Sale of Home of the Sages Building Wins Approval of State Attorney General

IMG_9266 (1)

Nursing home building at 25 Bialystoker Place.

It was a good day in court yesterday for the group in control of a nursing home building at 25 Bialystoker Place. The non-profit organization, Home of the Sages, got the go-ahead from the state attorney general to sell its Lower East Side property to a developer for $13 million. Now the group must wait for approval from a state Supreme Court judge.

Members of the synagogue located within the building have been trying to stop the sale to Peter Fine, one of the city’s most prolific developers of affordable housing. They say the deal is a sham — merely an effort to line the pockets of Samuel Aschkenazi, a Queens-based rabbi who heads Home of the Sages.

The attorney general’s charities bureau previously indicated it would not object to the sale, but reopened the case after a flurry of news coverage regarding the controversial transaction this past spring. In court yesterday afternoon, the AG’s emissary, Michele Abeles, told Judge Geoffrey Wright she had concluded the sale price was fair and that Home of the Sages plan for using the profits was appropriate.

In 2013, the property was appraised by Landauer Valuation & Advisory for $13 million. The leading opponent of the deal, Baruch Singer, turned to the same firm in January of this year for another appraisal. It found the property’s value had skyrocketed to $42 million. The AG determined that Landauer mistakenly used a larger lot size in the second valuation and also didn’t account for the stronger real estate market in 2015 vs. 2013. These were two reasons cited by Abeles, an assistant attorney general, for putting more credence in the lower estimate.

The contract calls for $3 million to be dedicated to a fund for a shul located at Rabbi Aschkenazi’s Kew Gardens home, while the remaining $10 million would be sent to Israel to build a new synagogue for the ultra-Orthodox Gur Hasidic sect. People who attend daily services at Home of the Sages were outraged, saying it’s wrong to move a Lower East Side institution to another borough. They also were concerned because the facility is the only handicap-accessible shul in the neighborhood. In response, Fine agreed to locate temporary space for the worshippers on the Lower East Side and to establish a handicap-accessible synagogue within the new project he plans to build. The offer seemed to sway the attorney general’s office.

Earlier this month, Bois, Schiller and Flexner, the high-powered firm representing Home of the Sages, dropped out of the case. David Scharf of Morrison Cohen LLP took over in court yesterday, arguing that Singer and the other LES shul-goers have no standing to block the sale. In 1993, he said, Home of the Sages split off from the synagogue, forming a separate corporate entity. A lease signed with a private nursing home operator provided space for daily prayers, but Scharf said, “they are not an owner of the building.” The right to sell, he contended, exists solely with the Home of the Sages board of directors.

Opposing attorney David Jaroslawicz was incredulous, telling the judge, “Every word you just heard is a lie. There was never any separation (between these two entities)… They’ve dreamt this up.” Noting that the owner of the nursing home served on the board, Jaroslawicz argued that the rabbi was in the habit of “appointing his buddies” and making a mockery of state law that requires religious institutions to consult their members about major financial transactions. In the face of criticism from Jaroslawicz, Abeles suggested the $3 million synagogue fund could potentially be placed in a court-supervised escrow account. After the court session, Jaroslawicz said the case is “an embarrassment to the attorney general’s office. Given the self-dealing from this board, who could possibly allow this behavior to go on?,” he asked.

Attorneys for Peter Fine, the developer, were also in court yesterday. Andrew Celli urged a quick decision from the judge. As for the purchase price, portrayed by Mr. Jaroslawicz as ridiculously low, he said Fine had agreed to take on a certain amount of risk to make the project happen. There’s no guarantee the nursing home will relinquish its below-market lease, which extends to the year 2025. Conversations are ongoing, but Fine is anticipating having to pay the nursing home operator $8 million to move from the facility.

The Home of the Sages deal is not happening in a vacuum. Fine has also made a deal to purchase a parcel behind the nursing home on Pitt Street and air rights from the Bialystoker Synagogue, located on the same block. But Singer, himself a major New York City developer, has vowed to fight those transactions, as well. The Pitt Street lot is jointly owned by the Bialystoker and the United Jewish Council of the East Side. Concerned residents have called a meeting for next week to discuss all of the land deals.

Judge Wright did not indicate how soon he’ll rule on the Home of the Sages sale.

1 comment to Sale of Home of the Sages Building Wins Approval of State Attorney General