Underground Empire

DUMBO’s Chic Real Estate Titan Lowballs His Workers

David Walentas is a silver-haired, Porsche-driving real estate tycoon who could have stepped from a Ralph Lauren ad. The 65-year-old developer likes to wear jeans to business meetings, but that's as close to the blue-collar crowd as he wants to get. Over the past two decades, Walentas has made millions forcing industrial employers out of his buildings to make way for posh lofts in DUMBO, on Brooklyn's waterfront. This holiday season, the developer has another gift for New York's working classes: the city's biggest-ever non-union construction project.

Using a contractor who has been at war with the city's trade unions, Walentas launched work this month on a 500,000-square-foot, $100 million project at the corner of Atlantic and Court streets in Downtown Brooklyn. The politically connected Walentas was awarded the site—a former parking garage—last year by Bloomberg administration officials, who said his was the best of 10 proposals made to the city. The developer's plans call for twin 11-story towers of offices and luxury rental apartments, including a new facility for the YMCA of Greater New York. Walentas's Two Trees Management paid $16.5 million for the site and received $93 million in low-cost financing from the city's Housing Development Corporation.

With Bloomberg's deputy mayor Daniel Doctoroff at his side, Walentas broke ground on December 1 as members of the carpenters', laborers', teamsters', and other construction unions hooted, jeered, and displayed a 12-foot-tall inflated gray rubber rat.

Union members protest at David Walentas's new Brooklyn project.
photo: Cary Conover
Union members protest at David Walentas's new Brooklyn project.

"We bid the different trades and then used the best people we could get, at the lowest cost," the dapper developer told the Daily News' Hugh Son at the groundbreaking. "It's the American way."

"It's hardly the American way to exploit people like this," countered Anthony Pugliese, an organizer for the District Council of Carpenters who has led a series of protests at the site. "What he's doing is taking advantage of his workers. And he's not doing it because he doesn't have the money, but in order to make more."

Walentas's choice for the project is IBK Construction, a new firm that has battled local trade unions over the past year. Its workforce is mainly composed of recent immigrants, many of them from Poland and the former Soviet Union. Wages at the firm, records show, range from $10 to $17 an hour, with the company chipping in a maximum of $150 a month for medical benefits. In contrast, union rates average $25 to $30 an hour with full benefits. IBK employees, according to the firm's union foes, wind up relying on public hospitals and other taxpayer-supplied benefits.

"This is what we can afford to pay," said Igor Kirtchakov, the Russian-born part-owner of IBK. "I can't offer more. Maybe, as we grow, the benefits package will increase. But we have many happy workers who are with us a long time."

Kirtchakov spoke in a construction shed high above the 40-foot excavation hole where his workers are building the project's foundation. He has not been awarded the contract to build the superstructure of the building, although he is hopeful of winning a bid to do so.

Construction unions went head-to-head with IBK in a bitterly contested representation election last year, which ended in a tie vote. Former employees of IBK, who later quit the company and became union members, said Kirtchakov warned them against the union. "Some guys were really scared—that they would lose their jobs, get deported, something. They got everyone frightened," said Jerry, a 44-year-old carpenter who asked that his last name not be used.

Gegi Kahiani, another former IBK employee, who is now a member of the laborers' union, said that when he started with IBK two years ago, after arriving from the former Soviet republic of Georgia, he was paid $8 an hour. "This money sounds good when you are just coming here. What else do you know?" he said. "When you go there, they tell you you have health insurance, everything. Then when you need it, they say, 'You know what? You got to pay $50 a week for that insurance.' "

Shortly after the contested election, IBK signed a contract with an independent union called the National Organization of Industrial Trade Unions. NOITU—pronounced NOY-too—is a kind of catchall organization that has been around New York's labor scene for decades, frequently signing up employers facing organizing drives from AFL-CIO unions. Its contracts typically call for low wages and benefits and are dismissed as "sweetheart" deals by union organizers.

In the case of IBK, NOITU's contract offers little in the way of on-the-job protection. Payment for family medical coverage, the contract states, "shall be the responsibility of the employee." The agreement, signed by Kirtchakov and NOITU president Gerard Jones, shows that they eliminated a clause requiring a union-assigned shop steward. Jones did not return messages.

Kirtchakov said he had nothing to do with NOITU's fortuitous appearance. "I guess they sent some organizers over to talk with the men and they liked it," he said. Unlike his resistance to the carpenters' and laborers' unions, the builder said he was able to quickly reach an agreement with the group, one he acknowledged was much cheaper in cost.

"It was a business deal, like anything else," he said.

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