Homeless Profit-Taking

Brooklyn Developer Pulls Bait and Switch on Neighborhood

Not that it ever really left, but New York's homeless crisis is back—full throttle. And so are those who always figure out how to make money on people in need.

A case in point is one of the city's latest prospective homeless shelters, a spanking new six-story red-brick building that towers above its two- and three-story neighbors on a side street in Fort Greene, Brooklyn. A year ago, when developers first began work at 65 Clermont Avenue, they posted a large sign out front declaring that luxury apartments would be offered. This pleased many of the block's residents who had seen fires and abandonment wipe out the homes that once stood there. For years, they said, they had waited to see the rubble-strewn lots alongside the elevated Brooklyn-Queens Expressway become something other than a dumping ground.

"Every morning I would walk by and see them at work," recalled Virginia Schwartzberg, who lives three doors up from the site. "I'd say, 'Hi, howareya? Lookin' good.' They'd wave back. They must've thought we were so dumb."

October surprise: Concerned neighbors outside 65 Clermont Avenue. Developers originally planned rental housing at the site, but then leased it as a revolving-door hotel for homeless families.
photo: Lauren Fleishman
October surprise: Concerned neighbors outside 65 Clermont Avenue. Developers originally planned rental housing at the site, but then leased it as a revolving-door hotel for homeless families.

The building rose three stories, fitting in snugly next to the modest brick and frame homes beside it on the residential block, which also has a public school and three day care centers. Then, as neighbors gaped, the structure grew another three floors, to a towering 60 feet, dwarfing all else around it.

In late summer, Margaret Delapp, who has lived next door for 30 years, watched as a truck pulled up and workers began unloading dozens of used mattresses and bunk beds. Another delivery contained freestanding closets. What are those for? she asked. "Shelter," was the response.

"That's when we found out they had turned it into a hotel," said Dan Borrero, 39, who grew up a block away, and runs Mr. D's Video across the street on Park Avenue. "Nobody knew a thing about it. Not the community board, not the politicians. No one."

The news was especially jarring to Borrero. He had purchased the lots three years earlier and installed chain-link fences to stop the illegal dumping. As the neighborhood improved, he got offers to sell. One was from a businessman who wanted to install pillars for a mammoth billboard sign. "I didn't like that idea," said Borrero. He later accepted $10,000 less from a Borough Park-based development firm called the Wolf Group, which told him it was going to erect three-family homes.

After he realized he had been victimized in a kind of bait-and-switch game, Borrero and other neighbors tried to reach the Wolf firm without success.

In the jargon of the homeless business, plans call for the building to serve as a "transitional shelter-hotel." Its 24 tiny rooms, each crowded with bunk bed, double bed, desk, bureau, and kitchen appliances, will serve as temporary homes for families while they are evaluated to see if they should be provided other housing by the city.

There were 37,000 homeless in the city's shelters last month, a figure that is mainly women and children. It is the most since 1987, when the population crested at 29,000 after rising in an ever-swelling wave through the early '80s. The numbers subsided only after public pressure compelled the city and state administrations, then led, respectively, by Ed Koch and Mario Cuomo, to fund new, low-cost housing. A new system of humane shelters was also created. Run by nonprofit organizations and staffed by specialists who helped the homeless cope with their individual problems, they provided day care, job training, drug counseling, and help in finding a new home.

Prior to these new transitional residences, the official policy was to send families to squalid, rundown hotels like the old Martinique on Herald Square, the Hotel Carter on West 43rd Street, and the execrable Brooklyn Arms, now demolished, that stood across from the Brooklyn Academy of Music. The city paid a fortune to the operators of these hotels, who treated their guests like cattle, made few repairs, and tried to bar the doors to anyone who sought to examine the horrific conditions. Like wartime profiteers, the hotel managers understood that, in an emergency, there are shovelfuls of money to be made.

Now, with homeless numbers soaring again, some landlords are reaching the simple economic conclusion that there is more profit to be made putting up the homeless than providing regular housing. The city no longer does business with the worst hotels, but it still pays top dollar. The going rate for a provider of emergency shelter is $90 to $95 a night, according to the city's Department of Homeless Services, which is struggling to cope with the exploding crisis. The developers of the Clermont Avenue building refused comment, but the emergency payments appear to be well above the income the owners might have expected had they offered their apartments as conventional rentals.

During the city's last homeless crisis, advocates finally drove home the point that as long as the city was going to spend huge amounts sheltering the homeless, it was better off directing the funds to nonprofit organizations, which would provide decent lodgings along with a panoply of services that helped pull the families out of homelessness.

"The [nonprofit] providers are the best equipped, the most sensitive to the needs of homeless New Yorkers," said Lauri Cole, the director of ASPHA/Tier 2 Coalition, an organization representing 58 nonprofit shelter operators. "They are the ones you would turn to first."

But interest in sustaining the push for more affordable housing and the creation of additional nonprofit shelters waned during the Giuliani and Pataki administrations. And now, under pressure of a decades-old court order that compels it to provide shelter for needy families, the city is once again scrambling to enlist private landlords motivated solely by profit.

Neighbors of the new shelter on Clermont Avenue, fearful of the old welfare-hotel-style conditions, met with city officials to ask if an experienced nonprofit organization could at least be brought in to manage the hotel. They said they were told that wasn't possible. "We are working aggressively to understand and address the issues raised by the community," said Jim Anderson, a spokesman for the homeless agency.

The neighbors had good reason for concern about operations at the new site. This February, the building's contractor, Moshe Junger, was sentenced to four months in prison for ignoring unsafe conditions that caused the death of one of his employees in a building collapse at another site in nearby Williamsburg.

The owner's architect, Henry Radusky, also ran afoul of authorities after he was found to have "repeatedly failed to follow the building code and the zoning resolution in his filings," according to the city's buildings department. Radusky has voluntarily surrendered his right to self-certify plans, officials said. The building plans for the Clermont Avenue project themselves reveal a tangle of often contradictory assertions. In order to meet minimum requirements of 400 square feet per apartment, the owner asked that city inspectors include the exterior and interior walls in their computations. Then, in an effort to avoid a requirement for secondary emergency exits, such as fire escapes, for the units, the owners asked that the square footage calculations be reduced. The owners also never filed an application to create a transient hotel, which buildings department officials said would be an improper use for the area, which is zoned for residential dwellings.

The hotel itself is to be managed by David Somerstein, of Somerstein Associates in Flushing, Queens. Somerstein operates more than a dozen separate for-profit homeless shelter sites in the Bronx, Manhattan, and Brooklyn. He did not respond to calls to his office.

Neighbors said they were not opposed to having the homeless as neighbors. "We wouldn't have any problem if they made this into permanent housing for the homeless," said Schwartzberg whose husband, Howard, teaches at several nonprofit homeless shelters. "But as a hotel, there could be as many as 200 strangers on this block every month, coming and going."

The first families are expected to arrive sometime this month, according to workers at the building. But the owners have already started earning revenue from the site. A large mesh banner advertising the new Eddie Murphy movie, I Spy, has been hung over the top four floors, covering the rear windows. The banner hangs neatly against the wall because there are no fire escapes to get in the way.

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