Inside operator mum on a lucrative Brooklyn shelter deal, no matter who’s asking
For weeks, as controversy has built over a highly expedited and ethically problematic city deal to award a contract to operate a homeless shelter in Carroll Gardens, two questions have loomed over the project.
What parties profit? And how much do they stand to profit?
The answer to the first question is now relatively clear. The man who built the building, which has a reported history of structural problems, is Stuart Podolsky, a convicted felon with a history of abusing the poor. And the landlord—as identified by the nonprofit provider making the bid to run the shelter—is Alan Lapes, a longtime associate of Podolsky's company, Amsterdam Hospitality, which appears to operate shelters all over the city. Lapes has his own history of reported tenant abuse.
The answer to the question of how much Podolsky and his associates will make from the no-bid contract was revealed by the Department of Homeless Services at a public meeting last night, held to address concerns from the community about the dimensions of the facility, which will house 170 homeless men in a 10-unit, 25,000 square foot condominium building.
At the meeting, Alex Zablocki, the director of community relations for the D.H.S., said he could not reveal exact figures, but gave a rough estimate of $102 per night, per bed, including services such as security.
All told, that works out to more than $3000 per month, per tenant. Or, in renter's terms, a monthly rent of $520,000, or $52,000 a month for each of the building's 10 units.
Robert Hess, the Bloomberg administration's recently departed D.H.S. commissioner who is now chief executive of Housing Solutions USA, pointed out that a sizable amount of the building's 10,000 square feet of commercial office space is being converted into bedrooms. Nonetheless, even if you figure in the unexploited office rent—perhaps $20-25,000 a month for that amount of space in this zip code, according to the listing service Costar—the city is paying far above the market rate, for a reportedly problematic building, to a landlord with a checkered professional past.
If the community was expecting the city to address these issues head-on at the meeting last night, it was disappointed, at least to the extent that "community" reaction can be characterized at all.
Over the last few few weeks, as people became aware of the suspiciously opaque "emergency" shelter contract, the liberal, gentrifying neighborhood of Carroll Gardens has revealed a split. One group of small-business people and creative-class members—the gentrifying element in the neighborhood—plastered the neighborhood with attractive signs depicting a tower of beds, and the stark phrase: "170 People into a 10-unit building." But that reaction produced a counterreaction: Within a week, an adapted version of the sign began appearing around the neighborhood, with the "170" figure whited-out, and a scrawled, plaintive: "Welcome Them With An Open Heart."
So the dynamic, at the moment, is a slightly complicated one. People who flat-out don't want a homeless shelter in their neighborhood are in an uneasy alliance with liberals, like the area's elected officials, who say they simply don't want that shelter. And on the other side, people who see the plight of the homeless as paramount are pushing back against what they see as the neighborhood's unreconstructed NIMBYism, and find themselves, at least for now, on the same side as the city and its favored landlord.
At the meeting, held in a packed, sweltering elementary school auditorium, a few opponents of the shelter—such as City Councilman Brad Lander and State Senator Daniel Squadron, a neighborhood resident—spoke up for the ideals of compassion and compromise. They expressed their support for the idea of some kind of shelter while stating their opposition to the sketchy proposal, and questionable business arrangements, involved in this particular inside deal.
But they were largely drowned out by a cacophony of angry, uncompromising voices of opposition to any shelter.
"This is a numbskull of an idea," shouted Salvatore "Buddy" Scotto, the Court Street funeral director and self-appointed neighborhood padrone, during a contentious question-and-no-answer session. He shook his cane in the direction of Hess, to riotous applause. "Don't you dare come in and tell us what our obligation is for social services. We have a few things to teach you!"
If anything, the meeting got less civilized from there. Zablocki, who looked like he was a third of Scotto's age, grimaced and bore the abuse, refusing to offer anything more than very vague parameters and even vaguer reassurances about the facilities, services, and security plans proposed at the shelter.
"From my experience at the agency for over two years ..." Zablocki tentatively began one answer.
I didn't hear the rest, because the auditorium erupted in derisive laughter.
Along with the rest of a DHS delegation—which notably did not include commissioner Seth Diamond, Hess' successor as the man in charge of the city's shelter siting decisions—Zablocki claimed he was unable to describe anything substantial about the proposal until after it was approved. Under questioning from Lander, the city officials admitted this nondisclosure was simply a matter of their policy, not the law. Zablocki did mention that under state guidelines, the facility was only required to have one bathroom for each ten men, and one shower for each 15. Each man is entitled to just 60 square feet of individual living space.
In the face of vehemently confrontational questions about crime and security, the delegation said they would monitor the men inside the shelter, but said they could take no responsibility for their actions outside it. (At one point, the man behind me whispered to his female companion that they would never again venture past Buttermilk Channel.)
Zablocki said the facility would have a 10 p.m. curfew, but then acknowledged that the curfew was not actually a mandatory condition of residence. Hess disclosed that seven staff members would be on hand at all times, though only three of them would handle security.
Inevitably, one young mother asked about "molesters." Hess said the facility would house men deemed "employable"—that is, not drug abusers or the mentally unstable—but otherwise offered little comfort.
"I know it's hard sitting here tonight, because we don't have a track record in this community," he said, on behalf of his 15-month old organization, which administers more than two dozen shelters under contracts with the city agency he headed until recently. "We will work each and every day to be good neighbors to this community. ... Will some people have other issues? You know, they may well in some cases."
Lisa Black, director of external relations of D.H.S., explained to the audience that under New York's "right to shelter" law, the city is obligated to provide a bed to every person in need of one, regardless of criminal history.
"Sex offenders are to be served in the city of New York like any other homeless person in the city of New York," Black said, over loud jeers. "We live in a very dignified city—you should be proud."
Nearly lost in the emotional back-and-forth were the larger issues of policy and ethics. Why is the city rapidly expanding its shelter system? Lander and Squadron attacked what they described as the policy failures of the Bloomberg administration that increased the ranks of the homeless in the first place. And why this shelter, in this location, with this landlord?
Hess, in his introduction, said that after it was formed last year, Housing Solutions USA had begun to "scour the city" for suitable properties in which to meet the crisis, and as fate would have it, found one.
"In this particular case," he said, "a landlord, Alan Lapes, showed us the facility on West 9th Street."
He did not mention that Lapes was also the landlord of the building that houses his company's headquarters, which is ultimately owned by Podolsky's family. Nor that Housing Solutions USA has shelter contracts at many other buildings that trace back to Podolsky, his family, or his company. Nor did he discuss the fact that Lapes and Podolsky have close business relationships with all three members of his nonprofit's outside board, who oversee—among other things—his employment.
(Hess' salary, like many other details pertaining to Housing Solutions USA, is supposed to be disclosed in the agency's annual I.R.S. filings, which he has refused to release, as is required by federal law, claiming that the nonprofit has not been in existence long enough to have filed them.)
Hess protested that he could not answer many questions about property renovations, maintenance, or his lease arrangements, claiming that he had to defer on these issues to the landlord—who was not present. Why, one citizen asked, did it appear that the property owner had collected an affordable-housing tax abatement on the building for many years, while it stood vacant? How, many asked, could a 10-unit condo building be converted into a group home for 170 men without any substantial renovations—and thus buildings permits? Hess shrugged and said he couldn't speak for the property's owners.
Working from the tentative $102-per-night estimate provided by D.H.S.—around the same cost as the rate at the Super 8 Hotel in Park Slope, when I checked last night—you can extrapolate that the city will be paying, at an absolute minimum, more than $6 million a year for the facility in Carroll Gardens. The cost for comparable Housing Solutions facilities, however, suggests the value of the contract will actually be much higher, and much of it will be paid to the owners of the building as rent. A flier handed out to the audience on their way in the door—which drew heavily on my previous reporting for Capital—detailed Lapes' and Podolsky's dubious histories: the "Hell Hotel" (as the Daily News called it) that Lapes ran near Times Square; Podolsky's 1980s conviction for unleashing a "routine of terror" on rent-controlled tenants of a building he owned on the Upper West Side.
"Why would you do business with someone like Alan Lapes?" one questioner asked Hess, as the evening drew to a close. "Why would you do business with someone like Stuart Podolsky?"
"There's been a lot said, I would suspect some true, some untrue," Hess replied. "We take, and I personally take, the issue of potential conflict-of-interest very, very seriously. We are conducting a complete internal investigation, so we can get to the bottom of what has happened, and what has not happened, what is true and what is not true, and get it resolved to the extent that there is anything to resolve. We don't believe that anything that's been done within the organization has been inappropriate. But we're going to find out."
Of course, Hess is presumably aware of who his landlord is, who his board members are, and who he ultimately answers to, even if the public can only speculate.
Critics say the nonprofit's numerous apparent connections to Podolsky raise serious questions of conflict of interest and self-dealing, questions that are unlikely to be examined until well after the emergency contract is awarded, if at all. When the conflict of interest issues were raised, Zablocki deflected the issue.
"We will take those concerns back to the commissioner," he said.
And with that, the contentious meeting adjourned.
"If anything happens to the kids of this community," one man shouted at Hess as he stood to leave, "I'm going to come to your house!"
Immediately afterward, I approached Hess—who has consistently declined my interview requests—at the front of the room, introduced myself, and asked about the ethical issues surrounding the deal, and about the nature of the investigation he says his organization is conducting.
"I don't have any comment for you," Hess said, stressing the word "you."
"How is this investigation being conducted," I went on, "if your own board members ..."
Before I could finish, the former commissioner of D.H.S. turned on his heel and ducked behind a police officer, who politely blocked any further questions as Hess ducked out a rear exit.