Omnibuild, the former construction manager for embattled developer HFZ's XI project, is suing the real estate firm for roughly $350 million in a sweeping lawsuit that claims it was ignored and rebuffed at every turn when it tried to bring up financial problems at the luxury condo development.
The Manhattan District Attorney's office recently indicted multiple employees at Omnibuild for allegedly being part of a criminal conspiracy orchestrated by former HFZ executive Nir Meir. But the Omnibuild lawsuit claims the company was "wrongfully indicted" in that case and was warning about possible financial issues at the XI dating back to 2019. The company said it only continued working on the project because of assurances from HFZ that ultimately proved to be false.
"As we have said since the beginning of this investigation, Omnibuild is a victim of HFZ's criminal theft and the negligence of multiple parties put in place to protect us," said Omnibuild spokesman Josh Vlasto. "The contents of this lawsuit prove just that."
HFZ hired Omnibuild to be the construction manager for the XI, located by the High Line at 76 11th Ave., in 2016 and was falling behind on its payments by spring 2019, according to Omnibuild's lawsuit, filed Friday in Manhattan state Supreme Court. Omnibuild sent its first written notice about this to HFZ that May, also noting that the project appeared to be going over budget with no plan to address the shortfall.
Omnibuild did not get a response to this notice or a second one, so the firm sent a third one to HFZ and the lenders that June, the lawsuit says. However, this one also sparked "no meaningful response whatsoever," according to the suit.
The construction firm sent several more default notices over the ensuing months and were "baffled by the complete lack of response," the lawsuit says. In April 2020, Omnibuild warned all subcontractors on the project about HFZ's defaults and recommended they not deal with the developer directly, and in May, an Omnibuild principal demanded Meir stop pressuring their accountant Kevin Stewart to sign documents on Omnibuild's behalf. (Stewart and Omnibuild co-CEO John Mingione were both indicted in the Manhattan District Attorney's investigation.)
In all, Omnibuild sent 16 notices of default to HFZ and the lenders between May 2019 and June 2020 and warned in its final one that HFZ could be "subject to criminal sanctions" if they were found to be inappropriately using the funds at issue, according to the lawsuit.
"This is a serious matter which cannot simply be brushed aside based upon the undocumented and unsubstantiated claims of the owner," Omnibuild wrote, according to the lawsuit.
Omnibuild sued HFZ for roughly $100 million worth of missing payments soon after its final default notice.
The Manhattan District Attorney's office indicted Meir earlier this year over "the precise illegal activity" Omnibuild had reported in its 2019 and 2020 notices, its lawsuit says. The construction firm would have stopped working on the project almost immediately after these defaults started, allowing it to mitigate its losses and avoid being criminally indicted, if not for repeated false statements about its finances from HFZ and the lenders, according to the lawsuit.
Omnibuild is suing HFZ and the project lenders for fraud, negligence and breach of contract.
Omnibuild's $100 million claim against HFZ during the summer of 2020 was one of the first lawsuits to hit the company. An avalanche of additional ones soon followed, and the once-prominent developer is now essentially defunct. Ziel Feldman, who ran the firm along with Meir, has placed the blame for the company's problems squarely on Meir and is not expected to be charged in the criminal case. He is, however, named as a defendant in the Omnibuild suit.
Feldman and a representative for the Manhattan District Attorney's Office declined to comment. A representative for Meir did not respond to a request for comment by press time.
The Manhattan District Attorney's office has accused Meir of orchestrating an $86 million scheme that included using money for the XI for other developments and forging bank statements to make it seem like HFZ had more money than it did. Officials have accused Omnibuild of taking part by making it seem like they were further along on the XI than they actually were, causing the project's lender to release more funds.
Mingione and Stewart were arraigned and released in the criminal case on Feb. 7, while Meir was arraigned on Feb. 21 and held on $5 million cash bail. They are next due in court on May 7.
The Brooklyn Navy Yard Development Corp. is seeking ideas from manufacturers who are focused on climate change or clean energy infrastructure to redevelop a massive, currently vacant building on its sprawling waterfront campus.
The nonprofit corporation that serves as the real estate arm of the approximately 300-acre city-owned industrial property released a Request for Expressions of Interest this week for the development and operation of a 2.75-acre parcel right on the edge of Wallabout Bay.
Dubbed "Building 293," the existing 104,000-square-foot structure at the intersection of Gee Avenue and Assembly Road, stands just one story tall and boasts 32- to 50-foot-high ceilings. It's equipped with 10 loading docks and can accommodate up to 50 adjacent parking spaces, according to the proposal published in the City Record on Wednesday.
The building was erected in 1970 for the construction of shipping components and is otherwise vacant except for the occasional raves and concerts thrown at the site by entertainment companies Broadwick and TCE. They operate as part of a joint venture under a short term agreement with the Navy Yard to host live music and other cultural events, such as fashion and art shows, according to Stephanie Báez, a spokesperson for the Navy Yard corporation.
But those interested in its long-term use are free to use the building however they like — except as a live concert venue — and as long as its purpose is to facilitate the creation of clean energy infrastructure or help advance the city's goals of addressing climate change and generating more jobs for the green economy. The eventual awardee can either demolish the whole structure and build an entirely new facility on its footprint or use what's currently there, according to the document.
The Brooklyn Navy Yard — which is currently in the process of building out its master plan, a $2.5 billion roadmap from 2018 that envisions about 5 million square feet of new manufacturing buildings on its campus — is home to more than 550 businesses and 11,000 workers and generates more than $2 billion a year for the city.
Crain's reported last year that the corporation had similarly issued a request for proposal to develop a new industrial and commercial building along Kent Avenue — the first of three major ground-up projects under the master plan.
The Navy Yard is currently 91% occupied, according to Báez. And City Comptroller Brad Lander's most recent audit revealed that as of June 2023, the Brooklyn Navy Yard Development Corp. reported current assets of $50.1 million and noncurrent assets of $1.2 billion consisting of restricted cash, tenants' security deposits and lease payments.
Seating a jury is simpler than finding new tenants at 40 Wall Street, the Donald Trump-owned building a 20-minute walk from the courthouse where the former president has spent much of his time this week.
Vacancies have risen to 21% at 40 Wall St., a landmarked 71-story building and supertall for its era when constructed in 1930. The three-percentage point increase since last August, Fitch Ratings said in a report this week, is due to Duane Reade closing a 20,000 square-foot store in a former bank lobby featuring graceful limestone arches and black marble balustrades.
The retailer also terminated its lease for 80,000 square feet of corporate office space upstairs. It isn’t clear when the lease was scheduled to expire. Duane Reade continues to pay its vacated store’s rent, Fitch said, and the lease continues until 2032. The owner of Duane Reade, Walgreens Boots Alliance, said the 40 Wall St. store was closed due to “unsustainable business performance and high operating costs.”
40 Wall St. was acquired by Trump in 1995, and the 1.2 million square-foot tower is one of three Manhattan office buildings owned by the Trump Organization. The others are Trump Tower and a 30% share of 1290 Sixth Ave.
Tenants have been steadily leaving 40 Wall St. since in 2018, when its vacancy rate was just 6%, according to Fitch data.
Fitch said rental income for the building has fallen by approximately 43% since 2015, when Trump refinanced the mortgage with the help of Jack Weisselberg, a loan originator at niche lender Ladder Capital and son of longtime Trump Organization CFO Allen Weisselberg. Many older buildings in the Financial District struggle with elevated vacancy rates — the average is 25%, according to CoStar — but Attorney General Letitia James’s fraud suit showed 40 Wall’s financial problems began well before the pandemic.
In 2011, when the building produced negative cash flow for Trump Organization, court records show Allen Weisselberg directed an employee in accounting to prepare a document showing $26.2 million in net operating income. The building actually ran annual deficits as high as $20.9 through 2015.
The document directed by Weisselberg contained “a series of implausible assumptions,” state Judge Arthur Engoron wrote in his ruling in which he ordered Trump to pay $354 million in penalties for fraud, since raised to $454 million. Trump has secured a bond so he doesn’t have to come up with the money while appealing, but James has contested the bond’s validity and a hearing is scheduled for Monday in the state courthouse at 60 Centre St. That’s the same day the president’s criminal trial may begin in a different courthouse at 100 Centre St.
James has threatened to seize and sell 40 Wall St. if Trump doesn’t pay.
“We are prepared to make sure that the judgment is paid to New Yorkers,” she told ABC News in February, “and, yes, I look at 40 Wall Street each and every day.”
40 Wall St. is an undeniably attractive building whose pyramidal crown was the symbol of the original tenant, Bank of Manhattan Co. But it probably wouldn’t be highly valued by rival landlords. Fitch said the average in-place rent is just $40 per square foot, compared to a market/neighborhood average of $55.
Rent for millions of New Yorkers living in rent-stabilized units will likely increase for the third year in a row. The Rent Guidelines Board on Thursday released an annual report recommending a 2.5 percent to 4 percent rent hike for one-year leases and a 4 percent to 7 percent rent hike for two-year leases in [...]
The post Rent hikes between 2.5% and 7% recommended for NYC’s stabilized apartments first appeared on 6sqft.
After months of community uproar over the state’s proposal to close SUNY Downstate’s University Hospital, policymakers have paused plans to shutter the medical center.
Lawmakers have reached an agreement with Gov. Kathy Hochul to halt the closure of the East Flatbush teaching hospital while officials appoint an advisory commission to examine the hospital’s services and financial status, according to budget documents. The commission will have approximately a year to devise recommendations for state officials to help them determine Downstate’s future.
Under the agreement, SUNY Downstate will be prohibited from cutting any of its inpatient services or submitting service reduction plans to state health officials until the commission releases recommendations. The commission's work will also happen in the public eye – the deal includes a requirement for the commission to hold a minimum of three public hearings.
The panel will be made up of nine members: three appointed by the governor, one appointed by the Senate, Assembly and local community boards, as well as representatives for the state Health Department, the Chancellor’s Office and labor unions.
In the meantime, SUNY Downstate will still receive operating funding to help it keep the lights on while the commission decides what comes next. The hospital runs a deficit of roughly $100 million a year.
The deal comes after lawmakers maneuvered to stall a closure during final budget negotiations. Hochul and SUNY leaders announced a transformation plan that would effectively close the hospital in January, pledging to hash out the details in the state budget. But the plan has been met with resistance from community members, elected officials, faith leaders, hospital workers and medical students who feared that it would erode access to care and medical training opportunities in Central Brooklyn.
SUNY Chancellor John King said that preliminary plans involved moving all inpatient services to surrounding hospitals, including New York City Health + Hospitals/Kings, and deploying $300 million in state capital funds to build a new ambulatory care facility and health equity center on Downstate’s campus. The state will still allocate the capital funds into a fund for the hospital; but the commission will make recommendations on how those funds are spent.
Sen. Zellnor Myrie, who represents the district where SUNY Downstate is located, said that the agreement to appoint an advisory panel will allow community members to take part in a robust conversation about how to sustain Downstate – not one that’s impacted by a looming budget deadline.
Myrie said that this deal marks the next phase of the conversation about Downstate – one that was made possible by the support of the community.
“The community showed up for Downstate,” Myrie said. “The community was the difference maker.”