Volume 21, Number 46 | The Newspaper of Lower Manhattan | March 27 - April 2, 2009
Michael Miller, the receiver at 225 Rector Pl., said of the building’s complex case, “Intellectually it’s very interesting, but for the people who live there it’s really a tough situation.”
Piles of paperwork and repair problems at 225 Rector Pl.
By Julie Shapiro
The more Michael Miller tries to solve the many problems at 225 Rector Pl., the more new problems he uncovers.
Nearly a month has passed since a judge named Miller, a lawyer, as receiver of the foreclosed condo and apartment building in Battery Park City. Miller’s tasks are many: finish the renovations that delinquent building owner Yair Levy started, sort out the building’s twisted financials and restore residents’ confidence in the building’s safety.
“There’s never been anything quite like this,” Miller said. “Intellectually it’s very interesting, but for the people who live there, it’s really a tough situation.”
One piece of good news is that Miller is close to bringing The Related Companies on to manage the building, several people with knowledge of the negotiations said. Related owned 225 Rector until Levy bought it in 2005, and they would now be charged with collecting rent and common charges, repairing the building and improving its safety.
But as Miller makes progress, new obstacles keep popping up: Miller recently discovered that the company that was managing the building for Levy was mishandling the residents’ payments.
That company, Cooper Square Realty, was supposed to put condo owners’ property tax payments into an earmarked fund, but instead all the money disappeared into the building’s operating fund, Miller said. That operating fund is now dry, without a cent of the property tax money going to the city, Miller said. The Anglo Irish Bank, which financed Levy’s purchase of the building, has advanced the lost property tax money but could look to be reimbursed in the future.
Maria Rapetskaya, a condo owner, is afraid she could have to repay six months of property taxes, which total about $3,000. Cooper Square stopped returning her calls and is not releasing any documents, she said.
“They took a bad situation and they made it infinitely worse,” Rapetskaya said.
Cooper Square did not respond to a request for comment.
When Miller is not dealing with Cooper Square, he is making plans to fix up the building’s common areas, which are a maze of exposed wiring and drywall. Miller has got contractors to start repairs on the unfinished pool, but most of the work will have to wait until the new manager is on board. The manager will begin by assessing the status of the incomplete renovation, then decide what has to be redone because previous contractors did it incorrectly, Miller said.
“It would be much easier to take a building and then renovate it than to start at the stage that we’re in,” Miller said.
Among the first tasks for the contractors is to clean the building from top to bottom, fix the intercom and finish the lobby.
“What’s frustrating me is that we’re not able to deliver it more quickly,” Miller said. “I wish it could have happened yesterday.”
Kim Allen, a leader of the rent-protected tenants in the building, was pleased that Related would likely be returning to manage the property.
“Related was a good managing company — certainly compared to Yair Levy,” Allen said.
Allen’s primary concern is that the tenants stay rent protected until 2019, as Levy promised in 2005 under duress from the attorney general. Miller has promised to respect that right, but he will not be in charge of the building forever, as the Anglo Irish Bank is likely to look for a new buyer for the property.
Miller held a meeting earlier this month with the building’s residents, including some tenants of the 45 rent-protected apartments and some owners of the roughly 70 sold condos, groups that have very different concerns. The building also has about 200 empty units.
Afterwards, Miller received an e-mail from a couple who put down a $55,000 deposit on a condo in the building over a year ago but have not been able to move in. They are renting an apartment in the building in the meantime but are tired of waiting. They told Miller that Levy’s lawyer refused to return their deposit. They had planned to have children, but without a real home, they can’t, Miller said.
“It’s heartbreaking,” Miller said.
Stuart Saft, Levy’s lawyer at Dewey & LeBoeuf, said he is keeping all deposits in an escrow account and would not say whether he would release them.
“Not one dime has left the escrow account,” Saft said.
“The whole situation is very unfortunate and I assume will be quickly resolved,” Saft added. “My expectation is that work in the building will be completed, and that the purchasers will have the building they thought they were getting.”
Saft, who refused to discuss his client or specifics about the case, would not say whether Levy hopes to retain a stake in the building after defaulting on $165 million in loans and failing to pay contractors.
Rapetskaya, who closed on a studio last August, said her attitude toward the future “depends on what day you catch me.”
“I’m generally optimistic,” she added. “In the end it’s all going to work out — it’s just a matter of how long that will take…. Once there are visible results, and workers in the building, I think people will feel better.”