintain their properties in excellent condition, attracting and retaining tenants will not be a problem.”

Like others, Maidman tips his hat to the resources that a family-run firm offers.  He acknowledges that years of experience offer invaluable know-how, which in itself can prove invaluable during an economic crisis.  “This is where I believe families with deep experience and solid assets have the advantage.”

Right now, Townhouse is proceeding conservatively.  “We’ve shifted to a mode of patience that has long done well for our family and others like us,” he says.  “As early as 2004-2005, we stopped buying and developing high rises in Manhattan and started buying low-rise buildings and walkups in upper Manhattan and the other boroughs.”

Long Island’s 50-year-old Albanese Organization counts the Vanguard in Chelsea, The German Mission to the United Nations and Battery Park City’s new 35-story Visionaire among its portfolio.  Christopher V. Albanese, executive vice president of the Garden City, NY-based company, works closely with father Vincent, who founded the company, and his uncle Anthony.

“We seek to buy and develop only well located properties, and we don’t over-leverage them,” says Albanese.  “The buildings we own are fully occupied with only moderate leverage.”

The company’s philosophy says that if you finance a project with 70% or 80% leverage, that’s moderate risk.  Instead, Albanese says, people were financing at 80% to 85% during the first mortgage, then they’d take another mortgage and eventually might effectively have 90% to 95% financing.

Like members of other real estate families, Albanese points out the “numerous buildings where the mortgages are worth more than the actual buildings themselves.  Between 2006 and 2008, when the market euphoria caused prices to shoot through the roof, we were very conservative.  We didn’t get caught up in that.”

In common with other families, Albanese sees a return to emphasizing fundamentals.  However, he hints that the current downturn offers an even bigger opportunity for family firm innovation and efficiency, which includes fully embracing environmentally conscious development.

Touting green buildings like Visionaire, Albanese says that they offer better air quality and hight tenant comfort, and that they many be more efficient.  “What we’ve put into that building will help sales continue, and it will assure projects remain successful, even in these downturns.”  He notes that his family has always maintained that when rents are falling, better-built properties hold their value.

Catellus names Canada firm for shop house phase of Mueller

Austin Business Journal by Cody Lyon, Staff writer

Date: Monday, November 28, 2011, 10:37am CST

Cody Lyon
Staff writer – Austin Business Journal

Catellus Development Corp. is introducing to Austin a new style of mixed-use development with its new “shop house” phase of the Mueller project.

Catellus, the master developer of the development, has named Homes by Avi — a Canada-based company — to build the 14 new shop houses, where a resident can live and work in the same building.

The phase puts a modern spin on an urban lifestyle once common in older towns and cities around the world where merchants often lived above the store or restaurant they owned or operated.

The Mueller Shop Houses will consist of two facing blocks of attached homes that will line a small urban park, according to plans. Each residence will have a ground floor of commercial space consisting of 500 square feet to 600 square feet each.

Commercial space will be available for a variety of opportunities such as retail, professional services and small restaurants or wine bars, Catellus said. The developer plans to build additional parking for customer use.

The Canadian firm is impressed by the neighborhood’s location, parks, shops and neighborly vibe, and is looking forward to bringing a new element to a truly mixed-use community,Darren Soltes, COO of Homes by Avi said in a release.

The company plans to begin construction on the shop house phase next summer.

Homes by Avi joins David Weekley Homes    , Standard Pacific Homes    andStreetman Homes    to build 221 single-family homes just east of Mueller’s planned town center. Upon completion, the new homes will bring total homes at Mueller to 1,600.

Mosaic at Mueller, a multifamily component of the development, plans to break ground in early 2012, the Austin Business Journal reported in October.

Nearly 40 percent of the homes built in the next phase of the Mueller development will be part of the Affordable Homes Program.

Written by codylyonreporter

February 2, 2012 at 2:00 am

Posted in Uncategorized