Rockaway developer gets tax breaks via troubled nonprofit partner

Rendering Via City Planning Commission

By Claudia Irizarry AponteTHE CITY

Additional reporting by Christine Chung

This story was originally published on Oct. 3, 2019 by THE CITY.

A massive Queens real estate project up for a City Council vote is slated for a site owned by a nonprofit landlord under fire from tenants and city housing officials for deplorable conditions in Brooklyn.

The Northeast Brooklyn Housing Development Corporation (NEBHDCo) also faces a lawsuit from workers who say they were badly hurt doing demolition at the Rockaways location.

On Thursday, a Council subcommittee will consider the case by Peninsula Rockaway Limited Partnership to allow it to build 2,200 affordable apartments in 11 buildings where Peninsula Hospital once stood.

City property records show that the site of Edgemere Commons was purchased in 2016 for $19 million by Peninsula Rockaway Housing Development Fund Corp., a nonprofit registered by NEBHDCo.

bill indicates NEBHDCo was still listed with the city Department of Finance as the party responsible for property taxes as of Aug. 28, 2019.

As THE CITY reported Wednesday, NEBHDCo’s vast housing portfolio — almost 1,000 apartments mostly in Bedford-Stuyvesant — is steeped in housing code violations and debt to city agencies. That’s prompted desperate tenants and officials to seek new owners for some buildings under a deal being weighed by a bankruptcy judge.

Court records from NEBHDCo’s bankruptcy case cite over 4,000 serious housing violations, including obstructed fire escapes, vermin infestations, water leaks, mold, and lack of heat and hot water. The decrepit conditions in some buildings secured its CEO, Jeffrey Dunston, the No. 2 spot on the public advocate’s “worst landlords” list last year.

Dunston says his connection to Edgemere Commons is in name only. “We have no role on the Edgemere Commons project and haven’t for two years. The Peninsula Rockaway Limited Partnership retains all equity and liability on this project,” he said in a statement, referring to a for-profit partner, the Arker Companies.

Tax Breaks for a Nonprofit

But Dunston’s nonprofit has already boosted the new Rockways project.

Under an agreement with the for-profit affordable housing developer Arker Companies and filed in city property records, NEBHDCO remains the owner of record. And, as a partner with Arker, it’s obligated to assist in securing tax exemptions.

In a signed affidavit submitted with a $14.2 million mortgage in 2016, Dunston, writing as president of Peninsula Rockaway HDFC, requested an exemption from mortgage taxes worth hundreds of thousands of dollars. The exemption is available to his group as a nonprofit housing corporation signing for the mortgage.

Records show the exemption was granted, allowing the purchase to proceed tax-free.

Jeffrey Dunston, CEO of Northeast Brooklyn Housing Development Corp., in 2013.
Jeffrey Dunston, CEO of Northeast Brooklyn Housing Development Corp., in 2013. Photo: Paul DeBenedetto/DNAInfo

“How is that possible? That’s what I wanna know,” Dino Perrera, who is among the tenants suing NEBHDCo, told THE CITY. “How could they be building affordable housing with all that’s going on?”

Arker has taken pains to distance itself publicly from NEBHDCo as tenants have gone public with their stories of woe.

In August, a spokesperson told Gothamist: “Northeast Brooklyn Housing Development Corporation was intended to be a social service provider, but as of now will no longer have anything to do with the Arker Companies’ Edgemere Commons project in the Rockaways.”

Yet the NEBHDCO spin-off remains the owner of record.

It also remains a defendant, along with Arker and a contractor, in an ongoing lawsuit from two workers who allege they were gravely injured in the demolition of Peninsula Hospital in September 2016. The duo contend a boom lift malfunctioned, hitting one worker in the face with a metal beam and jolting the other, leaving him hanging from a basket.

Both workers, Oscar García and Diego Ortega, say they required extensive surgery and physical therapy following the incident. García and Ortega’s attorney, Daniel Gluck of Zaremba Brown, declined a request for comment.

Jasmine Blake, speaking on behalf of the Arker Companies, said that NEBHDCo will be exiting Edgemere Commons entirely.

“We have a proven record of providing quality affordable housing, and we expect our partners to have the same standards. With this in mind, we stopped working with NEBHDCo on this project two years ago but are still in the legal process of removing them officially,” she said.

“They have no involvement on the project today.”

Neither the Arker Companies nor Dunston responded to questions about any compensation Dunston or NEBHDCo may have received for purchasing the property.

Council a Booster

Councilmember Donovan Richards, who sits on Council’s zoning committee and whose district includes Far Rockaway, has not made a decision on the project yet, according to Jordan Gibbons, a spokesperson.

By Council convention, other members will defer to his vote as the local Council member. In advisory votes earlier this year, Community Board 14 rejected the Peninsula rezoning, while Queens Borough President Melinda Katz is lending her support.

NEBHDCo is a known quantity to the Council, as the recipient of nearly $1 million in grants from members and the speaker’s office for its food pantry and food justice programs over the last four years, Council records show.

The includes $215,000 in six grants awarded in June 2019 by Councilmembers Robert Cornegy and Alicka Ampry-Samuel and by Speaker Corey Johnson — even as tenants and city lawyers fought NEBHDCo in court over debts and dire conditions.

Cornegy, who chairs the Council’s Housing Committee and has granted $70,000 in all to NEBHDCo, did not respond to THE CITY’s repeated requests for comment.

Jennifer Fermino, a spokesperson for Johnson and the Council, said that the grants went through after no red flags went up in city vendor integrity databases used to screen groups.

“The nonprofit has deep ties in the community,” said Fermino, “and the funding for food and green programs was done at the request of several members.”

This story was originally published by THE CITY, an independent, nonprofit news organization dedicated to hard-hitting reporting that serves the people of New York.