Cindy Rodriguez is the Urban Policy reporter for New York Public Radio.
525 Clinton: From Construction Fatality to Stalled Development
Monday, November 23, 2009
New York, NY –
In November 2008, WNYC aired a two-part report called "The Cost of Doing Business." It was an in-depth look at a construction accident that took the life of Mexican immigrant Jose Palacios. Palacios fell off of a poorly secured scaffold at a new luxury condominium tower in Clinton Hill, Brooklyn. Now, a year later, reporters Matthew Schuerman and Cindy Rodriguez revisit the story. None of the condos have sold, the building is facing foreclosure, and Palacios’ family continues to grieve his death.
REPORTER: On a windy fall day, the front of 525 Clinton Avenue is desolate, disturbed only by the rustle of fallen leaves. The 13-story glass tower is empty, the ground floor windows blacked out, except for the room where security guards sit watching television.
GREER: I just think of it as developer-driven blight.
REPORTER: That’s Amy Greer. She lives in a large rent-stabilized building next door and watched as 525 Clinton went up.
GREER: There’s fewer people around. It’s just kind of empty.
REPORTER: The street’s got a mixture of worn-out brownstones, a stone church, a funeral home and other pre-war buildings. An old brick mansion that served as a group home for mentally disabled adults once stood here. But four years ago Karnusa Equities, a small family-owned real estate company, bought the property, and tore it down.
GREER: They came in and built something -- it’s not wanted by the community, it’s not wanted by anyone obviously because I think it’s going into foreclosure.
REPORTER: Karnusa replaced the old mansion with luxury condominiums. In January 2008, an immigrant worker, Jose Palacios, died when the flimsy scaffold he was standing on collapsed.
GREER: It almost seems to me that after that happened there was a curse on the building.
REPORTER: Greer says construction stopped about a year ago. It looks almost finished, but according to online records, not one of the condos has sold. Court documents show that TD Bank began foreclosure proceedings in May. Greer calls 525 Clinton Avenue a poster child of New York's recent real estate history: First it became the site of a construction death. Now it’s fallen victim to the bursting of the real estate bubble.
GREER: But then you have to think there are lots of these buildings everywhere so I think the curse has to be the greed of the developers that didn’t see there was going to be an oversaturation of luxury apartments.
REPORTER: Hakeem Jeffries, the state assemblyman who represents the neighborhood, has proposed a bill that would encourage developers to convert financially troubled luxury buildings into affordable housing. And he says he’s been talking with TD Bank about doing that with 525 Clinton.
JEFFRIES: 525 Clinton presents one of the best opportunities to create affordable housing.
REPORTER: To do so, Jeffries admits the bank would need to take a big loss. 525 Clinton was built with high earners in mind: The condos were priced between $650,000 and almost $1 million. Its windows are made out of triple-plated glass, and its water supply is filtered, even for toilets and washing machines.
JEFFRIES: The reality is a significant amount of principal will have to be shaved off of the loan and the interest rate is going to have to change.
REPORTER: Jeffries says the bank’s reacted positively. A spokesman for TD Bank wouldn’t comment. No one from the developer, Karnusa Equities, would return calls for this story. Real estate experts say banks still aren’t ready to take the type of big losses that would be needed for Jeffries’ program.
While banks wait for the real estate market to rebound, Jose Palacios’ family continues to mourn. Before the construction worker died, he lived in Queens with his niece, Yasmine Solis, and her family. His picture continues to sit in her living room, and her small daughter still cries when reminded of her uncle. In Mexico last January, the family marked the anniversary of his death.
SOLIS: My uncles, his brothers, his parents celebrated a mass for him, they went to the cemetery and they went to put flowers and to eat with him at his grave site and, well, just continue to remember and talk about how he was with all the family when he was living.
REPORTER: Palacios left behind a wife and daughter in Mexico. His wife was reluctant to be interviewed. Solis says his family is receiving death benefits from a worker’s compensation claim, though she isn’t sure how much. According to the New York State Workers Compensation Board, payments are typically two-thirds of the employee’s average weekly income. Solis says the family wanted to file a lawsuit -- but isn’t sure if that’s happened.
SOLIS: If there was someone to blame, I want that person to pay for it. My uncle did not deserve to die that way. He was too good of a person to have ended his life that way.
REPORTER: A federal investigation found the contractor, Bell Tower Enterprises, was most responsible for Palacios’ death. The company has been dissolved, its phone disconnected, and federal officials say they never received payment on more than $30,000 in fines. The developer, Karnusa Equities, did pay the fines it incurred from the accident. But this past year, through a series of legal maneuvers, it successfully knocked off about $15,000 in default penalties from previous violations at 525 Clinton. But according to the city’s Environmental Control Board, Karnusa still hasn’t paid the balance on its account, which amounts to $7,500.
Solis says when her uncle died, each family member got to keep something small of his, like a hat or t-shirt. As for her, she says “I got the last years of his life.”
In June, an external report said city buildings department inspectors are inconsistent in applying safety standards from one building to the next. And in October, six former inspectors were arrested on bribery charges. The charges refer to other construction sites, but online records indicate that one of the accused, Exel Plass, responded to a complaint at 525 Clinton Avenue back in 2006. He dismissed the complaint as being unfounded. Plass pled not guilty on the bribery charges. City officials say they don’t believe inspector wrongdoing had anything to do with Jose Palacios’s death.
For more information about the building, and to listen to the original report from last year, visit the WNYC News Blog.