Cuomo accused of corruption in affordable housing suit
JANUARY 17, 2018
A group of West Village Houses tenants have accused Gov. Andrew Cuomo of participating in a pay-to-play deal that helped fund his political ambitions.
According to attorney Massimo D’Angelo, Cuomo misled tenants about the long-term affordability of their homes when he worked for landlord Andrew Farkas in the mid-2000s.
Now, with the tenants facing $8,000 rent hikes apiece, they have filed a complaint urging Attorney General Eric Schneiderman to investigate the conversion of the 420-unit West Village Houses complex from the Mitchell-Lama program into free market housing.
“We’re showing the people of New York the underlying corruption in this city,” D’Angelo said. “It really runs rampant and I don’t think people understand or appreciate that.”
According to D’Angelo, an attorney with the law firm of Adam Leitman Bailey, PC., Andrew Farkas, the property’s former owner, misled tenants about the building’s affordability requirements and engaged in pay-to-play politics with Cuomo, an arrangement that began when the now-governor was running the U.S. Department of Housing and Urban Development.
D’Angelo is representing more than two dozen tenants who couldn’t purchase their units when the 42-building complex was converted to co-ops in 2006.
Although he believes his clients have a sound legal argument for keeping their apartments affordable in perpetuity, D’Angelo said it’s important to expose the corruption at play.
The saga began in 1997 when HUD, under Cuomo’s watch, partnered with the Justice Department to prosecute a city landlord for taking kickbacks from Farkas’s Insignia Group. The following year, the parties settled for $7.4 million, a sum D’Angelo and others have deemed “a slap on the wrist.” Farkas sold his commercial real estate company for $910 million later in 1998.
After leaving HUD in 2001, Cuomo was hired as a vice president of Farkas’ new endeavor, Island Capital, where he reportedly collected more than $2 million in salary along with hundreds of thousands of dollars in campaign contributions, filling his coffers as he ran for governor in 2002 and attorney general in 2006.
Before taking office, Cuomo played an integral role in the West Village Houses co-op conversion, a fraught, two-year process that resulted in the majority of the units being sold to occupants and a promise to keep the other 99 units affordable but only for 12 years, at which point the city will no longer subsidize them.
This limitation is being challenged in court as unlawful. Although Cuomo’s entanglement with Farkas, his company and his money have been well documented in the public record, they have never been the subject of a corruption probe and no impropriety has ever been suggested.
However, D’Angelo said, in this case, where there’s smoke, there’s fire.
“Cuomo was at the helm of Island Capital Group,” D’Angelo said. “He was instrumental in putting this deal together while he was also getting all types of campaign contributions from Farkas after he essentially paved the way for him to become a billionaire. In politics, what comes around goes around.”
Neither Cuomo nor Farkas responded to requests for comment by press time.
A spokeswoman in the Attorney General’s office confirmed the complaint was received and is being evaluated, although she declined to provide a timetable for when action would be taken.
Of the 99 units that were kept as affordable rentals immediately after the conversion, only about 30 remain that way, with other owners moving, taking buyouts or dying. Most remaining renters are senior citizens and many are sick or disabled, Constance Rodgers, a representative from the tenant group, said. Of the two non-seniors, one has called the complex home her entire life.
If the price freeze is lifted, rents would rise from between $1,000 and $1,500 per month to more than $9,000.
A 26-year resident of the West Village Houses, Rodgers said she, like most of her neighbors, considered buying her apartment during the 10-year window that residents were allowed to do so. However, she found the expense to be untenable.
“Even if I put down 20 percent, I was going to have a mortgage that was a little more than what my rent was at the time and a maintenance fee that was more than my monthly rent,” she said. “So I was doubling my nut, which I couldn’t do as a single mother teacher.”
D’Angelo is confident the tenants will prevail against the complex’s new owner BRG West Village, a subsidiary of the Benedict Realty Group, because of precedents. First is the complex’s use of J-51 tax abatements, which are exemptions the city allows for owners who make widespread improvements to affordable housing developments on the condition that the facilities remain affordable.
The other advantage the tenants have is a guidance order issued by the attorney general in 2015 that makes it difficult to change a building’s certificate of incorporation from affordable housing to market rate.“
BRG West Village could not be reached for comment.