Mahfar Receives $39.5 Million Loan For Controversial Project at 255 East Houston St.

255 East Houston St.

255 East Houston St.

Earlier this week, Commercial Observer reported that Lower East developer Samy Mahfar secured a $39.5 million construction loan from Bank of the Ozarks for a new residential building at 255 East Houston St.

In the story, the project was described as a 14-story property with 88 apartments and 6,258 square feet of community facility space.

During the past few years, Mahfar has tangled with Community Board 3 and City Council member Rosie Mendez over this site, which formerly housed a low-income daycare center. Mendez blocked Mahfar’s proposal to change the zoning on East Houston Street, which would have allowed him to put a restaurant or retail business on the ground floor. Under current zoning, only community facilities (medical offices, schools, etc.) are allowed.

According to work permits from the Department of Buildings, the project covers 69,545 square feet and includes 88 apartments.

Mahfar’s attorney went before Community Board 3’s land use committee in October of 2016. He sought, but was denied, the board’s support for an application for inclusionary housing. Mahfar had already received 421a tax breaks to build some affordable units, but he was also seeking a floor area bonus through the city’s inclusionary housing program. We don’t know as of yet whether the city ultimately approved the application.

Mahfar’s SMA Equities did not respond to a request for comment from Commercial Observer. He has not replied to us, either.

255 East Houston

Community Board 3 Panel Opposes Mahfar’s Affordable Housing Plan at 255 East Houston St.

Attorney Al Schein represented Samy Mahfar before Community Board 3.

Attorney Al Schein represented Samy Mahfar before Community Board 3.

It was another rough night for developer Samy Mahfar at Community Board 3. CB3’s land use committee voted to oppose his application for inclusionary housing at 255 East Houston St., a residential building on the site of a former daycare center.

Mahfar got approval for tax breaks under the 421a program before it expired last year. He also wants to utilize a floor area bonus available to developers who set aside a certain number of units in their projects for affordable housing. In a presentation before the committee last night, attorney Alvin Schein said there would be 88 residential units at 255 East Houston St. Eighteen of those apartments would be reserved for families earning 60% of Area Median Income (AMI).

At one time, Mahfar envisioned putting up a 10-story building on the site, which includes frontages on East Houston as well as Suffolk Street. By taking part in the city’s inclusionary housing program, he hopes to add four stories and eight apartments to the project. The taller building is made possible due to the mayor’s recently enacted zoning scheme (Zoning For Quality & Affordability).

Community board members would normally be enthused about new affordable housing. But as committee vice chair Linda Jones said last night, “there’s an elephant in the room.” She referred to Mahfar’s reputation throughout the Lower East Side for alleged tenant harassment and illegal construction in a handful of tenement buildings controlled by his family.

255 east houston drawings

MyPhuong Chung, land use committee chairperson, said she believed Mahfar should add more affordable units to the building. She said an earlier 13-story version of the project was obviously “financially viable” and will be even more profitable if city agencies approve the enlargement.

Referring to concerns about Mahfar’s treatment of Lower East Side tenants, Schein said, “I don’t know how to respond to that. This is a new building.” He was asked about plans for a shared space at the top of the building. Community board members said they were concerned that it would become a rooftop recreational area. Schein said it wasn’t yet known exactly how the top floor would be used.

cb3 land use

Mahfar had previously tried to change the zoning along a stretch of East Houston Street. That change would have allowed him to put a restaurant or retail business in the ground floor of 255 East Houston St. Right now, the 4500 square foot space can only be used for community facilities (schools, doctor offices, etc.) But in the face of opposition from the community board and City Council member Rosie Mendez, Mahfar withdrew the application. Last night Schein was asked whether his client would pledge not to resubmit the application in the future. He said, “No.”

Board member Enrique Cruz said he saw no reason to approve the inclusionary housing application when Mahfar is already receiving a 421a tax break. Cruz said Mahfar will include affordable housing in his project, with or without the the additional incentives. Schein disagreed, saying, “He will not utilize 421a without the inclusionary housing (bonus).”

The full board will vote on the committee recommendation later this month. The community board will forward an advisory opinion to city agencies.

Mahfar Withdraws East Houston Street Rezoning Proposal (Updated)

255 East Houston St.

255 East Houston St.

Lower East Side developer Samy Mahfar has withdrawn a controversial application to rezone a two-and-a-half block stretch of East Houston Street. The City Council’s subcommittee on zoning and franchises was scheduled to vote on the proposal today.

Mahfar is demolishing a former preschool building at 255 East Houston St. and putting up a 13-story residential complex on a parcel that borders both East Houston and Suffolk streets. The City Planning Commission approved an application July 13 that would have mapped a C2-5 commercial overlay in the residential (R8) district. The change would have allowed Mahfar to install a restaurant or bar in the new building’s ground floor commercial space. As it stands, zoning only permits community facilities in this area.

In a letter dated Sept. 6 (yesterday), Mahfar told City Planning Director Carl Weisbrod that he was withdrawing the application. He did not give a reason. We have contacted Mahfar for additional information and will update this story if we hear back.

During a public hearing earlier this month, City Council member Rosie Mendez opposed the application, saying that it contradicted the community-driven rezoning of the Lower East Side in 2008. Community Board 3 and Manhattan Borough President Gale Brewer also opposed the application.

You can read our earlier coverage coverage here and here.

UPDATE 1:30 p.m. Here’s a statement from Samy Mahfar:

Although City Planning approved our rezoning application, we were unable to reach an agreement with the Council Member despite best efforts on both sides. We will continue to work towards creating a space on the ground floor of the new development that benefits both the neighborhood and the project.

UPDATED 9/9/2016 Here’s a statement we received from City Council member Rosie Mendez:

The application to rezone Houston Street and add a commercial overlay in my district did not move forward at the City Council. While a vote was scheduled to take place on September 8th, I did not feel that moving forward with the proposed commercial overlay was in the best interests of the community and the applicant withdrew their application. In 2008, my office worked closely with Community Board 3, the Department of City Planning, advocacy groups, residents, and businesses to address out-of-scale development happening across the Lower East Side and East Village. The selection of residential contextual districts was done in a purposeful manner which would allow for new development but protected the residential character of the community. The planning efforts completed in 2008 was the community’s self-determination for its future. It was the result of a transparent process that involved comprehensive thinking about the entire area. Continuing that tradition, the community board, and my staff evaluated the change in zoning and felt that only community facility or residential uses are the most appropriate uses in this area. In addition, the significant interest of area community facility providers leads me to believe that there is a high demand for the community facility space that will be offered at 255 East Houston Street. I remain open to helping to place 4,000 square feet of a non-profit or community oriented community facility at the location.

Council Member Mendez, Samy Mahfar Face Off Over Zoning Change

255 East Houston St.

255 East Houston St.

Following a victory at the City Planning Commission, developer Samy Mahfar took his battle to rezone a portion of East Houston Street to the City Council this morning. He was met with strong opposition from City Council member Rosie Mendez, Community Board 3 and community activists.

Mahfar has filed an application to map a C2-5 commercial overlay in a residential (R8) district, extending from Suffolk Street to the middle of the block between Clinton and Attorney streets. The change, impacting the south side of East Houston only, would allow him to establish a restaurant or retail store in the ground floor of a 13-story rental building he’s planning at 255 East Houston St. Under current zoning, only community facilities (such as a school or a medical office) are allowed in this area.

The planning commission approved the application over the objections of the community board and the Manhattan Borough President. At today’s hearing of the Council’s Subcommittee on Zoning and Franchises, Mendez said, “I am greatly concerned about this application.” While a vote has not yet been scheduled, Mendez’s opinion is likely to weigh heavily on her colleagues when the time comes to approve or deny the zoning change.

Mendez, right, with fellow Council members.

Mendez, right, with fellow Council members.

The District 2 council member said she participated for six years in a painstaking rezoning of 111 blocks of the Lower East Side, including the area now under review. Main goals of that process, she explained, were curtailing out-of-scale development, protecting neighborhood character and preserving community-based services. The new project will be replacing a building that housed low-income daycare centers for 40 years.

The developer argues that it makes little sense to restrict ground floor uses along a thoroughfare that already features many different kinds of shops and food/nightlife establishments. But Mendez said there’s no question the community wanted street-level spaces along this part of East Houston Street to be reserved for community facilities. “There is by no means,” said Mendez, “a shortage of places to eat and drink in my neighborhood. Yet facilities meant to provide services for people living in the area have become harder and harder to find.”

mahfar and team

Mahfar is seated (foreground) with his attorney and architect.

Mahfar’s attorney, Nick Hockens, told committee members that his client respects the intent of the community board’s 2008 rezoning. But he disagreed that restricting commercial uses on the south side of East Houston Street was intentional. A zoning change, Hockens asserted, would allow property owners to earn more revenue from ground floor spaces and make both market rate and affordable housing development more feasible. [This project would create 88 residential units, including 18 affordable apartments].

He also repeated claims made before the Planning Commission, saying that repeated efforts to find a tenant for the community facility failed. “There is no demand for a community facility on East Houston Street,” Hockens said. The developer has no interest in leasing the new 5,000 square foot space to a rowdy bar, he added. One potential tenant is a Sherwin Williams paint store. Other options, he said, are a diner or a “simple restaurant.”  Mendez asked Hockens whether Mahfar would give preference to a not-for-profit tenant. “We would like a market-rate tenant,” he responded.

Samy Mahfar also answered questions this morning. The property, he said, was listed with two brokers (Sinvin and Wexler Healthcare Properties). At different times, it looked like leases might be signed with the Blue Man Group and the Cooke Center. Those deals both fell through. Mendez was skeptical about Mahfar’s efforts. She asked to see documentation and inquired whether advertisements were taken out to market the space. When she asked whether there would be a willingness to talk with a not-for-profit organization interested in the space, Mahfar said he’d be happy to entertain the possibility.

At today’s hearing, Community Board 3 District Manager Susan Stetzer noted that the Lower East Side has lost three nursing homes in the past few years. She also said the board, “was never made aware that there was a problem in securing a community facility and never received a request for help.” CB3 submitted letters from the executive directors of Henry Street Settlement, University Settlement and Educational Alliance. They all expressed an interest in finding additional space on the Lower East Side and said no one contacted them about the availability on East Houston Street.

Enrique Cruz, a CB3 member testifying as head of ALBOR, said it’s clear to him what Mahfar is attempting to accomplish. He believes the developer is simply not satisfied accepting a lower rent that a community facility might bring. “What this gentleman is trying to do,” said Cruz, “is get $150/square foot. That’s the bottom line. He wants the community to pay for it by foregoing a community facility.”

There’s disagreement as to whether Mahfar is to blame for the permanent displacement of the daycare center. In its May resolution, Community Board 3 wrote, “the daycare (center) was forced to be vacated due to the open violations and the applicant’s failure to address them.” Cruz has said he knows what transpired because he was a former partner in the neighboring project at 265 East Houston St. Mahfar declined to make repairs, said Cruz, after the work next door caused the foundation to shift. [Mahfar did not address the issue this morning. But he told the planning commission that the neighboring developers were at fault for delaying repairs. He said the city, which controlled the daycare center space, chose to terminate the lease and consolidate daycare programs.]

Council members also heard testimony from Harry Bubbins of the Greenwich Village Society for Historic Preservation. “There is absolutely no benefit to the public in this rezoning,” he argued. “It is inconceivable that an applicant with such a checkered history would be so readily accommodated by the City Planning Commission.” [Tenant advocates and local residents have been at odds with Mahfar for many years, accusing the property owner of subjecting tenants to unsafe living conditions and harassment.]  Bubbins highlighted Mahfar’s retention of Capalino+Company, the high-powered lobbyist. “Here a single developer… has hired a well-connected lobbying firm that is a strong fundraiser for and supporter of the mayor…,” said Bubbins.

The most colorful remarks of the day came from Paul Young, who co-owns a building just to the west of Mahfar’s development site. He told Council members that approval of the zoning change, “would only be seen as an emblem of sleazy New York politics.” Young added that he didn’t have the money to “pay off politicians,” not very subtly intimating that the vote was already decided. “If you’re stupid enough or naive enough to believe that what’s going into this space is not going to be a giant bar with screaming people all night long,” said Young, “you’re even dumber than I think you are.”

His comments prompted a strong response from Donovan Richards, the subcommittee chairman. “I just want to correct you,” he said. “It’s not a done deal. This is why we’re holding a public hearing. No one has been paid off in this room… We make the final decision and that decision has not been reached.”


Public Hearing Next Week on Mahfar’s East Houston Street Rezoning Application

255 East Houston St., March 2016.

255 East Houston St., March 2016.

City Council member Rosie Mendez is encouraging locals to show up next week at a City Council hearing on a proposed zoning change along a two-and-a-half block stretch of East Houston Street. Mendez, the Manhattan Borough President and Community Board 3 are all opposed the change, which is being pushed by property owner Samy Mahfar.

Mahfar is planning a 13-story residential building with ground floor commercial space at 255 East Houston St. (near Suffolk Street). He’s preparing to demolish a building that once housed a low-income daycare center, which was displaced in 2010 after construction on a neighboring lot damaged the property.

A community facility is the only use allowed under current zoning. But Mahfar says attempts to find a tenant have been unsuccessful. So he wants to map a C2-5 commercial overlay in the R8 district (the change would impact parcels he controls, plus 18 other lots on the south side of the street). This alteration would allow a restaurant to occupy the commercial space.

The community board approved a resolution in May opposing the change. It stated that Mahfar has, “a well- documented history of illegal construction and construction harassment” in other buildings throughout the Lower East Side. The board also told the City Planning Commission, “The daycare (center) was forced to be vacated due to the open violations and the applicant’s failure to address them.” Most significantly, CB3 argued that the neighborhood lacks adequate community facilities and has lost a number of daycare and nursing facilities in recent years (Rivington House, for example).

The planning commission, however, approved the application July 13 (see below). Here’s part of the city’s rationale as explained by the planning board:

There is an existing C2-5 commercial overlay on the north side of East Houston Street between First Avenue and Avenue B, and the proposed action will create consistency in the permitted commercial uses along each side of East Houston Street, which includes a wide range commercial uses from retail shopping, grocery stores, and restaurants. Together, these commercial amenities provide much needed services to Lower East Side residents. The Commission believes that the proposed C2-5 commercial overlay on the blocks and lots on the south side of East Houston Street between the east side of Norfolk Street and the centerline of the block between Clinton Street and Attorney Street is in context with the surrounding zoning and reflective of existing uses.

The matter will be taken up by the Council’s zoning and franchises committee next Tuesday morning at 9:30 (in the committee room at City Hall). In a newsletter published yesterday, Mendez’s office wrote, “Council Woman Mendez does not support zoning changes at this time and would like to encourage the Community Board and constituents to testify at the City Council’s hearing on the application.”

During an earlier public hearing, CB3’s chairperson and Mahfar were quizzed by planning commissioners about the application. Mahfar, of course, disagrees with the community board’s assertion that he was responsible for displacing the daycare. You can watch the videotape of the June 8 meeting here.  [The East Houston Street discussion begins at approximately 15:45).

Community Board 3 Votes on Mahfar Zoning Application Tonight

255 East Houston St.

255 East Houston St.

Community Board 3 this evening is expected to vote against a proposal from developer Samy Mahfar to rezone a two-and-a-half block stretch of East Houston Street. CB3’s land use committee weighed in earlier this month on the application, which is winding its way through the city’s land use approval process. The full board will now have its say.

The panel drafted a resolution that cited Mahfar’s “well-documented history of illegal construction and construction harassment” in buildings throughout the Lower East Side. The developer wants to build a 13-story rental building with ground floor commercial space (likely a restaurant) at 255 East Houston St. Members of Community Board 3 said Mahfar bears responsibility for the permanent displacement of two daycare centers from the site.

The project would include 63 apartments. Under the city’s voluntary inclusionary housing program, 12 units would be affordable rental units. Current zoning would only allow a community facility (likely a doctors’ office) on the ground floor. Attorney Nick Hockens told land use committee members on March 9 that Mahfar and his partners are seeking to map a C2-5 commercial overlay on the parcels they own, as well as 18 other lots in the surrounding area. He acknowledged that his clients envision a restaurant in the commercial space.

The sites in question were part of the 2008 rezoning of the Lower East Side, an initiative meant to curtail overdevelopment. At the committee hearing, Chairperson MyPhuong Chung, told Hockens before he even began his presentation, “The rezoning that was enacted (eight years ago) did not allow for commercial, and I don’t think that was an oversight. It was because we wanted a community facility (at this location).” 

In April of 2010, construction on a neighboring site caused cracks in the facade of 255 East Houston St. Action for Progress and another day care center were displaced as a result. Community Board member Lisa Kaplan recalled the events that transpired back then. “This was the site of two very well regarded and really important daycare centers in our neighborhood for decades,” said Kaplan. “They were ACS (Administration for Children’s Services) facilities that were affordable to low-income people. They were run by community organizations. Now we’re going to get another bar.”

Another board member, Enrique Cruz, spoke out against the application. As a former investor in the neighboring project, at 265 East Houston St., he was privy to the back-and-forth that followed the 2010 displacement of the day care centers. Action for Progress, he said, had 20 years left on its lease. While a full vacate order was slapped on the property, the city lifted it within 72 hours (it became a partial vacate order). Addressing Hockens, Cruz said, “Your client refused to repair (the building)… He got money from his insurance company to fix the building. He didn’t (fix it). He got money from the developer next door to fix the building. He didn’t. He used it as an excuse to get out of a 20-year lease for an affordable daycare center.”

Rendering: 255 East Houston St.

Rendering: 255 East Houston St.

Hockens outlined the developers’ rationale for making the change. He noted that commercial zoning is prevalent across East Houston Street, and that the proposed commercial overlay would “fill a gap” that exists in relatively small area. There are four grandfathered businesses in the zoning district.

Hockens said the developers had no interest in bringing a rowdy bar to the building. “This is going to be a rental building,” he said, “so we’re not going want a use in there that is going to make a lot of noise or have odors and not really be compatible with the residential uses.”

Mahfar is a controversial figure on the Lower East Side. In the past several years, residents, advocacy organizations and local elected officials have taken him to task for allegedly illegal tactics against rent stabilized tenants. Earlier this month, tenants in four Lower East Side buildings settled lawsuits with Mahfar.

They received more than $200,000 in rent abatements. Some of those residents testified at the land use committee hearing. Among them was Seth Wandersman, who lived at 210 Rivington St.  “Our experience there,” he said, “was difficult and hazardous to our health and Mahfar broke a lot of regulations all the time.”

Referencing high lead levels in the building, Wandersman argued, “This is not a company that follows regulations. If you’re thinking about giving them extra room, they’re going to take even more than that.” Mahfar did have his defenders. Three commercial tenants testified that they have experienced no problems with their landlord. Community board members asked if Mahfar had asked them to appear at the committee meeting. They all responded, “No.”

The full board will consider the land use committee’s recommendation tonight at 6:30. The meeting takes place at P.S. 20, 166 Essex St. The borough president and City Council will also way in on the application. City Council member Margaret Chin has not yet stated whether she will support Mahfar’s proposal. In the past, she has been publicly critical of the developer’s treatment of tenants.


Community Board 3 To Consider Samy Mahfar’s Request For Zoning Changes

255 East Houston St.

255 East Houston St.

Lawyers representing Lower East Side developer Samy Mahfar will try to persuade members of Community Board 3 tomorrow evening to support zoning changes on East Houston St.

He wants to build a 13-story residential and commercial building at 255 East Houston St., near Suffolk Street. The project would involve tearing down a four story structure that once housed a daycare facility. Action for Progress Daycare was forced to evacuate after construction on an adjacent lot destabilized the building.

Rendering: 255 East Houston St.

Rendering: 255 East Houston St.

Mahfar is planning a project with 63 apartments and 7,240 sq. ft. of ground floor retail. Utilizing the city’s voluntary inclusionary housing program, 20% of the residential units (12 apartments) would be affordable.

The problem is this: A zoning text amendment enacted in 2008 prohibits commercial uses in this area. Mahfar is asking the city to map a C2-5 commercial overlay in the current R8A district to allow retail and restaurant/nightlife uses on the ground floor.

The change, if enacted, would not only impact Mahfar’s development parcel but 20 lots stretching two-and-a-half blocks along East Houston St.. CB3’s land use committee is weighing in tomorrow night as part of the city’s land use process (ULURP). The community board will be called on to issue a non-binding advisory opinion.

zoning map

According to a 120-page document filed with CB3, there are two other potential “development sites” included in the proposed rezoning area. One is 249 East Houston St., a three-story mixed use building. The other is 253 East Houston St, a three story mixed-use building that houses the longstanding and much-loved gallery, Participant.  Mahfar’s attorneys note that the structures are expected to remain, while the commercial uses change.

It’s likely going to be a long and contentious discussion tomorrow. First off, Mahfar isn’t the most popular figure on the Lower East Side, especially among affordable hosing advocates (some of whom sit on the land use committee). Second, the 2008 rezoning initiative was a painstaking process that involved many issues and local stakeholders. Changing the zoning ordinance is something the board will not take lightly.

Click here to see the full document filed with CB3. The land use committee with meet at 6:30 p.m. at University Settlement, 184 Eldridge St.