August 22, 2011

Blockbusting the West Side
by James Panero

How 'supportive housing' doesn't help anyone

In the 1950s and 1960s, the practice of "blockbusting" became commonplace. Speculators depressed housing prices by scaring away white middle-class residents. Then they resold the properties to black homebuyers at artificially inflated prices, often resulting in default and further devaluation.

Today the practice of blockbusting continues, except now it's largely minority renters that the investors want out. The new buyers are us, the taxpayers, underwriting the supportive housing industry.

Government agencies pay supportive-housing profiteers far above market rate for buildings they convert from normal rentals to taxpayer-subsidized housing for the mentally ill. For each "special-needs" tenant their facilities house, investors can collect more than $3,000 a month. Protected by rent stabilization, existing residents, who might only pay $500 a month for the same unit, often stand in the way of maximum profits. So investors use the threat of the incoming population to scare them off.

In the case of St. Louis Hall, a six-story residence on W. 94th St., supportive-housing developers known as Lantern Organization and its for-profit wing, the Lantern Management Group, have a blockbuster at their disposal called "NY/NY III." In 2005, Mayor Bloomberg and then-Gov. George Pataki started this initiative to house the city's most high-risk group of homeless single adults, with problems ranging from persistent mental illness and chemical addiction to HIV/AIDS. While pursuing a noble goal, the champions of NY/NY III failed to anticipate how supportive-housing speculators would use NY/NY III as a weapon to intimidate existing residents.

"To scare the Hispanic tenants, they had someone yelling immigration. They distributed flyers saying they are bringing in a population with AIDS, " says Aaron Biller, president of Neighborhood in the Nineties, of Lantern. Biller's organization, which sees a disproportionate number of supportive housing facilities on the upper West Side, litigated against Lantern's plans for St. Louis Hall since first proposed five years ago. Earlier this year, the group successfully opposed the conversion of the Alexander, a neighboring building, into a homeless shelter.

"They are putting them here because Gale Brewer and company think it's okay," Biller says of his City Council representatives. "It's classism and racism on the part of high-minded individuals. The community is set up for failure with a devastating population. And nothing clears a building faster. They are driving people out and have a huge economic incentive to do it." That's bad news for longtime residents. It's not good for the troubled populations that come in, either, as they require greater supervision than these facilities provide.

But the practice is rewarding to the developers. In 2008, CBS News conducted an investigation into Lantern that the organization "took millions of dollars from the city to provide clean, safe and affordable housing for the mentally ill, recovering drug addicts and others in need," but put them "in deplorable conditions." At the St. Louis, CBS reported "deteriorating conditions under Lantern's ownership," including longtime residents who were now sharing rooms "with rats, mice, roaches, bedbugs and ...dangerously toxic black mold." When the station tracked down Lantern's president, Eric Galloway, at his 6,000-square-foot mansion in upstate Hudson, he refused to comment.

How these developers reap their profits has much to do with the close relationship between the supportive housing industry and the government agencies that fund them. Before joining Lantern as executive director, Jessica Katz worked at New York City's Department of Housing Preservation and Development. At HPD, according to Lantern's website, Katz was "responsible for an annual Supportive Housing pipeline worth over $100 million." More than $15 million of that went to Lantern as an interest-free loan.

But the residents of the St. Louis are digging in. "The Lantern Group feels that they can bully and intimidate someone until they can leave," says Robert Atkins, a musician who has lived at the St. Louis for five years and now fights to keep his home. "If this were a building with a predominantly white population, they wouldn't try to get away with this.

"You want to know how shady these people are? I refused to move. So all of a sudden there is a massive flood. They caused a flood in my room of feces and urine, which destroyed my guitars. It smelled atrocious, so I couldn't stay here."

Still, Atkins keeps fighting. "This whole affordable housing thing is a hoax. It's not affordable to the taxpayer. It's not affordable to the poor. The only people who are making out on it are doing so at the taxpayers' expense. The neighbors lose and the neighborhood loses."