Call to Investigate Elm Street Condos Triggers Federal Monitoring

March 1, 2012 This was the promise from the Supervisor: "The Ramapo Local Development Corporation (RLDC) is spearheading an initiative to construct a new affordable work-force housing development on Elm Street in Spring Valley. The project, known as Ramapo commons, is going to benefit families who otherwise might not be able to afford to purchase a home in Ramapo." So who are the families who bought the first 24 condos recently completed? A clue: Most of them weren’t people.

The condos were built with town money, and state and federal grants would help buyers finance them. The RLDC, the same group that built the Provident Ballpark, is headed up by Supervisor St. Lawrence, and he told The Journal News the project serves the "tremendous" need for affordable, quality housing. The Executive Director of the RLDC, town attorney Aaron Troodler, said, "The Ramapo Commons project is open to anyone, regardless of who they are, what they look like or what they believe." What neither of these executives bothered to mention is that most of the buyers were not people, they were companies, and several of them had the kind of money to invest more than a million dollars in these affordable, work-force housing units subsidized by the state, town, and federal governments.

Only 24 of the first 48 units have been sold. Here’s a list of the LLCs (Local Development Companies) that bought units—the first four companies bought one unit at $349,000.00 each:

8 Elm Street Apartments, LLC

10 Elm Street Apartments, LLC

Unit 311 Associates, LLC

Spring Valley Elm, LLC

Classical Condos of One LLC (bought two units for $699,000.00

Elm Street Condos, LLC (bought four units for $1,398,000.00

Union Elm Condos, LLC (bought three units for $1,048,500.00

Broad Elm Condos, LLC (bought four units for $1,398,000.00

So 17 of the 24 units were bought not by "families who might not be able to afford to purchase a home in Ramapo," but by speculators.

Of the remaining seven, one was sold to an individual but signed by an LLC owner.

And of the final six deeds, five of the units were sold to individuals from Brooklyn and one, yes only one was sold to a local family from Monsey. (You can see all of the deeds here.)

The publicly heralded intention was to extend a hand to local families by the Ramapo Local Development Corp., but that only worked out for one family.

The fact that the RLDC could only sell half of this first round of construction is likely the reason it was only able to pay part of the multimillion-dollar loan back to Provident Bank. Where they go from here is uncertain. They need to borrow several million more to get the second round of building started. But now, the funding is only part of the problem for St. Lawrence’s RLDC. A formal request for investigations of the Elm Street project by the Attorney General and the Comptroller has been filed.

Specifics of the Complaint

On Tuesday, Feb. 28, ex-County Legislator Bruce Levine filed a complaint with New York Attorney General Eric Schneiderman and requested an investigation of the Elm Street project. He wrote:

"I am writing to ask that your office investigate and take action against the Town of Ramapo and the Ramapo Local Development Corporation for abuses and illegalities connected to the development of an affordable housing project called Ramapo Commons located at Elm Street, Spring Valley, New York situated in the unincorporated area of the Town of Ramapo bordering on the Village of Spring Valley."

A parallel complaint was filed with the New York State Comptroller whose office recently questioned the legality of mixing public and LDC funds in this project and the baseball stadium. Governor Cuomo, William Schaeffer of the Public Integrity Bureau, and Joseph Abate, Director of Community Development in Rockland County were all copied.

The complaint itemizes a list of illegal proceedings working backward from the sale of most of the units to paper companies. You can read the full text of the complaint here.

Levine, a municipal attorney with extensive local experience, offers a number of measures to correct the situation on Elm Street, including the removal of St. Lawrence as the President and Chairman of the Board of the RLDC. He writes:

"No town and no local development corporation have the right to plan, finance, build and sell a privately owned, market rate condominium property. These acts are clearly ultra vires and must be nullified. I request that your office commence a civil and a criminal investigation of this entire matter to protect the public interest in this property. I further request that you take legal action to remove the Town Supervisor Christopher St. Lawrence from membership on the Ramapo Local Development Corporation, look into whether the other members of the Board of the Corporation should be removed for breach of their fiduciary duties, consider taking it over and see if there are any grounds to remove the Supervisor from Office for consistently violating state laws concerning his actions as Town Supervisor and as President of the Board of the Ramapo Local Development Corporation. This last is based on his knowingly illegally signing the deeds of transfer of affordable housing to private non-eligible entities or persons.

Lastly, the Town of Ramapo and the Ramapo Local Development Corporation which took illegal actions in regard to the financing and building of an independent minor league baseball team and in regard to the Ramapo Commons affordable housing project are poster children for the need for serious reform of municipal governments, of local development corporations and of the relationships between the two. Numerous legislative changes are clearly necessary to clean up this mess and prevent other scandals like it from happening again."

Federal Monitoring

The Journal News noted in an article Wednesday that Joseph Abate, County Community Development Director, planned to set up monitoring of the project. "Upon receiving Mr. Levine’s email pointing out issues he discovered, we are setting up a federal monitoring on the behalf of the federal program to audit the records and to make sure the program is within compliance," Abate said, "If it is not in compliance we would then address the issue to bring compliance or return the funds."

Levine expects HUD will appoint the federal monitor as per Joe Abate's request. He or she would need to approve all future sales and methods of choosing the purchasers to make sure everything is in compliance with the particular rules for this affordable housing project (these have to be within state and federal guidelines).

The newspaper article ends with a comment on the difficulty the RLDC has encountered in selling the first 48 condos despite a generous $40,000 subsidy.

"The development has drawn interest from ultra-Orthodox Jews, since each condominium offers four to six bedrooms, with space for an extra kitchen and a shed for the Jewish festival of Sukkah. In phase one, 36 of the first 48 condominiums were eligible to be subsidized $40,000. Despite the initial interest from hundreds of people, the RLDC secured just 10 families who met financial requirements for the units, [Executive Director] Troodler said in January." (Full text of the Journal story here.)

In its recent audit of the Town of Ramapo, the Comptroller’s Office previewed its discomfort with the "intermingling of funds" between the taxpayers and the developers from the RLDC. Mr. Levine hopes that the numerous legal questions raised in that audit will get answered in a full investigation by the State’s Attorney General.

Michael Castelluccio
Preserve Ramapo

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