de Blasio mum about accusation that City Hall was involved in controversial 2014 NYCHA sale of Section 8 housing

An early version of an in-depth investigative report published by The New York Daily News revealed ties between developers, who bought into a portfolio of Section 8 buildings sold by NYCHA, and Mayor Bill de Blasio.

  • The developers, Donald Capoccia and Ronald Moelis, have acted as political or campaign supporters of Mayor de Blasio.

  • The initial report accused City Hall of having a hand in the sale of the portfolio of Section 8 buildings. Later, the report was revised without explanation to remove the accusation.

  • A reported Federal investigation is examining whether Mayor de Blasio has provided official acts to developers, who have acted as his political or campaign supporters.

By LOUIS FLORES

The administration of Mayor Bill de Blasio (D-New York City) was accused in an early version of an investigative report published online by The New York Daily News of being involved in the secret negotiations to sell a stake of Section 8 public housing owned by the New York City Housing Authority, or NYCHA, to politically-connected real estate developers.

“NYCHA’s process was shrouded in secrecy,” Councilmmember Ritchie Torres (D-Bronx) was quoted as having said to The New York Daily News for the early version of its report, adding that, “NYCHA was withholding information until the last minute, and my impression was that this was coming from City Hall.” Councilmember Torres chairs the City Council committee on public housing. If Councilmember Torres had been harbouring such concerns, it is not known why he never expressed concerns about alleged City Hall involvement in the NYCHA sale at the time when revelations were first being made about the sale. A request for an interview with Councilmember Torres was not answered by one of his staff members.

A request made by Progress Queens to the City Hall press office for a response to the accusation made by Councilmember Torres was never answered.

The initial, online report by The New York Daily News described how Ross Offinger, who has, at times, acted as treasurer and as a finance director for some of Mayor de Blasio's political committees, had reportedly targeted Donald Capoccia, an owner of the development firm BFC Partners, as a potential source of political fundraising for Mayor de Blasio. Mr. Capoccia and another real estate developer, Ronald Moelis, owner of the development firm, L+M Development Partners, had either served as fundraising hosts or campaign contribution bundlers for Mayor de Blasio, according to the report. These developers, or their business counterparties, had made further political contributions to support the electioneering and nonprofit lobbying work that has politically benefited Mayor de Blasio, according to the report. BFC Partners and L+M Development Partners were amongst the private sector firms, which were approved in secret to purchase significant interests of the portfolio of Section 8 housing sold by NYCHA.

930 HALSEY STREET, A PROJECT-BASED, SECTION 8 BUILDING FORMERLY OWNED BY THE NEW YORK CITY HOUSING AUTHORITY 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, DEMONSTRATING THAT SOME OF THE BUILDINGS SOLD MAY NOT HAVE BEEN AS DILAPIDATED AS NYCHA CLAIMED. THE SALE OF THE PORTFOLIO OF BUILDINGS WAS TRANSACTED WITHOUT PUBLIC INPUT. AN ACCUSATION HAS BEEN MADE THAT THE DE BLASIO ADMINISTRATION WAS INVOLVED IN THE SALE. DEVELOPERS, WHO BOUGHT INTO THE PORTFOLIO OF BUILDINGS, ARE POLITICALLY-CONNECTED SUPPORTERS OF MAYOR DE BLASIO. SOURCE : GOOGLE STREET VIEW

930 HALSEY STREET, A PROJECT-BASED, SECTION 8 BUILDING FORMERLY OWNED BY THE NEW YORK CITY HOUSING AUTHORITY 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, DEMONSTRATING THAT SOME OF THE BUILDINGS SOLD MAY NOT HAVE BEEN AS DILAPIDATED AS NYCHA CLAIMED. THE SALE OF THE PORTFOLIO OF BUILDINGS WAS TRANSACTED WITHOUT PUBLIC INPUT. AN ACCUSATION HAS BEEN MADE THAT THE DE BLASIO ADMINISTRATION WAS INVOLVED IN THE SALE. DEVELOPERS, WHO BOUGHT INTO THE PORTFOLIO OF BUILDINGS, ARE POLITICALLY-CONNECTED SUPPORTERS OF MAYOR DE BLASIO. SOURCE : GOOGLE STREET VIEW

The 2014 sale transaction of the portfolio of Section 8 public housing apartment buildings was the subject of controversy when the sale was announced to have been approved without any public input. Typically, the disposition of City real property requires public participation. However, as reported by Progress Queens, NYCHA and City officials approved the disposition of the portfolio of buildings by sidestepping the City's Uniform Land Use Review Procedure, often referred to as the ULURP process. A source familiar with Municipal policy told Progress Queens that 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 by the de Blasio administration due to the fast-tracking and opaque process by which the sale was transacted. A report of the sale published by Progress Queens showed that there was a conflict of interest in the private approval of the sale. Gary Rodney, a senior de Blasio administration official, whose agency was involved in approving the sale or providing financing for it, was a former senior employee at Mr. Capoccia's firm ; Mr. Rodney was also affiliated with a think tank sponsored by Mr. Moelis. Evidence also showed that the buildings that were sold were not as dilapidated as NYCHA had claimed. Indeed, photographs taken by Google Street View and obtained by Progress Queens showed that a cash-starved NYCHA was in the process of spending scarce agency money refurbishing the exteriors of some Section 8 apartment buildings prior to the sale.

The de Blasio administration has refused to explain the preferential treatment given to the developers, who bought into the portfolio of Section 8 buildings. If it can be shown that developers benefited as a result of the political and campaign support that they provided to Mayor de Blasio, the administration of Mayor de Blasio may face legal problems. In a recent, unrelated Federal corruption investigation that matured into the filing of criminal charges and a subsequent Federal grand jury Indictment, prosecutors from the office of U.S. Attorney Preet Bharara pressed Federal wire fraud charges against a public official and three businessmen, who allegedly conspired to profit from insider Government access. Counts Two and Four in the Indictment released last month against several co-Defendants in the Buffalo Billion corruption case alleged that a public official conspired with businessmen to defraud the public by exploiting inside information to violate fair, open, and competitive bids for public work. A lobbyist was alleged to have played a part in the acts that constituted fraud, according to the Indictment. Information obtained by Progress Queens from an impartial source indicates there has been Federal law enforcement interest in the disposition of real property by NYCHA. Even though it is not known if that interest ever matured into an investigation, it has been reported that NYCHA is the subject of a Federal investigation into the physical condition standards of its apartment buildings and into the representations or warranties made by its officials to the Federal Government. Federal prosecutors follow a strict policy of not acknowledging investigations. It is also not known, should it be shown that the sale transaction took place under the influence of fraud, whether Federal prosecutors would demand the forfeiture and return of the Section 8 buildings to NYCHA. A request made by Progress Queens to the U.S. Attorney's Office for information about examples where Federal prosecutors have demanded the forfeiture of real property for its specific return to Government ownership was not answered. In the past, Federal prosecutors under U.S. Attorney Bharara have sought the forfeiture of real property when the purchase of real property was made to further financial fraud, like money laundering.

Did de Blasio "correct the record" ?

Almost all of the information about the 2014 NYCHA sale transaction was later purged without explanation from The New York Daily News's report. After the cable news channel NY1 recently published an trove of archive e-mail correspondence between City Hall and one of Mayor de Blasio's key private sector campaign consultants, Jonathan Rosen, it came to light that Mayor de Blasio has turned to outside consultants to push back against critical reports published by the press. It is not known if efforts by Mayor de Blasio or his private sector consultants were the cause of the purging of information from The New York Daily News's report.

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