Maladies at the Malibu

City Houses HIV-Positive Homeless in Illegal SRO

When Debbie first checked into the Malibu Hotel, the linens in her room were marked with bloodstains and cigarette burns. She turned on a faucet and roaches scurried out of the nozzle. But all that wasn't as bad as the night last May, she says, when a Malibu security guard came banging on her door after 3 a.m., demanding intercourse, a blowjob, or both for the right to stay in her room.

Debbie, 33, is homeless and HIV-positive. For five years she has been in and out of the city's HIV/AIDS Services Administration's (HASA) emergency shelter system. But in all that time, she says, one hotel owner has provided the worst accommodations with the fewest services and yet fetches the highest city rates—the Malibu's Hank Freid.

Freid runs Branic International Realty and a few other companies like 11th Street Associates and Helm's Properties, paper corporations in which his ownership in a handful of illegally converted single-room-occupancy (SRO) hotels has been disguised. Many, like the Malibu, at 2686, 2688, and 2690 Broadway, are riddled with serious code violations; nearly all have been cited for vermin and rats.

Freid housing has been deemed "unfit for human habitation."
photo: Keith Bedford
Freid housing has been deemed "unfit for human habitation."

But there are no vacancies. For the last year, Freid has been renting rooms exclusively to HASA, a small division of the city's expansive Human Resources Administration (HRA), an agency under court order to find what lawyers and judges call "medically appropriate" sites to house clients in permanent and emergency shelters. Typically, HASA puts up homeless clients in emergency SROs for only 28 days: just long enough for many to get their lives in order, and not quite long enough to obtain tenant's rights. So they move, shuffling in and out of 54 emergency hotels scattered throughout the city.

Debbie lived at the Malibu for three months. "Other hotels don't have these kinds of problems," she says. For starters, the building where she lived, the north wing of the Malibu at 2690 Broadway, is illegal. Currently, it doesn't have a certificate of occupancy (CO), and until mid August, a vacate order issued nine years ago by the Department of Housing and Preservation Development (HPD) was still in force, deeming the property "dangerous" and "unfit for human habitation." Clients complain about toilets that often don't work and interruptions in heat or hot water service.

Still, taxpayers pay Freid a whopping $2400 a month for rooms in the Malibu. That's currently the highest rate, according to HASA's executive deputy director, Jane Corbett, who says that sites are selected for their services, and clients are placed in the cheapest hotels first. However, according to an internal list of all arrangements with SRO landlords, HASA's been paying Freid nearly double what they pay most providers, for many rooms that clients say fail to offer the required services, such as fridges to keep medication cold, fans or air conditioners, and new mattresses, much less the amenities like community kitchens. So far this year, Freid's taken in over $4 million, for five locations—two of which HASA top officials like Corbett are unaware house their clients.

"It's lunacy," says Jennifer Flynn, director of the nonprofit New York City Aids Housing Network. "We're paying ridiculous rates to house these people in crappy and illegal rooms—the money could be used for permanent housing." That's the goal, but HASA's spending priorities have been duly criticized. In a recent oversight meeting, City Council members grilled HRA Commissioner Verna Eggleston and Corbett about funds mismanaged in fiscal year 2002. Why, they asked, did HASA choose not to spend 15 percent of its allotted budget for permanent housing, but spend 150 percent on emergency placements in unsuitable SROs like the Malibu? There were no answers. Eggleston kept her head down. "I got a lot of fixin' to do," she said.

She might consider starting with Freid. "When the homeless first started coming, I thought we were doing something good for the community," says one of Freid's top employees. "It never happened that way. We're bilking the city for more than you could imagine—for bullshit rooms! Hank has a very close relationship with the city."

The city Department of Investigations (DOI), the agency that probes municipal corruption, is currently investigating Freid. "We've received some complaints about the Malibu Hotel and we're reviewing those complaints," said Emily Gest, DOI spokeswoman, in a statement.

Says Rick de Ariaz, a veteran HASA field supervisor: "Since day one, we've never had a clear mission on how and where to house our clients. We put them in places like Dachau, then make multimillionaires out of millionaires who fail to provide what they promise. It's a totally broken social policy."

Freid, like many SRO landlords, tries to keep a low public profile. He doesn't allow photos to be taken of himself, he says. He's not that discreet, though, about the wealth real estate has brought him. He drives three cars, including a Mercedes-Benz S600 and a Range Rover. "We work hard for our money," he says in the lobby of the Trump Palace, his city home. "Why shouldn't we spend?"

Some violations have gone on too long, he admits, but he says rooms are in prime condition. "Why's everybody picking me out?" he says. "I'm the one putting these people up. If it's not me, it's going to be somebody else. I'm bending over backwards. If anything, the city should be paying me more."

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