Ocean Park Apts. Center Of $390 Million Lawsuit
Two investors who bought into a local apartment complex are now suing their partners for hundreds of millions of dollars because the apartments remained affordable housing instead of changing to market rate.
According to published reports, B. Tuckey and David Workman, of DB Development, have filed a $390 million lawsuit against Related Companies. The investors say Related breached an agreement made when they partnered with them in 2003 to buy Ocean Park Apartments in Far Rockaway, which they say called for changing the complex from affordable housing to market rate. Tuckey and Workman call Related’s actions politically motivated.
The complaint states that in 2002, the two investors obtained an exclusive option to buy Ocean Park for $34.5 million.
In April 2003, Tuckey and Workman became partners with Related Companies. Related had the majority share of 87.5 percent while DB Development got a 12.5 percent share.
The complaint also says that Related was chosen because it promised DB Development the apartment complex would be removed from the affordable housing program and become market rate.
Ocean Park was previously part of the Mitchell-Lama affordable housing program. Related removed the apartment building from the program and signed a 40-year agreement for another affordable housing program on February 15 of 2005.
The plaintiffs say that, if the housing development was made market rate they could have made a profit of $200 million.
The lawsuit states that Related’s “refusal to withdraw the property from [the affordable housing program] has completely eviscerated the value [of our] rights to ‘cash out.’
The principal, if not sole, reason for refusing to withdraw from the [affordable housing program] was so that Related could curry favor with the federal, New York City and New York state officials and politicians with respect to other lucrative real estate ventures.”
While the president of Related, Jeff Blau, was not named in the legal case, Tuckey and Workman’s lawsuit points to a November 2009 interview with Blau, on the Real Estate website, The Real Deal. During that interview, Blau says, “For us, it’s about preservation, versus conversion to market rate.”
Ocean Park Apartments, which has 602 units and is located at 125 Beach 17 Street, was renovated after Related took ownership. When the ribbon was cut to celebrate the revitalization in June 2006, The Wave reported that Mark Carbone, the then-president of Related said, “We are very pleased to be able to continue to preserve existing structures, renovating and rehabilitating them into affordable housing that is updated, appealing and well-maintained. The Ocean Park development provides and maintains much needed affordable housing in this community in Queens.”
According to reports, the attorney for the plaintiffs would not comment on the lawsuit. A representative for Related Companies said his company does not convert affordable housing units to market rate.
The lawsuit was filed in New York State Supreme Court on March 2.