Preview
FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF ROCKLAND
HELLO LIVING DEVELOPER NOSTRAND LLC Index No: 034885/2021
and HELLO NOSTRAND LLC,
AFFIDAVIT OF PAUL J.
Plaintiffs,
KORNGOLD IN SUPPORT
PLAINTIFFS'
- against - OF MOTION
FOR A TEMPORARY
RESTRAINING ORDER AND
1580 NOSTRAND MEZZ LLC and MADISON
PRELIMINARY
REALTY CAPITAL LP'
INJUNCTION
Defendants.
STATE OF NEW YORK )
) ss.:
COUNTY OF W g mNrkt )
PAUL J. KORNGOLD, being duly sworn, deposes and says:
1. I am an attorney with Korngold Powers LLP. I have been retained by plaintiffs
Hello Living Developer Nostrand LLC ("Developer") and Hello Nostrand LLC ("Hello") to serve
as an expert witness in this matter.
2. I am a graduate of Brooklyn Law School and have been practicing law in the State
of New York since 1977.
3. I am the past chairman of the Law Committee of the Associated Builders and
Owners of Greater New York, a former director of both the New York State Builders Association
and the Associated Builders and Owners of Greater New York, a past member ofthe Tax Certiorari
and Condemnation Committee of the Association of the Bar of the City of New York, and am an
honorary director and former President of the Real Estate Tax Review Bar Association, a
specialized Bar dealing with real estate tax assessment matters.
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FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022
4. I have lectured on the topic of New York City Real Estate Taxes before the
Association of the Bar of the City of New York, the Real Estate Tax Review Bar Association, the
New York County Lawyers Association, the Rent Stabilization Association, the New York
Association of Realty Managers, the Council of New York Cooperatives, the Federation of
Housing Cooperatives, the Community Housing Improvement Program and the Associated
Builders and Owners of Greater New York.
5. I have an extensive practice in real estate tax review matters and in ICAP/ICIP,
421-a and J-51 tax exemption/ tax abatement applications. During my career, I have represented
the owners of approximately 3,000 buildings in the City of New York, and filed applications for
correction of the tax assessments and tax exemptions/tax abatements on these properties
6. I have prepared and filed applications for correction of the tax assessments and tax
exemptions/tax abatements on numerous properties and have written and reviewed real estate tax
opinions for condominium offering plans.
7. I have been asked to review the notice of sale, the bidding procedures, and the
room."
information that is contained in the "data I understand that the data room materials were
provided to counsel for Developer and Hello on September 13, 2022. In reviewing those materials,
there iscontained in the data room a one-page Word document titled "Summary of Path for 421A".
Exhibit A) This document states the following:
Summary of path for421a
o No action was needed totake place before the June 15, 2022 421a expiration date
o To qualify for 421a forthe expanded building:
" Amend plans/combine the tax lots
" Reopen the application to file
a PAA with cellar level the two
connecting
buildings
" Amend the Permit
Building
" To enlarge the permit to include the second lot
" Renew and expand TCO to the full
enlarged
existing building
" Existing CO issued June 2021
originally 24,
" Complete the expanded June 2026
building by
o Pay full
taxes on the existing building untilthe new expanded building is complete
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FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022
0 Once TCO forthe expanded building isreceived, follow the typical steps for421a
application and approval
421A"
8. The of Path for Word document contained in the data room may
"Summary
lead prospective bidders to believe that the undeveloped portion of the property located at 1580
Nostrand Avenue, Brooklyn, New York 11226, Block 5131, lot 106 ("Lot 106") is ineligiblefor a
421a tax abatement as of right because the June 15, 2022 deadline to commence work on the
undeveloped portion of the property was not met.
9. While itis true that June 2022 is a criticaldeadline because under RPTL 421-
15, §
a(16)(a)(xxviii) work had to commence by that date for the property to be eligible for an abatement
under that program, the evidence provided to me is that deadline was met.
10. This is evident including a Site Safety Log dated May 22, 2018 (Exhibit B) and a
ZD 1 Zoning Diagram ( Exhibit C). These materials conclusively demonstrate that required work
commenced in May of 2018, well before the deadline. At the time of the commencement of work,
there was a valid NB permit from the Department of Buildings, all that would be required in
addition was to prove that the filing was going to provide a load bearing portion of a new building
constructed on Lot 106.
11. According to Section 6-01(c) of the Administrative Code of the City of New York,
construction'
"'Commencement of shall mean the date upon which excavation and the
faith."
construction of initialfootings and foundations commences in good The permits, Site Safety
Log dated May 22, 2018 (which contains photographs) and ZD 1 Zoning Diagram evidence that
construction"
clearly shows "commencement of of the building on Lot 106 occurred well prior to
June 15, 2022.
12. While a potential bidder would be able to ascertain from the public record that
permits were issued, they would not be able to ascertain from the materials that were supplied in
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FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022
the data room that the work to startconstruction had occurred before the deadline. The
necessary
materials in Exhibit C demonstrate that the necessary work had taken place before deadline. That,
however, is not apparent from the data room and not available to the public. "Summary of Path for
421A"
falsely implies that the deadline had not been met.
13. The of Path for 421A suggests an alternative route for obtaining tax
Summary
benefits, but it would require a revocation of the TCO for the already completed building and
the two buildings. I do not believe that this is a feasible route to pursue, and ifI were
connecting
advising a bidder based on the materials in the data room and the publicly availability information
(from the building department and ACRIS), I would be forced to advise the bidder to assume that
Lot 106 could not achieve a 421-a tax exemption.
14. Eligibility for a 421-a tax abatement is a significant component in determining the
value of commercial real estate and development projects in New York City. For a property the
size of the one at issue in thisproceeding, the difference in value of the property based upon a 421-
a tax exemption could be inthe tens of millions of dollars.
421A"
15. Thus, in my opinion, the "Summary of Path for false and misleading because
itsuggests a much lower value for the underlying property, which would likely unreasonably
suppress bidding and reduce the value of any submitted bids.
16. I have been asked to ascertain the difference in value to the owner if the
hypothetical property that would be built on Lot 106 had a 421-a exemption and ifit did not have
the 421-a exemption. I would assume the property when complete would be assessed at
approximately $100 per square foot. Utilizing the filings at the Department of Buildings as a guide
forthe size of a potential building and taking into account the lower rent that would be charged to
some units due to the 421-a mandated 30% occupancy for the affordable units, I would
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FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022
conservatively estimate a building with a 421-a exemption would pay approximately $75,000 a
year in taxes while the building without a 421-a exemption would pay approximately $1,750,000
a year in taxes.
Paul f. Ko gold
Sworn to before me this
day of September, 2022
Notary Pub U
Laurie J. Korng9M
Notary Public State mf NeurYork
No.amestseth
Qualified inWestchester Cou
Comimlesion Expiree March 24, OR
5
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Preview
FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021 NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ROCKLAND HELLO LIVING DEVELOPER NOSTRAND LLC Index No: 034885/2021 and HELLO NOSTRAND LLC, AFFIDAVIT OF PAUL J. Plaintiffs, KORNGOLD IN SUPPORT PLAINTIFFS' - against - OF MOTION FOR A TEMPORARY RESTRAINING ORDER AND 1580 NOSTRAND MEZZ LLC and MADISON PRELIMINARY REALTY CAPITAL LP' INJUNCTION Defendants. STATE OF NEW YORK ) ) ss.: COUNTY OF W g mNrkt ) PAUL J. KORNGOLD, being duly sworn, deposes and says: 1. I am an attorney with Korngold Powers LLP. I have been retained by plaintiffs Hello Living Developer Nostrand LLC ("Developer") and Hello Nostrand LLC ("Hello") to serve as an expert witness in this matter. 2. I am a graduate of Brooklyn Law School and have been practicing law in the State of New York since 1977. 3. I am the past chairman of the Law Committee of the Associated Builders and Owners of Greater New York, a former director of both the New York State Builders Association and the Associated Builders and Owners of Greater New York, a past member ofthe Tax Certiorari and Condemnation Committee of the Association of the Bar of the City of New York, and am an honorary director and former President of the Real Estate Tax Review Bar Association, a specialized Bar dealing with real estate tax assessment matters. 1 of 5 FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021 NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022 4. I have lectured on the topic of New York City Real Estate Taxes before the Association of the Bar of the City of New York, the Real Estate Tax Review Bar Association, the New York County Lawyers Association, the Rent Stabilization Association, the New York Association of Realty Managers, the Council of New York Cooperatives, the Federation of Housing Cooperatives, the Community Housing Improvement Program and the Associated Builders and Owners of Greater New York. 5. I have an extensive practice in real estate tax review matters and in ICAP/ICIP, 421-a and J-51 tax exemption/ tax abatement applications. During my career, I have represented the owners of approximately 3,000 buildings in the City of New York, and filed applications for correction of the tax assessments and tax exemptions/tax abatements on these properties 6. I have prepared and filed applications for correction of the tax assessments and tax exemptions/tax abatements on numerous properties and have written and reviewed real estate tax opinions for condominium offering plans. 7. I have been asked to review the notice of sale, the bidding procedures, and the room." information that is contained in the "data I understand that the data room materials were provided to counsel for Developer and Hello on September 13, 2022. In reviewing those materials, there iscontained in the data room a one-page Word document titled "Summary of Path for 421A". Exhibit A) This document states the following: Summary of path for421a o No action was needed totake place before the June 15, 2022 421a expiration date o To qualify for 421a forthe expanded building: " Amend plans/combine the tax lots " Reopen the application to file a PAA with cellar level the two connecting buildings " Amend the Permit Building " To enlarge the permit to include the second lot " Renew and expand TCO to the full enlarged existing building " Existing CO issued June 2021 originally 24, " Complete the expanded June 2026 building by o Pay full taxes on the existing building untilthe new expanded building is complete 2 2 of 5 FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021 NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022 0 Once TCO forthe expanded building isreceived, follow the typical steps for421a application and approval 421A" 8. The of Path for Word document contained in the data room may "Summary lead prospective bidders to believe that the undeveloped portion of the property located at 1580 Nostrand Avenue, Brooklyn, New York 11226, Block 5131, lot 106 ("Lot 106") is ineligiblefor a 421a tax abatement as of right because the June 15, 2022 deadline to commence work on the undeveloped portion of the property was not met. 9. While itis true that June 2022 is a criticaldeadline because under RPTL 421- 15, § a(16)(a)(xxviii) work had to commence by that date for the property to be eligible for an abatement under that program, the evidence provided to me is that deadline was met. 10. This is evident including a Site Safety Log dated May 22, 2018 (Exhibit B) and a ZD 1 Zoning Diagram ( Exhibit C). These materials conclusively demonstrate that required work commenced in May of 2018, well before the deadline. At the time of the commencement of work, there was a valid NB permit from the Department of Buildings, all that would be required in addition was to prove that the filing was going to provide a load bearing portion of a new building constructed on Lot 106. 11. According to Section 6-01(c) of the Administrative Code of the City of New York, construction' "'Commencement of shall mean the date upon which excavation and the faith." construction of initialfootings and foundations commences in good The permits, Site Safety Log dated May 22, 2018 (which contains photographs) and ZD 1 Zoning Diagram evidence that construction" clearly shows "commencement of of the building on Lot 106 occurred well prior to June 15, 2022. 12. While a potential bidder would be able to ascertain from the public record that permits were issued, they would not be able to ascertain from the materials that were supplied in 3 3 of 5 FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021 NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022 the data room that the work to startconstruction had occurred before the deadline. The necessary materials in Exhibit C demonstrate that the necessary work had taken place before deadline. That, however, is not apparent from the data room and not available to the public. "Summary of Path for 421A" falsely implies that the deadline had not been met. 13. The of Path for 421A suggests an alternative route for obtaining tax Summary benefits, but it would require a revocation of the TCO for the already completed building and the two buildings. I do not believe that this is a feasible route to pursue, and ifI were connecting advising a bidder based on the materials in the data room and the publicly availability information (from the building department and ACRIS), I would be forced to advise the bidder to assume that Lot 106 could not achieve a 421-a tax exemption. 14. Eligibility for a 421-a tax abatement is a significant component in determining the value of commercial real estate and development projects in New York City. For a property the size of the one at issue in thisproceeding, the difference in value of the property based upon a 421- a tax exemption could be inthe tens of millions of dollars. 421A" 15. Thus, in my opinion, the "Summary of Path for false and misleading because itsuggests a much lower value for the underlying property, which would likely unreasonably suppress bidding and reduce the value of any submitted bids. 16. I have been asked to ascertain the difference in value to the owner if the hypothetical property that would be built on Lot 106 had a 421-a exemption and ifit did not have the 421-a exemption. I would assume the property when complete would be assessed at approximately $100 per square foot. Utilizing the filings at the Department of Buildings as a guide forthe size of a potential building and taking into account the lower rent that would be charged to some units due to the 421-a mandated 30% occupancy for the affordable units, I would 4 4 of 5 FILED: ROCKLAND COUNTY CLERK 09/16/2022 05:19 PM INDEX NO. 034885/2021 NYSCEF DOC. NO. 133 RECEIVED NYSCEF: 09/16/2022 conservatively estimate a building with a 421-a exemption would pay approximately $75,000 a year in taxes while the building without a 421-a exemption would pay approximately $1,750,000 a year in taxes. Paul f. Ko gold Sworn to before me this day of September, 2022 Notary Pub U Laurie J. Korng9M Notary Public State mf NeurYork No.amestseth Qualified inWestchester Cou Comimlesion Expiree March 24, OR 5 5 of 5