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Affordable Housing Developer Was Set To Buy Building at 56 West Broad Street in Village of Haverstraw; Now Knights Are In Talks To Donate Building To Haverstraw So Town Can Preserve Senior Center Site And Bingo
By Tina Traster
In March, the Knights of Columbus (581 Haverstraw) was finalizing a deal to sell its brick building at 56 West Broad Street in the Village of Haverstraw to an affordable housing developer.
The agreement to build more than 100 affordable units had the support of the Village Mayor Michael Kohut and the Village Board, which has been making affordable housing a priority due to an acute shortage of housing options. The Knights stood to gain $2.4 million for the sale of their key asset and was promised ongoing free space in the building. The developer agreed to relocate the fraternal/religious order at its expense during the project construction.
And though it was not in the Purchase of Sale Agreement, which was being finalized after nearly two years of negotiations, the developer St. Katherine Group of Port Chester, had said it would add space for seniors to meet in the building, according to the developer.
In a surprise turnaround in April – one that blindsided Kohut, the developer, and others who were working on the deal and rooting for desperately-needed affordable housing in the Village – the Knights shelved the agreement and instead are planning to donate the building to the Town of Haverstraw in exchange for a raft of short-term financial incentives and promises from the Town of Haverstraw that would enable it to occupy forever 1,500 square feet of space in the building, a portion of the space it has occupied since 1970s. The draft proposal, which promises to back pay the Knights’ expenses via taxpayer money for 2024 and go forward until a deal is signed with Haverstraw, includes $7,000 in monthly “rent” and legal fees. Total payments promised by the town could easily exceed $200,000. Additionally, the Knights had been paying property taxes; the building, if owned by the town, would come off the tax rolls, affecting the Village, Town and School District.
The proposed deal also includes provisions for the Town of Haverstraw to continue to use the building for its seniors and BINGO night, while the Knights have been exclusively allocated the office, the meeting room, and a storage closet.
In a March 8, 2023, letter to the developer, Kohut wrote, “On behalf of the Village and its Trustees, I’m pleased to lend support to your proposed project and welcome the prospect of future collaboration on this significant public-private partnership.” Kohut was in attendance at Rockland County’s Annual Housing Forum in April, which focused heavily on the dearth of affordable housing countywide. The project would have also provided a much-needed parking garage for the Village.
How a real estate agreement got scuttled at the 11th hour is a story of fear, horse-trading, and a meeting between a nonprofit board and the members of the Haverstraw Town Council, which may have violated New York’s Open Meetings Law, according to those close to the deal. On March 26, 56 West Broad Street Angels Holding Inc., the Knight’s holding entity for the property, and at least three Haverstraw Town Board members, along with town Attorney Bill Stein, and others, met to discuss an alternative path for the building, according to at least two people who were present. New York’s Open Meetings Law prohibits public officials who make up a quorum (in the case of Haverstraw, the number is three) to meet in private to do the town’s business.
RCBJ reached out to Haverstraw Town Attorney Bill Stein multiple times for confirmation of the meeting and its attendees, but he declined to provide an answer to our questions by press time.
Conducting public business in private without the public present, or failing to notice a “public” meeting, is a violation of the Open Meetings Law.
At the time of the unpublished meeting, the developer, Kings Katherine LLC, an entity created by St. Katherine Group, had submitted final contracts for the deal based on a Letter of Intent previously signed off on by the Knights. But during that afternoon meeting at 56 West Broad Street, Haverstraw Town Supervisor Howard Phillips told the Knights, according to sources at the table, he was aware of the pending sale including the price but emphasized the seniors need a place to meet and that there are no equivalent halls that can accommodate that group.
Phillips went on to say, according to those present at the meeting, that the town couldn’t match the $2.4 million offer but told the Knights to make him an offer. Stein attended the meeting and “took notes.” The former Grand Knight Todd McGowan said the fraternal order’s lawyer was not present at the meeting and the organization did not take minutes.
“What rankles me is that when the decision was made to sell the building for the affordable housing project, it had the full consensus of our board and our members,” said McGowan. “It was a good deal.”
In January, Knights board member Joseph Vargas, who voted for the affordable housing project, became the new Grand Knight and backroom conversations began unravelling the deal. Vargas for years had been hoping to get the Town of Haverstraw to allow the nonprofit to receive tax-exempt status. He complained that the Knights pay high taxes ($27,425 in 2023, including county, town, and village). According to the Knights’ 2022 IRS990, total revenue was $114,416, while expenses exceeded $93,000.
“A small portion of our revenue, $2,500 quarterly, comes from rent the Town of Haverstraw pays to accommodate the seniors once a week,” said McGowan. “Joe had a meeting with Howie (Phillips). He used the senior citizen agreement like leverage. He knows Phillips panders to the seniors, so he proposed to Phillips that the town will need to pay far more, or the Knights wouldn’t be able to renew the leasing contract. Shortly after that, we were looking at a building donation, which I call a ‘benevolent takeover.’ ”
Additionally, many involved in the deal said Phillips has discouraged additional affordable housing in the town and Villages — making such remarks both in private discussions and in public.
Within weeks, the real estate deal soured, partially due to the sudden belief after nearly two years at the negotiating table that the developer wasn’t a sure thing, that there were too many financing contingencies, that “there were too many outs and we had no outs,” according to Gil Carlevaro, who sits on Knight’s 56 West Broad Steet Angels Holding Inc. board, and is also a Village of Haverstraw council member.
“We believed there would be certain milestones with PILOTs (payment in lieu of taxes) and building permits and financing and different thresholds,” said Carlevaro. “There was no certainty. We got a better deal.”
Carlevaro is referring to a proposed draft the Haverstraw Town Board’s attorney has sent to the Knights, which promises $42,000 in back pay to cover the Knights’ expenses from January through June 2024, even though the Town did not and still does not own the building. Going forward, the town will pay $7,000 monthly until the deal is inked. The proposed agreement also states: “If expenses increase above $7,000 per month, the town will increase the payment commensurate with the increase.”
The Town’s proposed agreement also says it “shall pay the legal fees for representation of 56 West Broad Street Angel Holdings, Inc. and /or Knights in this transaction and prior failed transactions regarding Premises upon execution of this document.” The Town is offering to pay legal fees for the Knights to obtain New York State Attorney General approval, which a nonprofit requires when transferring an asset.
In addition to paying back rent and rent going forward, the town may well find itself on the hook for $85,000 in expenses the developer incurred in preparation for the deal, including engineering and architectural designs. The developer last week sent an email demanding reimbursement for project costs. It is unclear whether the developer will sue for breach of the confidentiality clause in the executed letter of intent and for its costs.
“We are in conversations with our attorney for what actions will be taken,” said the developer.
“We were going to pay the Knights far above the appraised value,” said Alana Smith, Principal of Calyx New York City, the developer’s project consultant. The 8,880 square-foot 1972 detached brick building appraised for $1.6 million. The developer had promised the Knights 1,500 square feet of space in the building in perpetuity, to pay the Knights’ legal fees and to absorb the cost of filing for approval with the Attorney General. And it was amenable to creating a senior center on the first floor in the new building.
“The town has become the Sugar Daddy,” said McGowan, the former Grand Knight. “Just give us the receipt and we’ll pay it.” McGowan said the town has come in and inspected the building, realizing it needs a new $14,000 fire alarm system. “We were told to send the bill and the town will reimburse it,” even though the deal has not been completed and the Town does not own the building.
“They’re using taxpayer money to do this,” said one source, who asked not to be identified. “This is not a viable economic engine. So they’ll get to play Bingo in the building for 100 years. What value is this serving? This is not for the greater good.”
That issue may arise down the road when the Attorney General is asked to sign off on this “purchase.” The Attorney General’s role is to determine that the terms of the transaction are “fair and reasonable.” The Attorney General will generally reject the petition if it is not supported by an appraisal done within the past twelve months and by a party that’s independent of both the buyer and seller.
“How does the town come up with a better arrangement than the one we agreed on?” said the developer, emphasizing the original planned affordable housing plan. “How will the town owning the building generate more benefit than ongoing long-term taxes? As well as bringing people into the Village to live and shop and use the ferry. That’s the larger benefit. Instead, this is happening.”
The Village of Haverstraw, where the median income trails Rockland County, has an acute affordable housing shortage. According to the U.S. Census for 2021, median income for all households in the Village of Haverstraw is $69,839. In a recent report issued by The Hudson Valley Pattern for Progress thinktank, the vast majority of households in the Village of Haverstraw are unable to afford even subsidized units when those subsidized units are priced for families at 80 percent of the county’s average median income which exceeds $110,000. Lack of affordable housing leads to over-crowding and safety concerns.
The Village of Haverstraw, according to the report, has 3,912 housing units for its over 12,000 residents with only 73 units available for rent at the time the Pattern report was compiled. The village’s population increased by 3 percent from 2010 to 2020.
In January, the Village of Haverstraw passed a local law to establish the Residential Inclusionary Zone for Affordable Housing, a floating zoning district, which was aimed at attracting affordable housing projects with up to 115 units per acre.
By at least four separate accounts, Kohut was blindsided by the failed negotiations and disappointed that the promise of the affordable housing project looks doomed.
Kohut did not return an email requesting comment.
