‘Unbearable’ Noise and Dust: Kushner Cos. Accused of Driving Out Tenants in Brooklyn Building

NEW YORK — When the Kushner Cos. bought the building at 184 Kent Ave. in Brooklyn in 2015, there were 316 rent-stabilized tenants, seemingly protected from eviction and large rent increases.

By June of this year, there were 71 left, according to documents filed with the state attorney general.

There is a natural attrition at any rental complex, but rent-regulated units are usually so prized that the turnover is about 3 or 4 percent a year, according to Richard LeFrak, a third-generation landlord. That percentage might be slightly higher where the tenants are largely young people.

But the exodus of 245 rent-regulated tenants in a building in less than three years allowed the Kushners to promote those apartments as condominiums and to sell, so far, roughly 130 units for tens of millions of dollars.

Last month, a group of 20 current and former tenants at the building filed a $10 million lawsuit, claiming that their apartments were made nearly uninhabitable during two years of renovations, when an army of workers trooped through the seven-story building on the Brooklyn waterfront. The tenants say the sound of drilling reverberated through the hallways. A fine layer of dust covered their furniture and clothing at the end of each day.

“Anytime we lose rent-protected units, it’s a problem,” said Stephen T. Levin, the City Councilman who represents Williamsburg and other parts of Brooklyn. “We have an affordable housing crisis. It’s also harder and harder to find middle-income housing on the open market.”

The Kushners denied the charges that they deliberately drove out renters. In a statement, the Kushner Cos. insisted that they took all the appropriate precautions to protect existing tenants, including daily vacuuming, mopping and daily air scrubbing. State officials are investigating the tenants’ claims.

This is not a story of low-income families being forced out of their homes. But it is a classic tale of gentrification and profit-taking on the Brooklyn waterfront over the past two decades. First, small manufacturers, breweries and sugar mills made way for artists and musicians who remade industrial buildings into lofts. They, in turn, were replaced by young professionals buying pricey apartments in the renovated factories or in the new glassy towers that have sprung up.

At its center is the family real estate company once led by Jared Kushner, the president’s son-in-law, who has moved to Washington to be a White House adviser. Kushner led the company’s push into New York real estate, from its roots in New Jersey, a move that included the purchase of 666 Fifth Ave. in Manhattan for a record $1.8 billion, that brought the company to the brink of financial disaster, until it was bailed out in a deal by Brookfield Asset Management this month.

The building at 184 Kent opened in 1915 as a warehouse for Austin, Nichols & Co., one of the world’s largest wholesale grocers, at a time when Williamsburg and Greenpoint were working waterfront neighborhoods. The building, which covers an entire block, was designed by Cass Gilbert, the architect who designed the Woolworth Building in lower Manhattan. It was a rare American example of the Egyptian Revival style, with concrete walls and tall, narrow windows.

Austin, Nichols & Co. maintained its headquarters on Kent Avenue through the 1950s.

In 1985, Louis Kestenbaum and Meyer Hirsch, two Williamsburg landlords, bought the warehouse for $56,000, according to city records. They immediately obtained a $4 million bond from the city’s Industrial Development Agency to renovate the building for tenants that manufactured and distributed women’s clothing and health and beauty aids.

At the time, it was city policy to preserve industrial jobs on the waterfront.

But before Kestenbaum’s group paid off the $4 million bond in 2001, it had converted a portion of the third floor of the building into loft-like apartments for artists, filmmakers and others, in violation of the building’s zoning. The city cited him for 50 violations in 2000 and issued a stop work order.

He soon got a variance from the city for plans to carve the building into large apartments. He made plans to add a glassy, six-story addition on the roof and install large picture windows.

But preservationists objected, and, with broad support, the city’s Landmarks Commission voted in September 2005 to list the warehouse as a city landmark.

That led to a remarkable showdown.

City Councilman David Yassky, whose political campaigns received generous contributions from the Kestenbaums, said that the landmark status would impede development, and at his prompting the City Council overturned the landmark designation.

Mayor Michael R. Bloomberg vetoed the Council’s decision five days later. The Council promptly overrode him.

At the same time, the city, no longer interested in preserving aging industrial buildings, rezoned the Williamsburg-Greenpoint neighborhoods for residential development, and the value of waterfront properties skyrocketed.

Indeed, two months before the Council vote, Kestenbaum had signed a contract to sell 184 Kent Ave. to Jason Halpern of JMH Development for $61.8 million, according to city records. The tenants — the artists and filmmakers — were evicted.

Beginning in 2006, Halpern began knocking out the center of the building to create a central courtyard and 338 apartments, some with terraces. He built several penthouses and outdoor space on the roof. Halpern did not return requests for comment.

In contrast with Kestenbaum, Halpern sought to have the Austin, Nichols Warehouse listed on the National Register of Historic Places (much less restrictive than city landmark designation). Afterward, he received $34 million in historic preservation tax credits for the renovations. He later said he would not have been able to complete the project without the tax credits.

Halpern, who lived in a seventh-floor penthouse, also received tax breaks worth, so far, about $10 million under the city’s J-51 housing program, according to the Department of Finance. Under the program, the city grants landlords property tax breaks for new boilers, elevators and other building improvements. In return, the apartments must adhere to rent-stabilization laws, which restrict rent increases and require landlords to offer renewal leases.

Barth and Rosa Bazyluk arrived in 2010. “It was really nice for the price,” said Barth Bazyluk of their one-bedroom apartment overlooking the courtyard. Their rent started at $2,350. “For what we were paying, we thought we got a good value.”

Eric Barna, a doctor of internal medicine and another plaintiff who moved to the building in 2012, left a “cookie-cutter high-rise in Manhattan” for what he described as a less expensive, but still luxury, apartment in a building with industrial chic and great amenities. But the city and the country were in a deep recession by then and leasing was slow. To fill the building, Halpern gave tenants leases at rents substantially lower than permitted under rent stabilization. In New York real estate this is called a “preferred rent.”

Still, the rents for many apartments were more than $3,000.

In early 2015, Jared Kushner, then chief executive of Kushner Cos., along with LivWrk, a real estate company and frequent Kushner partner, and Rockpoint Group, a real estate investor that put up most of the money for the project, bought the warehouse for about $275 million. Their plan was to convert it to condominiums.

In May of that year, the Kushners filed a certified rent roll with the attorney general’s office, which oversees condominium conversions, indicating that there were only 22 vacant apartments in the building.

That meant there were 316 rent-stabilized tenants who could not be evicted.

The Kushners quickly raised rents to the highest legal limits. A tenant living in a one-bedroom apartment said his rent increased to $4,000 from $3,200. He was angry, but after talking to lawyers, he said, he learned that it was legal.

Then the Kushners started what was essentially the third gut renovation of 184 Kent Ave., this time to make it attractive to higher-income residents. The work started in the lobby, hallways, courtyard and rooftop before moving on to vacant apartments, where new, higher-end fixtures were installed in the bathrooms and kitchens.

“You could see the practically new sinks and toilets being carried out,” said Barna. “You had to live through drilling throughout the day and a parade of construction workers up and down the corridor.”

The noise and the dust were relentless, the tenants say.

“The cabinets were literally shaking on the walls,” said Jens Mebes, a creative director for commercials who has lived in the building since 2014 and is a plaintiff. “The hammering. I’d literally find myself coming home for work and wondering, what is this fine film on the kitchen counter. It goes into the furniture. Your clothes. I thought, maybe it’ll be OK. But there was just no care for the tenants who still lived in the building.”

Erin A. Simmons, a lawyer who bought her apartment there in 2017, is sympathetic to the complaints outlined in the lawsuit. Simmons said, “The noise and dust during demolition were unbearable. I was forced to buy industrial air filtration units and began to rely on daily doses of Visine and allergy medications to address my aggravated dust allergy.”

The Bazyluks gave up and moved to Westchester in December, when Rosa Bazyluk was pregnant.

“It takes a lot for someone born and raised in New York City to throw in the towel on a rent-stabilized apartment,” Barth Bazyluk said. “We lived in one of the best neighborhoods in New York City. But at that point, we didn’t want to put up with the noise, the dust and the lack of response from management anymore.”

Simmons and other tenants contend that some of those measures, including plastic walls that zipped up in front of apartment doors designed to seal out construction dust, didn’t start until after tenants organized and brought their complaints to the owner.

The city’s Department of Buildings said that although it responded to more than two dozen complaints at the building in 2017 and 2018, it found “no violations.”

But five current and former tenants have joined the lawsuit since it was filed last month. The tenant group negotiated a 20 percent discount on the purchase price for their units, which did not include new wood floors, designer refrigerators and stoves and new bathroom fixtures being installed in vacant apartments. A few bought their units, but many did not. Throughout 2016 and 2017, dozens and dozens of tenants left.

At one point, the Kushners estimated that their profit on the sale of the apartments would be $70 million, according to a filing with the state attorney general.

The growing number of vacancies were “very noticeable,” Mebes said. “I’d have friends over for a barbecue on the roof and they’d say, Wow, it’s all emptied out.”