This is my final post today on the First National situation. One line keeps popping in Nevada news accounts about the six-count indictment against Aaron Yashouafar: “Yashouafar could face decades in prison if convicted.”
Here is what the Voice wrote about Yashouafar, who owns First National Center, in the March 16, 2010 story:
In November 2006, the Yashouafar brothers—two Los Angeles real estate developers better known for signature luxury high-rises in Las Vegas and the redevelopment of historic commercial buildings in downtown L.A., Oklahoma City, and other Western venues—ventured into the Bronx.
They were used to far-flung adventures. Solyman, the elder, fled the Iranian Revolution in 1979 and landed in Southern California. Younger brother Aaron had come to the U.S. in 1977 and attended Beverly Hills High School; he entered the family’s real estate business when he was 16.
Their high-flying portfolio is based in the Sun Belt, but the brothers, who control a family-owned company called Milbank Real Estate, got a $35 million loan from Deutsche Bank and used it and subsequent loans from other banks to buy about 20 Bronx buildings containing about 1,000 apartments. Many of the buildings, like 1576 Taylor Avenue in Parkchester, are in rough-hewn parts of the borough. And the buildings themselves already suffered from blight, safety violations, and both abandonment as well as squatters. Far from trains and even, in some cases, from bodegas, they were nevertheless billed by the Yashouafar brothers as “positioned for significant gentrification.”
The brothers’ pitch to investors was to call these buildings “Bronx Collections I & II” and refer to them as “multi-family assets” that had “poor prior ownership with a history of neglect.”
Under Milbank, the plan was that “revitalization would occur by infusing the capital necessary to improve the condition of the buildings, as well as aggressively pursuing the collection of past-due rents—allowing for an improved tenant base and increased income from the properties.” Milbank further assured investors that it “provides full-service management” that covers, among other things, “evictions, collections, and other legal general matters.”
Things appeared to have fallen apart even before the company could put into place its publicized eviction strategy. The company still claims (online, at least) to own 18 properties in the Bronx, but at least 13 of its original 20 are actually in foreclosure proceedings, according to court papers. Milbank’s top execs couldn’t be reached for comment.
Quotable: Milbank CEO Aaron Yashouafar, recalling for another publication his romance with property: “I loved it. When the other kids were going to McDonald’s and Burger King after school to have fun and drink milkshakes, I’d drive to our office and take care of business.”
What it’s like to live there: On a recent frigid day in the Parkchester neighborhood, a giant boiler-services truck is parked outside 1576 Taylor Avenue, pumping emergency heat into the building. It’s too late to pump financial life back into the place; the bank foreclosed on the Milbank building in 2009.
Right down the block, Milbank’s building at 1535 Taylor Avenue is not in foreclosure, but it’s in constant hot water—if only figuratively: The 41-unit building (formerly controlled by notorious landlord Frank Palazzollo) has 251 unresolved violations at last count. That number doesn’t quite capture the ambience of the place: When it rains, the leaky roof discharges water onto the top-floor apartments. Luis Delatores and his wife, Erica LaGuerre, recently moved with their newborn son from their decrepit fifth-floor apartment down to the second floor after she fell down soggy stairs and badly bruised her back.
During their first four months in the building, their shower didn’t work, so they had to take the subway to Erica’s mom’s apartment on Mosholu Parkway to bathe. Delatores estimates that the building has had heat this winter for about 20 days.
Tenants at 2427 Webster Avenue, near Fordham, say they endured six consecutive months last year without heat or hot water before rebelling in late November. In a protest preserved on YouTube, tenants rallied in front of the building, carrying “No Hot Water! No Heat!” signs and displaying rats they’d caught in their apartments. As the melodrama continued, Milbank’s field manager, Ray Radpadvar, showed up at the protest and, while ripping down the protest signs, told State Assemblyman Nelson Castro, who had joined the protesters, “Tell the fucking tenants to pay their fucking rent.” The heat and hot water weren’t restored until after Fannie Mae started foreclosure proceedings on the building in January.
The day of the Voice‘s visit to 1535 Taylor Avenue, Radpadvar, the field manager who co-starred in the Webster Avenue protest video, is in the building to oversee the repainting of a stairwell. He says he’s doing his best to take care of the countless repairs, but that funding is tight—in short, the banks and the company aren’t giving him enough money to do his job. The Bronx portfolio was a stupid deal, in his opinion. When the California owners came to New York for a few days before purchasing the buildings, he says, they were shown only the best properties. “We were lied to,” he says. “Some of the apartments looked vacant on paper, but they were really full of squatters!”
Listening to Radpadvar is tenant Delatores, who later says, “I can’t feel sorry for that man. How can you buy a building and not know who lives there and who doesn’t? He’s seen what goes on.”
If life weren’t tough enough in Milbank’s Bronx buildings, busted elevators are a theme: Tenants at 2427 Webster say they recently went through a whole year without a working elevator—elderly fifth-floor tenant Leonides Correa says she suffered asthma attacks from trudging up the stairs in the chronically underheated building.
The only elevator in Milbank’s six-story building at 780 Garden Street (which has a startling total of 584 unresolved violations) was broken for at least six consecutive months last year; its tenants include the elderly and at least one disabled veteran of the Gulf War who can negotiate stairs only with great difficulty. The tenants were so desperate that they contacted “Help Me Howard” at WPIX. He couldn’t get through to Milbank’s executives, either. In December 2009, the bank initiated foreclosure proceedings on the building.
Mitigating factors: Of the five Milbank buildings that the banks haven’t seized, two have front-door locks.
Future:Now it’s up to court-appointed receivers, for the buildings that are in foreclosure proceedings, to try to pry money from the banks for repairs.”It’s triage, you know? I almost feel like I’m on a battlefield with the wounded coming in,” says Joe Cicciu, the court-appointed receiver for 10 of the Milbank buildings that have gone into foreclosure proceedings. “Not everyone is shot up. Sometimes these are only flesh wounds. So we go to some of those apartments and try to fix things, patch things up, to give people a chance to live in decent apartments. But for people with the collapsing ceilings, we are trying to relocate them into vacant units. The problem is, most of the vacant units need a gut renovation! And we don’t have the dollars for that anymore.”
SO HOW DID YASHOUAFAR RESPOND TO ALL THIS? IN MY LAST INTERVIEW WITH HIM (JUNE, 2010), HE HAD THIS TO SAY:
QUESTION: You’ve seen properties in L.A. and New York go into foreclosure and the newspaper accounts paint a pretty bleak picture of your company – how do you respond to that?
ANSWER: Although Oklahoma has been, to a great extent immune, the rest of the nation is undergoing one of the most significant recessions, with the real estate industry taking a substantial hit and undergoing tremendous devaluations. Many properties, many owners, and many banks have gone out of business. Milbank, however, on behalf of the various owners it represents, is continuing to deal with the economic slowdown by repositioning the properties it manages. Many other owners faced with the same facts, have simply abandoned the properties.
QUESTION: What’s your reaction to The Village Voice describing you as one of New York City’s “worst slumlords”?
ANSWER: I am not sure you have all the right facts. Milbank has not been managing the properties in question for nearly a year and a half. The lender hired its own management company to manage the properties, and that management company is the one being blamed. Unfortunately, when that management company was engaged, Milbank was prevented from carrying out its plan to improve and stabilize that property. In fact, the tenants are suing the lender now because of its lack of care for the properties. During the time that Milbank was managing those properties, many violations from prior owners were removed, the buildings improved substantially, and the tenants were being tended to. We do not believe that Milbank is a “bad manager” – especially here in Oklahoma City, where occupancy at the FNC has increased threefold in four years.
Today I broke the story of how the owner of First National Center, Aaron Yashouafar, has been criminally indicted on charges of theft by false pretenses and embezzlement regarding his involvement with a Nevada condominium complex that is home to mostly senior citizens. Other reports are coming out questioning whether he is fit to be involved in running tenant properties, including this one on his Sky condominiums in Las Vegas:
This leads to the next question: at what point does all this play a role in Yashouafar’s ongoing bankruptcy with First National? I’ve asked Yashouafar to do an interview about these latest reports. He is aware of those requests. So far they’ve not been granted.
Imagine my surprise when the new sponsor for OKC Central turned out to be Crain Mortgage. It was the firm’s founder, Danny Crane, who as a former VP with GMAC Mortgage correctly predicted in early 2008 that changes were about to make high-end, for-sale condominium development a dud both nationally and locally. He also correctly predicted the downtown market was shifting toward apartments.
Meg Salyer was inquiring today about the Hale’s Photo Building on Broadway, noting she has yet to see any repairs started on the building that was almost placed on the city’s dilapidation list last month. City staff responded they believe the owner, Hugh Hale, has begun preparations needed to start, but was not aware of any other progress on fixing its caved in roof.
Hale received a 60-day continuance on the notice, but was also warned he won’t be given any further leeway. Councilwoman Meg Salyer made it clear Tuesday Hale is on a short leash…
“I don’t want to get to sixty days and learn nothing has happened at all,” Salyer said.
On Sept. 6 I posted the following:
The new Project 180 street lights are going up throughout downtown – so why are they not going up on Film Row, where they are desperately needed?
The response I got back from the city was the lights would go up in three weeks. Guess what? Still no lights?
It wasn’t that long ago that the online community was fretting about a cut in funding for the Skydance pedestrian bridge over the new I-40 south of downtown and changes that included the elimination of metal cable ropes planned as part of the original winning design. It looks like the actual bridge ain’t too shabby and such worries may have been unwarranted. Will Hider, who has done so much to document recent changes downtown, has another great video to provide us all a closer look at this project:
Over at www.downtownontherange.blogspot.com, Nick Roberts is continuing to put his own stamp on the discussion of downtown Oklahoma City’s ongoing transformation. Nick, who is pursuing a planning degree in college, is able to take that discussion a bit further than I can due to our different roles in the blogging world. I try to offer news and observation (and sometimes very uncomfortable questions posed to those I cover), while Nick goes straight to commentary. He’s good at what he does. But confusion sometimes emerges. Last summer developer Richard Tanenbaum put up a slide of quotes praising his track record and attributed it to OKC Central – when it actually was written by Nick over at Downtown on the Range.
Nick and I are often thinking about the same topics. This time we’re both thinking about Avis Scaramucci, owner of Nonna’s and The Painted Door in Bricktown, and who is going on her fourth year as chair of the Bricktown Association (she also serves of chair of the Bricktown Urban Design Committee). A few weeks ago, I took the following photo:
Yep, that’s more windows getting covered with plywood over at the Rock Island Plow Building. Keep in mind it’s a structure that is on the National Register of Historic Places. Before I could post anything on OKC Central, Nick posted his own photo with the following quote:
Does a single successful restaurant make someone the “Queen of Bricktown?” So far Avis has done nothing to prove that she wasn’t one and done in terms of Bricktown development, and how did this get to be the person chairing the Bricktown Suburban Design Committee?
So I guess Nick would be none too thrilled to see more plywood going up on windows at the 100-year-old Rock Island Plow building, which Avis owns. It’s the ONLY boarded up structure left in Bricktown, and it’s along Reno Avenue where thousands of visitors travel daily, both by foot and by vehicle. It’s a prime corridor for tourists and those attending NBA games at the nearby Chesapeake Energy Arena.
County records show Avis and her husband Phil bought the building for $1,450,000 in 2003. I’m also aware they spent a significant amount of money doing emergency structural repairs several years ago that, if not done, we likely would have lost this building all together.
I’ve been hearing complaints similar to those voiced by Nick, and I asked Avis why the wait – why not move forward with a development or simply sell the building to someone who will make something happen. I know they’ve had willing buyers – parties with a track record of successful development. So far, Avis’ response is simply “now is not the time.”
This won’t make Nick any happier. And I fully anticipate he’ll have more to say on this matter.