Real Estate

City reinstates plan to convert hundreds of shelter apartments into affordable housing

740 East 243rd Street in the Bronx.

The city’s plan will lead to new apartments for 1,200 formerly homeless New Yorkers

New York City is finalizing a deal to purchase 17 apartment buildings in the controversial, Giuliani-era cluster site program which for decades has paid private landlords inflated rents to house homeless families in rent-stabilized apartments. The city confirmed Thursday that 468 cluster apartments in the Bronx and Brooklyn will be converted back to permanent affordable housing for homeless families.

Initially announced in December, the deal was put on hold in January after the New York Daily News reported that the notorious Podolsky family, reportedly under federal investigation for tax evasion, owned the buildings in question. “I want to caution, I don’t know this family. I don’t know the history of this family,” Mayor Bill de Blasio told the Daily News in February.

But a spokeswoman for the mayor said Thursday that the city reviewed the allegations against the Podolsky family and decided to move forward as planned. The purchase price is $173 million, City Hall confirmed—above the independently-appraised value of $143.1 million. The sale was negotiated under threat of eminent domain, according to city officials.

“Under threat of eminent domain, we are immediately providing permanent affordable housing to 1,200 homeless New Yorkers, while upgrading these buildings, guaranteeing rent-stabilized leases and regulatory protections for these families and other low-income tenants,” said Human Resources Administration commissioner Steven Banks in a statement.

The city declined to provide the exact addresses of the buildings. Attorney David Satnick, who represents the Podolskys, did not immediately respond to a request for comment. A spokesman for the family told the Daily News they are “delighted” with the deal.

Nonprofit service provider Samaritan Daytop Village will manage two buildings in the Podolsky deal, 708-10 and 740 East 243rd Street in the Bronx, president Mitchell Netburn confirmed. The first building has 50 units and 18 open hazardous violations including mold, roaches and a broken door, according to HPD records. The second building has 72 units and 14 hazardous violations. “We will have full-time staff on site,” Netburn said. The city will identify homeless families to move into any vacant units, he added. Their contract is still being negotiated.

The Podolsky deal is another step toward the mayor’s commitment to phase out the notoriously mismanaged cluster site program, which will soon have about 1,090 units down from a 2016 peak of 3,650. (Cluster site contracts have stipulated the city pay an average of $2,7000 per month, per apartment, in excess of stabilized rents.) Other cluster sites have been converted to traditional shelters, an approach advocates have criticized since it cuts into the city’s already dwindling stock of rent-stabilized apartments. In Brooklyn, 60 former cluster site families are fighting eviction after the city exited contracts with their landlord, Barry Hers.

Though it’s never ideal to reward bad landlords says Judith Goldiner, Attorney-in-Charge of the Civil Law Reform Unit at the Legal Aid Society, purchasing back and preserving cluster sites is the best outcome for the mix of homeless and rent-stabilized tenants living across these buildings.

“I hope there will be more of these deals,” Goldiner told Curbed. “The city could have used eminent domain but there would have been huge litigation costs and it would have taken a long time, and this ensures that people are going to get out from under these evil landlords quicker.”

The Podolsky buildings, she argued, “could have been sold to some other scumbag and the tenants would have been left twisting in the wind.”

Monique George, executive director of the nonprofit Picture the Homeless, said her organization is “really excited” about the deal. “We’re hoping that the city makes more steps forward to make a real dent in homelessness,” she added. There were 63,839 New Yorkers living in shelters as of January.

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