Jared Kushner's family real estate company is attempting to oust a Brooklyn coffee shop over unpaid rent that the cafe owners say dates to last summer when a fire rendered their storefront unusable for more than three months.
The coffee shop Pudge Knuckles closed in mid-June 2016, when a fire in its century-old Williamsburg building set off sprinklers that flooded the place. The blaze was one of at least five in the building in a little over a month, all still unsolved. The water soaked the cafe's walls, coffee bags, custom furniture, and all the rest. A mold remediation team ripped open the walls and the ceilings for their examination, prompting co-owner Ivan Greene to think, "Oh, cool, [the landlord is] going to fix the cafe."
Pudge Knuckles closed for over three months due to flooding from fire sprinklers. (Nathan Tempey/Gothamist)
But no. Greene said that the day after the contractors' visit a property manager told him that no more repair work would be done. The coffee shop had to be gutted and totally rebuilt. Weeks of back-and-forth followed, Greene said, before he decided to take on the work himself.
"It was bonkers, batshit crazy," he said of the delay. Greene has some carpentry experience, so, "Finally I was like, 'We’re going to do the work.' Because we have to reopen."
Summers are the cafe's busiest months, and things were cooling down by the time Pudge Knuckles reopened in October. Just before the reopening, Greene said a Kushner Companies rep paid the business a visit and asked, "So, how much do you want?"
"What?" Greene remembers asking.
"How much do you guys want if you’re thinking about going somewhere else, doing something else," he remembers the rep responding. Greene blinked, and asked the man to repeat himself. Even then, it took a moment for him to realize the man was trying to buy him out.
Greene, a former professional climber, and his wife, former Trump Model Hartje Andresen, had been focused on reopening and recouping their losses, so they hadn't given moving much thought. They are 6 years into a 15-year lease, and in that time the average commercial rent for the neighborhood has shot up to over $40 per square foot, whereas Pudge Knuckles is paying $4,600, according to Greene. This encounter was when they first got the sense that the owners wanted them gone.
Pudge Knuckles owners Hartje Andresen and Ivan Greene (Courtesy of Ivan Greene)
Andresen and Greene had already started receiving notices about the back rent they supposedly owed. Greene said he tried to explain to the building's lawyer that the cafe's insurance company was good for any outstanding balance, not that there should be one, and said that emails to a Kushner staffer went unanswered. There was then, according to Greene, a call from someone at the main office who said, simply, "Let me know when you're going to pay the rent." Then, in March, came the eviction lawsuit.
"You have a mom-and-pop coffee shop in an area that’s now becoming developed. It’s been there since before the development took place," said Pudge Knuckles' lawyer Adam Love. "You have two local individuals...that are trying to serve the community with a great product, great service, and the landlord is trying to push them out with no reason."
In a motion responding to the initial suit, Love argued that the entrepreneurs didn't owe rent for last summer because they'd been constructively evicted, a legal term for when building conditions become so hazardous that a tenant must move out. Based on the rough contours of the situation, not having read the lease or the corresponding court documents, tenant lawyer Samuel Himmelstein said that it sounds like the cafe has a case.
"If during this period of reconstruction the tenant was not operating a business, the tenant has a defense for constructive eviction," he said. (Separately, Himmelstein's firm is representing the building's tenant association in trying to negotiate favorable condo purchase terms.)
In his response to the lawsuit, Love also wrote that the building's owners had cost the couple over $100,000 in lost income. Scaffolding for facade work went up out front in March, further obscuring the business, which is already set back from the road.
"You really can’t see our cafe," Greene said. "It’s choking us. Our sales have gone down tremendously."
Kushner Companies' public relations firms declined to answer a detailed series of questions, but a spokeswoman from one emailed a statement reading, "We worked with Pudge Knuckles to repair minor damage last summer. Unfortunately, even after re-opening their store, they decided to withhold rent for several months. We were forced to take legal action to recover these missing payments." The spokeswoman said that Pudge Knuckles failed to pay rent in October 2016 and this March. Love, the cafe's lawyer, denies this.
Love told Gothamist that the couple plans to file their own lawsuit in the next several days seeking damages for the lost income, repairs, and other costs. The experience of other Kushner tenants, including those upstairs from the coffee shop, seems to suggest that they're in for a fight.
184 Kent Avenue, sans scaffolding (Nathan Tempey/Gothamist)
Kushner Companies bought the block-long former warehouse at 184 Kent Avenue for $275 million in April 2015, in partnership with Asher Abehsera's LIVWRK and the Boston private equity firm Rockpoint Group. Their plan is to convert the building into condos, but a J51 tax abatement taken out by former owner JMH Development means that the tenants, though some of their rents fall above the usual $2,700 rent-stabilization cap, are rent-stabilized until 2025. Knowing that, some are reluctant to leave.
In addition to the fires, which management blamed on an unnamed "obviously sick" tenant, renters in the building have complained of lacking repairs, lax security, gas and hot water outages, construction dust invading their apartments, and infestations of rats, mice, and ants. Greene and Andresen lived in the building at the time of the sale, but, Greene said, "We bailed very early because it was clear they were doing constructive evictions."
Their breaking point was a broken fan belt near their apartment that made noises so loud "we couldn't sit in our living room," according to Greene. Others held on, formed a tenant group and demanded rent abatements. Some also sought to buy their apartments as condos at cheaper prices. It's unclear how much success they're having. Only a small fraction of the building is currently occupied, and two-bedrooms are starting at $1.2 million.
"I think they just want the whole building gone," said one tenant, who asked to remain anonymous for fear of retribution. "They want to push everybody out and... get more money from new people."
While Jared Kushner is busy advising his father-in-law on an ever-growing portfolio of the world's problems, tenants of buildings he owns are having problems of their own. (Getty)
Nationally, legions of lower-rent tenants seem to be the subject of similarly aggressive tactics by Kushner Companies. The president's son-in-law stepped down from his position as company CEO in January in a nod to ethics requirements, and formally divested from some of his many assets. Still, he continues to own nearly 90 percent of his real estate holdings, including his share of 184 Kent. The portfolio is valued at $132 million-$407 million. (Curiously, a disclosure form dated March 31st lists Kushner's stake in 184 Kent Associates LLC as worth $250,001-$500,000, despite the building's sticker price of hundreds of millions.)
Many reporters have focused on Kushner's high-profile holdings in Jersey City, the East Village and Midtown, but another major area of his investment is working-class apartment complexes in suburbs in Maryland and the Rust Belt. The New York Times and ProPublica looked into these, and found that in Maryland alone Kushner's management company has pursued hundreds of lawsuits for back rent against tenants, chasing debts in the thousands of dollars through former tenants' job changes, moves, and deaths, even when the company was clearly in the wrong.
In one instance cited, Kushner's JK2 Westminster LLC sued a home health aide for $3,000 three years after she moved out before the end of her lease. A judge repeatedly ruled against her over the course of years, allowing Kushner to garnish her wages and drain her bank account, even though she had a note from the property manager reading, "The tenant gave notice in accordance with the lease."
Questionable nonpayment cases are nothing new in the ultra-heated New York City real estate market, and according to Himmelstein, they are particularly common when tenants are paying below market-rate. Pudge Knuckles' owners, unlike many of Kushner's residential tenants, have a lawyer, greatly improving their chances.
Discussions with the cafe's insurance company are ongoing, Greene said. Meanwhile, it's becoming harder and harder to be the cheery face of a new Williamsburg waterfront that's for sale.
"It really doesn't make me want to tell customers, 'Oh, this is a great building, you should totally move in here,'" he said.
