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On Nancy Wackstein’s office wall, there’s a framed copy of an old report.

Wackstein: We had done this whole report, when Mayor Dinkins was borough president of Manhattan and I had worked for him then. We had done a whole report, a shelter is not a home.

Wackstein went on to be a top advisor to Mayor Dinkins. She spent the early 1990’s trying to move families OUT of what were then called “welfare hotels.” We gave her a list of the hotels the city is placing the homeless in today.

Wackstein: So these hotels, as I’m looking at your list, some of them are the ones that we phased out you know 12 years ago, 13 years ago. I see the Cross Bronx, the Cross Bronx is on here, the Stadium. A lot of them are owned by the same people who owned them then. The Prospect, Hamilton Place, Allerton house these are familiar to me, Baychester.

In the emergency hotel world, there are no contracts, and no competitive bidding. And that’s enabled a relatively small group to control almost all the business. Linda Gibbs is the Commissioner of the Department of Homeless Services.

Gibbs: We do work regularly with a group of people who do understand our work and quite frankly step up when we need them.

But Gibbs says this is an open process.

Gibbs: The reality of the past year is the proposals are all eagerly reviewed because we have an increasing demand for family shelters.

We spoke to one would-be provider who has a track record in homeless housing outside New York. He said he submitted five proposals in recent years that have been turned down. He didn’t want us to use his name, because he says he’d still like to do business with the city.

Senora Selzy admitted it’s a hard business to enter. As the recently retired Director of the Family Hotel Program for the Department of Homeless Services, she was the one responsible for bringing new hotels into the system.

Selzy: I know of, personally, a number of people, a number of organizations, who offered buildings to the city, that were truly decent to house their homeless families and it didn’t happen, it just didn’t happen.

Yet the city’s payments to hotel owners have increased five fold in just six years, to $180 million. But despite this huge growth in spending, the same small group of a dozen or so operators just keeps getting more and more of the business.

For example, in the first nine months of this fiscal year, homeless services brought on line sixteen new hotels. Almost $9 million was paid out to hotel owners already in the business. Just sixteen thousand dollars went to a new owner.

Harvey Robins was a top official in the Koch and Dinkins Administrations.

Robins: It is a small group and they controlled the air in my room when I was trying to address this issue and they clearly have the city exactly where they want ‘em.

We asked one of those landlords, David Fuld, whether he thought the industry was controlled by a tight-knit group.

Fuld: I think in the real estate industry there’s cross-investments and limited partnerships. People invest in one another. People do joint ventures and do deals together. Upper class, middle class, lower class. I don’t think that’s uncommon in the media and the press either, is it?

But for officials like Harvey Robins, that group had the control.

Robins: We were desperate. At 1, 2, 3 o’clock in the morning to be able to make a match and have a family move into a hotel. They knew they had the city over a barrel and they took us to the cleaners.

Prices remain high, costing the city up to $3000 dollars a month for tiny, often dirty rooms. Joan Malin, the Homeless Services commissioner under Mayor Giuliani, says she tried to get a better deal, once.

Malin: This was a particular moment when we did have some give in the system, so we reduced the rate. For the hotel owners. But they went crazy. But I had sufficient vacancies that I could handle it. But that lasted for maybe six months or a year, and as soon as there’s pressure back on the system, you’re in no position to negotiate.

Without contracts, the city works out a rate on a hotel to hotel basis, shakes hands, and the deal is done.

In his building on East 104th Street, hotel owner David Fuld invited Amy Eddings to take a whiff of the garbage area.

Fuld: Smell it.
Eddings: Smells like oranges.
Fuld: Look up. It’s not by accident. It squirts out every few minutes, keeps the place deodorized, people generally are neat, because this is available, people don’t generally throw garbage in the hallways, and things ARE kept neat.
Fuld: by the way.
Amy: No roaches.
Fuld: You don’t see a roach.

In the hallway, he flags down a resident.

Fuld: Are you very pressed for time? She doesn’t know who I am, I stopped her at random. Did you ever talk to me before?
Woman: No
Fuld: I’m one of the owners. This lady works for a radio station. Would you talk to her?
Woman: It’s nice, it’s comforting.

Fuld was the only one of the dozen or so major players in this industry who would grant us an interview.

In the course of our investigation, we found that David Fuld has been in the business for two decades. In the past four years, the city paid him 75 million dollars. One of his business partners is a director of a company being investigated for bribery.

But that information isn’t in the city’s central database. Unlike people who have contracts, the city doesn’t require these hotel owners to disclose anything about themselves, their business partners, their past performance, or whether they’ve been investigated. None of this information would necessarily prevent the city from doing business with the owners – but these are taxpayer dollars, and taxpayer dollars are usually subject to public scrutiny.

We also learned in this investigation that one city agency is so dissatisfied with David Somerstein it will no longer refer people to his hotel… and that that three members of another family in the business, Stuart, Jay and Zenek Podolsky, were convicted in the 1980’s of grand larceny.

But the city hasn’t required the hotel owners to divulge these details.

Patricia Smith is the first deputy commissioner of the city Human Resources Administration, which provides emergency housing for people with AIDS. We asked her how, without contracts, she would know if one of the hotel owners was partners with, say the late mobster John Gotti.

Smith: How would I know? I wouldn’t know, and if I did know the question would be how one acts on that in an emergency housing situation. .. I’m not saying it’s not good information, what I’m saying is that our responsibility our primary responsibility at HRA is to house people in a medically appropriate environment because if it’s a medically appropriate environment we will put an individual there in an emergency.

After we began working on this series, the city said it wanted to move toward a contracted system. As for landlord David Fuld, he said contracts would help him get financing. Yesterday, we asked Mayor Bloomberg: do you as a business man, think it’s a good idea to end $180 million with no contracts?

Bloomberg: The procurement rules of the city are very complex and there should be some oversight on everything. In some of these cases you can’t get multiple vendors who are willing to give you the product that you want so the city isn’t conducting a real arms length negotiation, we are asking people, please, please sell us a service that we absolutely have to have.

In the last 20 years, the lack of contracts has surfaced from time to time. Officials promise reform. But the tremendous crush of homeless families continues to arrive, and the emergency housing system doesn’t change. This summer, the numbers of homeless are expected to reach record highs. For WNYC, I’m Andrea Bernstein.

 

Interviews:

David Fuld: "We provide a superb service to families who are in need of it. I think most families you might interview would suggest they’d rather be in our facilities than elsewhere in the system."
Listen

Jacqueline Davis: “How long have you lived in these hotels? Ever since I was 18 off and on I never had an apartment yet. How are you now? 35.”
Listen

Sadie James: “My youngest is fifteen and I gave temporary custody of him to my older son until I find a place because he’s in school and I do not want him traveling around with me every 28 days.”
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Lester and Annette Bell: “We lived in Baltimore, Baltimore, MD, unlike New York doesn’t do anything for married couples. We lost our apartment, we lost our job with World Com….We knew how the system worked and said let’s come to New York to start all over again.”
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Patricia Smith, First Deputy Commissioner, New York City Human Resources Administration and Bob Bailey, Counsel, HRA. “If it’s a medically appropriate environment, we will put people there.”
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Linda Gibbs, Commissioner, New York City Department of Homeless Services, “This is a legal relationship that we have for use of conditional placements. There is nothing inappropriate about it. What we’re looking at is trying to build a stronger relationship with the providers that does use the procurement process.”
Listen

Comptroller's audit

'Handshake hotels' are only part of the city's uncontracted, emergency homeless housing program. Temporary apartments are also used. Read Bernstein and Eddings' report HERE

NonProfit Homeless Housing Provider May Have Misused Public Funds Part 1 and Part 2

NYC Homeless Services

NYC Human Resources Administration

NYC Housing Preservation and Development

| Handshake Hotels home | part 1 | part 2 |