This post has been read 8686 times!
Update July 21, 2015- The Real Deal blog picked up our story. No other local “news” site covered this, because they are just adverting fliers. We inform.
July 19, 2015- By Steven E. Greer
In court documents obtained by BatteryPark.TV, real estate business partners of mogul Howard Milstein have sued to essentially fire him as the property manager of three large apartment buildings in Battery Park City. The suit also seeks to remove Mr. Milstein’s own management company, Milford Management, and replace it with Douglas Elliman.
On May 18th, 2015, two of the three business entities that operate the buildings at 200 Rector Place (Liberty Court), 377 Rector Place (Liberty House), and 380 Rector Place (Liberty Terrace), filed a lawsuit in New York State Court to remove Howard Milstein as the property manager of all three addresses. The Index Number is 651726/2015. (The complaint and other documents are found at the bottom of this article)
The plaintiffs, Michael Nelson and Ivan Goldstein, inherited the properties from their older relatives and have different investment horizons than Mr. Milstein. They view the real estate market as peaking now in strength and want to sell the unsold apartments in the buildings, now generating revenue as rental properties. Mr. Milstein seems to need the near-term cash less and is willing to hold onto the assets.
Despite being designated in the 1980’s as condominium units, which means that all of the apartments should have been sold by now, Mr. Milstein has chosen to set aside a large portion of the apartments as pure rentals. Mr. Milstein stated in 2013, “I am not a seller”, according to the complaint. Those are the units that the plaintiffs want to flip now before the real estate bubble bursts.
Mr. Milstein owns 40% of the partnership that controls the three buildings. The other two plaintiffs own a combined 60% and claim to have the right to vote out Mr. Milstein.
The plaintiffs accuse Mr. Milstein of profiting by taking above-market-rate fees from his Milford Management company that manages the rental units. They have tried to obtain the details of the operating agreements, but Mr. Milstein has stonewalled them, they allege. They also allege that Mr. Milstein “took out $1,762,266” from the partnership in 2014 while also claiming that he worked without compensation.
On May 19, 2015, the plaintiffs voted to remove Mr. Milstein as the managing partner. On June 11, 2015, they filed the official certificate.
In the Third Cause of Action, the plaintiffs seek to remove Milford management and replace it with Douglas Elliman Property Management as the new property management company. That would mean that certain people well known to many BPC residents would lose their jobs, such as Steve Rossi. Recall, Loraine Doyle has already “retired”.
In the Fall of 2014, one of the three properties in question, 377 Rector Place, changed property management. Milford Management was voted out after the condominium association become displeased with the company. If the plaintiffs of the current lawsuit prevail, then the other two properties would also remove Milford Management.
While almost all of the several hundred rental units at the center of the battle have never been sold since the creation of the buildings in the 1980’s, interestingly, one apartment was sold in 2009. In the May 28th Reply Affirmation, the plaintiffs allege that Mr. Milstein sold an apartment for below-market-rate to a “BPCA insider”.
BatteryPark.TV has exclusively learned that the name of the “BPCA insider” buyer was Robert Mueller. He was on the board of the BPCA then. He has since sold his apartment and works for Charles Urstadt now.
Mr. Mueller never disclosed the price he paid to Milstein for his apartment that the plaintiffs allege was sold at below-market-rate, but a real estate website indicates that he paid $1.6 Million. Also, the same source lists the year 2007 as the purchase date, not 2009 as the plaintiffs allege in their legal complaint.
This transaction between Milstein and the BPCA insider confirms what many have believed: Mr. Milstein and the BPCA have enjoyed decades of too-cozy relations. With the BPCA being the landlord of Mr. Milstein, collecting PILOT fees, facility fees, and ground rent, it would seem inappropriate for Mr. Milstein to be selling cut-rate apartments to BPCA insiders.
Was there a quid pro quo reduction in the PILOT fees or ground rent charged of Milstein in exchange for cheap apartments for BPCA board members? Were Milstein buildings that were receiving reductions in PILOT fees due to the 421-a law allowed to not tell their tenants that the apartments were also rent-stabilized?
This lawsuit could drag on for years. Stay tuned.
Exclusive: Milstein Properties continues to clean house at its Milford Management