By Anna Merlan
By Anna Merlan
By Julie Seabaugh
By Jon Campbell
By Albert Samaha
By Anna Merlan
By Alex Distefano
By Scott Snowden
Everything about the derelict apartment building at 2320 Aqueduct Avenue in the Bronx is a gamble. The place is pretty much a madhouse.
From 1994 to 2007, the prewar building was owned by Jacob Selechnik, a former member of the Voice's "10 Worst Landlords" list whom tenant activists dubbed "Jake the Snake"—and not just for his rap sheet of more than 10,000 code violations on his vast array of Bronx properties.
Not so long ago, pigeons were being raised on the roof of 2320 Aqueduct, prompting an invasion of rats on the floors below. More recently, prostitutes plied their trade in the lobby's utility closet (and, when kicked out, they merely took their johns to a nearby radiator and sprawled on it). When the dope dealer out front concluded his business for the day, you could find him living in the building's elevator machine room, perhaps cooking a chicken on his hibachi. Currently, a makeshift casino and numbers parlor operates out of a first-floor apartment—and that's one of the place's amenities.
And then there's the gambling with the building itself by real estate legend Stephen B. Siegel—the guy who put Gucci in the Trump Tower, the guy who is the global-brokerage chief for CB Richard Ellis, the world's biggest commercial real estate operation. Siegel started a side project called SG2 Properties and plunked down $300 million a couple of years ago in a deal with an arm of the huge private equity firm BlackRock to buy 2320 Aqueduct Avenue from Selechnik and 50 other buildings in some of the most rundown parts of the Bronx.
Just imagine: Selechnik, an ordinary guy who works out of a windowless basement office in the Bronx, rounding up his paperwork and traveling to Siegel's sleek midtown office to ink the deal. The city's real estate community gasped at the size of such a big transaction in the Bronx, but Siegel denies that he and the institutional investors in the deal are in the business of simply forcing out tenants and flipping the buildings. He proudly touts his own Bronx origins, recalling the days of his youth when he was busy trying to make a buck peddling sodas and World Book encyclopedias. So how do you make money in such a deal? The Bronx was going through a renaissance, a confident Siegel told a local paper at the time, and he announced that he would transform the buildings little by little, "making sure that doors lock and lights work and that they're well maintained." Talk about a gamble.
Some of 2320 Aqueduct's long-suffering tenants contend that Siegel may be an even worse landlord than Selechnik. That is debatable. But the craziness of New York's real estate market? That's not debatable.
This is what $300 million will buy you.
No one really knows how long 2320 Aqueduct Avenue has been going downhill. So many buildings in the city have similar histories, but the life of longtime tenant Gladys DeJesus, a family counselor at the Department of Education, is a good measuring stick for this one. Even during the turbulent '70s and '80s, she recalls, tenants brought welcome dishes to new tenants and neighbors pitched in to decorate the lobby for Christmas at the six-story building with more than 60 units. By the time Selechnik bought the building in 1994, its stained-glass window was gone and the only furniture left in the lobby was a beat-up couch. In 2003, DeJesus was shot in the leg while walking down the block to a bodega to buy milk. In 2006, she was leaving for work one morning when a prostitute who frequently spent the night curled up by a radiator tried to poke her with a syringe. "I had to turn around and say, 'You don't want to poke me.' That's how bad it's gotten," she says. "Little by little, things just fell apart. Now we have to look out when we come into the building. Half the time, I'm scared."
There's a different vibe, though, in Apartment 1E, the building's ersatz casino, where Perfect Stranger (with Halle Berry) is the matinee playing on TV on a recent Sunday. The gambling parlor is a sparsely furnished room with two faded couches, two genuine slot machines, and a middle-aged woman sitting behind a desk, wearing a purple hoodie over her stringy blond hair, working the phones, taking bets from people wandering in, and reporting results on a variety of numbers games. Pink and yellow pamphlets list the numbers you can bet in various games—some people bet hundreds of dollars. The pamphlets cost 60 cents a pop, are printed in Brooklyn, and carry fine-print disclaimers that say they are not to be used for gambling. Calls with results come in every hour, and the woman behind the desk shouts numbers in rapid-fire Spanish into the phone. To her left is a poster of the Mexican heartthrob actor Diego Luna.
Normally, the denizens of the gambling parlor roast a chicken on Sundays, but today, no one is in the kitchen. People are getting drunk. Some hang out on the couch, watching the movie distractedly, and wait for the results to come in. Others go back and forth to the liquor store. Above the television, there are two video cameras that monitor the lobby so the whole operation can be shut down in seconds.
Cowboy, a middle-aged man notable for his gold Geronimo belt buckle and old-fashioned beret, says his lucky number is seven. He always bets on seven. But it must not be too lucky, because he gambles every day. A jumpy fellow, he spends his Sundays shuttling between Aqueduct Avenue, the nearby liquor store, and other gambling parlors in Bronx laundromats. Sometimes, he goes to Yonkers. He lives in another building in the neighborhood.
As Cowboy strolls out of 2320 Aqueduct, he passes Eva Perry and her husband, Thomas, who are returning from church. The Perrys have the misfortune of living on the first floor, and their windows face the street, so they can see and hear the everyday drama of the building—a drama they are not fond of.
"When I first moved here, it was like Park Avenue," says Eva, who wears a conservative plaid skirt and a small gold cross over her blouse. "You thought you were in the country. You could hear a pin drop." She shakes her head after Cowboy saunters by. "You didn't have none of this." She lives roughly 20 feet from the gambling parlor, but insists that she's only vaguely aware of it. What really bothers her are the kids who play in the hallway, bouncing balls at all hours. The couple, who has lived in the building for three decades, recalls the days when new tenants had to go through an application process and be screened. "Now it's just welfare and Section 8," Eva says. Every June, for the past three years, neighborhood punks have smashed her front window, and ever year, it takes months to get the landlord—first Jake the Snake and then Siegel's SG2—to fix it. Since SG2 bought the building, in February 2007, the city's Housing Preservation and Development agency made 85 emergency repair visits because SG2 was taking too long. (The city billed SG2, and the company paid.)
As Eva goes on about the kids, a man standing outside of the building beside her reminds her of the Utility Closet Story. The man is Adolph Santana, president of the building's tenants association. Eva gives him a look—as if he's mentioning something she just wants to forget. Then, reluctantly, she explains: Over the past few years, when the front door was perennially unlocked, prostitutes had been using the utility closet on the first floor for business. Tenants on the first floor complained a lot about it, and eventually, the super nailed a two-by-four across the closet door. It didn't really help, Santana said, because the prostitutes just moved to a nearby radiator. "You wouldn't believe what goes on here," Eva says quietly.
To contend with the chaos, the tenants in the building—mostly working-class African-Americans and people of Caribbean descent—have learned to keep to themselves. They mind their own business and avoid their neighbors.
For the most part, they accept that there's a cyclical nature to their being under siege: The landlords install a lock on the front door. Someone breaks it. Drug dealers and prostitutes move in. The tenants complain to the landlords and call 311. They wait and wait and, eventually, it gets fixed. Sometime after, someone busts the front-door lock, and the drug dealers and prostitutes come back. With great skepticism, the tenants hope each new landlord and super will be better than the last.
To get to Jacob Selechnik's office, you take the 1 train to 281st Street. You pass a Dominican diner on Broadway, and then you walk through a parking lot and descend stairs to an unmarked door. You wouldn't know that you were entering the office of a very rich man.
Selechnik's office is full of kitchen cabinets, haphazardly stacked on top of each other. Other than the cabinets, the office is relatively bare. Motivational phrases that you see in offices are tacked on a bulletin board. Elsewhere, the walls are adorned with a large photograph of Selechnik's grown daughters that looks as if it was taken in the '80s, and a portrait of a rabbi. Selechnik's desk has no computer—he appears to know every aspect of his business by heart. "Of course I'll talk to you," he says, offering a seat. "As long as you don't put me on a blacklist." Despite the fact that the Voice had put him on its famed "Worst Landlords" list numerous times—he landed there in 2006 for having 15,260 housing-code violations on 110 properties in the Bronx—he seems happy to talk. First, he explains the kitchen cabinets: He manufactures them himself—it's cheaper that way. "Do you know how much you can get a cabinet for at wholesale, at Home Depot?" he says. "$110. And how much do I make them for? $75." He pauses, and his cell phone rings. "We're counting pennies here!"
He remembers 2320 Aqueduct Avenue right away. "I loved that building!" he exclaims. "The lobby with those beautiful chimneys! The rooms are very large—beautiful apartments! Apartment 4J has two bedrooms with a big foyers. I promise, you or I would love to live there."
Selechnik insists that he kept the building well-maintained. Then he turns to the deal with SG2. "This company made an offer," he says, a Yiddish lilt turning the statement into a question. "And, well, I'm not getting any younger." He is 65. "It was a decent offer," he adds, and the buildings hadn't even been on the market when SG2 approached him.
He says that he knew the buildings had problems and that he was certain SG2's officials were aware of them. "These people aren't average shmucks, like me," he says. "These are brilliant people. Mr. BlackRock was on top of the world, and they thought the market would just go up. . . . From the running of the properties themselves, you can't get rich."
At one point, Selechnik owned nearly 7,000 buildings. Now he claims to own fewer than 50.
He says he's disheartened to learn that the condition of some of his buildings might have worsened, at least according to some accounts. "I loved those buildings!" he says. "I'm walking around like I'm missing an arm." His cell phone rings, and he proceeds to have a conversation in very good Spanish. After hanging up, he doesn't a miss a beat in his reverie about 2320 Aqueduct: "That building should be a shining star in their portfolio!"
Even with the whores in the utility closet or on the radiator. "Prostitution is a nice business compared to some others," he says. "At least they don't break the locks on the doors! There have to be some apartments—you'd be naïve to think that some don't have that setup."
Owning a big cluster of such buildings, he adds, is difficult. "It's tremendous work to keep up this portfolio of properties," he says. "So maybe if they had a little less, they could keep them in better condition. Just the basic costs of keeping them running—a big problem." In February 2007, he notes, heating oil cost more than $3 a barrel. "Now, it's gone down again," he says. "How big of a difference does that make? How about the difference between going broke and being in business?!"
To demonstrate, he picks up a piece of paper from his desk. On the paper is a typed list of oil prices for November. "You see?" He launches into a monologue about what it takes to run a building, about the difference between fixed costs (insurance) and variable costs (taxes, water, sewer, and oil).
He claims that he made a huge effort to reduce the violations in his buildings, paring some of them down to near zero. "One or two violations for a single building! I'm the cleanest baby in the lot!"
Signing off after his interview, he shouts, "Come back anytime!"
Stephen B. Siegel's office is on a different subway line in a different world. He conducts business from the headquarters of CB Richard Ellis, in a corner office on the 19th floor of the MetLife Building, above Grand Central Station. No kitchen cabinets here. He has a collection of antique elephants—trunks up, for good luck. Recalling the Bronx deal for Selechnik's buildings, he shakes his head and says, "There were so many violations. He had some of the best buildings, the best blocks. We had to secure them from a security perspective. There are convicted felons, deadbeats. We put on a night watch. We patrol some of them. We make it as secure as we can."
He doesn't go into details but insists there's no way to repair things more quickly. "Everything takes time," he says. "You can't take a battleship out to sea in a day."
Siegel grew up in the Bronx and has warm memories of selling soda and encyclopedias as a youngster: "When I was growing up, the Grand Concourse was where you aspired to live!" he says. "They are nice buildings, and I now know how nice they are, because I own them."
Back to the future: Initially, he says, SG2 and BlackRock committed $20 million to capital improvements—not enough for, say, a Manhattan-style renovation. "The money goes a long way," he says, but "it's an ongoing job. You spend $20 million, and then the things you bought four years ago you need to replace. Some of the ones we bought were distressed, and now, no matter what we do, they get distressed again."
According to the city's property records, Siegel paid just under $90,000 per unit—he bought about 4,000 units in the Selechnik deal. When the city analyzed nearby properties at the time of the deal, it deemed that too high a price—a price one might pay if one expects to, say, flip the properties or convert them to market rate. But Siegel insists that he didn't buy them to flip them. His strategy, he says, was to keep them affordable. "People have to live somewhere they can afford," he says.
Within four months, he says, SG2 was able to get three buildings off the city's violations list, and the city responded with a gushing letter of thanks. Siegel denies that 2320 Aqueduct was on the list at all. "I heard that," he says. "That must be wrong."
It's possible that SG2 inherited all of the problems with that particular madhouse—though the building didn't show up on the city's worst-buildings list the prior year, when it was still owned by Selechnik. In any case, since SG2 took over the 110 Bronx buildings, the company has been hit by several lawsuits regarding three of the buildings. Siegel says that lawsuits are par for the course and that activists for the tenants are trying to rile people up.
Beyond that, regarding what sort of returns he promised his investors, Siegel says he only remembers that it was "good."
"I'm the equalizer in the building," Adolph Santana says with a smile. "Whether you're gay or straight, sick or going blind—I'll help anybody. I'm the president of the tenants association! I know when the girls get their periods. Kids come out to me. Everybody knocks on my door."
Brave and cheerful words from someone who may not fit the picture of a typical crusading activist for tenants' rights. A former law enforcement officer and addict who specialized in providing security for thugs and gangsters, the 58-year-old Santana is missing a few teeth and is covered in metal. He wears three silver chains: Two bear silver crosses; the third, a Virgin Mary pendant. He sometimes adds a fourth silver chain, to which is attached a giant "S." He also wears a silver Virgin Mary bracelet and two giant silver rings on each hand that also have the letter "S" engraved on them. He is short and very stocky, and the Dominican women in the building refer to him as "El Gordito." After studying forensics and psychology at John Jay College of Criminal Justice, he says, he had a stint in law enforcement. In the '80s, he says, he worked as a bouncer at after-hours clubs where he was approached by legendary Harlem heroin kingpin Nicky Barnes with an offer of employment. Santana says he turned him down. Most recently, he was on the security team for Bronx State Senator Pedro Espada; he says he guarded voting precincts from the security team hired by Espada's rival, Efrain Gonzalez, in the September 2008 election.
Concerned about other aspects of security, Eva Perry turns to Santana during one encounter and asks whether the video cameras that SG2 had installed in the building (not the ones the gambling parlor installed to protect itself from the cops) actually work. He says they do. "So they should know what's going on," she murmurs to nobody in particular. The prostitutes are bad enough, but that's not the biggest problem for Eva: "What really gets to me are the kids. What kind of parents let their kids run around at all hours?" she says.
Santana can sympathize, and he says he does what he can. The building's kids, he claims, "come to me before they go to their parents, because they know I don't judge them. I sit in the park a lot of the time, so I see what goes on. I see when they are in trouble. I tell them to go to their parents, or I have sit-downs with the parents. But the sad thing is, a lot of the time, the parents are worse than the kids."
Eva and her husband go inside their apartment, and Santana resumes the narration of his life's story.
He is a devout Catholic, he says, but he strayed for a while. After a bitter divorce in the late '90s, he lived with his dog, Charlie, in Central Park for three years. Then he wound up in a homeless shelter in the Bronx. After three years in the shelter, he got himself a Section 8 apartment at 2320 Aqueduct in 2003, resumed going to church, and promised his mother he would settle down.
When he first moved in, his sixth-floor apartment had shattered windows, no heat, broken plumbing, and a floor so rotten that he could see into the apartment below him from the bathroom.
Though the apartment was falling apart, Santana recalls being thrilled. It was spacious and, of course, it was much better than the shelter. The way he saw it, he'd had a hard life and by the time he moved to Aqueduct Avenue, he felt like an old man and pretty much wanted to live quietly. He says he soon discovered that was impossible.
When he moved in, prostitutes lived in empty apartments on his floor, and homeless people squatted on the roof. He and another tenant took to patrolling the hallways with a baseball bat. He says he was stabbed in the stomach, and someone set fire to his door. "I got tired of it," he says. "Coming home every day, tenants crying, seeing prostitutes. I said, 'I've been through too much. I'm too old for this.' "
It was his idea, he says, to form a tenants association. For years, he held monthly meetings that were attended by around 20 people. He was president; Gladys DeJesus was secretary.
In late 2006, when SG2 sent appraisers to look at the building, Santana says, he gave them a stack of papers listing all the violations and tenant complaints. He told them about the mold, the rodents, and the other vermin dealing drugs. After SG2 bought the building, it would send representatives to some of the tenant meetings. "Every time someone would come, I would hand them more papers," he recalls. "You can't say they didn't know."
Santana says that SG2 was slow to react in some ways, but responsive in others. Many tenants didn't help their own situation when they simply stopped paying rent and even refused to let building inspectors in. "I try to tell them!" he says.
Which landlord is better for the building: the old one or the new one? More to the point, which is worse? It's impossible to say. Since SG2 took over the building, the city has had to do 85 emergency repairs because the landlord neglected to do so. Under Selechnik, the number since 2000 was 34. A check of the city's computer records shows a huge increase in violations since the sale. SG2 did get the building off the city's official shit list this past April, yet there are currently 128 open violations—32 of which are considered dangerous. SG2 has brought the number of open violations way down from a high of 831.
One tenant recalls that 2007, the first year under SG2, was "bad," adding, "I called 311 every single week—'cause we had no heat!" On the other hand, 2008 was "so-so"—apparently better.
When Selechnik did do repairs to the building, he personally supervised them—the tenants recall those days as "Jacobo did this" and "Jacobo did that." SG2's execs don't come up to the Bronx and roll up their sleeves as often. Many of the tenants the Voice talked with don't have much use for either landlord—a familiar complaint by tenants across New York City.
Then there's the touchy issue of whether SG2 gobbled up 2320 Aqueduct and the other Bronx buildings solely for the purpose of forcing the current low-rent tenants out and flipping the properties. An informal survey of tenants indicates that no such eviction strategy is occurring. Rents have been raised, but not outrageously, and the tenants interviewed by the Voice say they don't feel threatened with eviction by the new landlord.
For his part, Siegel says that SG2's strategy as landlord is gradual rent increases. Some of SG2's Bronx buildings are reportedly up for sale, which is probably good news for the institutional investors who bought into them. But Siegel says, "We're in it for the long haul. This is a marathon, not a sprint."
Problems at 2320 Aqueduct are cyclical, after all: Like front-door locks, they come and they go. Like pigeons.
There were no birds living full-time on the roof of 2320 Aqueduct when SG2 bought the building, but the super that the big midtown firm retained from Selechnik's reign allowed someone to start raising them. The tenants harshly criticized this super, saying that he hired neighborhood low-lifes to clean the hallways and that he filched appliances when tenants moved out.
Residents complained that they were being extorted for such basics as fixing mailboxes and locks on their doors. They say that every time the lock on the front door had to be replaced—which was often—the tenants were supposed to receive keys for free, but the super would charge them. Eventually, that super was fired.
Finally, a group of five tenants filed a lawsuit against SG2. But they eventually dropped it, with no settlement. "I was going back to court, back and forth," says DeJesus. "Taking days off work, spending too much money on lawyers. After a while, you become frustrated. You get tired. I refused to dish out any more money. When I went back to court, I saw it was the same charge, and I just gave up."
Santana didn't give up on his own fight with SG2. He brought his own suit over for repairs not made in his apartment. He won the suit, and SG2 has offered to relocate him to another building. Since he's disabled and lives on the sixth floor, the constantly broken elevator is even more of a pain.
The pigeons on the roof have already flown the coop. A super finally kicked out the man who had built the coop and was raising hundreds of them. The guy wasn't even a resident, but he bragged that he paid $300 to the previous super to allow him to stay up there and raise them. With all the pigeons, the building became infested by rodents, but despite tenants' complaints, the man managed to keep them up there until one day, a rival neighborhood pigeon-raiser sneaked up onto the roof and killed 90 of them with rat poison, Santana says. Soon after, a new lock was put on the door to the roof, and, according to tenants, the super used the wood from the dismantled coop to build floors in his basement apartment.
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