Dream Off?

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“I’ve got a sister at 690 141st Street and some grandnieces at Triple-Six,” says Norma Allen, the president of Tenants United for a Better Living. Her voice is agitated as she stands tall in the office of the group representing the more than 2,000 low-income families who live in one of New York City’s most sprawling housing developments: the Jose de Diego Beekman Houses.

Allen lights a Kool in front of a “No Smoking” sign and ticks off a half-dozen other relatives–aunts, nephews, cousins–who are sprinkled throughout Beekman’s eight-square-block spread of low-rise brick buildings. These family members are connected not just by birth and marriage, but by decades of fighting to make their homes safe–from drug gangs, from collapsing infrastructure and from one of the Northeast’s most notorious big landlords.

Now, they are bound by the alarming possibility that the scheme they’ve been developing for six years to take over ownership of the battered buildings will fall into a void–the no-man’s land between two administrations in Washington. The worst-case scenario, hinted at by HUD and feared by tenants: The agency will sell the buildings, which are $27 million in debt, individually on the open market.

“We don’t want them to turn this property over to just anybody,” says resident and former Tenants United president Wilma Johnson. “We’re families in 38 buildings, and we want to stay together.”

After their experience with their last landlord, the tenants here don’t want to take any chances. Starting in the early 1970s, the U.S. Department of Housing and Urban Development gave a Boston real estate company, Continental Wingate, not only the deteriorating buildings but mortgage guarantees, generous tax breaks and up to $12 million a year in federal housing subsidies. All the company had to do in exchange was keep up the buildings and provide decent and safe housing to poor families.

It didn’t. Fed up with sporadic heat, backed-up sewage, infestations of rats, piles of trash in the hallways, crumbling ceilings and unlit and unsafe hallways, Allen and dozens of fellow tenants organized in the mid 1990s and convinced HUD to investigate Continental Wingate, a billion-dollar company owned by Gerald Schuster, a major Democratic party contributor. It all began when a few women, tired of covering broken windows with plastic sheets, knocked on their neighbors’ doors and, with the help of a tenant organizer, began meeting and agitating until they couldn’t be ignored.

As City Limits reported in an award-winning series [“Anatomy of a Sweetheart Deal,” November 1997, and “Reversal of Fortune,” December 1997], the feds’ probe uncovered negligence, fraud and buildings run like a bank machine. Critics of the Clinton Administration also found ammunition to accuse then-HUD Secretary Andrew Cuomo of giving a major break to a politically connected developer.

Yet even amid that wreckage, ambitious affordable-housing developers saw the vast 1,200-unit Beekman complex as full of possibilities for revitalizing long-suffering Mott Haven. They sat down with the tenants to develop a plan to reclaim the buildings, and came up with an imaginative vision for tenant control and community development, in which the tenants would own the project, helped by managers with expertise in cleaning up troubled buildings. Residents would have home computers, on-site day care, a security force–the building blocks for a thriving community. HUD’s own consultants confirmed that the complicated funding scheme would work.

For nearly two years, Continental Wingate has been out of the picture entirely–and HUD officials have assured tenants repeatedly that their plan was back on track. “I thought it was a win-win situation for everyone,” says Victor Solomon, one of the prospective managers of the complex. “I thought HUD would jump at this.”

But if HUD itself has been enthusiastic about the tenants’ proposal, it hasn’t been showing it. Six years after the residents demanded the agency help them, and four years after HUD agreed to turn the project over to the tenants, the Beekman plan is still only an extremely detailed proposition. For much of the past year, the tenants have had no contact with HUD at all.

Only at the end of January, once City Limits started making calls, did HUD get serious about negotiations. Now, it’s a race to the finish. HUD officials appointed under Clinton are finally hammering out financial details with the management team. But the flurry of activity may well be too late. Even if regional HUD staff agree to a last-minute deal, there are no guarantees that their new bosses in the Bush administration will green-light the ambitious plan–its ties to a major Clinton campaign donor hardly help–or that the people negotiating the project will still have jobs a few months from now.

Housing developers involved in the negotiations say it should never have come down to this. Cuomo’s HUD, they say, had plenty of time to approve the Beekman plan. “HUD has thrown up roadblocks instead of making decisions,” charges Gale Kaufman, who served as a technical consultant to the plan from the New York City Housing Partnership. Beekman’s Wilma Johnson, who has been working on the plan for five years now, says negotiating with HUD is “like beating your head up against a stone wall.”

The tenants and their management team look back on the thousands of pages of administrative and financing proposals they’ve submitted to HUD, the months they’ve waited for feedback, the funds that have been promised and then withdrawn, and wonder what happened. Was it a change in HUD policy? In personnel? Did HUD decide the tenants were expendable once Continental Wingate was out of the picture? Did Secretary Cuomo, who announced his candidacy for New York governor in February, decide to make the Beekman bailout his successors’ problem instead of his own political liability?

Norma Allen doesn’t know. After 23 years living at Beekman, doing battle with both a corrupt management company and the federal government, she has little faith that outsiders are looking out for the people who live here–and she’s not positive they’re interested in the tenant takeover. There’s just one thing she’s sure of. “To divide us would be wrong,” says Allen. “We’re related not just by blood but by Beekman.”

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In 1996, the Beekman tenants thought they could see their way out of their mess, as affordable-housing developers converged on the complex with talk of transformation and community power. Kathryn Wylde, then head of the New York City Housing Partnership, envisioned a role for the Neighborhood Entrepreneurs Program, a citywide housing program she helped design to transfer troubled buildings from city ownership to handpicked landlords with community ties. Wylde introduced the tenants to some of the program’s landlords, and five of them stuck around, including Michael Rooney, a financial expert in low-income housing, and Victor Solomon, the owner of a Harlem real estate business. HUD urged them to unite in a new company, Diversified Management.

By 1997, the tenants, Diversified, Continental Wingate, the Housing Partnership and HUD consultants had ironed out a deal committing to the “redevelopment of Jose de Diego Beekman Houses” under a “locally based ownership structure.” The agreement included millions in federal and city dollars and $2 million from Continental Wingate, which would remain as a limited partner [see “Anatomy of a Sweetheart Deal,” November 1997].

For HUD, the tenant deal was a good story. It turned attention away from Continental Wingate and suggested that HUD was open to innovative solutions. It was a chance to recast a disaster into a showpiece.

But the agreement, and the tenants’ ambitions, were sidetracked from the start. Continental Wingate was not just a financial liability for HUD, but a political one, too: General partner Gerald Schuster and his wife, Elaine, were devoted Democratic Party fundraisers, raising millions for President Clinton’s campaigns and the Democratic National Committee. When details of the deal were made public by City Limits in late 1997, it looked an awful lot like a $40 million bailout of a wealthy and politically connected slumlord. HUD’s inspector general concluded at the time that the deal “rewards a landlord who may bear responsibility for the deplorable conditions of the projects.”

The IG had worse in store for Continental Wingate. In early 1998, the office found that the company had done more than run Beekman into the ground–it also may have misappropriated $1.4 million of federal money intended for the buildings. For HUD to go ahead with the original plan could have meant more bad press and more embarrassing investigations into Schuster’s company. HUD put the Beekman deal on hold.

That June, it asked Continental Wingate to increase its contribution to the bailout, to $6.4 million. Wingate refused, and HUD, eager to get Continental Wingate out of the picture, seized the Beekman deeds in May 1999. Continental Wingate, which did not return calls from City Limits , has yet to pay a cent toward the rehabilitation of the buildings it bled.

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The Beekman blowup set back the tenant takeover plan by at least a year. But the delay was a blessing, too, giving the tenants and Diversified the opportunity to improve their scheme, their way. Hundreds of hours of meetings led to a proposal for day care for 50 preschoolers, to be housed in converted apartments, and a partnership with a local computer recycler and technology trainer, Per Scholas, to equip each apartment with a PC and Internet line and train residents to use them. “Our plan’s about making life better for Beekman’s people,” says Johnson. “Part of what we need isn’t just a clean apartment, but help with our kids. So we added the day care. And people need to learn to use those computers so they can get jobs. So we added that too.”

Wingate’s exit also paved the way for tenants to establish a mutual housing association–a new nonprofit entity, controlled by tenant-members and a board of directors, that would run the buildings and their finances. A strong cast of neighborhood leaders and housing advocates has committed to serve on the association’s board, including the Housing Partnership’s George Armstrong, Rev. Martha Overall of St. Ann’s Church in Mott Haven, Lorraine Montenegro of the advocacy group United Bronx Parents, and a local police chief.

The plan got more financially sound, too. Without Wingate, Diversified needed to find other sources of money; it got a commitment from Fleet Bank for a $23 million construction loan to fix up the complex. The Diversified plan calls for federal and city subsidies to be paid out gradually over the next 12 to 16 years: $19.6 million from HUD, $7.5 million in tax breaks from the city and a $3.3 million loan from the city Housing Development Corporation, on top of income from rents and Section 8 housing subsidy payments.

“It’s a truly outstanding plan, a remarkable concept,” says Rev. Overall. “I’ve been involved with Diego Beekman houses since I first came to Mott Haven 20 years ago. The tenants have been in such an awful situation. But this new plan will improve their lives.”

The tenants couldn’t agree more. Under the buildings’ temporary overseer, Arco Management, their living conditions have improved, and new security measures like surveillance cameras and timed lighting are a godsend. “There’s a big difference between back then and now,” says Allen. “The buildings are in pretty decent condition right now.”

But the cleanup didn’t make them forget their bigger ambitions. Eager to make HUD understand the breadth of community support for the Beekman plan, they brought a representative from each of the 38 buildings, plus their board members and local elected officials, to a meeting HUD called in March of last year–their first since the tenants had turned in their revised plan in June 1999. “Until then,” contends Diversified’s Solomon, HUD officials “didn’t really know how hard these tenants had worked and how much pull the community had.”

At the meeting, HUD said it would get back to the team with comments. (By now, the agency had asked for so much information that the team’s plans included loads of minutiae, such as a commitment that janitors should be “using a solution of soap and water, thoroughly mop floors, including behind and beneath laundry machines.”)

Then came an unexpected response: six months of dead silence. As late as this December, Solomon complained that “HUD is pulling out the rug completely.” By then, chads and ballots were the only matters anyone in Washington seemed to care about, and it was clear that the Clinton-Gore era could be coming to an end. The tenants turned in desperation to local elected officials, particularly Congressman José E. Serrano, and asked them to get HUD to finalize the deal. Serrano met with HUD personnel in Washington, D.C., and gave the tenants more suggestions for improving their plan. But still, HUD was silent.

Cut off from contact with HUD, Rooney could only reflect back on what one official told him prior to the big March meeting: “We’re thinking of bidding this out,” meaning that the agency would bypass the tenant agreement and seek another owner. HUD denies that it is considering auctioning the buildings.

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The Beekman team’s relationship with HUD wasn’t always so distant. Until the beginning of 2000, the main HUD contact with the tenants was Bill de Blasio, Secretary Cuomo’s representative in the New York region. The tenants respected de Blasio, who came regularly to the South Bronx. “He listened to us,” says Norma Allen, pointing to a letter posted on the wall of the Tenants United office, dated April 19, 1999: It’s from de Blasio, assuring them that a tenant with heat and hot water complaints had had them fixed.

But the Continental Wingate scandal strained relations. After the company was kicked out, de Blasio told the tenants that HUD would move forward with their plan. Still, the tenants were worried. They believed that the political pressure–and embarrassing presence–of Continental Wingate had first driven HUD to the bargaining table in 1994. With the attention-gathering slumlord gone, would HUD still give heed to a group of organized South Bronx residents?

De Blasio vehemently disputes that HUD lost interest in the project after it got rid of Wingate: “That flies in the face of all the evidence,” says de Blasio. “The amount of time, money and energy we put in this project after Continental Wingate left contradicts that.”

But another departure does appear to have made a decisive difference in the negotiations: de Blasio’s. He left in November 1999 to run Hillary Clinton’s Senate campaign (and is now running for City Council). The responsibility of working with tenants on the Beekman plan shifted to another official, and she began to openly question HUD’s commitment to the project. Deborah VanAmerongen, HUD’s director of multi-family housing in New York, hammered away at two of the project’s building blocks: the choice of the project’s management team and the use of millions in federal subsidies to finance the deal. Both decisions, the Partnership’s Gale Kaufman and others point out testily, were first recommended by HUD.

HUD representatives informed the tenants early last year that they weren’t sure Diversified was qualified. “We are not aware that any of the members of the development team have either monitored or managed a project of this size,” VanAmerongen tells City Limits.

Kaufman says she finds that point of view incredible. “This team manages several thousand apartments,” she says. “And what they’re particularly good at is managing troubled properties with unhappy tenants. They have an impressive track record at improving them and involving tenants in making decisions.” The Diversified partners currently manage over 3,500 low-income apartments in New York City, including a 900-unit project in the Bronx. Also giving Diversified a vote of confidence is the powerful Enterprise Foundation, which agreed in December 2000 to regularly evaluate the project’s financial health and its impact on the tenants. Enterprise, laughs Rooney, “can remove us from the project in a day.”

The other sticking point is $19.6 million in proposed federal subsidies, in the form of interest reduction payments on the buildings’ massive mortgage. That subsidy was inked into the original Continental Wingate deal, to the tune of $1 million a year, and Diversified had always anticipated it would be there for them to use. But VanAmerongen has contended that Congress’ 1998 public housing act might prohibit use of the money for the complex’s redevelopment. Disregarding her agency’s original commitment to include interest reduction payments in the deal, she urged Beekman’s development team to create a new financial plan without it.

Rooney and Solomon are still pushing for that money, which they say will make or break the deal. As of late February, HUD’s Philadelphia regional office was negotiating with Diversified over not whether the interest reduction funds can be used, but how much they will need.

As some federal officials pack their desks and new ones arrive, Beekman tenants are trying to be hopeful each time HUD calls a new meeting or requests a new document. But they’ve also grown weary of waiting. “This place has done wore me out,” says Johnson.

For Johnson and her neighbors, the joys of the victories of the mid-1990s have faded, and they just don’t understand why. “HUD was willing to cut a deal with Continental Wingate and let them go with a slap on the wrist,” she observes. “Our plan has support from bankers and a board with big-name people. Why will HUD make an agreement with criminals but not us?”

Matt Pacenza is a Brooklyn-based freelance writer.