A deal to transform a long-derelict state-owned building on Brooklyn’s Fulton Street into affordable housing for seniors is dead, according to multiple people involved in the project.

The negotiations collapse marked the latest setback for 1024 Fulton Street, a onetime Brooklyn Union Gas showroom abandoned for four decades, even as the neighborhoods around it have boomed.

Assemblyman Walter Mosley (D-Brooklyn) blames the leader of the nonprofit he handpicked to develop and operate the Clinton Hill site for “going rogue” — by trying to bring in a for-profit developer to cash in on the deal.

Jeffrey Dunston, chief executive officer of the Northeast Brooklyn Housing Development Corp., strongly rebutted Mosley’s claim.

“We couldn’t make the project work based on what the local elected officials wanted to see,” said Dunston, adding Mosley wanted the building to be 100% affordable housing.

The struggle to revamp the bricked-up structure highlights ongoing battles between government officials trying to maximize revenue from valuable property and elected officials trying to create housing for constituents being priced out of the neighborhood.

A History of Hurdles

The Cuomo administration took the 33,600-square-foot building off the auction block in 2014, when Mosley was worried the property would attract luxury real estate developers.

Mosley and state Sen. Velmanette Montgomery (D-Brooklyn) then sponsored an unusual measure, signed by Gov. Andrew Cuomo, that gave Dunston’s group exclusive rights to take over the property for “fair market value.” Under the deal, the developers were to build apartments for low-income senior citizens and veterans.

But hurdles mounted. State officials insisted on a $5.3 million price tag, according to Dunston — more than double the cost, he said, that would make affordable housing feasible.

What’s more, the property comes with a city deed restriction, permitting only a community facility at the site, that would have to be lifted.

Mid-negotiation, City Hall blocked such deed changes, after its botched removal of similar restrictions from the former Rivington House AIDS home on Manhattan’s Lower East Side for a group that flipped the property to a condominium developer. New rules imposed since then make lifting restrictions more complicated.

“That situation did not help,” Dunston recalled. “The mayor had to go back and restructure how to remove a zoning restriction.”

So Dunston came up with a workaround: setting aside 30% as affordable housing units for seniors. The rest of the units would be co-shares where tenants share common areas like the living room and kitchen. Those units would run similarly to a hotel, with regular housekeeping and other amenities.

But Mosley balked, arguing more of the building needed to be set aside for affordable units, according to Dunston. “The vision for what should happen with the site has been the conflict,” Dunston said.

‘He Just Went Rogue’

Mosley conceded he demanded the building be all affordable units. But he says the deal went bad because Dunston started to duck meetings and rarely returned phone calls.

“He just went rogue,” Mosley charged. “We would not hear from him. He’d never come in for a meeting. It got to the point where we realized something was going on.”

The lawmaker said he pressed the state to kill the deal after discovering that the nonprofit was in touch with an unnamed for-profit developer.

Over the past 40 years, there have been big plans for 1024 Fulton. None have worked out. Credit: Ben Fractenberg/THE CITY

“I thought what he was doing was underhanded,” Mosley charged. “It was misleading. I thought he was personally trying to cash in for himself. We didn’t want to be a part of something that was nefarious.”

Dunston vehemently denied any bad intentions. He says he reached out to Ollie, a co-living startup, to get information on how to run a similar project.

“They have had very good success at dealing with difficult sites,” he said. “We wanted their knowledge and know how on how would something like this would work.”

Previous attempts to revive the three-story building, which came into government possession when the Koch administration took it over for nonpayment of taxes, have failed.

In 1996, the state purchased the property from the city for $330,000 to make it into a community space. Officials nixed that idea after discovering serious structural issues with the early 20th century building.

In 2011, the Center for Nursing and Rehabilitation bought the building for $9 million, but failed to secure federal funding needed to overhaul the property.

“For as long as I can remember, the intention has been to develop 1024 Fulton St. into a community center,” said Council Member Robert Cornegy Jr. (D-Brooklyn). In anticipation, he allocated funding to improve the adjacent green space, Crispus Attucks Park.

One More Try

Mosley is not giving up seeking new life for 1024 Fulton.

He is now proposing that developer TCH Holding LLC and the Fort Greene Senior Citizens Council team up to build out space for the nonprofit’s senior center, along with a community center and ground-floor retail stores. The new plan would not include any housing, affordable or otherwise.

TCH, an obscure Philadelphia firm, was Northeast Brooklyn’s initial partner on the failed Mosley-brokered plan. This time, it will share in some of the gains generated by the proposed retail, Mosley said.

Who is behind TCH and why it was brought into planning for 1024 Fulton St. remain unclear.

Mosley and Dunston each say they were introduced to the firm by the other several years ago. In November 2018, the firm gave Mosley a $1,000 campaign donation, records show.

The Brooklyn lawmaker insists the firm was chosen on its merits. “They are a black-owned firm, which is very, very rare,” he said. “They have the ability to develop at this level and are solvent.”

He said TCH has a stellar track record in Philadelphia but declined to detail specific projects it had completed. “It’s going to be a tremendous public benefit. I can’t keep going back and forth with you. I’m in Albany,” he said before hanging up.

TCH did not return multiple calls seeking comment.

Mosley said he believes the project will be ready to break ground by summer 2020.

The Cuomo administration seems to have a different take. Any new proposal would once again require special legislation, according to the state’s Office of General Services. The site also could be put up for auction on the open market, an OGS spokesperson said.

Dunston expressed skepticism anyone could develop the site without market-rate apartments in the mix.

“This building has been around since I was a kid,” he said, noting he’s in his fifties. “One would wonder why it can’t get done. At the end of the day, if the vision of the community is driven by politics then it can’t work.”

Sign up for “THE CITY Scoop,” our daily newsletter where we send you stories like this first thing in the morning.

Want to republish this story? See our republication guidelines.