Bruce T. and Chuck S. Rumble in Starrett City

031907 article schuerman Bruce T. and Chuck S. Rumble in Starrett CityBruce Teitelbaum, the controversial former aide to Rudy Giuliani, has been scurrying behind the scenes to shore up David Bistricer’s troubled bid for Starrett City in the past several weeks.

And for good reason: Mr. Teitelbaum has money riding on it.

Mr. Teitelbaum, who once ruled City Hall as Mr. Giuliani’s fixer (or, if you prefer, enforcer), is one of the silent investors behind Clipper Equity’s $1.3 billion bid for the 5,881-unit Starrett City housing complex in East New York.

And yet, despite Mr. Teitelbaum’s connections—or perhaps because of them—the bid has floundered before a well-coordinated assault by housing activists and their political allies.

Right now, Mr. Teitelbaum is working with co-investors and other consultants on a new plan they hope will persuade Alphonse Jackson, the Secretary of the Department of Housing and Urban Development, to approve the sale. H.U.D., which holds the mortgage for the complex, rejected the bid on March 1, saying that it was incomplete and lacked any proof that the new buyers would keep Starrett City affordable “for New Yorkers of modest means.”

“All I can tell you is that we are working very hard, and we will continue to work hard, and we are optimistic,” said Mr. Teitelbaum, who told The Observer that he was involved in the purchase but wouldn’t confirm that he would own a piece of Starrett if the deal goes through.

Senator Charles Schumer, who opposed Clipper’s bid almost from the moment it was made public, is maintaining that Clipper’s revised plan—expected in the next seven to 10 days—would need to meet a high standard.

“We stopped the proposed sale because Clipper Equity had a spotty record and gave no assurances that they would keep the development as an oasis of well-maintained affordable housing,” Mr. Schumer said in a statement. “Any buyer has the right to submit an offer, but it must have an ironclad guarantee that the current tenants won’t be evicted, and must ensure that Starrett’s middle-class character will be maintained.”

MR. TEITELBAUM’S INVOLVEMENT IN THE DEAL has stayed under the radar, but a well-placed source told The Observer that he has an equity position in Clipper Equity.

Reached by telephone on March 13 at the offices of the lead lawyer, Leonard Grunstein, Mr. Teitelbaum wouldn’t confirm that he had money in the deal, saying instead that he was “part of the team that represented David in the transaction.”

According to Mr. Teitelbaum, Metcap Holding—the private equity company that he runs with Mr. Grunstein—has invested in other real-estate deals and assisted foreign companies in the days since he left Giuliani Partners. Mr. Teitelbaum said he took part in putting together the original bid in early February and encouraged Mr. Bistricer to hire his wife, Suri Kasirer, as a lobbyist.

In 2005, Ms. Kasirer was ranked as the city’s top paid lobbyist and has raised money for Edolphus Towns, the local Congressman who has so far opposed Clipper’s bid.

“I happen to know her pretty well and think she’s very good at what she does,” Mr. Teitelbaum said of his wife.

The two, who have a 4-month-old daughter, also worked together supporting Elad Properties’ purchase of the Plaza Hotel. “It seems that we tend to always get involved in big, complicated projects—but it’s fun,” he said.

Lloyd Kaplan, a spokesman for Mr. Bistricer, said he didn’t know if Mr. Teitelbaum had an equity stake in Clipper, but added: “Bruce is one of the people I talk to regularly and who is very knowledgeable. He is someone whose instincts and understandings have been very valuable.”

Have they? Together, this team has been unable to counteract the public’s anxiety over out-of-control real-estate prices that have found their way into the farthest, most highly subsidized reaches of Brooklyn, where a thing called a market-rate apartment sounds as foreign as a pied-à-terre. Making back your $1.3 billion investment in a complex where apartments yield an average of $1,200 a month requires a lot of box tops.

A lawyer by training and the son of a Brooklyn accountant, Mr. Teitelbaum rose from an unemployed organizer in post-riot Crown Heights to become the liaison to the Jewish community in Mr. Giuliani’s 1993 Mayoral campaign, and raised $10,000 in the process. After Mr. Giuliani won, he hired Mr. Teitelbaum as a deputy chief of staff, later promoting him to chief of staff; the Daily News would eventually dub him “Rudy’s Rudy.”

Some Jewish leaders relished Mr. Teitelbaum’s attentiveness, especially after the indifference of former Mayor David Dinkins, but the balding, thirtysomething operative soon brought a little old-fashioned arm-twisting back to City Hall.

“If they wanted a city agency to take care of someone, he pulled the commissioner aside and made sure that he’d support it or otherwise he’d rip his head off,” said one Jewish leader who dealt with City Hall in the 1990’s.

Mr. Teitelbaum was widely accused of triggering a federal investigation of State Assemblyman Dov Hikind, supposedly in retaliation for his support of Governor George Pataki, a Giuliani foe. Mr. Teitelbaum himself was questioned by the Brooklyn District Attorney’s office for allegedly ousting a building inspector who tried to clamp down on a troubled Hasidic builder who ran a construction site where, in 1999, a Mexican day laborer drowned in wet cement. Mr. Teitelbaum was never charged.

When Mayor Giuliani considered a Senate bid in 2000, Mr. Teitelbaum left to run the campaign. When that ended, he advised then–City Comptroller Alan Hevesi in his 2001 Mayoral bid—until Mr. Teitelbaum told a reporter that Jews wouldn’t be welcome in City Hall if Bronx Borough President Fernando Ferrer, a rival candidate, won. Yet Mayor Giuliani was fiercely loyal, and he later brought Mr. Teitelbaum into his consulting firm after leaving office. Mr. Teitelbaum left Giuliani Partners in 2004.

SOME CRITICS OF CLIPPER’S BID FOR Starrett City said that they were unaware of Mr. Teitelbaum’s involvement or that it made no difference to their opposition, but it’s another question whether his legendary aggressiveness made that bid any more or less palatable.

“It is safe to say that I have mellowed somewhat,” Mr. Teitelbaum told The Observer. “I learned a lot when I was in government, and now I appreciate sensitivities, what needs have to be satisfied. Having that experience has helped me tremendously in the private sector.”

The chances are that whichever team won the bidding for Starrett City was going to have a target painted on its back. Peter Cooper Village and Stuyvesant Town’s sale last October split the city’s political establishment down the middle about whether or not to intervene, but the sale of the country’s largest subsidized apartment complex presented a more clear-cut case. Mr. Bistricer, Mr. Teitelbaum and Sam Levinson, another investor, were offering $220,000 a unit. A nearby complex went for a mere $92,000 a unit last year.

What’s more, while the sellers, led by investor Disque Dean and represented by CB Richard Ellis, had said there would be a two-stage buying process, they accepted Clipper’s offer in the first round, thereby surprising elected officials. Senator Schumer, City Councilman Charles Barron, the housing group ACORN and U.S. Attorney General Andrew Cuomo created so much opposition momentum early on that even the market-minded Mayor Bloomberg jumped on the bandwagon.

“Even if you give them the benefit of the doubt of every assumption they are making to develop on the unused land or whatever, it is still a wildly inflated bid,” said Jonathan Rosen, a spokesman for ACORN. “We don’t see how you pay back investors or lenders without gutting services and raising rents. Otherwise, it’s a recipe for going bankrupt.”

Mr. Kaplan, Mr. Bistricer’s spokesman, said that three or four of the next highest bids were also more than $1 billion.

“These are fairly sophisticated people bidding,” Mr. Kaplan said. “They know what Starrett City is. They understand its background, and recognize and believe that they can maintain affordability while paying that kind of price.”

The litmus test for affordability is whether Clipper, or anyone else who steps forward to buy the property, is ready to guarantee to keep the complex in the state’s Mitchell-Lama program, which sharply limits the amount of profit that owners can make and the rents they can charge.

However, in the weeks since its early February offer was made public, Clipper has encountered another hurdle: negative publicity surrounding the more than 8,000 housing violations in Flatbush Gardens, another apartment complex recently purchased by Mr. Bistricer.

Mr. Kaplan said that those violations predated Mr. Bistricer’s purchase, and that 90 percent of the most serious violations at Flatbush Gardens have been addressed.

“He has spent close to $8 million and counting,” Mr. Kaplan said of Mr. Bistricer. “He replaced all 59 elevators at a cost of nearly $4 million.”

“That is certainly the case, that they have made some repairs there, and that’s good,” said Neill Coleman, a spokesman for the city’s Department of Housing Preservation and Development. “But at the same time, although they corrected some, others have been added. The total change has only gone down 3.3 percent.”

Mr. Kaplan said that those new violations were often repeats for the same offense. He presented a letter from the Flatbush Gardens Tenants Association to Mr. Bistricer that read: “You have accomplished many things in the short 18 months of your ownership.”

Officially, H.U.D. Secretary Alphonse Jackson said that he would consider any new affordability plan with an open mind. But it seems that the publicity surrounding these violations will make it hard for Clipper to succeed.

“H.U.D. can say that,” said Mr. Barron, the local City Council member, “but I know one thing: They have been supportive of the people of Starrett City and [the state Department of Housing and Community Renewal] and H.P.D., and all of us are saying that this guy is not the type of guy we want. We want a new bidder.”

The irony is that the current owners could opt out of Mitchell-Lama right now and hike rents on more than two-thirds of the apartments by next summer—well, hike them as high as the market in East New York would bear—and nobody could do a thing. H.U.D. only gets a say when the mortgage needs to be transferred.