3.15.11 cfc bsa supplemental submission

8/3/2019 3.15.11 CFC BSA Supplemental Submission

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EXHIBIT I



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News

May opening date likely for BRC 25th St.facility

BY WINNIE McCROY

Published: Wednesday, March 9, 2011 1:38 PM CST

The spring opening date of the Bowery Residents’ Committee’s 12-story vertical campus facility at 127 W.

25th Street will likely not be hampered, despite a recent request from City Council Speaker Christine Quinn

that the project not move forward until all lawsuits are resolved and public reviews are complete.

“I don’t want to leave the impression that we are moving forward without being mindful of the fact that we

need to talk with the community about this, but our partners [BRC] have had extensive discussions with the

Speaker’s office, public hearings on the project, and it has been an open and transparent process,” said

NYC Department of Homeless Services Commissioner Seth Diamond, the recipient of Quinn’s request.

In a February 22 letter to BRC Executive Director Muzzy Rosenblatt and Commissioner Diamond, Quinn voiced

some misgivings about the project, noted the ongoing nature of the city’s SEQR/CEQR and Fair Share Review

Act, and requested that the project stop until these issues were resolved.

“The lawsuit filed against the city and DHS remains unsolved. This creates a significant level of uncertainty

about the future of this project,” she wrote.

Diamond did not see the lawsuit as an obstacle, saying, “Judges have had the opportunity to stop it, and that

has not happened. There is substantial community support for [the shelter], there is not unified opposition to

it by any means, and I am encouraged by that, and have a very responsible provider who has met with

members of the community and made modifications based on their input.”

In the letter, Quinn also shares her previously voiced opinion that a 328-bed shelter is too large for the

neighborhood, and notes that the shelter under construction will not meet the DHS demands for winter

housing.

“I ask that this project not move forward until the result of this lawsuit is clear and the public has had ampletime to review the Environmental Assessment Statement,” writes Quinn. “Anything less would be an attempt

to subvert transparency.”

When questioned about what exactly he thought Quinn meant when she requested that the “project not

move forward,” Rosenblatt said, “I’m not going to comment on the letter. You should ask the person who

wrote it.”

Asked whether Quinn’s request would alter his present timetable, Rosenblatt said, “We are moving ahead with

plans for opening in the spring, and we are making great progress. We look forward to a successful and

smooth transition.”

On March 8, Rosenblatt told Chelsea Now that he expects the facility to be open in May. Interviewed on



February 24, Diamond cautioned that as with any construction project, any given time frame could be

delayed. “But,” he said, “I think this is the kind of project that advocates for the homeless have been asking

for, one that integrates a variety of services and provides good programs for the people living in the shelter to

get counseling and job training. I do not believe it will have a negative impact on the community.”

Daniel Connolly, lawyer for the Chelsea Flatiron Coalition (CFC), expressed misgivings with Diamond’s

statements that the community had been given ample time to review the project, and had given their

overwhelming support.

“I would only say that the issues and concerns being raised by the community in connection with this

proposed project need to be seriously addressed by DHS. And if not by DHS, by the courts,” said Connolly.

When questioned about whether he was surprised by how quickly Diamond had shot down Quinn’s request to

stop the project, Connolly paused, then said pointedly, “I’m not commenting on that.”

Said Quinn, in a March 7 statement, “In light of the pending litigation, I urge the Department of Homeless

Services and the Bowery Residents’ Committee to wait for the result of this court action before advancing on

this project.”

The project does have the support of some community groups, such as Save Chelsea and Chelsea West 200

Block Association. And Community Board 4 District Manager Robert Benfatto said that his organization alsosupported the shelter, with a “vastly limited number of beds.”

“If [Commissioner Diamond] used CB4 as an example of support he’s right, but not as far as the number of

beds. We said we support the shelter with 128 beds, and that’s still the board’s position,” said Benfatto.

Questioned as to whether he believed the shelter project had widespread community support, Benfatto said,

“The community is very broad and hard to define. If he means the community within a two-block radius of

the center, then no — we know they don’t support it because they are suing. But I doubt people in other

areas of the community even realize it is being built.”

Benfatto also restated CB4’s wish to see environmental reviews and the Fair Share Review Act, saying, “The

board would like to see that done, and for there to be a public discussion of it before the opening of the

shelter. That hasn’t changed.”

Lawsuits from both sides continue

On March 1, lawyers for the BRC and CFC went before the commissioners of the Bureau of Standards and

Appeals at 40 Rector Street to argue the CFC’s claim, made in their lawsuit, that the Department of Building’s

interpretation that the proposed use was a transient hotel. The CFC maintains that the shelter violates the

area’s M1-6 zoning district, which does not permit medical facilities.

In a September 2010 Chelsea Now article, Rosenblatt noted that the DOB had ruled that the building was

“not a medical facility. It’s a transient hotel. The Building Department has reviewed our plans — and they are

the experts — and has determined that what we are building and what was designed has two components: a

transient hotel component, and an office component. And so what we’ve designed is consistent with zoning

regulations and building codes for a transient hotel and an office use.”

In that same article, Connolly explained that the BRC had created a firewall that split the building in two

halves, with two separate entrances, with one side housing residential units for the 328 clients, and the other

side housing the medical services, treatment facilities and substance abuse counselors.

“Although the BRC keeps talking about a fully-integrated vertical facility, the residences will use the definition

of a Group 5 transient hotel, while the other side will work under the Group 6 professional offices,” said

Connolly in the article. “They are calling them professional offices, but really they are Group 4 use medical

offices, which are not permitted in this zoning area.”



Much of the BSA hearing was spent defining this distinction, and determining whether any doorways

connected the sleeping areas and medical/social services. If this were the case, the building would likely be

considered Use Group 3-4, defined by the Department of City Planning as community facility use, and

prohibited in this zoning district.

“The long and short of it is that they asked BRC and the DOB to submit a post-hearing brief, which is due

March 8, and then they asked us to respond to whatever the city and BRC submits by March 15,” saidConnolly regarding the hearing. The BSA is scheduled to reconvene on the matter on April 5.

Can BRC find the cash to finish the project?

The Bowery Residents’ Committee may have hit a roadblock in accessing promised funding for construction of

the homeless shelter. In February, they served papers against the landlord, Daniel Shavolian, for failure to

provide millions originally agreed upon for construction, and for restricting access to the 11th floor of the

building.

The case was brought before Judge Joan Madden on February 22. An argument quickly arose between

Shavolian’s lawyer, Claude Castro, and the BRC’s attorneys, Thomas C. Lambert of Lambert & Shackman,

PLLC, and John Hadlock and Neil Underberg of Winston & Strawn, over the BRC’s right to contest the notice

and seek a Yellowstone injunction, used to challenge a landlord’s claim of breach without risking eviction andforfeiture of lease rights.

The case was “permitted to be withdrawn per stipulation” on February 22, but on March 1, the case was filed

again under index number 650358-2011E. According to a court clerk, the new hearing has not yet been

scheduled.

“No bank will give us financing for this project if there are no valid permits,” countered Shavolian’s attorney,

Claude Castro, after the initial February 22 hearing before Judge Madden. “What if the judge stops

construction? That’s why we had asked her to hold it in abeyance,” an agreement to suspend funding until

the case is resolved.

During the February 22 hearing, BRC’s attorneys told the judge that construction on the building was 80

percent completed, but maintained that the contractors had not been paid. Lambert indicated that the BRCwas seeking alternate funding through Lance Capital.

Research revealed that Lance Capital, based in Reno, Nevada, is a hard-money lender that charges 20 percent

interest on loans. BRC has given no indication they will borrow money from Lance Capital, or if so, how much

money they will borrow. But according to BRC lawyers’ estimates in court, they are experiencing a shortfall of

$8 million, originally promised by Shavolian.

Chelsea Now asked Diamond whether the cost of these high interest rates would be passed on to the

taxpayer.

“That is nothing I know anything about,” he said. “That was not something presented to us. We have a

contract we’re moving forward with, and we have an established rate we pay. If there are complications for

the provider [BRC], they will have to work that out. We have not adjusted the numbers.”

But with the majority of expenses for the project coming from city coffers, it remains to be seen who will

ultimately foot the bill for these additional costs.

Notwithstanding any financial problems that may still exist, the project is moving forward as planned.

“Obviously the landlord isn’t funding it, but the contractors are moving forward, there is a bevy of activity in

there with the work crews, and everything is looking great,” said Rosenblatt. “We can’t wait to move in and

hope for the best in terms of timing. We are not concerned at all about completing the project.”

3.15.11 cfc bsa supplemental submission

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