Bloom-Struck: Aiello’s Studio Faces Eviction

Stapleton Studios, a movie-making complex in Staten Island whose best-known backer has been tough-guy actor Danny Aiello, was once touted as the future of the movie industry in New York. In addition to attracting filmmakers with one of the world’s biggest facilities, its supporters promised, it would give rise to hotels, a booming marina and thousands of jobs to one of the most underutilized parts of the city.

But now the studio is barely clinging to life, and in the next several days, its owners may find out whether it will have to close its doors for good. The studio has been embroiled in a nasty legal dispute with the city since late last year, when the Bloomberg administration abruptly withdrew its support for the operation. The city declined to extend a lease for the studio’s building, which sits on city-owned land.

On Sept. 16, a Manhattan-based State Supreme Court judge will decide whether to side with Mr. Aiello’s company, which would allow the studio to continue operating, or with City Hall, in which case the studio would be saddled with crushing and perhaps fatal debt.

“I’m not giving up, and I intend not to give up until the last battle has been fought,” Mr. Aiello told The Observer. “I just hope the judge will understand the problems that exist for us.”

The back-and-forth between the city and the Stapleton group has been characterized by accusations of hidden agendas and biases. Mr. Aiello, for his part, says that he’s still confused about how things have gotten to this point.

“It’s a wonderful project,” he said. “You put in two years of your life-and you know I’m not a kid. I can see it. Why can’t they? It’s because they’re neophytes, I suppose, or maybe they just don’t know. Or maybe there’s some other clandestine reason for not allowing us to go, maybe something to do with another studio. I just don’t know.”

The Stapleton Studios project was created in the late 90’s as part of a boomlet of high-profile, city-aided studio projects, including Studio City on the West Side of Manhattan and the massive Steiner Studios in the Brooklyn Navy Yards in Williamsburg. The idea was that New York would become a major destination for moviemaking, perhaps rivaling Hollywood, and that the studios themselves would act as economic magnets, creating and reviving entire neighborhoods. Stapleton Studios was to have been a model of this sort of economic engine, leveraging a 110-by-120-foot sound stage inside a refitted bagel factory to attract businesses and restaurants to the blighted Stapleton neighborhood on the Staten Island waterfront. The plan ultimately called for 14 sound stages, making it one of the largest movie facilities in the world, and the partners quickly burned through $2 million in upgrades to the facility.

But the economic picture for the film industry in New York-and Stapleton in particular-has become considerably less rosy since that time. Worries about not having enough studio capacity to compete with Los Angeles have turned instead to hand-wringing by industry groups over “runaway production”-the exodus of film projects to other states and Canada, which has left existing New York studios operating at half-capacity or worse.

Last October, the city’s Economic Development Corporation announced that it no longer regarded the Stapleton project as financially feasible and would not be extending the occupancy permit for the site. In a last-minute compromise, the city agreed to let the studio stay on. But City Hall also informed the studio’s owners that they would no longer be allowed to pay below-market rent for the site, a perk which had initially been extended to the studio as part of a broader plan to attract development to the area.

This meant a massive increase in operating costs for the studio. It also meant a sharp decrease in business because of uncertainty over the studio’s future-speculation which, according to the studio’s backers, the city did little to discourage.

“The city made things extremely difficult for us,” said Robert DiMilia, Mr. Aiello’s partner in Stapleton Studios. “They’ve been telling producers that we’re in litigation and we may close any time. We just lost a Paramount picture that would have brought in $125 million. Recently, another producer friend of mine working on a smaller production said he couldn’t risk working with us either. We’re now operating at maybe 10 percent of capacity. It’s really a disaster.” (The Paramount movie, School of Rock , was filmed elsewhere and will be opening in theaters next month.)

Determining that their situation was untenable, the Stapleton group decided to show its displeasure with the city-and stave off financial collapse-by refusing to pay the rent. City Hall demanded that they pay up. A series of legal skirmishes, in which the courts alternately ordered the studio to pay and then put a stay on the order pending further hearings, preceded the current court proceeding. If the judge decides next week that the studio’s arguments have merit, the fight will continue, and the studio will continue to operate under favorable terms. If not, the judge may decide that Mr. Aiello and his partners owe some $750,000 in arrears (meaning, more or less, curtains).

“In all reality, if they hit us for the back rent and some of the other things, there’s no way we can pay it,” said Mr. DiMilia. “We’ll just have to pack our bags and leave.”

The Stapleton group’s argument will be based on papers-some of which were obtained from lawyers representing Hasidic opponents of the Williamsburg studio project-that lay out the specifics of the city’s deals with other studios. For example, they’ll point out that Steiner Studios, backed by the politically powerful father-son team of David and Douglas Steiner, has received $28 million in capital funds from the city to date and is currently paying 45 cents per square foot in rent. By contrast, the city is charging $8.50 per square foot in Stapleton.

The Stapleton group also plans to play up charges that the Bloomberg administration is unsympathetic to Staten Island, echoing a series of angry editorials in the borough’s daily newspaper, the Staten Island Advance , which accused City Hall of “bias” against the borough. “I think it has a lot to do with the fact that we’re on Staten Island,” said Mr. DiMilia. “I can’t think of any other reason they would be treating us so much differently than the way they’re treating their friends, or the Steiners, or any of these other studios.”

Reversal of Fortune

The administration’s position is that the reversal of fortune for Stapleton Studios is sad but unavoidable, and that the studio’s inability to meet its rent obligations was proof that it couldn’t sustain itself in the long run. The administration is also seeking to redevelop the area, which is the size of Battery Park City, and a studio may or may not fit into those plans.

Vincent La Padula, who is the senior adviser to Mayor Bloomberg and who heads a task force on improvements to Staten Island, said, “The Mayor is committed to planning for the appropriate development of the entire [site]. And we have an aggressive time frame that we are sticking to. At the end of the process, we will present a plan that Staten Islanders and New Yorkers can call a jewel in the crown of New York.”

The court decision, he said, would not interfere with that vision. “The litigation is going to happen either way, and they’ll be successful or not. We’ll plan around it if we have to. The site is a massive untapped resource for the city and an opportunity for developers to do very well.” From the early 1980’s until the early 1990’s, the site was home to a Navy base which served as a home port for the U.S.S. Iowa and other ships.

Mr. La Padula also said that the city would be perfectly happy to have Mr. Aiello and his partners at the site on the condition that they met the terms of their lease. “There’s certainly no bias here,” said Mr. La Padula, who pointed out that he comes from Staten Island.

A spokesman for Steiner Studios declined to comment.

Whether the court’s upcoming decision allows Stapleton Studios to survive, the city isn’t alone in thinking that it will face problems over the long term. Some industry executives feel that the location isn’t ideal, and that the group didn’t formulate an investment plan able to weather the problems that inevitably accompany a project of this magnitude.

For Mr. Aiello, a native New Yorker, profit was never the idea. He points out that he has personally brought millions of dollars in revenue to New York in the past by insisting that many of the films in which he starred be shot in the city. He also said that he persuaded CBS president Les Moonves to move production of the television series in which he starred, Dellaventura , to New York. He said that he’s been working for Stapleton Studios without compensation all along, precisely because it was meant, first and foremost, to be a boon to the city in general and to Staten Island in particular. All of which leaves him to puzzle over the current situation.

“It’s just a big misunderstanding here, and I don’t know what it is,” he said. “I hope it’s not one of those things where you step on my toes, and I step on your toes. I think now we’re in a pissing match, and let me tell you, if that’s happening, the city is definitely not benefiting.”

Bloom-Struck: Aiello’s Studio Faces Eviction