In the early 1990s, with New York City eager to find creative ways of rehabilitating its troubled neighborhoods, it struck a multimillion-dollar deal with the Greater Harlem Chamber of Commerce: The city sold the chamber a collection of dilapidated Harlem apartment buildings for a nominal amount, and arranged for close to $10 million in low-cost loans to help fix and restore the buildings.
The deal could hardly have gone worse — in almost every way, and over many, many years.
The chamber’s development arm twice faced foreclosure on the collection of properties; utility bills went unpaid, and renovations were never done.
Nonetheless, in 2008, after years of failed promises to run the buildings effectively, the Bloomberg administration chose to invest additional millions with the chamber’s development arm, known formally as Greater Harlem Housing Development Corporation. It awarded the group a $2.55 million forgivable loan, essentially a grant, to take care of long-neglected rehabilitation work. Now, two years later, there is evidence this investment has proved as troubled and disappointing as the first one.
A review of the public record makes clear the decision to award the money came just as the administration was in the final push to gain City Council approval for one of its largest and most controversial neighborhood rezoning initiatives, a plan to change the rules for development in an area that straddles 125th Street, Harlem’s main thoroughfare.
Such things do not move forward without the approval of the local council member. And in Harlem, that person was Inez E. Dickens, a woman with a lifetime’s worth of connections to the Harlem chamber and its president, Lloyd A. Williams. Ms. Dickens’s father had been president of the chamber before Mr. Williams; she had served on its board; and Mr. Williams had been among her few fund-raisers.
Ms. Dickens had initially spoken against Mayor Michael R. Bloomberg’s rezoning plan for Harlem. The plan — which involved things like initiatives for housing and rules on the heights of new buildings — had provoked fierce neighborhood opposition from those who feared that remaking the neighborhood’s signature thoroughfare would price out longtime residents and businesses.
But on April 30, 2008, Ms. Dickens threw her support behind the plan, and directed her colleagues on the City Council to approve it, a decision that provoked jeers and taunting from dozens of Harlem residents who had turned up at City Hall. The same day, the city’s Department of Housing Preservation and Development notified Mr. Williams that it was finalizing the $2.55 million grant.
Ms. Dickens declined a request for an interview.
Eric Bederman, a spokesman for the city’s Department of Housing Preservation and Development, said there was no connection between the approval of the loan and Ms. Dickens’s support for the rezoning plan.
The new loan has yet to yield much beyond additional problems. Repair work that was supposed to be done to the more than dozen buildings along 135th Street in the heart of Harlem has not been completed; building code violations that were to be corrected are still unresolved. And in court filings this year, Mr. Williams conceded that Greater Harlem Housing was “unable to manage and fund the operation of the properties on its own.”
The Harlem Chamber of Commerce was founded in 1896 to advocate for and assist uptown businesses. In recent decades, it has taken on more sweeping pursuits. In 1993, for instance, the group formed an arm devoted to developing low-income housing, the Greater Harlem Housing Development Corporation.
The next year, a special committee formed by the chamber personally urged Mayor Rudolph W. Giuliani to let the chamber take over distressed city-owned properties. Two members of that committee were Mr. Williams and Ms. Dickens. “This needs to happen quickly,” Mr. Williams wrote in a March 1994 letter to Mr. Giuliani.
Three months later, the city and Mr. Williams signed a deal to sell nine city-owned properties to Greater Harlem Housing for $38,000. The group bought four additional properties from private sellers for about $350,000. The properties, on or near 135th Street between Adam Clayton Powell Jr. Boulevard and Frederick Douglass Boulevard, held 117 rent-stabilized apartments and 11 commercial spaces.
Problems soon emerged.
In 1997, Greater Harlem Housing faced foreclosure. One of the lenders involved in the deal between the city and the chamber charged the group with having defaulted on $5.7 million in principal and interest and accused it of “misappropriating” $50,000 a month in collected rents.
Greater Harlem defended its performance, and ultimately a resolution was reached with the lender.
But the troubles were multiplying. By 2000, Greater Harlem Housing owed the city more than $320,000 in overdue property taxes. It was eligible for a program that would have helped it limit its liabilities, but had never filed the paperwork.
In 2005, the lender again moved to foreclose on the chamber’s holdings. Mr. Williams wrote in a court affidavit that Greater Harlem Housing was trying “to restore itself to fiscal viability.” He acknowledged “the need for capital improvements and repairs” but blamed rent-stabilization laws and delinquent tenants for the group’s financial distress.
A tenants’ group saw things differently. It wrote to the judge complaining about “years of mismanagement” and “the neglect and deplorable conditions” of the buildings.
“Additionally, past history has proven” the organization “incapable of properly owning and managing these properties,” the group said.
In spring 2006 the city intervened to give Greater Harlem Housing another reprieve.
Mr. Williams has long been at the center of the Harlem Chamber of Commerce’s expanding interests. He is president of the three nonprofit organizations run from the chamber’s headquarters and an active player in Harlem politics.
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The location of Harlem Housing Development properties.
He runs a for-profit company, LMR Productions, which is based in the same offices as the chamber and shares key staff members. LMR bills the chamber’s nonprofits for “production” and “solicitation” fees. Mr. Williams also had a brief experience as a partner in a for-profit enterprise to rehabilitate affordable apartments.
It did not, though, go any better than the Greater Harlem Housing project.
In 1992, the city sold eight buildings to Uptown Housing Partnership for a dollar each. Mr. Williams was an officer of the partnership, and problems emerged quickly there as well.
In 1996, a lender sued the partnership for having defaulted on $3.7 million in mortgages, and Mr. Williams and his partners lost the buildings in a 1999 foreclosure auction.
State and city investigators who began looking into Mr. Williams’s dealings determined that he had used his oversight of another charity to misdirect public money into Greater Harlem Housing.
A federal investigation of Uptown Housing followed. No one was ever charged with a crime, but at the insistence of the city’s Department of Investigation, Mr. Williams was removed from the board of the charity at the center of the inquiry.
Calls to Mr. Williams were referred to Joseph Fleming, the lawyer for Greater Harlem Housing, who said that the difficulties with the apartments in the 13 buildings bought back in 1994 are only part of the picture, and cited the chamber’s work bringing in new businesses and services to revive the area.
“There are a number of things that we’ve helped bring into the area that have really added some significant quality to the lifestyles that people live in the area,” Mr. Fleming said. He mentioned a Quizno’s, a Caribbean restaurant and a bank branch, among others.
Ms. Dickens, 61, joined the Council in 2006. She quickly gained the ear of Speaker Christine C. Quinn, who appointed Ms. Dickens to the leadership position of majority whip. Ms. Dickens took center stage when the Bloomberg administration’s ambitious ideas for rezoning Harlem neared the final stages of the approval process.
The administration, which had successfully rezoned vast parts of Brooklyn and Queens in its efforts to promote development, sought to create a new blueprint for a 24-block corridor on and around 125th Street that would revitalize the area with development.
Such rezoning plans need the approval of the City Council, and so hearings were scheduled and held. The Council has historically deferred to the decision of the local member in such matters.
At a Council subcommittee hearing on the rezoning on April 1, 2008, all eyes turned to Ms. Dickens. Her voice rose as she described herself as inspired by civil rights leaders in her “fight” with the city.
“Over all, I’ve felt that the mayor’s rezoning plan favored the developers and did encourage overdevelopment,” she said. “I said no. After long hours of discussion, they understand that I do mean no. And if I do not get the protections and community benefits that my community must have, there will be no rezoning plan signed into law.”
Ms. Dickens, it turns out, had already been asking the Bloomberg administration for help with the Harlem chamber’s various efforts. She was hardly unfamiliar with its principals and its work.
Her father, Lloyd E. Dickens, was a real estate developer and a state assemblyman who had served as the chamber’s president before Mr. Williams. After she and her sister, Delores Richards, took over their father’s real estate company, Ms. Dickens was listed as a member of the chamber’s executive board, including after she joined the Council.
In 2004, the Dickens real estate firm served as a broker on a nearby project, Strivers Gardens, sponsored by the chamber, according to an article in New York Construction, a trade journal.
And Mr. Williams was one of two registered fund-raisers for Ms. Dickens’s successful 2005 City Council campaign and, according to a newspaper report, was the master of ceremonies at her inauguration in 2006.
Since joining the Council, Ms. Dickens has sent several pieces of city business to the chamber, including $75,000 to help minority- and women-owned businesses register for city contracts.
Her initial and public opposition to the administration’s rezoning plan led to weeks of negotiations between Ms. Dickens and city officials. They proved successful, with the city agreeing to some of Ms. Dickens’s demands.
On April 30, 2008, Ms. Dickens endorsed the rezoning, and cleared the way for the full City Council to pass it. As she spoke, people who opposed the plan jeered her from the balconies, shouting “sellout!” and “liar!”
“I need no one to document my commitment to my community,” Ms. Dickens said over shouts from the balcony. That day, the city housing agency gave Mr. Williams the news that it was finishing work on the $2.55 million forgivable loan the chamber had sought.
As part of the deal, the city once again modified Greater Harlem Housing’s mortgage to let it catch up on nearly two years of payments totaling $110,860.62. The group had to pay $22,930.03 in cash; the rest of the arrears were added to the mortgage balance.
In May 2008, five days after the Council vote on the rezoning, Mr. Williams attended a fund-raiser for Ms. Dickens at Melba’s restaurant in Harlem. The event yielded about $20,000, Ms. Dickens’s biggest fund-raising day. Protesters gathered outside the restaurant yelled out again at Ms. Dickens as she left.
“People felt so aggrieved that she was so transparently selling out their interests,” said Michael Henry Adams, a Harlem historian, shortly after the fund-raiser.
Change of Heart
Ms. Dickens has previously cited numerous reasons for supporting the rezoning, including that it would offer new affordable housing, safeguards against overdevelopment and protections for “indigenous” businesses and cultural institutions.
Mr. Bederman, the spokesman for the city’s Department of Housing Preservation and Development, said the agency was aware of the earlier performance problems before the 2008 grant was approved, but noted the forgivable loan program had enough checks and balances that “it works regardless of the prior history of the owner, which shouldn’t be a barrier to the future of these tenants.”
“We were aware of the issues,” Mr. Bederman said. “We do recognize that these are serious concerns, and as such we have followed the necessary procedures for the project during this process and sought to ensure that the organization adhered to the structure of the program.”
Providing the grant, he added, helped prevent a long and uncertain foreclosure process that would have likely caused the repairs to have gone undone even longer.
In the two years since that contentious vote in City Hall, Greater Harlem Housing has continued to founder.
In March, it filed a petition in State Supreme Court seeking permission to sell a large percentage of its interest in the properties to a private real estate developer, the Friedman Organization, for $1.5 million, a fraction of their appraised value.
In the petition, Mr. Williams said that Greater Harlem Housing had been “unable to maintain the infrastructure and staff to provide property management.”
The group owed $100,000 to Consolidated Edison and more than $800,000 to people who lent the group money to help it avoid losing the properties in the 2005 foreclosure.
The petition also shows that a property appraiser hired by the group had determined that the properties should produce $700,000 in annual profit after expenses, something Greater Harlem Housing had not accomplished.
The terms of the 2008 grant from the city required that the repairs be completed and all outstanding code violations be resolved by June 3, 2010.
Neither condition has been met. Mr. Bederman, the city housing spokesman, blamed unforeseen delays. He said that the work was 70 percent completed, and that all the violations would be taken care of upon completion.
Ms. Dickens has since allocated an additional $2 million of city funding for a second phase of rehabilitation, but that money has not yet been released.