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Stringer Issues Subpoena After More Questions Surface About $173 Million Deal With Notorious Slumlords

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City Comptroller Scott Stringer announced on Friday that he is issuing a subpoena for appraisal information and other documents used by the de Blasio administration to purchase a $173 million real estate portfolio from a reputed slumlord family, as part of the administration's push to convert the apartments to housing for the homeless.

Stringer's action comes one day after news reports that the lawyer for the landlords, Frank Carone, both donated and helped raised money for Mayor Bill de Blasio’s federal political action committee, Fairness PAC, which is being used to explore a presidential run.

In a press release, Stringer said:

“I have repeatedly expressed concern regarding the $173 million price tag that, to date, has lacked any trace of transparency. 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. The City has refused to provide my office with all of the documents and information it relied on to make their decisions. The time for excuses is over and I am therefore issuing a subpoena for any and all appraisals and any other information supporting this deal.”

A spokesperson for the city's Department of Social Services did not immediately respond to a request for comment.

The city closed on the deal on Thursday, after months of controversy following a Daily News story in January that revealed that the owners of the 17-building portfolio were Stuart and Jay Podolsky, brothers who had successfully built a housing profit model of renting the city poorly run homeless shelters.

Homeless advocates defended the purchase, saying that it would allow the city to convert the so-called “cluster-site” units into permanently affordable housing. The effort to buy cluster-site housing is part of the mayor's "Turning the Tide on Homelessness" initiative introduced in 2017.

Stringer’s inquiry raises the question of how the city handled the negotiations with the Podolskys, whose buildings had a history of violations.

But aside from the appraisal process, Joshua Goldfein, a staff lawyer with the Legal Aid Society, which represents tenants who live in the buildings, said Legal Aid attorneys had wondered why the city did not elect to investigate the Podolskys for their management of the buildings and administration of social services they were contracted by the city to provide.

“There’s certainly a lot of room to look into the business practices of these entities,” he told Gothamist on Thursday. “Had they looked they might have found evidence of wrongdoing that would have given them leverage [in the negotiations].”

The Legal Aid Society supported the deal, arguing that the need to convert the units into safe and permanently affordable housing outweighed the unsavory aspects of the landlords. “The most important thing is for the city to take control of these buildings,” Goldfein said. “All of those people are much better off with the city as their landlord.”

But as an example of how the city could have handled the Podolsky-owned units, he pointed to how the de Blasio administration responded to malfeasance in another government-assisted housing system, shelters for drug addicts also known as three-quarter homes.

In 2015, following a New York Times investigation that focused on unsafe housing conditions and the corrupt practices of one operator, the de Blasio administration formed an emergency task force to investigate the houses. It also spurred a series of City Council bills to regulate the industry, which eventually passed into law. In addition, the state Attorney General’s office launched an investigation, and to date the Attorney General has successfully prosecuted three housing providers.

During his weekly interview on The Brian Lehrer Show, de Blasio on Friday said he was not involved in negotiations with the Podolskys. “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.

He said city officials estimated that seizing the properties through eminent domain would have taken three years.

“This was the price we were going to end up paying,” he said. He said the purchase will secure permanently affordable housing for 2,000 people. “This was the right thing to do to.”

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