A Canadian developer will take on a tricky site in Gowanus as a key tax break takes effect.
Toronto-based H&R Real Estate Investment Trust has purchased a controlling stake in 459 Smith St., a 3.8-acre, canal-front parcel, for $76.5 million.
The seller of a 75% stake in the site at Huntington Street is a shell company linked to developer All Year Management, which filed for bankruptcy protection in 2021, though it appears to have held on to a 25% share.
All Year, which was founded by Yoel Goldman, had paid $48 million for the polluted former gas company property in 2017, according to the city register. But Goldman, whose sweeping Brooklyn portfolio once included the William Vale Hotel, landed in trouble with bondholders in 2019 after falling behind on loan payments.
Debt trouble is not the only hurdle experienced by the site, the former home of Citizens Gas Works, which stopped operation in the 1960s but is still responsible for some of the pollution that lingers in the Gowanus area, a designated Superfund site since 2010 that’s undergoing a major cleanup effort. Superfund sites contain contaminated land eligible for Washington, D.C.-led remediation.
In 2022 anti-gentrification group Voice of Gowanus sued to stop preliminary foundation work on the project over environmental concerns, though a judge later tossed the case. At the time of the construction work, Yoel Schwimmer, son of developer Cheskel Schwimmer, was linked to the project, which has also gone by 477 Smith St. The work was apparently being done in a last-ditch attempt to qualify the property for the state’s 421-a tax program, meant to spur the creation of affordable housing, which expired in June 2022.
H&R, which did not return an email by press time, arrives in Brooklyn as the Gowanus area is primed for redevelopment. In 2021, after years of efforts, city officials approved a 80-block rezoning of a once-shunned manufacturing zone to allow for up to 8,000 new housing units. And developers who had placed bets long ago on large parcels there with the assumption that the city would eventually green-light apartment buildings rushed to get shovels in the ground as soon as the zoning changed.
In fact, brokers estimate about two-dozen projects with more than 6,000 units are in the works.
The expiration of 421-a reportedly put the brakes on some plans. But Gov. Kathy Hochul has since unveiled a similar program for the Gowanus area. Under it, the state can take control of eligible sites and temporarily lease them back to developers for an amount equal to what the developers might have paid in taxes had 421-a been in place.
Nineteen projects applied for the alternative program; the state approved 18 of them in February, including 477 Smith St. The H&R deal closed Feb. 22, records show. H&R owns properties in Florida, Texas and New Jersey, though the Gowanus site seems to be its first holding in New York City.
C. J. Hughes , 2024-03-12 17:25:36
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