salvation army deal on the west side blocked by a.g. Development

Upper West Side In a major blow to the Salvation Army’s plan to sell a 352-unit senior residence on the Upper West Side, State Attorney General Eric Schneiderman recently came out against the deal and asked the State Supreme Court to block it.

As a non-profit charity, the Salvation Army must receive approval for any sales of major assets from the state, and is subject to oversight from the AG’s office.

In response to the Salvation Army’s petition before the State Supreme Court to sell the building, which sits at the corner of 95th St. and West End Avenue, an attorney for the AG’s office, Gary Brown, called the deal premature, questioned whether it was fair to residents, and said the Salvation Army should get an independent appraisal of the property, among other things.

The building has 352 units, but the Salvation Army has been leaving vacated units unoccupied, ostensibly in anticipation of this deal. There are currently 192 seniors living there.

As noted in the AG’s response, the terms of the deal are complex. The Salvation Army will sell the building for $109 million to the developer, then lease it back and operate it as a senior residence for two years while a new facility is built in East Harlem at Third Avenue and 125th St.

In addition, $39 million of the purchase price is being financed as a mortgage that the developer will owe the Salvation Army. That part of the deal, known as a purchase money mortgage or seller-financing, is usually done when the buyer can’t qualify for a mortgage through traditional lending channels and is sometimes used as an incentive by the seller to close on the property.

Seniors currently living at the Williams will have the choice to live at the new facility in East Harlem once it’s completed or have the Salvation Army relocate them in another of their buildings elsewhere.

But many of the seniors at the Williams are frail and the idea of moving crosstown at this stage of their lives is daunting. And, according to the AG’s response, many residents said the Salvation Army guaranteed them they could live out their lives in the building, which is called the Williams.

“Indeed, some say that they never would have given up their prior place of residence, and moved to the Williams residence in the first place, were it not for these assurances,” said Brown in the AG’s response.

But Major James Betts of the Salvation Army, in a previous interview with The West Side Spirit, said the cost of needed renovations to the Williams is somewhere north of $20 million, money the Salvation Army doesn’t have. He characterized the deal as necessary to keep the organization operating in Manhattan, and therefore very much in keeping with their mission. He also said for those seniors that elect to leave the Williams and not live at the new East Harlem facility, the Salvation Army will pick up the tab of moving and figure out where to relocate them.

But upon review, the AG called the terms of the deal “highly controversial.” In addition to the objections outlined above, the AG is calling on the court to require the Salvation Army to hold a hearing so residents of the Williams can voice their concerns and objections. They also called for an independent appraisal of the building, which they said may be undervalued at $109 million. The basis for this objection, Brown said, is that the Salvation Army used as a yardstick similar buildings that are occupied. But the deal is predicated on the building being unoccupied, which would raise its value significantly.

Lastly, the AG’s office said that the proposal assumes residents are not protected by rent regulatory laws, which the Salvation Army has not proved, nor has any administrative agency or court decision affirmed. This last point is the basis for them characterizing the deal as “premature.”

Another problem with the deal, lawmakers said in June when news of the plan broke, is that they couldn’t get a guarantee from the Salvation Army that rents at the East Harlem facility would stay flat in the years ahead.

At the time, elected officials urged the Salvation Army to make a deal with a community organization and the city’s Dept. of Housing Preservation and Development - willing partners, they said - but Betts characterized the idea as taking money from his organization’s coffers and giving it to another entity.

Those same lawmakers are now applauding the AG’s stance.

“I’m glad that the Attorney General has recommended denial of the sale of the Williams, and I hope the judge agrees,” said Manhattan Borough President Gale Brewer.

Upper West Side council member Helen Rosenthal said the Salvation Army has been opaque since the beginning about their plans to sell the building, and that she’s been working with residents of the Williams and the wider community to come up with an alternative.

“We have been from the start, and continue to be, firmly against the proposal to sell the Williams and displace the seniors who call it home,” said Rosenthal. “We remain available to sit down with the Salvation Army at any time to develop an alternative solution that would prevent the loss of senior housing on the Upper West Side and allow the Salvation Army to fulfill their mission to create housing for the elderly and those in need.”

A tenant leader at the Williams, Jean Poleshuck, applauded the AG’s stance and said it was a needed affirmation of her and her neighbors’ fears over the looming deal.

“The Attorney General’s response speaks to the concerns and anxieties that we, the residents of the Williams, are experiencing at the prospect of losing our homes and being relocated,” said Poleshuck, a member of the Williams Residents Association. “We have high hopes that we can remain at the Williams.”

In response to the AG’s filing, Betts told the West Side Spirit the Salvation Army is committed to seeing the deal through.

“The Salvation Army is continuing to discuss our proposal with the residents of the Williams Residence,” said Betts. “We are confident that this proposal, which will give them the opportunity to a brand-new facility at the Salvation Army’s expense, is the best possible option. We look forward to sharing our thoughts with the court as well.”

The petition will be heard before Judge Thomas Walsh in State Supreme Court, in Rockland County, on Friday, Nov. 14.

A spokesperson for the AG’s office, Matt Mittenthal, said, “the Salvation Army’s proposed sale will result in stress, disruption, and relocation for elderly residents of the building they now call home. Attorney General Schneiderman strongly urges the court to listen to the concerns of residents, consider the hardship this move will bring to almost 200 senior citizens, and dismiss the Salvation Army’s sale as premature.”