Should The City Cut A Housing Deal With Notorious Landlords? Homeless Advocates Say Yes

As part of his "Turning the Tide" initiative, Mayor de Blasio has said the city would partner with nonprofit developers to buy cluster site housing and turn them into permanently affordable units.

City homeless advocates are urging the de Blasio administration to proceed with a controversial deal to buy nearly 500 “cluster site” apartments from a notorious slumlord, saying that taking over the poorly managed units and converting them into permanently affordable housing for the homeless is the best outcome — even if a bad landlord stands to profit from it.

Last month, the city put the brakes on negotiations to buy 17 buildings in the Bronx and Brooklyn as part of an effort to end its long-criticized reliance on cluster sites, private apartments that the city rents for the homeless. Although the de Blasio administration had announced the pending purchase in December, city officials withheld the names of the owners—who turned out to be members of the Podolsky family, landlords with a long record of abuses who have amassed hundreds of millions in dollars over the years by renting shelter properties to the city.

“The city wants to get out of these units,” said Joshua Goldfein, a staff lawyer with the Legal Aid Society, which represents tenants who live in the buildings. “The ideal solution is to convert them to permanent housing.”

He added: “You hold your nose and make the deal.”

Giselle Routhier, a policy director at Coalition for the Homeless, agreed, saying that having the city buy the units and put them into the hands of a nonprofit developer would be the best outcome for homeless families. Her organization has for years been calling on the city to do away with cluster site housing. The buildings are often in poor condition and run by negligent landlords who overcharge the city. A 2015 city Department of Investigation report estimated that the city paid $2,451 a month on average for cluster units in low-income neighborhoods where average rents ranged from $528 to $1,200 per month.

“The ultimate goal is the same,” she said. “It’s trying to get [the apartments] into better shape.”

But several factors have complicated the sale. In a Daily News investigation several weeks ago that revealed that the Podolskys were the sellers, the paper noted that the market price for the Podolsky portfolio could be as high as $60 million. Around that time, the de Blasio administration put the sale on hold.

Two days before the Daily News story, the Wall Street Journal reported that federal prosecutors are currently investigating brothers Stuart and Jay Podolsky for tax evasion and overbilling practices related to hotels they own that are rented by the city for homeless families.

The family has a long rap sheet. In 1984, they were among a group of landlords indicted for using harassment tactics to force out tenants, which included the use of “professional vacators” who were hired to make living conditions unbearable for tenants. Two years after that, the Journal reported, Stuart and Jay Podolsky pleaded guilty to 37 felonies that included grand larceny and coercion.

In 2013, the family was profiled in a lengthy New York magazine story titled “Why Run a Slum If You Can Make More Money Housing the Homeless?”

In addition to detailing the family’s empire of shelters and SROs and their elaborate effort to hide their ownership of the buildings, the story revealed that then mayor-elect de Blasio had raised more than $35,000 from shelter landlords linked to a nonprofit management company that was connected to the Podolskys. He eventually returned some of the contributions.

David Satnick, an attorney for the Podolsky family, did not immediately respond to a request for comment.

Yet even in light of all of the family's well-chronicled history, de Blasio has denied knowing about the Podolskys.

“I want to caution, I don't know this family. I don't know the history of this family,” de Blasio was quoted in a Daily News story last week.

In the same story, City Hall spokesperson Jaclyn Rothenberg said, “He doesn’t know details about the family. They are not close. They are not friends.” She added: “He doesn’t have encyclopedic knowledge of people mentioned in New York magazine stories five years ago.”

Rothenberg and Department of Homeless Services officials did not immediately respond to requests for comment by Gothamist.

Over the years, de Blasio has made a mission out of cracking down on bad landlords. In 2010, as a newly minted public advocate, he created the “NYC worst landlords” registry, which is based on housing violations. He also arranged to have a link to the list appear on Craigslist, so as to make it easy for apartment hunters to identify bad actors.

Legal Aid's Goldfein said he believes that city officials knew who they were dealing with in the Podolskys. Prior to negotiations, the Legal Aid Society had encouraged the city to investigate cluster site providers for malfeasance. "We believed they would have found evidence that would have strengthened their hand," he said. "But at this point, the buildings have a market value that will be paid by someone, and the residents and future tenants will be better off if the City has control of what happens to them."

As homelessness continues to soar to record levels, with the most recent count in December showing 63,498 homeless people sleeping in the city's shelter system, the city does not appear to have any good options. Goldfein said that should the city nix the deal, it could elect to stop renting from Podolsky and begin the difficult transition of finding the homeless tenants new residences, but that might also pave the way for the Podolskys to try to deregulate their units and profit from market-rate rents.

Another option is to force the sale of the buildings through eminent domain, but that could take years, Goldfein said.

What made the Podolsky purchase so appealing to the city was that the family’s portfolio is so large; in one fell swoop, it would provide permanent affordable housing for more than 1,000 vulnerable New Yorkers, according to the city. “There’s not going to be another deal like this one," Goldfein said.