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Complaints Say Deal Was Done Illicitly, Haverstraw Is Abusing Taxpayer Money, Donation Deprives Village of Much-Needed Affordable Housing
By Tina Traster
A Haverstraw elected official has joined a cadre of complainants who have expressed opposition to the Attorney General’s office about the Town of Haverstraw’s efforts to persuade the Knights of Columbus to donate its building, an asset that could have been sold to the fraternal order for $2.4 million on a site that was slated for an affordable housing development.
The elected official, who asked to remain anonymous, shared the complaint, sent late Dec., with RCBJ. In it, the letter echoes the sentiments of at least five other complainants who believe the donation deprives the Village of Haverstraw of much-needed workforce housing, and who cites that the arrangement struck with the Knights of Columbus amounts to an abuse of taxpayer dollars.
Complaints are being sent to the AG’s office because nonprofit organizations are required to show the AG’s office that a fair market transaction is taking place. The AG’s role is to determine that the terms of the transaction are “fair and reasonable.” The AG 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.
The latest complaints states: “This transaction raises significant issues related to community welfare, potential conflicts of interest, and misuse of public funds that warrant immediate scrutiny by your office.”
The complaint continues: The KOC property has been the subject of negotiations with a housing developer who proposed a project to build approximately 100 affordable rental apartments. This development would have directly benefited seniors, veterans, and families at risk of homelessness, while also providing the Village with a much-needed parking deck. In addition to the monetary value of $2.4 million offered for the property, the Knights would have received approximately 1,500 square feet of space in the new building, rent-free and in perpetuity. This offer exceeded the appraised value of the property by approximately $800,000, making it a highly advantageous arrangement for both the Knights and the broader community.”
For two years, Todd McGowan, the then Grand Knight of the Knights of Columbus (581 Haverstraw), along with the organization’s executive council, worked on a deal to sell its brick building at 56 West Broad Street in the Village of Haverstraw to an affordable housing developer.
McGowan was thrilled that the building would be used for a good cause, while the Knights would walk away with $2.4 million once the deal closed. And to sweeten the negotiation, the Knights were promised ongoing free space in the new building. Should the AG sign off on the deal, it remains questionable as to whether the Knights will be allowed to continue their religious mission in a town-owned building.
Last May, without warning, the housing deal collapsed after the new Grand Knight negotiated secretly with Haverstraw Town Supervisor Howard Phillips and others to donate the building to the Town of Haverstraw. Phillips has been public about his opposition to affordable housing in the Village of Haverstraw and the Town at large, and has been holding up two other major developers who are seeking PILOTs for affordable housing and workforce housing projects.
McGowan says the deal was ill-gotten; he too is hoping the New York State Attorney General will agree with him because the transfer of a building owned by a nonprofit requires state approval from the New York State Attorney General, Charities Bureau.
In a complaint filed in September, McGowan wrote: “As the former Grand Knight of the Council, a deal was prepared to be signed with a developer bringing affordable housing to the village for a payment to the Knights of $2.4 million and perpetual tenancy. At the 11th hour, the parties named (Town of Haverstraw, Howard Phillips) negotiated an outright donation of our building to the town, with free permanent tenancy for our Council.”
He also wrote: “In addition to the sacrifice of a sum that would have been used for many years in our mission, the current deal would result in a Catholic Fraternal Organization subsidized by Town taxpayers, raising issues of improper use of taxpayer funds, and constitutional tax issues separating church and state.”
The Town of Haverstraw had been paying the Knights about $2,500 per quarter ($833/month) for the town to use part of the Knights’ building for meetings with seniors. The new short-term deal boosted that rental amount to $7,000 per month (an 840 percent increase) for the same use, and although the agreement was hatched in June of 2024, the town agreed to pay the rent retroactive to January of 2024. Payment was made in one lump sum to cover the back rent and payments continue going forward. The payments cover all the Knights’ expenses including phones, water, electric, insurance, pest control, landscaping, insurance and most importantly, property taxes due back to the town. (Should the NYS AG’s office reject the donation, the rent would automatically reset from $7,000 per month down to $2,000 per month.)
The elected official’s complaint states “Such expenditures raise serious concerns about the appropriate use of taxpayer dollars.”
The Freedom From Religion Foundation (ffrf.org – a national non-profit that advocates and litigates church/state constitutional issues and has won countless cases) agrees.
FFRF has twice alerted the Town of Haverstraw to its violation of the law and demanded that the town rescind the donation. Evidence has been provided to the FFRF showing the details of the town’s financial support for the Knights. Copies of text messages between Town Supervisor Howard Phillips and Grand Knight Joe Vargas have been shared with FFRF counsel. The Town of Haverstraw and its attorney ignored the first letter from the FFRF. A second follow-up demand also went unanswered.
“While we understand the Town’s desire to maintain a location for seniors to gather, it cannot accomplish this goal by awarding taxpayer funds to a Catholic fraternity which will also be using the building for religious purpose,” wrote Samantha F. Lawrence, a staff attorney for FFRF, in a letter dated Oct. 21, addressed to William Stein, Haverstraw’s attorney. The Madison, WI-based group was founded in 1978, and has 20 chapters nationwide.
“Government funds cannot be given away to religious organizations in order to help advance their religious missions,” the letter states. “We write to ask that the Town of Haverstraw cease providing taxpayer funds to support religion and any ongoing entanglement with the Knights.”
Copies of FFRF’s correspondences have been shared with the AG’s office, according to several sources.
Haverstraw has also agreed to pay the Knights’ legal fees. TOH has engaged the Albany-based law firm of Girvin Ferlazzo to represent the Knights at the town’s expense, making itself the “responsible payor” of the Knights’ legal fees.
Finally, the most recent complainant points out that “there is a potential conflict of interest involving one of the KOC board members who approved the donation, but who serves as a Village of Haverstraw trustee. The complaint refers to Village of Haverstraw’s Deputy Mayor Gil Carlevaro, who is a KOC board member who originally voted in favor of the sale to the affordable housing developer.
Finally, the complaint says that right from the start the dealings around this transaction may have violated the Open Meetings Law.
In September, an attorney for Kings Katherine LLC, the developer chosen to redevelop the site and build affordable housing and as well as parking deck for the village, sent the Town of Haverstraw saying it had discriminated against minorities, violated the separation of church and state, and is misusing taxpayer money.
Attorney Mark Cermele of Cermele & Wood LLP of White Plains urged the town to rescind its offer to take over the Knights’ building. The AG’s office is aware of this letter.
Cermele also pointed out the deal was hatched illicitly in a private meeting that included public officials but was not formally noticed.
“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.
“This meeting resulted in the presence of a quorum of the Town Board, raising transparency and compliance concerns under open meeting laws,” the complaint said.
The Town of Haverstraw has retained and is paying the fees for Brown & Weinraub, LLC, a consulting firm based in Albany, to lobby for Attorney General approval.
