1 2 CITY COUNCIL 3 CITY OF NEW YORK 4 -------------------------------x 5 THE TRANSCRIPT OF THE MINUTES 6 of the 7 SUBCOMMITTEE ON PLANNING, 8 DISPOSITIONS And CONCESSIONS 9 -------------------------------x 10 February 6, 2008 11 Start: 1:20 p.m. Recess: 1:49 p.m. 12 City Hall 13 Committee Room New York, New York 14 15 B E F O R E: 16 DANIEL GARODNICK Chairperson, 17 18 COUNCIL MEMBERS: Sara Gonzalez Inez Dickens 19 Vincent Ignizio Maria Arroyo 20 Darlene Mealy 21 22 23 24 LEGAL-EASE COURT REPORTING SERVICES, INC. 17 Battery Place - Suite 1308 25 New York, New York 10004 (800) 756-3410 2 1 2 A P P E A R A N C E S 3 Carol Clark 4 Assistant Commissioner NYC Housing Preservation and Development 5 Victor M. Hernandez 6 Director of TIL Program NYC Housing Preservation and Development 7 Andrea Phillips 8 Annandale Contracting, Inc. 9 Theresa Arroyo Director of Land Use 10 NYC Housing Preservation and Development 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: Good 3 afternoon, everybody. And welcome to the 4 Subcommittee of Planning, Dispositions and 5 Concessions, the Subcommittee of Land Use of the New 6 York City Council. Today's date is February 6th, 7 2008. We are joined today by Committee Members Inez 8 Dickens of Manhattan and Vincent Ignizio of Staten 9 Island, and our colleague Maria del Carmen Arroyo of 10 the Bronx. 11 We have a number of items on the 12 agenda today. Since we are joined by Council Member 13 Arroyo, we are going to start with the item that is 14 in her district, which is Land Use No. 561. 15 Non-ULURP No. 20085081 HAX at 430 East 149th Street 16 in the Bronx. It is part of the TIL Program. 17 And Ms. Clark and your colleagues, 18 why don't you come join us at the witness table, and 19 please introduce this item. 20 ASSISTANT COMMISSIONER CLARK: Good 21 afternoon, Council members. I am Carol Clark. I am 22 the Assistant Commissioner at HPD and I'm joined by 23 Victor Hernandez, who is the Director of the Tenant 24 Interim Lease Program. 25 LU 561 consists of the proposed 4 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 disposition of one occupied City-owned building at 3 430 East 149th Street, through HPD's Tenant Interim 4 Lease Program. We call that "TIL," and TIL assists 5 organized tenant associations in City-owned 6 buildings to purchase and manage low-income 7 cooperatives. 8 The project consists of ten 9 residential units. We have had a lot of dialogue 10 with Council Member Arroyo, and she has, I believe, 11 indicated her approval. 12 CHAIRPERSON GARODNICK: Well, thank 13 you. I know there have been a number of concerns 14 raised about this particular item, and Council 15 Member Arroyo is here and I know that she has 16 something to say on the subject, so we'll give her 17 an opportunity to do that now. 18 COUNCIL MEMBER DEL CARMEN ARROYO: 19 Thank you, Mr. Chair. 20 Just to say thank you to everyone 21 that was involved in the process. It was a little 22 bit challenging for me, given that I came into the 23 discussion a little bit late in the process, but as 24 usual, the Land Use staff, HPD, and Mr. Chair, your 25 participation in discussions in helping the tenants 5 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 association walk through a process that could lead 3 them to a place where they feel confident and 4 comfortable that they are going to be supported and 5 successful in this endeavor. 6 So, I want to thank you all for your 7 understanding and your patience, while I work with 8 the tenants to get them to a good place. 9 So, with that, I urge you to approve 10 the UDAAP before us. 11 CHAIRPERSON GARODNICK: Thank you, 12 Council Member Arroyo. 13 With respect to this item, I just 14 want to note that there is a letter that is dated 15 February 5th, 2008, from Joseph Rosenberg of HPD to 16 Council Member Arroyo regarding this particular 17 item, and it refers to the extensive discussions 18 which had taken place relative to this item, and 19 noted that there are a total of ten apartments in 20 the renovated building, but that only three would be 21 occupied by tenants when they return. Of the seven 22 vacant units, HPD has agree to allow two of them to 23 be sold by the HDFC to families earning no more than 24 120 percent of area median income, rather than being 25 used as relocation resources, and that, of course, 6 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 is what Council Member Arroyo had felt so strongly 3 about, and so I wanted to make sure that this was 4 officially part of the record. And, so I want to 5 congratulate Council Member Arroyo and thank her for 6 her advocacy on this. And also to HPD for their 7 willingness to work with her. 8 So, with that, my understanding is 9 that Council Member Arroyo is in support of this 10 item. I see nobody else wishing to testify on this 11 item, so we'll close the hearing on Land Use No. 12 561, non-ULURP 20085081 HAX, and we will open the 13 hearing on Land Use No. 565, non-ULURP No. 20085085 14 HAM, at 16 Morningside Avenue in Manhattan, in the 15 district of Committee member, Council Member Inez 16 Dickens, also part of the TIL program. And Ms. 17 Clark, if you could go ahead and introduce this item 18 as well. 19 ASSISTANT COMMISSIONER CLARK: 20 Certainly. 21 LU 565 consists of the proposed 22 disposition of one City-owned building located at 16 23 Morningside Avenue through HPD's Tenant Interim 24 Lease Program, TIL, which, as you know, is an 25 organized tenants associations to purchase and 7 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 manage low-income cooperatives. 3 This project consists of 12 4 residential units. Council Member Dickens has been 5 briefed, met with the tenants and has indicated to 6 us that she approves of this project. 7 Thank you. 8 CHAIRPERSON GARODNICK: Thankfully we 9 have Council Member Dickens right here and we'll 10 give her a chance to speak on Land Use 565. 11 COUNCIL MEMBER DICKENS: Thank you, 12 Chair Garodnick, for the opportunity to express my 13 support for this project at 16 Morningside Avenue. 14 I am pleased that today the tenants 15 at 16 Morningside Avenue will be one step closer to 16 becoming the owners of their building, having 17 successfully completed the TIL Program. 18 The building itself, 12 units of 19 which are most three- and four-bedroom units, has 20 undergone a gut rehab leaving all of the committed 21 residents as owners of brand new apartments right in 22 Morningside Park. 23 The rehabilitation included a new 24 heating system, skylight, elevator and electrical 25 systems. 8 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 Most importantly, I have met with the 3 tenants and have assured that they are committed to 4 being owners together in the building. They know the 5 potential pitfall of ownership and have expressed 6 their willingness to work together to keep the 7 building up and maintain it as owners. 8 They are all aware of the jewel they 9 have and have demonstrated passion and tenacity in 10 owning their apartments and their building. 11 In a time of unprecedented change in 12 Harlem, these owners, many of whom have been in the 13 community and in this building for decades, are 14 making sure that their piece of the community they 15 know and love remains theirs for a long, long time. 16 I have repeatedly, both prior to my 17 joining the City Council and since, expressed 18 concerns with the TIL program, but I worked closely 19 with Deputy Commissioner Carol Clark (sic) to help 20 to make the TIL program work with all residents to 21 make the transition buildings a success and not 22 return to HPD in failure. 23 I am happy for these new owners, and 24 I hope my Council colleagues share my happiness for 25 these enterprising Harlemites. 9 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 I thank the Chair for my time and 3 respectfully ask my colleagues for their support on 4 this legislation. 5 CHAIRPERSON GARODNICK: Thank you, 6 Council Member Dickens. 7 And seeing no members of the public 8 wishing to testify on Land Use 565, we will close 9 the hearing on that item, and open the hearing on 10 Land Use 613, non-ULURP No. 20085166 HAK, a number 11 of properties in Brooklyn, Willoughby, Myrtle, 12 Throop and Marcy Avenues in the district of Council 13 Member Al Vann. 14 Ms. Clark. 15 ASSISTANT COMMISSIONER CLARK: Thank 16 you, Chairman Garodnick. Yes, LU 613 consists of the 17 proposed disposition of four City-owned vacant lots 18 located at 821 Willoughby Street, 267 Throop Avenue, 19 890 Myrtle Avenue and 594 Marcy Avenue through HPD's 20 New Foundations Program. 21 The proposed developer, Annandale Bed 22 Stuy Corporation, will construct four two-family 23 homes, one three-family home, and 12 condominium 24 units for a total of 23 dwelling units for sale to 25 eligible purchasers. 10 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 Council Member Vann has reviewed the 3 project and indicated his support and I understand 4 the principal of Annandale Bed Stuy Corporation, 5 Andrew Phillips, is here and has signed up to 6 testify as well. 7 CHAIRPERSON GARODNICK: Thank you. We 8 will invite Ms. Phillips up in a moment. 9 If you could just let us know what 10 the eligibility requirements are for purchasers of 11 the four two-family, the one three-family and the 12 12 condo units is? 13 ASSISTANT COMMISSIONER CLARK: Of the 14 condo units there's two homes that will be sold up 15 to 80 percent of AMI, which is approximately $57,000 16 a year for a family of four, and the remainder are 17 at 165 percent of AMI, which is about 117,000 for a 18 family of four. 19 The homes, there is one three-family 20 at 110 percent of AMI, approximately $78,000 for a 21 family of four with the remainder at 130 percent of 22 AMI, approximately $92,000 for a family of four. 23 CHAIRPERSON GARODNICK: And -- sorry, 24 didn't mean to interrupt you. 25 ASSISTANT COMMISSIONER CLARK: Go 11 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 ahead. 3 CHAIRPERSON GARODNICK: Were you 4 finished? 5 ASSISTANT COMMISSIONER CLARK: Yes. 6 CHAIRPERSON GARODNICK: When an 7 eligible purchaser buys one of these units or homes, 8 is there an obligation, remind us if there is an 9 obligation to sell it themselves, if they were to 10 sell it at a later date to only eligible buyers, or 11 if obligation lapses after the first purchase? 12 ASSISTANT COMMISSIONER CLARK: No. As 13 you may remember, it goes up to a 30-year period and 14 indeed at New Foundations, the idea is home 15 ownerships. So that generally speaking, the 16 homeowner buys the building and then rents it out to 17 one or two others, and the income from that rental 18 helps to defray the mortgage expenses that the owner 19 holds. 20 And I wanted to mention that, among 21 the other funding sources here is the New York State 22 Affordable Housing Corporation, as well as New York 23 City capital funds in this project, as well as 24 private lending institutions. So, there is a range 25 of funding sources. 12 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: Thank you. 3 That actually wasn't the question I was asking, 4 though. The question was, if I were an eligible 5 purchaser of one of these condo units, and I bought 6 it once these buildings are constructed, and five 7 years from now I wish to sell; am I limited in my 8 sale to only eligible purchasers? People who meet 9 those same income requirements? Or may I sell it to 10 anybody? 11 ASSISTANT COMMISSIONER CLARK: If you 12 were in that circumstance and you sold the amount of 13 the City capital money that had been put into the 14 project, which in the current financing scenario is 15 something just under a half a million dollars, would 16 need to be repaid in portion divided by a 30-year 17 period. So, if we were in year five, it would be 18 approximately five-sixths of that amount would need 19 to be repaid by you in doing the transaction, in 20 selling to another entity. 21 That's the resale restriction we have 22 discussed about the New Foundations Program. 23 CHAIRPERSON GARODNICK: Okay, great. 24 Thank you. 25 Seeing no other comments from 13 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 colleagues, we're going to invite Ms. Phillips, 3 Andrea Phillips, to come testify on this one. 4 Ms. Phillips, welcome. 5 MS. PHILLIPS: Thank you. 6 CHAIRPERSON GARODNICK: And if you 7 just say your name yourself, and go right ahead. 8 MS. PHILLIPS: Andrea Phillips, and 9 I'm the developer and general contractor for the 10 Annandale Bed Stuy Homes. 11 CHAIRPERSON GARODNICK: Welcome. Do 12 you have particular testimony or just wanted to 13 state your support for this? 14 MS. PHILLIPS: I'm just here to state 15 my support. We're ready, hopefully, to start 16 construction and hopefully in the spring, early 17 spring, early summer. 18 CHAIRPERSON GARODNICK: Terrific. 19 Well, we're glad you're here, and 20 thank you for your presence here at City Hall. 21 And with that, there is nobody else 22 wishing to testify on Land Use 613. So, we will 23 close the hearing on this item, and we will open the 24 hearing now on a new item, Land Use 618, which is 25 non-ULURP No. 20085180 HAK, 232 Norwood Avenue in 14 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 Brooklyn, in the district of Council Member Erik 3 Martin Dilan. 4 Ms. Clark. 5 ASSISTANT COMMISSIONER CLARK: Yes, 6 I'm joined now by Terry Arroyo, who is HPD's 7 Director of Land Use. 8 And on LU 618, it does consist of the 9 proposed disposition of one City-owned vacant lot, 10 which as you noted is at 232 Norwood Avenue, and 11 this is through HPD's Negotiated Sale Program. 12 This is an undevelopable vacant lot. 13 The dimensions of the lot are 25 feet by 67 feet, 14 and it's proposed to be sold to the adjacent owner, 15 a gentleman named Thomas Frigente (phonetic), and it 16 forms an L shape around a City-owned lot. So, this 17 sale will facilitate development of the private lots 18 with one three-family home. 19 Councilman Dilan has been briefed and 20 supports the project. 21 CHAIRPERSON GARODNICK: Thank you. 22 Just remind us again then, when you have the 23 Negotiated Sales Program, you have an undevelopable 24 lot, which is sold to an adjacent property owner, 25 what are the obligations when additional space is 15 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 added onto that vacant lot? What are the obligations 3 to the new owner, relative to housing and to the 4 future? 5 MS. ARROYO: Well, in this case there 6 isn't any resale value, because it's a lot that we 7 couldn't do anything with. And here is a man who has 8 enough land that he could possibly two homes, so he 9 could use our land to actually build out, so we're 10 not going to put in restrictions. 11 CHAIRPERSON GARODNICK: So, he's 12 allowed to build -- 13 MS. ARROYO: That's why he purchases 14 as near appraised value. 15 CHAIRPERSON GARODNICK: Oh, okay. So, 16 it's just a straight-up sale? 17 MS. ARROYO: It's just a straight-up 18 sale. 19 CHAIRPERSON GARODNICK: Straight-up 20 sale and he can do with it as he sees fit. 21 MS. ARROYO: Right. He came to us 22 because of the fact that we're interrupting his 23 ability -- we took away his ability to develop, and 24 we have something that we could definitely get 25 revenue for the City and get homes. 16 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: Got it. So, 3 this is just a sale at assessed value, nothing more. 4 MS. ARROYO: Right. 5 ASSISTANT COMMISSIONER CLARK: 6 Appraised value. 7 CHAIRPERSON GARODNICK: Appraised 8 value. At appraised value, right. 9 Okay, thank you. 10 Seeing no members of the public 11 wishing to testify on Land Use 618, we'll close the 12 hearing on that item, and open the hearing on Land 13 Use No. 642, non-ULURP No. 20085207 HAK. Several 14 addresses, some on Mother Gaston Boulevard and one 15 on Liberty Avenue, in the district of Council Member 16 Dilan. 17 Again, Ms. Clark. 18 ASSISTANT COMMISSIONER CLARK: Yes, LU 19 642 does consist of the proposed disposition of four 20 City-owned vacant lots, that's 273, 283, 299 Mother 21 Gaston Boulevard and 100 Liberty Avenue, through 22 HPD's New Foundations Program. The proposed 23 developer, the Housing Partnership for Debar 24 Development, will construct one two-family home and 25 three three-family homes for a total of 11 dwelling 17 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 units. 3 Council Member Vann (sic) has 4 reviewed the project and indicated his support. 5 CHAIRPERSON GARODNICK: Thank you. 6 Same rules apply for New Foundations, as it did in 7 the item, Land Use 613, that we discussed a few 8 minutes ago? 9 ASSISTANT COMMISSIONER CLARK: That's 10 correct. 11 CHAIRPERSON GARODNICK: Thank you. 12 Seeing nobody else wishing to testify 13 on Land Use 642, we will close the hearing on that 14 item, and open the hearing on Land Use No. 650, 15 non-ULURP No. 20085237 HAM, at 484 Convent Avenue in 16 Manhattan, in the district of Council Member Robert 17 Jackson. 18 Ms. Clark. 19 ASSISTANT COMMISSIONER CLARK: Yes, LU 20 650 consists of the proposed disposition of one 21 City-owned building located at 484 Convent Avenue, 22 through HPD's Tenant Interim Lease, TIL Program, 23 which as you know assists organized tenant 24 associations to purchase and manage low-income 25 cooperatives. 18 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 This project consists of a total of 3 20 residential units. Council Member Jackson has 4 been briefed and indicated his support. 5 CHAIRPERSON GARODNICK: Thank you. 6 So, again, the TIL rules, as 7 discussed before, and as described in the items in 8 the district of Council Member Arroyo and Dickens 9 would be the ones that would apply, with the 10 exception of the specific provisions that you made 11 in the district of Council Member Arroyo. 12 ASSISTANT COMMISSIONER CLARK: That's 13 right. 14 CHAIRPERSON GARODNICK: Thank you. 15 And with that, nobody else wishes to 16 testify on Land Use 650, we will close the hearing 17 on that item, and open the hearing on the last item 18 of the day, Land Use No. 661, which is in the 19 district of our own Sara Gonzalez. 4213 4223 Second 20 Avenue, Brooklyn Community Board 7. C070551 HAK. Ms. 21 Clark. 22 ASSISTANT COMMISSIONER CLARK: Yes, LU 23 661 consists of the proposed disposition of the 24 property you just cited on Second Avenue. 25 Back in 1991, the City took title to 19 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 the disposition area through an in rem tax 3 foreclosure, and the property was later the subject 4 of litigation to cancel fraudulent deeds which had 5 conveyed the property to private entities in the 6 Year 2000. 7 In the Year 2003, a stipulation of 8 settlement was reached by the City and the City 9 agreed to convey the property to Zadrema Property 10 Corporation (phonetic), which had been the victim of 11 the fraudulent deed, subject, however, to the ULURP 12 approval, which is the reason why we are before this 13 Subcommittee today. 14 The sponsor will conserve the 15 property for commercial use. We have had dialogue 16 with Council Member Gonzalez, and she has approved 17 of the project moving forward. 18 CHAIRPERSON GARODNICK: Thank you. I'm 19 going to give Council Member Gonzalez an opportunity 20 in one second. 21 Let me just make sure that I 22 understand what we're talking about here. You said 23 there was an in rem foreclosure, and at that time 24 who took the legal title to this property? 25 MS. ARROYO: Just repeat that again. 20 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: There was an 3 in rem foreclosure. 4 MS. ARROYO: Mm-hmm. 5 CHAIRPERSON GARODNICK: And the title 6 went to, the legal title went to? 7 MS. ARROYO: The City of New York. 8 CHAIRPERSON GARODNICK: The City of 9 New York. 10 And there was a fraudulent? 11 MS. ARROYO: Deed. 12 CHAIRPERSON GARODNICK: A fraudulent 13 deed. 14 MS. ARROYO: 1999. Yes, a fraudulent 15 deed was registered with the City claiming it to be 16 private property. From that point in 19 -- there was 17 that first original fraudulent deed in 1999, March 18 of '99, that entity, private entity, then sold it to 19 another in April of '99, like a month later. 20 Then there was a third sale, which 21 was to Zadrema (phonetic), all right? Zadrema in 22 turn, I guess with time, we don't know the -- right 23 now I don't know the facts, if it was a title 24 search, the insurance company, whatever, thought 25 wait a minute, something is wrong here, and came to 21 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 the City of New York some six years or so back, and 3 said I think I have a problem here. Because he came 4 forward and he assisted us with pursuing the 5 litigation, after the original person, who did the 6 fraudulent deed, we agreed to sell him the property. 7 CHAIRPERSON GARODNICK: I'm sorry, 8 when was the in rem foreclosure? 9 MS. ARROYO: '91. 10 CHAIRPERSON GARODNICK: It was in '91. 11 MS. ARROYO: And then eight years 12 later, '99, there was a fraudulent deed filed in 13 City Records that it was privately owned. 14 CHAIRPERSON GARODNICK: I see. And 15 then it was sold to somebody else, and then it was 16 sold to Zadrema. 17 MS. ARROYO: Right. 18 CHAIRPERSON GARODNICK: Zadrema says, 19 wait a minute, we see a problem. 20 MS. ARROYO: Right. After he purchased 21 the property, either title insurance or whatever, 22 somewhere he realized something is not right, came 23 to HPD, and that's where we started to negotiate. We 24 worked with the litigation and agreement to sell him 25 the property. 22 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: Okay. All 3 right. 4 And now you say this is the part of 5 the ULURP action to actually convey to Zadrema -- 6 MS. ARROYO: Right. 7 CHAIRPERSON GARODNICK: And this was 8 part of a negotiated settlement agreement in court? 9 MS. ARROYO: Well, they call it a 10 negotiated sale, because what it is, it was a 11 settlement in the court that we would go through a 12 public process, letting the public know what 13 happened here and that we were selling this property 14 to this entity. That was part of the agreement. 15 CHAIRPERSON GARODNICK: Mm-hmm. Okay. 16 It's an unusual one. 17 All right, we have Council Member 18 Gonzalez and then Council Member Ignizio. 19 COUNCIL MEMBER GONZALEZ: Thank you, 20 Chair. 21 Land Use No. 661. Approving this 22 application will ensure that the tenant of 4213-4223 23 Second Avenue, who was the victim of a fraudulent 24 lease agreement, will be allowed to remain and 25 operate in their current place of business. 23 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 And I must say that Community Board 7 3 was, definitely is in support of the principles of 4 the application, however, I should note that they 5 voted to disapprove the application, but they did it 6 solely on problems with procedure. I have since then 7 spoken to the Chair, and right now he supports a yes 8 vote. 9 So, I would like to thank HPD for 10 their hard work in resolving this matter. Thank you 11 very much, and to the Committee, and I urge a yes 12 vote on Land Use 661. Thank you. 13 CHAIRPERSON GARODNICK: Thank you, 14 Council Member Gonzalez. 15 Council Member Ignizio. 16 COUNCIL MEMBER IGNIZIO: Anybody who 17 knows me in this Committee knew that this was going 18 to be one that I was going to be asking questions 19 about, just from what I hear. 20 So, the property was owned by 21 someone; do we know who prior to it being taken in 22 rem? Any of the subsequent owners or any of the sub 23 -- after the in rem? 24 MS. ARROYO: From in rem in 1991 to -- 25 COUNCIL MEMBER IGNIZIO: Well, did any 24 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 of them match, prior to the City taking it in rem 3 and after the City -- after the selling between 4 entity to entity to entity and then ultimately -- 5 MS. ARROYO: If it matched anything 6 prior to? 7 COUNCIL MEMBER IGNIZIO: Yes. 8 MS. ARROYO: I'm not aware of that 9 being the case, no. 10 COUNCIL MEMBER IGNIZIO: We don't 11 think it's the same people? 12 MS. ARROYO: I don't believe so, no. 13 There is no indication in the papers to say that. 14 COUNCIL MEMBER IGNIZIO: Okay. So, the 15 City then takes title. 16 MS. ARROYO: Mm-hmm. 17 COUNCIL MEMBER IGNIZIO: What happens 18 after that? 19 MS. ARROYO: Basically it sits in our 20 inventory. Back in '91 it was sitting in our 21 inventory, waiting for a program to dispose of it. 22 COUNCIL MEMBER IGNIZIO: And the last 23 person who quite frankly feels they may have gotten 24 taken comes to you and says we paid money for this 25 property. 25 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 MS. ARROYO: Mm-hmm. 3 COUNCIL MEMBER IGNIZIO: And you guys 4 confirm that money was paid for to the prior entity? 5 Has the prior entity been prosecuted? 6 MS. ARROYO: Yes. I would have to say, 7 yes, because there's an agreement. But all of the 8 details of what happened to the other entity, I 9 don't know. 10 COUNCIL MEMBER IGNIZIO: Yes. 11 MS. ARROYO: I just have the 12 paperwork, the court papers for our agreement with 13 Zadrema in the court of what we were going to do. 14 How we were going to pursue this. 15 COUNCIL MEMBER IGNIZIO: Okay. Because 16 what happens is the City is acting as a benevolent 17 person, in my view, to the person who potentially 18 would have gotten taken for. I want to make sure 19 that the people who did the taking, the other two, 20 are prosecuted to the fullest extent of the law, 21 because they committed fraud. 22 MS. ARROYO: As a matter of fact, that 23 is -- originally that was the whole intent, that the 24 fact that Zadrema came to HPD, in turn the agreement 25 was that he would assist the City in prosecuting the 26 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 original person who did the fraudulent deed, so that 3 with his testimony we could pursue that, and we in 4 turn for his cooperation, we would sell him the 5 property. 6 COUNCIL MEMBER IGNIZIO: Now, you're 7 selling to him at what he bought it for prior? 8 MS. ARROYO: I have the dollar 9 amounts. The amount is $350,000. 10 COUNCIL MEMBER IGNIZIO: Okay. 11 MS. ARROYO: But I don't know if that 12 is equivalent to what he paid -- 13 COUNCIL MEMBER IGNIZIO: What is that 14 compared to market value? 15 MS. ARROYO: I don't have that. That 16 was the agreement in court. 17 COUNCIL MEMBER IGNIZIO: So, in a 18 sense the City paid for this person, this entity's 19 testimony. You can't comment on that, I know. 20 MS. ARROYO: Yes. 21 COUNCIL MEMBER IGNIZIO: But that's 22 what it seems like to me. 23 ASSISTANT COMMISSIONER CLARK: I mean, 24 I would refer you, Councilman Ignizio, to the New 25 York City Law Department, if you wanted to pursue it 27 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 in greater detail. And certainly we could look into 3 it and find some of the back history. I'm sure there 4 are title reports and other information. But it 5 really is the Land Use matter that we're here to 6 discuss today, and so we came prepared to discuss 7 that, not the other piece of it. But the Law 8 Department did do the negotiation once, you know, 9 the building, the fraudulent deed issue had arisen. 10 COUNCIL MEMBER IGNIZIO: Understood. 11 But what is before me is the approval of a situation 12 whereby the City is disposing of a property which 13 may have been in the terms of an agreement of a 14 legal proceeding. 15 What I'm saying is that they may have 16 inherently, or maybe they were aware, or were not 17 aware, paid for the testimony of somebody in the 18 confines of a trial in order to bring those who are 19 guilty to court. It kind of, for me it straddles the 20 line of concern, whether if this was the market rate 21 or somewhat similar to market rate, the market rate 22 at when this situation occurred, then I'd feel more 23 comfortable in voting yes, without which I need to 24 vote no. 25 CHAIRPERSON GARODNICK: Thank you, 28 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 Council Member Ignizio. Just one point on that. It's 3 clear we don't have the answer as to whether that 4 $350,000 that Zadrema paid to the City was equal to, 5 less than, or more than what they had paid 6 previously. But the one thing that I should say and 7 note is that the City is not allowed to pay for 8 testimony in any form, obviously, and, so, if the 9 issues of the Law Department, I don't know any of 10 the details of this case, but any incentives that 11 could have been -- I mean, that's an illegal act 12 itself, so if that were done, that would be an 13 ethical violation by the City. But I don't have any 14 reason to think that that happened here, although I 15 think that your questions are legitimate as to what 16 the background was here, but I just wanted to make 17 that point. 18 COUNCIL MEMBER IGNIZIO: Yes. If I 19 may, Mr. Chairman, I don't disagree with the 20 sentiments, and I have no reason to doubt the 21 question, but I think it's an important part of our 22 procedures and our fiduciary responsibility that if 23 this was sold at a substantial price below market 24 value, and it was done, as the testimony indicates, 25 in exchange for and appreciation of the person 29 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 coming forward and testifying against those that did 3 the doings to him, you know, I'm going to let the 4 public at large view, but without which, as I said, 5 I'm required to vote no. 6 CHAIRPERSON GARODNICK: Thank you. 7 Let me just ask one more question 8 about how -- and you may not be equipped to handle 9 this, but the issue of the ultimate disposition 10 here, Zadrema becoming the owner, this was part of 11 an agreement that was worked out, but did the City 12 contemplate starting this process anew and saying, 13 wait a minute, well, we have a strange situation 14 here, and we find ourselves in the situation where 15 somebody now believes they have title, but realize 16 there is something that's gone wrong here, perhaps 17 we should start from scratch and start an open 18 process again? 19 MS. ARROYO: As I say, unfortunately 20 we're talking about something that was discussed 21 years ago that none of us were privy to, so I don't 22 know. 23 But I will say, in the history that 24 I've been at HPD, fraudulent deeds are not unusual 25 and this is the first time I am seeing this type of 30 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 thing, so... 3 ASSISTANT COMMISSIONER CLARK: And I 4 would add that the application really would 5 facilitate the disposition of a City-owned property 6 that was purchased under false ownership by the 7 intended purchaser, and then the intended purchaser 8 has been working cooperatively with the City to 9 facilitate this disposition, and intends to secure 10 long-term leases with the existing tenant. 11 The Borough President had raised the 12 question and a concern about would the existing 13 commercial tenant be dislocated, and we've made a 14 promise that that would not happen, as part of the 15 public review process. 16 Finally, I would note that the 17 disposition of this subject property will allow it 18 to return to the City tax rolls, which is another 19 point worth noting. 20 CHAIRPERSON GARODNICK: When was the 21 ultimate settlement reached here between Zadrema and 22 the City of New York? 23 ASSISTANT COMMISSIONER CLARK: The 24 settlement was reached in 2003, according to our 25 records. 31 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 CHAIRPERSON GARODNICK: And, so, what 3 has happened here between 2003 and now February 4 2008? 5 ASSISTANT COMMISSIONER CLARK: The 6 wheels of government have been moving and the 7 application process for the ULURP has been prepared 8 and put into the public review process. Sometimes 9 these things do take a long time, because as you can 10 see, this is an unusual one, and not one that's, you 11 know, a high priority, in terms of creating 12 affordable housing units, which is the agency's 13 mandate. 14 CHAIRPERSON GARODNICK: Okay, thank 15 you. We've been joined by Council Member Darlene 16 Mealy of Brooklyn, and with that, I see no other 17 members of the public wishing to testify on this 18 item, and so we will close the hearing on Land Use 19 No. 661, 4213-4223 Second Avenue, and we will couple 20 together all of the items that we heard today for 21 the purposes of voting. We will lay over all of the 22 rest that are on today's calendar at the request of 23 the individual members and whose districts the 24 properties sit, and on the items we've considered 25 today, the Chair recommends an aye vote, and I will 32 1 PLANNING, DISPOSITIONS AND CONCESSIONS 2 ask the Counsel to call the roll. 3 COUNSEL TO COMMITTEE: Chair 4 Garodnick. 5 CHAIRPERSON GARODNICK: Aye. 6 COUNSEL TO COMMITTEE: Council Member 7 Gonzalez. 8 COUNCIL MEMBER GONZALEZ: Aye. 9 COUNSEL TO COMMITTEE: Council Member 10 Dickens. 11 COUNCIL MEMBER DICKENS: Aye. 12 COUNSEL TO COMMITTEE: Council Member 13 Ignizio. 14 COUNCIL MEMBER IGNIZO: No on 661; aye 15 on all others. 16 COUNSEL TO COMMITTEE: By a vote of 17 four in the affirmative, none in the negative and no 18 abstentions, the aforementioned items are approved, 19 with the exception of LU No. 661, which is approved 20 by a vote of three in the affirmative, one in the 21 negative and no abstentions. 22 CHAIRPERSON GARODNICK: Thank you very 23 much. And with that, this hearing is -- we are 24 adjourned. 25 (Hearing concluded at 1:49 p.m.) 33 1 2 CERTIFICATION 3 4 5 STATE OF NEW YORK ) 6 COUNTY OF NEW YORK ) 7 8 9 I, CINDY MILLELOT, a Certified 10 Shorthand Reporter, do hereby certify that the 11 foregoing is a true and accurate transcript of the 12 within proceeding. 13 I further certify that I am not 14 related to any of the parties to this action by 15 blood or marriage, and that I am in no way 16 interested in the outcome of this matter. 17 IN WITNESS WHEREOF, I have hereunto 18 set my hand this 6th day of February 2008. 19 20 21 22 23 --------------------- 24 CINDY MILLELOT, CSR. 25 34 1 2 C E R T I F I C A T I O N 3 4 5 6 7 8 9 I, CINDY MILLELOT, a Certified Shorthand 10 Reporter and a Notary Public in and for the State of 11 New York, do hereby certify the aforesaid to be a 12 true and accurate copy of the transcription of the 13 audio tapes of this hearing. 14 15 16 17 18 19 20 21 22 23 24 ----------------------- CINDY MILLELOT, CSR. 25