few minutes immediately before the meeting looking at Zillow for the same scope. I went in and looked
for new construction in West Philadelphia, kind of near Parkside. And I found two buildings who
are who just sold they're both built in 2024 and uh there are like 210 to 220 dollars a square foot
sale price so um not surprisingly um there weren't a lot of units not a lot of buildings sold um but
there were a couple and not surprisingly um the cost of real estate is increasing the prices
The prices that are shown on the previous page are all from 2003, 2022.
There might be one or two 24s on it, but they're older.
All right, then let's turn to the multifamily because, I mean, again, I think that the same point follows through.
So, again, if you look at your multifamily on your recent sales chart, am I correct here that your average sales price is $168 a square foot across two, three, and four families? Is that accurate?
it yep so then again if we scroll down here same same situation that that we believe renders this
data uh essentially not credible because you've established a construction cost of 172 square foot
and then again a total development cost that is higher than what somebody could expect to sell
the property for except that that's not that not the case at the moment um that uh there are two
properties that are selling over 200 so right but you're saying two properties two properties that
were not a part of your report two properties that are not sold they weren't listed yet these
are new listings new sales but again that that respectfully is not relevant to the data that
you presented to this board. I am asking you about the data that you presented to this board,
not about sales that may have occurred in the last couple of weeks that are not a part of
your data. Well, let me ask a hypothetical question. Is your client going to rent or sell
the units he's going to build? Is he going to rent or sell them? So I think Mr. DeBroom,
listen to me i i think she's the lawyer she'll ask you questions that you just answer the
questions okay i will my apologies okay so um just in in terms of your data here um
do you recall what interest rate you were assuming for the loan that you've sort of
tried to account for in here do you happen to recall what interest rate you were assuming
I have assumed that the loan costs are in the construction cost.
I've assumed that the loan costs are in the construction costs.
I did not.
I did not try to dive in and understand the developer's costs because every
builder has a different cost structure.
I can't win that argument, so I'm not going to make it.
All right.
And then, so in your testimony during the last hearing a month ago,
um you mentioned in your testimony that no one would build what they can't sell so
in creating your data for this exercise understandably you analyzed properties that
had sold but did you analyze properties that may have been sitting on the market
or were unable to be sold that may not contribute towards the conclusion you were seeking to
reach? For every property that I looked at that's on that list, I looked at the Zillow
information. And if there was any previous sale information, I kind of took that down.
And then I went into Philadelphia Atlas and tried to figure out when the permits were issued
So I could get a reasonable period of when it was, when the actual construction occurred.
So I think that the values that I've provided are the correct values for timescale anyway.
So I want to show you then a couple of examples here.
I'm objecting.
These were not part of the applicant's case in chief.
And you closed their ability to provide any new data or any information.
So this is completely unacceptable and against the rules of the ZBA.
So we're going to let her continue right now.
Thank you, Mr. Chair.
I would just like to note this as an objection.
Can you just explain why?
We're going to move on.
But she never even brought it five days ago.
We're going to move on, please.
Mr. Chairman, and I, if I can, I, this is, this is for the purpose of rebutting his witness here. So there has been no case in front of the board where, please proceed. Okay. All right. So, just to give, wait a minute, just to give you a notice, you have 10 minutes left.
AND I JUST WANT TO NOTE THIS WAS SUBMITTED TO THE BOARD IN ADVANCE. IF IT WAS NOT RECEIVED
BY MR. MASTERS, PLEASE SEND A COPY OF IT TO HIM IMMEDIATELY.
IT WAS.
BUT NOT FIVE DAYS IN ADVANCE.
PLEASE, PASHEED.
THANK YOU. OKAY. SO, AGAIN, JUST VERY BRIEFLY, MR. DEBRUIN, ARE YOU FAMILIAR WITH THE
MULTIPLE LISTING SERVICE? YOU'RE ON MUTE.
Sorry about that. Yeah, yes, I am familiar.
All right. So just taking this as an example. So 4973 Wyalusing Avenue, just outside of East Parkside Avenue.
Would you agree that this MLS listing showed a price per square foot here of $267 a square foot?
Clearly.
okay uh and again the board can take note that this was a listing that was active for a year
and was withdrawn after a year unsold at that at that price uh it's a hundred dollars per square
foot i'm sorry it's it was overpriced it's a hundred dollars more square foot than anything
else that's in in the neighborhood so okay but again we're just trying to show here that that
what you are alleging is being a reasonable sales price is not reflective of what the actual market
is suggesting so so 39.57 why losing uh again would you agree this this shows it was listed at
235 dollars a square foot and again public information would show that this went unsold
after a year as well. Just for the board's efficiency of time here, there are several
other examples, $39.59 Wyalusing, $17.26 Memorial, and $17.13 North 42nd, which again, all went
unsold at prices that were consistent with what you put in your report in terms of what a reasonable
sales price would be and then the last example a little closer to home 4206 viola so this was a
three unit this one can you see here where it says price per square foot 174 dollars a square foot
okay so now this one shows pending
But again, can you see here that the original sales price was $295,000?
but again can you see here that the original
And the new, what's the current price?
The sale price is $280,000.
So it's a couple of other questions.
$280,000.
So even if we assume it sold at the last asking price of $280,000, $174 a square foot price
would be considerably less than your estimated cost of construction of triplex at 250 square foot
what isn't that right the the price per square foot is 174 on the sale right oh but let's talk
about the the his listing price because that's going to represent what a better what it should
be so let's go down to the higher price and that's going to be what 180 something like that a square
foot sure but even if that that's 40 35 000 less per square foot than your client wants just to
build the building but i'm not i'm not talking about i'm not talking about what he wants i'm
talking about what you are saying that the market supports so the total development cost is what i
think the total cost for the broker for the builder developer um that he's going to try and
sell for and then the sale cost is what my guess at what the sale price would be okay
the um the sale portion of this is somewhat irrelevant because i don't think your client
intends to sell a 16 unit building as an individual units and this is not how you
would price a 16 unit building mr chair i don't have anything further from for mr de brun i do
have two redirect questions for for German that should be very brief but I don't know if you want
to allow Mr. Masters the opportunity for his redirect before we let Mr. DeBruin go. Well the
question is Mr. Masters may have other redirect later too right when she's done? Well she seems
to be done with with my with my witness. You want to redirect him right now? I do. Can you do in five
minutes yes okay thank you uh hello mr de brun good afternoon good afternoon so let's um i'm going to
um share the screen oh sorry i have to stop
all right i think i have to be promoted
all right thank you
all right
One more seconds.
Mr. DeBrun, let's just touch briefly on the pro forma that Mr. Jakubov presented.
Can you briefly review why it was that you were surprised that all of the development
costs was equal in his pro forma of $715,000?
um it's kind of the main the main cost in building and obviously the main cost in
building a building is the structure right and that changes with the square footage
it's very reasonable to um to use a square foot number for structure and and foundations you can
do pretty easily um but when you start talking about fitting out apartments um a kitchen is
kitchens and bathrooms are the most expensive part and every time you if you add a couple of
kitchens it it's going to mess up your square foot cost number it's going to increase your
square foot cost number dramatically so going from one one kitchen and maybe two baths to
six kitchens and six baths um is going to change is going to increase a lot um the square foot cost
so so was it your what was your conclusion as to how um mr yakubov said that each configuration
two units three units four units up to six units had the exact same construction cost um it's
um it's it doesn't strike me i mean overall um it didn't strike me that this was a serious
it doesn't
detailed pro forma of the project as i said earlier it's just a list of
numbers kind of tangentially related to construction i guess um
okay but is there in any is there in any in any possibility that six units with with six bathroom
with six bathrooms or more and six kitchens would have the exact same cost as two units
it's highly unlikely it is highly unlikely the cost to build a bedroom and the cost to build
a living room is you know a fraction of the cost to build a bathroom or a kitchen so adding
bathrooms and kitchens is going to dramatically raise the square foot cost. All right. So going
to your pro formas, you mentioned in the cross-examination that you were looking at the
rental scenario rather than the sales scenario for these comparables that you found because
the developer is actually going to maintain ownership of this project and simply rent out
the units to people is that correct yes and two reasons why it's it's important is number one is
i think that's what the intended use is is a rental apartment building and number two when
you're selling a rental apartment building um the the sale cost is based on the rental flows the
cash flows um and i did not make that calculation when i was doing this i just kind of threw a
square foot number at the sale cost. So, um, the sale pro forma is less than perfect in this case.
Okay. But you looking at the rental, um, pro forma, um, is it, it appears that in your,
in your data that the, that the, the duplex option, uh, the two family option, um, appears
to have the lowest development cost and the same construction cost, or actually, no, a
lower construction cost also.
Is that correct?
Is there any, in all the calculations and review that you've done, is there anything
that suggests that a duplex, that they're constructing three duplexes on the parcels
that we're here about would be anything other than completely viable?
Let's see.
I'm looking at the Excel spreadsheet to see if I made a mistake.
So the calculation is the same for each of them.
So it's about the difference in construction costs is about the square footage differences, really.
I think two families is a viable option.
i think that's what this shows so all right and would you agree that um if we're talking about
what would be the minimum configuration that would be that would be economically viable in the for
this for this project what what would you say would be the the minimum uh configuration that
would be economically viable i think that a small developer with a low um cost of doing business
could would build some single families and i think that's proved out by the fact that there are single
families being built in philadelphia um the two family is something would be the lowest option
for maybe a larger developer who has a higher cost of doing business all right i have one last
question mr chair so um mr uh yakubov's email was displayed earlier in in these hearings showing
that he was intentionally holding on to certain properties and keeping them bladed is there a cost
that he has to pay for for that type of uh for his choice to do that and is that objection does
that really objection mr chairman this is the the witness is in no way capable of testifying about
finished finish your question thank you um my question is we uh you you got my preamble the
question is, is there a specific economic cost for a developer who chooses to hold onto properties
and not develop them? And does that come into play when they are trying to figure out what
would be economically viable for them to do this project? I can't speak specifically about
Mr. German's business model because I don't have any information about it other than what's been
presented here. So however, most development companies that have an ongoing business have a
need to have need to line up jobs for the future. So buying property.
um um need to line up jobs for the future so buying properties prior to doing construction
work on them is very common and most developers consider that a cost of their business and it and
form and run their paperwork that run their you know decision making that way and include all
that information in there um most other people would say we're done we're done we're gonna
to we're going to tell me where i just wanted him to be able to finish his his well he seems to
re-ram a little but he said he can't answer the question then he start down a road so
no you can get him to answer it in one minute then let him do it all right mr mr durin can
you just summarize it very quickly as to as to whether mr um yakubov's um holding on to
properties and not developing them might require him to have a higher development cost than other
developers? Yes. A developer would typically, it would, it consumes revenue for whatever minor
maintenance is done. There's a, there's an opportunity cost for the purchase price for
the properties. So there's a definite cost. Maybe there's financing costs for the purchase,
for the properties that they're holding onto. It's a standard development tactic and,
way of doing business.
But it's an actual cost of doing business
for a larger developer.
And that's his choice.
And that's his choice as to how...
That's his choice how to spend his money, yes.
We're done. So here's...
Meredith, what do you have next?
I have two questions
that I'd like to ask German
just to rebut.
I would just maybe have a rebuttal
to cross-examine Mr. Jakubov
briefly.