No-bid deal could enrich political fixer

By Sean Carlson on August 23, 2012 8:40 am

For $2, the city has allowed a trio of politically-connected men to maintain control of this 14½-acre site at 149th St. and Prospect Ave. since the mid-1990s.

Political operative has hidden stake in city project

A longtime political operative and two other allies of the Bronx Democratic Party stand to benefit from a controversial plan to develop the site of a former community garden in Mott Haven, the Herald has learned.
In a deal that dates back to the days when Rudy Giuliani was mayor, the Bloomberg administration has continued to grant the three partners, who include the former counsel to the Bronx Democratic Committee, exclusive rights to develop the site on the land at the junction of 149th Street, Southern Boulevard and Prospect Avenue, according to city records.
City evicted gardeners
Vacant for years before a group of gardeners took it over and planted Morning Glory Community Garden in 2010, the site became the object of demonstrations and arrests after the Department of Housing Preservation and Development evicted the group and tore up the plants in November.
The 14- 1/2 acre parcel is one of the largest remaining vacant pieces of city-owned land, a commodity that has become increasingly precious for the building of affordable housing as the supply has dwindled over the years.
When contractors employed by the housing department tore up the garden, city officials argued that the community would be better served by the construction of Crossroads Plaza, a three-building complex of affordable housing, a daycare center and commercial space that would rise there. They named veteran developer Jeffrey Levine, chairman of the Queens-based Douglaston Development, as the builder.
They did not disclose that Levine’s partners in the project include Stanley Schlein, who has been a key political aide to Bronx Democratic political leaders for more than 25 years, and two other Bronx political players.
Long-time lobbyist
Schlein, who since 2009 has provided legal services to the likes of Bronx Borough President Ruben Diaz, Jr. and Public Advocate Bill de Blasio, has also served as an attorney to the New York Yankees and a lobbyist for the real estate industry. He played a key role in lobbying the City Council to vote to approve the new billion-dollar Yankee Stadium.
Records obtained under the Freedom of Information Law show that Schlein has two partners, Louis Rios and Robert Perez.
Rios, owner of a building maintenance firm, has been a generous contributor to the political campaigns of Reps. Jose Serrano and Nydia Velazquez as well as to former Senator Alfonse D’Amato, New Jersey Senator Robert Menendez, Hillary Rodham Clinton and candidates for Congress in Brooklyn and California. Perez is a commercial developer who once chaired the Board of Trustees of the Bronx Museum of the Arts, one of Schlein’s lobbying clients. Together, the three have held control over the Mott Haven site for more than 15 years, dating back to the administration of former mayor Rudy Giuliani.
Spokesmen for the housing department declined to comment on the matter. But they did not dispute that Schlein has no previous background in the development of affordable housing.
No competitive bidding for site
Officials also acknowledged that the housing department never opened the site to competitive bidding, such as a request for proposals from interested developers.
Officials from the agency indicated that awarding land to developers without competition was common at the time the Bronx partners gained control of the Crossroads site. The agency did not respond to requests for written policies regarding how such decisions are made.

A rendering of the planned Crossroads Plaza, by Newman Design, an architectural firm.

In contrast, two other major sites in Brooklyn—Livonia Avenue and Prospect Plaza—are currently the source of competition among affordable housing developers. Both sites are similar in size to the future Crossroads Plaza, which when completed will boast over 400 housing units. The project’s first phase, approved last month, consists of an eight-story tower including 126 units. The building will include a daycare center operated by Easter Seals. Schlein chairs the board of the New York Chapter of the nonprofit, which provides services to the disabled.
The officials also acknowledged that the three Bronx partners stand to profit from Crossroads Plaza, the first phase of which will cost about $42 million to build, but they insisted they could not calculate how much.
Records show that Schlein has not invested any equity or cash in the project although he is the second largest owner after Levine. He owns 18 percent of the corporate entity controlled by Levine, which owns 84 percent of the company. Rios and Perez hold 8 percent each of the project.
Deep subsidies, tax exemptions
The project is deeply subsidized by both the Department of Housing Preservation and Development and the New York City Housing Development Corporation, which will issue bonds for the project. Each apartment in the first phase is currently slated to receive a city subsidy of $85,000. The area has also been designated an Urban Development Action Area, which exempts the developers from real estate taxes for up to 20 years. The project is aimed at low- and moderate-income residents, with a quarter of the units reserved for families making no more than $49,800.
“There is a long history to that site,” said Perez when reached in July at Checkspring Bank, where he works as an underwriter. He declined to comment on his participation in the development, saying that it would take “more time than I have right now.”
Schlein did not respond to multiple requests for comment. Rios also did not respond to messages left at his company, Classico Building Maintenance.
The trio of Bronx partners first approached the city regarding the Crossroads site in 1996, records show. That plan, which included space for retail stores and offices, never came to fruition. Yet documents obtained by the Herald show that the Department of Housing Preservation and Development regularly extended exclusive negotiating rights to the partnership after the initial proposal, even as Schlein was twice disciplined by public agencies for improper behavior.

In March of 2006, the attorney was removed from a list of qualified court-appointed fiduciaries—lawyers designated to oversee others’ estates and finances—for mishandling cases assigned to him.
Schlein was also fined $15,000 by the city’s Conflicts of Interest Board in 2008 for his actions while chairman of the Civil Service Commission. The penalty was the result of an inquiry conducted by the Department of Investigation, which discovered that Schlein had made over 2,000 phone calls from a city office and used city employees to conduct his private law practice from the Commission’s office.
Records show that the trio of partners were in negotiations with another development firm, the Ader Group, before switching to Douglaston. In 2008, those records show, Ader dropped out of the deal due to “internal management issues.”
Douglaston Development, records show, was brought on by the Bronx partners in 2010. The firm is responsible for a number of notable affordable housing projects and condominiums throughout New York City, including The Edge, a 30-story tower on the Williamsburg waterfront. Douglaston is also facing a $62 million foreclosure suit after defaulting on loan payments for The Cameo, a luxury residential building on West 50th Street in Manhattan.
Jeffrey Levine, who owns Douglaston and its subsidiaries, did not respond to multiple messages left with his firm.
The land where the Crossroads project is due to rise will be transferred to the developers for a symbolic $2 dollars, documents show.
Some residents rallied vs. project
The eviction of Morning Glory Garden led to a series of protests. In November, gardeners occupied the office of Community Board 1. In December, police broke up a rally at the site, arresting five people. Two months later, some 30 protestors attended a meeting of Community Board 1 to air their grievances. The meeting was a raucous back and forth between protestors and officials.

“We knew 100 percent that this was city-owned land,” said Aazam Otero, one of the Morning Glory gardeners. “But we knew it was abandoned for years. We didn’t even know the name of the project.”
Otero said the lack of transparency regarding Crossroads Plaza was a problem.
“Land is a community’s most valuable resource,” said Otero. “If we can’t have some control over our land, then we don’t have control over our community.”
When completed, the Crossroads Plaza will feature three towers at eight, 13 and 15 stories, respectively. The development will have commercial space at the ground floor, as well as the 20,000 square foot Easter Seals daycare center.
The Crossroads site is also under long-term monitoring from the New York State Department of Environmental Conservation due to an oil spill on the site that was discovered in 1993. An abandoned Gaseteria station stands on the northern end of the site and has prompted remediation and continued monitoring of potential soil contamination.
This article was produced as part of the urban investigative reporting project of the CUNY Graduate School of Journalism.
Tags: Bronx Borough President Ruben Diaz Jr., Bronx Democratic Party, Classico Building Maintenance, Community Board 1, Congressman Jose E. Serrano, Crossroads Plaza, Douglaston Development, Easter Seals, Jeffrey Levine, Louis Rios, Mott Haven, New York Housing Development Corporation, NYC Dept of Housing Preservation and Development, Robert Perez, Stanley Schlein