Comptroller subpoenas de Blasio administration over $173M deal with notorious landlords

The subpoena came a day after the city closed a deal with developers to pay $30M above the appraised price

Comptroller Scott Stringer hit the de Blasio administration with a subpoena Friday for appraisals conducted as part of a controversial real estate deal that would convert hundreds of shelter units into permanently rent-stabilized apartments.

The subpoena came a day after the city closed a deal with notorious developers Stuart and Jay Podolsky to buy 468 cluster apartments in 17 buildings in the Bronx and Brooklyn for $173 million—above the independently-appraised value of $143.1 million. The sale, which was initially announced in December but was put on hold until January, was negotiated under the threat of eminent domain, according to city officials.

"I have repeatedly expressed concern regarding the $173 million price tag that, to date, has lacked any trace of transparency," Stringer said in a statement. "My office has made multiple requests to see the appraisals and documents that support this seemingly inflated price, and the explanations provided by the City so far have raised more questions than answers."

In his statement, Stringer stressed that the "difference in price between the original estimates and the final settled deal could have been used to create even more affordable housing units."

A spokesperson for the mayor's office pushed back on the comptroller's claim that the city isn't being forthright with the appraisals.

"We told the comptroller before the subpoena that we are happy to provide him with appraisal documentation," said Jaclyn Rothenberg in a statement. "While Comptroller Stringer focuses on cheap political stunts, the Mayor's providing 2,000 people with improved, permanent, affordable housing with this agreement."

Further complicating matters is that the Podolsky brothers were represented by attorney Frank Carone, a politically connected lawyer for the Brooklyn Democratic Party who contributed $5,000 to the mayor's Fairness Political Action Committee in September, the New York Daily News reported.

The Podolsky brothers are infamous for how they manage their portfolio of properties. They were each indicted in the 1980s by then Manhattan District Attorney Robert Morganthau's office for dozens of felonies and eventually pleaded guilty to avoid prison time, in part, by agreeing to give control of three buildings to a nonprofit homeless services provider.

Mayor Bill de Blasio defended the deal during an interview on The Brian Lehrer Show Friday, saying he was not involved in negotiating the deal and that "this price was determined by the Law Department and Social Services based on what they thought would happen in an eminent domain scenario," he said.

The mayor said city officials estimated that obtaining the properties through eminent domain could take three years and that the deal was the best way to expedite the process.

"This was the price we were going to end up paying," de Blasio said. "Rather than wait three years, and have these folks not have permanent affordable housing, we made the decision to move ahead."