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Kings Katherine LLC Attorney Issues Stern Letter To Howard Phillips; Says Town Needs To Rescind The Contract For The Donated Building & Resurrect Original Plan For 100 Affordable Housing Units At Knights Of Columbus Site
By Tina Traster
The Town of Haverstraw has discriminated against minorities, violated the separation of church and state, and is misusing taxpayer money, according to a letter written to Town Supervisor Howard Phillips by legal counsel for an affordable housing developer whose project was scuttled earlier this year in the Village of Haverstraw.
“What is being done here is illegal and is callously suspect of rank discrimination against minorities,” the letter says.
The letter, sent Sept. 13 to Phillips, refers to actions resulting from the collapse of a deal in which Kings Katherine LLC offered the Knights of Columbus (581 Haverstraw) $2.4 million to purchase their building at 56 Broad Street in the Village of Haverstraw. In the transaction, which had been in the works for two years, the developer promised to build 100 affordable units of “Workforce Housing,” and to create free space for the Knights to continue their charitable operations in perpetuity.
Attorney Mark Cermele of Cermele & Wood LLP of White Plains is urging the Town of Haverstraw to rescind its offer to take over the Knights’ building.
“With this offer, the Town chose to undermine the autonomy of the incorporated Village,” Cermele wrote. “I write to implore the Town to revoke its Offer, which is illegal and will result in serious repercussions upon the Town and the K of C (Knights of Columbus) by the NYS Attorney General, the New York State Comptroller’s Office and possibly the US Attorney’s office.”
His letter was cc’ed to Village of Haverstraw Mayor Michael Kohut and Grand Knight Joseph Vargas.
For two years, Kings Katherine LLC worked closely with the Knights of Columbus, Mayor Kohut, and village officials, to negotiate a deal to purchase the building and bring much-needed affordable housing to the village. At the eleventh hour, the deal collapsed in May: Phillips and Vargas in backroom talks had come to an informal agreement that the Knights would donate the building to the town for recreational purposes for the town’s seniors. Bingo night is already held at the Knights’ building.
By several accounts, Phillips was motivated to quash the plan because he has openly said, and in private discussions, he opposes additional affordable housing in the town.
“What is being done here is illegal and is callously suspect of rank discrimination against minorities,” the letter says. “The Workforce Housing Project had the support of Village Mayor Michael Kohut and the Village Board, which has prioritized making affordable housing available to minorities and other communities in need, as expressed in the Village’s recently adopted Comprehensive Plan.”
The letter raises issues about Phillips’ point of view on affordable housing.
“To our astonishment, on August 13, 2024, you openly acknowledged at the Town Board Meeting that you knew about the deal between Kings Katherine LLC and the K of C, and that you were on record already stating you were against ‘low-income’ housing. Specifically, you state: we have 2,000 and don’t need any more.”
Cermele’s letter also takes aim at the process involved in the unraveling of the deal. He says the project was “usurped” when the Phillips made promises to the Knights that it would cover expenses on the condition that the Catholic Order does not proceed with the deal. The letter blames Phillips and the town for “mischaracterizing the project as ‘low-income’ housing.”
Rockland County’s elected officials have been stressing the need for more affordable housing. By all accounts, the need for affordable housing in the county and especially in Haverstraw is dire.
According to the recently issued Rockland County Housing Assessment Needs report, 42 percent of the town’s (Town of Haverstraw) residents are housing burdened, while 52 percent of residents in the Village of Haverstraw are spending more than 30 percent of income on housing costs.
According to the report, Haverstraw has 327 subsidized units, landing second to last among the five towns. Ramapo leads with 1,781, followed by 665 in Orangetown, and 527 in Clarkstown. Stony Point has the fewest, 89.
Cermele’s letter raises questions about the legitimacy of the deal between the town and the Knights, citing issues over the use of taxpayer money, as well as a possible violation of the establishment clause of the First Amendment.
“There are several laws that would be violated, including but not limited to New York State Constitution Article VIII, Section I which states: No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association or private undertaking.”
The letter questions whether the town can allow the Knights, a Fraternal Catholic Organization, to display its religious insignias and memorabilia in a public building.
“This would certainly violate the establishment clause of the First Amendment to the US Constitution, as well as violating many other civil rights laws,” Cermele writes.
According to the former Grand Knight Todd McGowan, who led the team to sell the building, his successor Vargas was roped in by Phillips’ financial carrot because the Knights have been struggling financially. McGowan last week filed a complaint with the New York State Attorney General’s Office, Charities Bureau, in an effort to stop the transfer of the building to the Town of Haverstraw.
On June 25, the town voted to enter into a formal contract with the Knights. The agreement acknowledges that the donation is subject to Attorney General approval or to the New York Supreme Court. The AG’s office can kick the approval to the courts.
The approved resolution called for paying the Knights $56,000 in back rent with taxpayer money for January through June (which has already been meted out), before the contract between the two entities was signed. It is not clear why the town has paid rent for a period of time prior to the transaction. In addition, the agreement calls for paying the Knights $7,000 monthly until the Attorney General signs off on the deal. The resolution built in a provision in case the AG’s office denies the donation: Starting the first day of the next month after such a denial, rent shall be reduced for the remaining lease term to $2,000 a month.
“This would certainly violate the establishment clause of the First Amendment to the US Constitution, as well as violating many other civil rights laws,” Cermele writes
Nonprofit organizations are required to show the AG’s office that a fair market transaction is taking place. 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.
McGowan is asking the Attorney General to stop the donation, arguing the Knights are on the losing end of the deal.
The Town of Haverstraw has retained Brown & Weinraub, LLC, a consulting firm based in Albany, to lobby for Attorney General approval.
Cermele’s letter says the deal does not make financial sense for the Knights or for taxpayers.
“The Offer serves no legitimate public purpose; instead, it derails a legitimate business transaction with the Village’s full-throated support that would have reaped millions for the K of C, created new space for the K of C to use in perpetuity and left the Town with the same space for its seniors to meet without any cost to the town or village.”
Further, the developer’s attorney states it is common knowledge the Knights are in financial trouble covering taxes and insurance premiums. And that the property is in need of costly renovations.
Cermele’s letter adds: “This too begs the question: are public funds already being used for these renovations prior to approval from the New York Supreme Court and the AG’s office?
Cemele raises another issue of propriety: Was the deal hatched illegally in a private meeting?
“New York State’s Open Meetings Law prohibits public officials who constitute a quorum (in the case of the Town of Haverstraw, the number is three) to meet in private to do the Town’s business,” he wrote. “Conducting public business in private without the public present, or failing to notice a “public” meeting on March 26, 2024 between the board members of 56 West Broad Street Angels Holding Inc., the K of C’s holding entity for the property, and at least three Haverstraw Town Board members including (Phillips) along with Town Attorney Bill Stein,” is illegal.
Finally, the letter says the developer has lost substantial funds to conduct preliminary investigations into the project’s sustainability and stands to lose millions more.
“Should the Town and/or Village fail to rectify their illegal conduct, Kings Katherine LLC intends to hold all responsible parties accountable for the damages Kings Katherine LLC stands to incur.”
Haverstraw Attorney Bill Stein did not return an email seeking comment.
