City Comptroller, Department of Investigation mum on controversial NYCHA sale

Sale was transacted without public input

NYCHA spent taxpayer money to refurbish buildings it claimed it couldn't afford

Conflicts of interest

No transparency by NYCHA

By LOUIS FLORES

The offices of the New York City Comptroller and the New York City Department of Investigation did not answer requests made by Progress Queens for comment about the controversial sale of project-based, Section 8 buildings by the New York City Housing Authority, or NYCHA, to a consortium of real estate investors.

A report published last week showed that four of the buildings sold by NYCHA to Triborough Preservation LLC, or Triborough, had received major improvements in the time before the sale.

930 Halsey Street, a project-based, Section 8 building formerly owned by NYCHA in Bedford-Stuyvesant, Brooklyn, received major improvements in the time before the building was sold to a consortium of private real estate developers.  The above photograph is dated September 2014, three months before the structured finance transaction closed.  Source :  Google Street View

930 Halsey Street, a project-based, Section 8 building formerly owned by NYCHA in Bedford-Stuyvesant, Brooklyn, received major improvements in the time before the building was sold to a consortium of private real estate developers.  The above photograph is dated September 2014, three months before the structured finance transaction closed.  Source :  Google Street View

The four refurbished buildings, located at 930 Halsey Street and 55 Saratoga Avenue, both in Bedford-Stuyvesant, Brooklyn, and at 1780 and 1782 Madison Avenue, both in Spanish Harlem, Manhattan, had scaffolding wrapped around the buildings, according to photographs dated September 2014 posted to the Internet by Google Street View.  The sale of the buildings closed in December 2014.

55 Saratoga Avenue, in Bedford-Stuyvesant, Brooklyn, was almost entirely obscured by the late summer foliage of September 2014.  However, this photograph clearly reveals the scaffolding encircling the building three months before the transaction agreement for the building's sale and financing were signed.  Leading city housing officials have justified the sale of public assets to a consortium of private real estate investors on the premise that the portfolio of buildings were too dilapidated for a cash-strapped NYCHA to maintain.  NYCHA Source :  Google Street View

55 Saratoga Avenue, in Bedford-Stuyvesant, Brooklyn, was almost entirely obscured by the late summer foliage of September 2014.  However, this photograph clearly reveals the scaffolding encircling the building three months before the transaction agreement for the building's sale and financing were signed.  Leading city housing officials have justified the sale of public assets to a consortium of private real estate investors on the premise that the portfolio of buildings were too dilapidated for a cash-strapped NYCHA to maintain.  NYCHA Source :  Google Street View

City housing officials, including Shola Olatoye, the CEO of NYCHA, and Councilmember Ritchie Torres (D-The Bronx), the chair of the New York City Council committee on public housing, have claimed that NYCHA urgently needed to make the sale of the project-based, Section 8 buildings, which were transacted fully out of public view and without public input, because the portfolio of buildings were too dilapidated for a cash-strapped NYCHA to maintain, with Councilmember Torres even suggesting that were it not for the sale, the portfolio of buildings would have otherwise suffered from "demolition by neglect."

1780 Madison Avenue, obscured by a large tree, center, and 1782 Madison Avenue, right, seen here in September 2014, were included amongst a portfolio of project-based, Section 8 buildings sold by NYCHA to a consortium of private real estate developers.  Officials with the corporation counsel of the City of New York approved the transaction agreements for the sale of the buildings, which sidestepped the ULURP process.  Source :  Google Street View

1780 Madison Avenue, obscured by a large tree, center, and 1782 Madison Avenue, right, seen here in September 2014, were included amongst a portfolio of project-based, Section 8 buildings sold by NYCHA to a consortium of private real estate developers.  Officials with the corporation counsel of the City of New York approved the transaction agreements for the sale of the buildings, which sidestepped the ULURP process.  Source :  Google Street View

In response to the special report by Progress Queens, NYCHA has provided a partial response to various questions posed by Progress Queens.  However, NYCHA is refusing to release the charter documents of a series of corporations being used by Triborough to own and maintain the Section 8 buildings.  NYCHA maintains an interest in the portfolio, since NYCHA issued $250 million in tax-free bonds that NYCHA, in turn, loaned to Triborough, so that Triborough could then use the proceeds to purchase its interest in the buildings. 

Many issues were raised in the Progress Queens review of the NYCHA sale.

City housing officials did not publicly disclose that the cash-strapped agency had spent taxpayer money to improve some of the buildings before their sale.  A review by Progress Queens of online Department of Buildings records showed minor outstanding violations for many of the buildings.

NYCHA and city officials approved the disposition of the portfolio of buildings by sidestepping the city's Uniform Land Use Review Procedure, or the ULURP process.  The disposition of city real property should be subject to the ULURP process, as provided for in Section 197-c of the City Charter, a process that was not used, due to the fast-tracking and opaque process by which the sale was transacted.  

The Progress Queens report also questioned whether conflicts of interest rules were violated in the transaction of the sale, given that one of the real estate lobbyists on the transaction, Jonathan Greenspun, was appointed to the city's Commission on Human Rights, where the real estate lobbyist will now have authority to review cases of housing discrimination.  Mr. Greenspun works for the lobbying firm Mercury Public Affairs, which now employs another former de Blasio administration official, Rachael Noerdlinger.  Another administration city housing official, Gary Rodney, had a prior relationship with one of the private real estate investors.  Still yet another administration city housing official, Vicki Been, had served on the board of a New York University think tank that was founded by one of the principals of another of the private real estate developers.

Furthermore, NYCHA did not provide any transparency in respect of the process the agency used to select which buildings would be sold.  According to the Progress Queens report, many of the buildings were located in neighborhoods that were prime for further gentrification, benefitting the consortium of real estate developers with a greater potential for real estate property value appreciation.

Some government reform activists claim that Mark Peters, the commissioner of the Department of Investigation, is too close to administration of Mayor Bill de Blasio (D-New York City) to fully hold he administration to account for possible misconduct.  Commissioner Peters had previously served as treasurer for Mayor de Blasio's political campaign committee.

However, Scott Stringer, the city's comptroller, has generally exerted enough independence to lock horns with the administration, including, most recently, when it was announced, for example, that the Comptroller's Office would review a $1 billion technology contract awarded by the city's Department of Education to Custom Computer Specialists.  

While Commissioner Peters's silence on the controversial NYCHA sale could be explained by a possible motivation to protect the de Blasio administration from investigation, it is not known what may explain Comptroller Stringer's silence about the NYCHA transaction, unless perhaps Comptroller Stringer was loathe to investigate major real estate developers.

The lack of a rigorous city investigatory apparatus mirrors lax investigatory agencies up in Albany, where the absence of oversight has contributed to a widespread culture of corruption, so much so that federal prosecutors have launched a long series of investigations that have resulted in the convictions of over 18 state legislators since 2007, according to U.S. Attorney Preet Bharara, the top federal prosecutor in New York's southern district.  

At a speech delivered at Fordham Law School on Friday, U.S. Attorney Bharara spoke about the need for the community to join in efforts to fight public corruption.

Speaking generally about public officials, who refuse to acknowledge the prevalence of public corruption, U.S. Attorney Bharara said, in part, "Anyone, who denies the fact or suggests that corruption is not a pervasive problem, given the cases that we've brought recently in Albany, is off-base, and everyone, who is in a position to do something about it, bears a responsibility to cure the problem, and that includes prosecutors, and the public, and the press, and the politicians themselves."