Real estate developer, Africa Israel Investments Limited has been brought to task by Attorney General, Eric Schneiderman's office for failing to complete work on two residential buildings in the Financial District and one in Dumbo, Brooklyn, The New York Times first reported. The buildings in question are 15 Broad Street, 20 Pine Street, both in FiDi, and 85 Adams Street in Dumbo. Africa Israel reached a settlement with the Attorney General's office whereby the developer will have to fix all the problems and incomplete work at the buildings and pay millions of dollars in fines for taking unfair advantage of tax breaks.
"Today's settlement is a warning to property developers in New York State," Schneiderman said in a press release. "Those who collect the enormous profits that flow from offering real estate securities in New York will not be allowed to shirk their obligations to purchasers and the public. My office will not allow developers to walk away from their promises."
The three buildings were developed as a joint venture between the billionaire owner of Africa Israel, Lev Leviev and Shaya Boymelgreen in the early 2000s. Sales in all three condo buildings, which include over 800 apartments all together, netted the developers over $900 million, according to the AG's office. In the case of 15 Broad and 20 Pine, the developers received tax breaks through the 421-g program, which offered incentives for the conversion of former office buildings into residential and in turn the revitalization of commercial districts. While the developers received the breaks, they never completed renovation work at any of the buildings, and did not acquire permanent certificates of occupancy for the buildings either.
Boymelgreen left the partnership in 2007, but as part of the settlement the developers have to fix all three buildings, pay $2 million in fines for improperly benefitting from tax breaks, and cede control of all three buildings to their respective condominium boards. Additional costs include paying the AG's office $250,000 for the investigation and creating an escrow account that will be used if the developers fail to live up to the settlement.
Africa Israel has also been ordered to complete work on the historic 23 Wall Street building, the former home of J.P. Morgan and Chase Company. The developers started work on the building in 2002, abandoned it during the financial crisis, and it has now been vacant for the last eight years.
· Developer Reaches Settlements Over Luxury Buildings That Were Left Unfinished [New York Times]
· A.G. Schneiderman Announces Major Settlement with Africa Israel over Condominium Development Practices [Attorney General's Office]
· All the Africa Israel Coverage [Curbed]