Lawyer with tenant sympathies takes over at 225 Rector Pl.


By Julie Shapiro

The beleaguered residents of 225 Rector Pl. have some reassuring news at last: On Tuesday night, the judge handling the case of their building’s foreclosure appointed a receiver to take control.

The receiver, estates attorney Michael Miller, does not have an easy road ahead. The owner of 225 Rector, Yair Levy, abandoned the building midway through major renovations, leaving the common areas a construction site. Miller, who has taught classes on being a receiver, toured the building for the first time last weekend.

“They are living in unacceptable conditions, utterly unacceptable,” Miller said. “I was really shocked to learn that they don’t have an intercom. Even in tenement buildings you have intercoms.”

Miller said the case of 225 Rector is the most complicated he has ever handled, partly because of the many parties involved: the rent-protected tenants who moved in decades ago; the condo owners who bought into the building over the summer; Levy, the developer who bought the building in 2005; the Anglo Irish Bank, which sued Levy this month for defaulting on loans; and everyone’s lawyers.

In a phone interview Wednesday, Miller pledged to hold a meeting with the residents at the building next week, where he will present a detailed plan for safety and other improvements.

“I want to do everything I can to rectify the situation as soon as possible,” Miller said.

After a meeting Assembly Speaker Sheldon Silver held last Friday with nearly all the major players, the residents were happy to hear that a receiver would be appointed soon.

“Already there is a palpable sense of relief,” said Kim Allen, a tenant leader. “You can feel it in the building — just that something is going to change.”

Levy has had a rocky relationship with tenants from the beginning, when he sought to end their rent protections to convert the building to condos in 2005. Back then, Attorney General Andrew Cuomo forced a deal to keep the remaining tenants in place until 2019, but it turned out the battles with Levy were only beginning.

“He treated us like fourth-class citizens,” Allen said.

Allen and other tenants said Levy refused to replace appliances from the 1980s or fix anything that was broken in their apartments. Instead, he renovated empty units and tore apart the common areas, attempting to convert the building into luxury condos that would fit in alongside the neighborhood’s newer buildings. The construction dragged on, choking the hallways with dust and noise, and then, late last fall, the workers inexplicably disappeared, their jobs undone.

Levy had run out of money. He was behind on payments of his $165 million mortgage to the Anglo Irish Bank and could not afford to finish the renovations. New condo owners moved in expecting the amenities they had been promised, but instead they found that the lobby was a jungle of concrete beams; the gym had exposed wiring; the pool was nowhere to be found; and the renovated units had a slew of problems, ranging from cracking floorboards to malfunctioning plumbing.

“Obviously, they did a very, very rushy job with what looks like the worst quality of materials,” said Maria Rapetskaya, who closed on a studio last August. “There is nothing I can list that is right with this building, except the wonderful people living in it.”

The condos went for over $1,000 per square foot, many totally over $1 million, said Mark Held, a lawyer representing about 50 of the 72 condo owners.

As Levy’s financial troubles deepened, the building lost heat and hot water for several days this winter, Held said.

“The situation is pretty dire,” Held said.

But in the first piece of good news the residents had heard in months, the Anglo Irish Bank promised last week to step into the shoes Levy abandoned. Miller, who was appointed by State Supreme Court Judge Joan Madden, fleshed out the details Wednesday: The bank will provide $2 million to finish the construction in the building’s common areas and will also cover any operating shortfalls, ensuring that the building will have heat, hot water and staff.

Miller’s next step is to hire a managing agent to handle the building’s basic services and an engineer to determine the status of the construction.

The bank is not providing Miller with money to continue renovating the roughly 200 empty units in the building.

Levy could not be reached for comment. Michael Shvo, who was marketing the renovated units, did not respond to a request for comment.

Tenants in the 45 rent-protected units are particularly concerned about how the foreclosure will affect them, but it looks like they’ll have a friend in Miller, who started his career as a tenants’ lawyer. Miller could make no unequivocal promises until he looked at everyone’s leases, but he said, “I’m very sensitive to the rights of tenants.”

Sam Himmelstein, lawyer for the tenants, said he was glad a receiver had been appointed and hoped he would recognize the right of the tenants to stay in the building until 2019.

The tenants are paying between $900 and $1,400 a month for their apartments, Himmelstein said.

Tom McCormack moved in when the building opened in 1986, and he does not want to leave his one-bedroom unit, despite the many recent problems.

“I’d pick up and go where?” he said. “Where is there affordable housing for working-class people in Manhattan? Where?”

McCormack called Levy “a nightmare” and said his reign over the building was poor repayment for the tenants’ return to the neighborhood after 9/11. Now, after putting up with months of disruptive construction — “They tore this building down around our ears,” McCormack said — McCormack is hoping that stability is finally on the way.

Ruth Brafman, 83, another tenant, is hoping so as well.

“I’m on a fixed income,” Brafman said. “I can’t afford to go out into the market.”

Brafman started organizing the tenants when their rent protections were threatened in 2005, and she is optimistic they will once again win the right to stay. Still, she added, “It’s stressful.”

Rapetskaya, the condo owner, shares Brafman’s optimism.

“One way or another, this is going to work out,” Rapetskaya said. “It’s a potentially beautiful building in Battery Park City. We’re in a prime location here — it’s not going to get condemned or abandoned.”

Rapetskaya looked elsewhere in Battery Park City to buy a studio, but 225 Rector was the only place she could afford. The relative discount because of the building’s age drew in many young, first-time homeowners, Rapetskaya said.

“They dumped all their savings into this, and now we’re all stuck,” Rapetskaya said. “We’re paying for it dearly now.” Still, she added that even knowing what she knows now, she would have made the same decision to have a chance to live in the neighborhood.