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Elm Street Housing Project—completed buildings and new foundations Ramapo—A Fiscal Deadbeat? January 10, 2012 It was just a little
over a week ago that Supervisor St. Lawrence admitted on the radio
that the Town would not be able to pay back the $2.5 million
borrowed in September from the Workman’s Compensation Fund and two
other funds. The loans were due no later than December 31, but the
Town let the deadline slip. Eight days later, The Journal News
reported that of the $15 million owed to Provident Bank in
Ramapo-backed loans for the Ramapo Local Development Corp’s Elm
Street Housing project, the Town has only been able to repay $6
million, less than half of what’s owed. Worse yet, the housing
project now needs another $8.4 million from Provident Bank—an
institution that is experiencing its own dangerous fiscal stresses
at this point. What’s that old advice about debt? Something like: When you find yourself in a deep hole, step one is to immediately STOP DIGGING! Maybe those two words should be etched onto the back of the nameplates that sit in front of the Town Board members and the Supervisor at their meetings. Something has to be done. The numbers surrounding St. Lawrence’s Elm Street Housing project are seriously off-kilter. Not as bizarre as the numbers for that other Ramapo Local Development Corp debacle—Provident Ballpark—but they are heading in that direction. When St. Lawrence decided to become a semi-independent developer, he formed the Ramapo Local Development Corporation (RLDC), fashioned a board of three and got himself elected President of the Corp and Chairman of the Board. Then he persuaded the Ramapo Town Board to fund the projects with taxpayer-backed loans for the Elm Street Project, the ballpark, a hotel next to the Joseph St. Lawrence Sports Center, and a housing development in Sloatsburg. He also thought that the taxpayer-purchased lands for these projects should be donated to his development company by the good people of Ramapo. The New York State Comptroller has since expressed his own suspicions about the comingling of taxpayer and RLDC money. Elm Street Numbers Here are some of the numbers and rhetoric surrounding the Elm Street housing project near Union Road in the Spring Valley-Monsey area. In October 2010, St. Lawrence explained to the Journal News that the project will be built out in three phases. Each will be funded with loans that will be paid off with the sale of units in the phase just completed. New phase, new loans, and a new cycle of repayment. He told the Journal, "By the end of November, we expect to pay down the $15 million loan from Provident Bank, and then expect to take out $8.4 million more for phase two." Here’s where the ledger starts to tip. It is way past November, and the RLDC has only been able to repay Provident Bank about $6 million. So what happened to the sale of the units to cover that first loan? Well, only 21 of the 48 built have sold. The first four, four-story buildings are predominantly empty—it’s been a tough sell. And now, to make matters worse, the "affordable housing" price for these units has been jacked up another $20,000, raising the selling price of the remaining units to $369,000. So it would be wise now, to "stop digging," right? Not in the eyes of our own little Trump. The foundations for seven more buildings have been dug (see photo) and speaking through his executive director (Town attorney Aaron Troodler), the boss has expressed optimism: "I’m optimistic that we will be able to commence on phase two even as the units on phase one are still closing." This kind of "Donald-style dementia" is not only a problem for the taxpayers of Ramapo, remember this LDC group is still eyeing a hotel and housing development in Western Ramapo despite the experience of the ballpark and Elm Street, but it could be even worse for Provident Bank. Recently, a high-profile group of analysts at The Motley Fool financial services company took the Provident Bank (PBNY) to task for "not hav[ing] fully provisioned for their bad loans." Bad loans, hmmm. It gets worse, much worse. On December 18, The Motley Fool published its official list of The 10 Worst Thrifts of 2011. They explained, "The market has been basically flat, but these 10 thrifts have gotten slammed." Number three on the list of the Motley Fool’s Top 10 Worst is the same name that appears on the signage at the front of St. Lawrence’s ballpark in Pomona--Provident New York Bancorp (Nasdaq: PBNY). The S&P 500 is down 1.7% after factoring in dividends this year, but Provident is down 37.5% with a stock price today of $6.9 off from the corporation’s high of $15.35 in 2007. Maybe the new CFO who began with the bank yesterday will heed that "stop digging" admonition. Other Elm Street Issues Besides the problem that the Chief Examiner of the State Comptroller’s Office has with the mixing of tax funds and the RLDC debt, there are a couple of other interesting issues with the 11 proposed four-story buildings in the middle of a residential neighborhood.
Michael Tauber The builder that St. Lawrence chose for the Elm Street Project (aka Ramapo Commons) is Michael Tauber. You might recognize his name from previous stories here. Tauber is the developer who initiated the RLUIPA lawsuit against the Village of Pomona over a project called the Rabbinical College of Tartikov—a development of 250 homes. He filed the lawsuit even before the application for the project was filed. That conflict is still ongoing. Also, in 2007, a donation was made to Friends of Christopher P. St. Lawrence by someone or something called Monsey Rt. 59 Associates with a post office box for a business address. The amount was a whopping $3,500—the second highest amount from any of the 40 corporate donors in that campaign. The donation was traced to Mr. Tauber. A question brought up in the Journal story about the unpaid loans for Elm Street concerns whether this housing will, in fact, be occupied by a diverse population representative of the area in which it is being built, or will it be occupied by political supporters from one special interest group. On November 6, 2007, St. Lawrence met at the Crown Moulding building in Monsey to thank his bloc constituents for his win in the election. At that meeting he promised, "Coming up in 2008, we are going to deliver affordable housing for this community ( http://www.youtube.com/watch?v=GzydI5liD9c)." By December 22, 2008, Michael Tauber was in attendance at the RLDC regular monthly meeting discussing how the town could prevent drainage problems in the area surrounding the Elm Street project. The Journal article also explained that Joseph Abate, director of the county’s Community Development Office said his office will request documentation if a fair-housing complaint is filed with his office. (A recent court decision in New York City involving a similar situation can be read here--includes full text of the court decision Broadway Triangle v Bloomberg.)And finally, there’s the question about the many land purchases that the town has made over the years, which St. Lawrence and town attorney Michael Klein swear are for open space preservation and are protected against any other use. We have warned for several years now that this vast collection, paid for by the taxpayers, constitutes a Ramapo Land Company that is just waiting for a developer to take over. So far, St. Lawrence’s Ramapo Local Development Corp. has built on town land purchases in Pomona (the ballpark) and on Elm Street. See Bob Rhodes’ "Open Space Generates Overwhelming Debt for Taxpayers: Opportunity for Developers" for a discussion of the economic consequences of increasing debt service and other costs of this land purchase program ( http://www.preserveramapo.org/Open_Space_generates_debt.htm).Michael Castelluccio If you would like to be added to our email list and receive updates on the articles posted on the site, send your email address to pr.webmaster@gmail.com
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