Rick Aidekman and the Crazy World of NYC Landlords-Other Characters Parts 1 and 2

The Crazy World of NYC Landlords-Individual Stories-2 Other Characters I was at my desk one morning when my assistant advised me that there was a boiler outage at one of our largest properties in Washington Heights, NYC.   She knew this from a few tenants that were affected and decided to call her.   Even though tenants knew that they should first reach out to their super and if not satisfied with the results, they had a building specific contact in our building repair coordinator department.   However, there were always those tenants who wanted to call the “boss,” meaning me or my partner.    I immediately contacted my partner, who, I still believe to this day, was the best operator/manager in the multi-family business in the City. He advised me that he was awakened in the middle of the night by the property manager.   Apparently, an underground gas line had ruptured from the extreme cold of the winter.   He ensured me that he was on top of it and that our boiler repair company was there and doing what they could.   Dealing with ruptured gas lines is always a difficult issue for property owners as it is not something you just go in and fix like a water line.    At the time, the process was to first notify Con Edison, the gas provider, who immediately shuts down the line to protect against the risk of an explosion that could not only cause greater damage, but injury to people as well. Once Con Edison shuts down the line, the boiler repair company can trace to find the part of the gas line that has ruptured, figure out the necessary repair and to then submit a plan to the City to obtain its approval to make the repair.   After obtaining the approval, you then need to go to Con Edison to set up the repair process and ultimately the resumption of service to the property.   Often, an owner, upon determining it is not an immediate fix, will hire a temporary heat producing boiler to be parked on the street and pipe heat into the building’s heating pipes.   These were the steps that we were taking. We were also ready to provide hot plates for the tenants to use to make their meals due to the gas also off for their stoves and ovens. However, on the same day that I heard about the gas line rupture, I was called by a local community activist, who asked to meet with me to discuss how we were going to deal with the tenants and the outage of their heat and the gas for their stoves and ovens.    I was happy to meet with him and set a meeting up for later in the afternoon at his office.    I decided to take my assistant with me in the event that some of the tenants from the building would be there, many of whom spoke only Spanish. She could be of major assistance because my Spanish was mediocre, and she was raised speaking Spanish.   (At the time, I was taking Spanish classes at the Learning Annex, as it was something that would help in my relations with the tenants and most of our superintendents.) We entered the Tenant Advocate’s office, which was on the second floor, above a small grocery store.   I did not know him, nor had I ever heard of him, but I wanted to hear what he had to say and to assure him and the tenants that we would do the right thing to protect them and help them in this emergency. He was extremely cordial and quite friendly.    He told me that he had spoken to only a few of the tenants but was totally aware that the gas was turned off and that they didn’t have heat.    I filled him in on what steps we were taking and our expectations of how long it would take to put the situation back to normal.   By the way, there were no tenants there, nor did he have any other of his staff with him (if he had any).    After I finished explaining the process that we had undertaken, he asked if my assistant would leave the room for a few minutes so that he could speak with me privately.   Although this felt rather odd, I thought maybe he wanted to give me a hard time privately. So, we are sitting there alone, and he takes out a yellow pad and scribbles something on it.    He then turned it towards me, without a word, to show me what he had written.   On the pad he wrote: “$10,000” In big bold numbers.    My immediate reaction was: “Is that for the tenants?” He didn’t say a word but pointed at himself. I said: “It’s for you?” He shook his head affirmatively.    I said: “Not what we do. ” I then told him that we would do what’s right by the tenants and I got up and left. When I told my partner, he said to ignore him, and my partner assured me that he would get the job done quickly. My meeting was on a Thursday.   On the following Tuesday, it was reported that the same Tenant Advocate was found bludgeoned to death and dismembered.   His body found in trash bags in the Bronx. Six years later, a NYC building owner and his brother were arrested and charged with his murder.   The Tenant Advocate in their case was pressing this Landlord as the Landlord was allowing drug dealing to run rampant in his properties and not taking care of violations. Yet another character One of the oddest cases was with an owner of some absolutely beautiful buildings in the Bronx  located near the Bronx Zoo, in an area where the properties were built in the 1930s and 1940s as luxury properties for the affluent families living in the Bronx.   To my taste, the properties built in those times for the high-income tenant were the most beautiful ever in New York.   In a later article, I will discuss these buildings versus those built both before and after that era that still remain occupied in the Bronx, as well as in the rest of the City.   But simply said, for the most part, these buildings, again built for the upper middle- class tenants had large rooms, many with sunken living rooms, marble bathrooms, beautiful wood flooring, large vaulted ceiling lobbies and walnut or bronze elevator interiors.   Of course, they all had elevators. But, back to this owner.   When we met, in 1988, he owned about a dozen of these art deco buildings, each with between 75 and 100 units, all large and beautifully maintained and well located.   This individual was at the time, very ill, in a wheelchair with an oxygen mask.    He was operating the business with a son, who I believe was in his 20s. At the time we met, he had been trying to refinance his properties through paying off the existing debt, which had now become due, and replacing it with a  new loan.  The new loan would not only pay off the existing debt, but would give him some extra cash to put back into the properties and protect him with cash to defend against any future downturn in the economy.   At the time, all of his tenants were rent regulated, either rent controlled or rent stabilized (I will explain the difference later).   The problem he confronted was, that over the years, he collected a substantial amount of his rent in cash from the tenants and did not report it to the government and did not show it on his financial statements.   Thus, where typical competitor owners would show collections of 95% or more, his books showed collections of around 55% (the cash receipts not showing). As a result of the information he provided to the existing lender and prospective lenders, he could not receive a loan that would even pay off the existing debt.   He was in a real bind.   With his failing health, and this financial predicament, he decided to sell the portfolio.   One other issue, which will be further understood in a moment, was a problem he had with the future of the company. We met him in his office.   It was a bit odd, that, when we entered the office, located in one of his beautiful buildings, at the entrance were two desks.   A receptionist and his son.   We thought it odd, that his son was in the entrance and not in a normal office, but we just ignored it.  As stated, the owner was suffering from his illness and could not hold a totally normal conversation.   However, since we loved the properties and had the capital and were in an expansion mode, we felt we could meet his price, make a deal and take our competitors out of the race for his properties.    Once the price was agreed, which, as I recall, was around $40 million, he said to us quietly, that he wanted $2 million in “shmatas.”   “Shmatas” is a Yiddish word for rag and had acquired a new meaning in NYC real estate.   Initially, people in the textile industry would criticize other merchants as being in the “shmata” business, meaning their clothing was low class, or rags.   However, in NYC real estate it took on the meaning of cash, under the table.    The primary focus for this was to not show the money to the government for tax purposes.   In this case, there was a difference. Being surprised that he would say this to strangers, which my partner and were, caught me off guard.   My immediate response was “You want us to pay you $2 million in cash so you can hide it from the government?” “No,” he said, “I don’t want my son to know.” I think to this day I am still frozen by that response.   Needless to say, the conversation went downhill from there.   Here was a man, experience a life threatening illness, and he wanted to screw his son. We of course said no, and the meeting ended.

Leave a Reply

Your email address will not be published. Required fields are marked *