Award–winning journalist Andrea Bernstein is Senior Editor for Politics & Policy for WNYC News. She has previously served as Metro Editor, Political Director, Director of Transportation Nation, and Senior Reporter.
Handshake Hotels: Part 3
How a few big landlords benefit from NYC's homeless placement system
Thursday, June 26, 2003
Additional audio and links
On Nancy Wacksteins office wall, theres a framed copy of an old report.
Wackstein: We had done this whole report, when Mayor Dinkins was borough president of Manhattan and I had worked for him then. We had done a whole report, a shelter is not a home.
Wackstein went on to be a top advisor to Mayor Dinkins. She spent the early 1990s trying to move families OUT of what were then called welfare hotels. We gave her a list of the hotels the city is placing the homeless in today.
Wackstein: So these hotels, as Im looking at your list, some of them are the ones that we phased out you know 12 years ago, 13 years ago. I see the Cross Bronx, the Cross Bronx is on here, the Stadium. A lot of them are owned by the same people who owned them then. The Prospect, Hamilton Place, Allerton house these are familiar to me, Baychester.
In the emergency hotel world, there are no contracts, and no competitive bidding. And thats enabled a relatively small group to control almost all the business. Linda Gibbs is the Commissioner of the Department of Homeless Services.
Gibbs: We do work regularly with a group of people who do understand our work and quite frankly step up when we need them.
But Gibbs says this is an open process.
Gibbs: The reality of the past year is the proposals are all eagerly reviewed because we have an increasing demand for family shelters.
We spoke to one would-be provider who has a track record in homeless housing outside New York. He said he submitted five proposals in recent years that have been turned down. He didnt want us to use his name, because he says hed still like to do business with the city.
Senora Selzy admitted its a hard business to enter. As the recently retired Director of the Family Hotel Program for the Department of Homeless Services, she was the one responsible for bringing new hotels into the system.
Selzy: I know of, personally, a number of people, a number of organizations, who offered buildings to the city, that were truly decent to house their homeless families and it didnt happen, it just didnt happen.
Yet the citys payments to hotel owners have increased five fold in just six years, to $180 million. But despite this huge growth in spending, the same small group of a dozen or so operators just keeps getting more and more of the business.
For example, in the first nine months of this fiscal year, homeless services brought on line sixteen new hotels. Almost $9 million was paid out to hotel owners already in the business. Just sixteen thousand dollars went to a new owner.
Harvey Robins was a top official in the Koch and Dinkins Administrations.
Robins: It is a small group and they controlled the air in my room when I was trying to address this issue and they clearly have the city exactly where they want em.
We asked one of those landlords, David Fuld, whether he thought the industry was controlled by a tight-knit group.
Fuld: I think in the real estate industry theres cross-investments and limited partnerships. People invest in one another. People do joint ventures and do deals together. Upper class, middle class, lower class. I dont think thats uncommon in the media and the press either, is it?
But for officials like Harvey Robins, that group had the control.
Robins: We were desperate. At 1, 2, 3 oclock in the morning to be able to make a match and have a family move into a hotel. They knew they had the city over a barrel and they took us to the cleaners.
Prices remain high, costing the city up to $3000 dollars a month for tiny, often dirty rooms. Joan Malin, the Homeless Services commissioner under Mayor Giuliani, says she tried to get a better deal, once.
Malin: This was a particular moment when we did have some give in the system, so we reduced the rate. For the hotel owners. But they went crazy. But I had sufficient vacancies that I could handle it. But that lasted for maybe six months or a year, and as soon as theres pressure back on the system, youre in no position to negotiate.
Without contracts, the city works out a rate on a hotel to hotel basis, shakes hands, and the deal is done.
In his building on East 104th Street, hotel owner David Fuld invited Amy Eddings to take a whiff of the garbage area.
Fuld: Smell it.
Eddings: Smells like oranges.
Fuld: Look up. Its not by accident. It squirts out every few minutes, keeps the place deodorized, people generally are neat, because this is available, people dont generally throw garbage in the hallways, and things ARE kept neat.
Fuld: by the way.
Amy: No roaches.
Fuld: You dont see a roach.
In the hallway, he flags down a resident.
Fuld: Are you very pressed for time? She doesnt know who I am, I stopped
her at random. Did you ever talk to me before?
Fuld: Im one of the owners. This lady works for a radio station. Would you talk to her?
Woman: Its nice, its comforting.
Fuld was the only one of the dozen or so major players in this industry who would grant us an interview.
In the course of our investigation, we found that David Fuld has been in the business for two decades. In the past four years, the city paid him 75 million dollars. One of his business partners is a director of a company being investigated for bribery.
But that information isnt in the citys central database. Unlike people who have contracts, the city doesnt require these hotel owners to disclose anything about themselves, their business partners, their past performance, or whether theyve been investigated. None of this information would necessarily prevent the city from doing business with the owners but these are taxpayer dollars, and taxpayer dollars are usually subject to public scrutiny.
We also learned in this investigation that one city agency is so dissatisfied with David Somerstein it will no longer refer people to his hotel and that that three members of another family in the business, Stuart, Jay and Zenek Podolsky, were convicted in the 1980s of grand larceny.
But the city hasnt required the hotel owners to divulge these details.
Patricia Smith is the first deputy commissioner of the city Human Resources Administration, which provides emergency housing for people with AIDS. We asked her how, without contracts, she would know if one of the hotel owners was partners with, say the late mobster John Gotti.
Smith: How would I know? I wouldnt know, and if I did know the question would be how one acts on that in an emergency housing situation. .. Im not saying its not good information, what Im saying is that our responsibility our primary responsibility at HRA is to house people in a medically appropriate environment because if its a medically appropriate environment we will put an individual there in an emergency.
After we began working on this series, the city said it wanted to move toward a contracted system. As for landlord David Fuld, he said contracts would help him get financing. Yesterday, we asked Mayor Bloomberg: do you as a business man, think its a good idea to end $180 million with no contracts?
Bloomberg: The procurement rules of the city are very complex and there should be some oversight on everything. In some of these cases you cant get multiple vendors who are willing to give you the product that you want so the city isnt conducting a real arms length negotiation, we are asking people, please, please sell us a service that we absolutely have to have.
In the last 20 years, the lack of contracts has surfaced from time to time. Officials promise reform. But the tremendous crush of homeless families continues to arrive, and the emergency housing system doesnt change. This summer, the numbers of homeless are expected to reach record highs. For WNYC, Im Andrea Bernstein.
David Fuld: "We provide a superb service
to families who are in need of it. I think most families you might interview
would suggest theyd rather be in our facilities than elsewhere in
Jacqueline Davis: How long have you lived
in these hotels? Ever since I was 18 off and on I never had an apartment
yet. How are you now? 35.
Sadie James: My youngest is fifteen and I gave temporary
custody of him to my older son until I find a place because hes
in school and I do not want him traveling around with me every 28 days.
Lester and Annette Bell: We lived in Baltimore, Baltimore,
MD, unlike New York doesnt do anything for married couples. We lost
our apartment, we lost our job with World Com
.We knew how the system
worked and said lets come to New York to start all over again.
Patricia Smith, First Deputy Commissioner, New York City Human
Resources Administration and Bob Bailey, Counsel, HRA. If its
a medically appropriate environment, we will put people there.
Linda Gibbs, Commissioner, New York City Department of Homeless
Services, This is a legal relationship that we have for use of conditional
placements. There is nothing inappropriate about it. What were looking
at is trying to build a stronger relationship with the providers that
does use the procurement process.
'Handshake hotels' are only part of the city's uncontracted, emergency homeless housing program. Temporary apartments are also used. Read Bernstein and Eddings' report HERE
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