S.O.S. – Selling Out Seniors

Clarkstown drained its reserves keeping afloat budgets rippled with a river of structural deficits. It must now sell a Town asset for cash or lose its Triple A bond rating. Clarkstown’s seniors will be muzzled and ‘sold down the river’ for cash.

From news reports it is becoming increasingly worrisome that the Town Board of the Town of Clarkstown is being maneuvered by Supervisor Gromack and his ‘right hand woman’ Town Attorney,Amy Mele, towards a sale of the senior citizen housing complex known as ‘Middlewood’.  It is openly being stated by sources within the Town that Moody’s has been assured the Town’s seriously depleted reserve fund will be given a cash infusion shortly and that the Town can thereby retain its cherished AAA bond rating.

Clarkstown has slipped into insolvency and the outlook for its cherished AAA bond rating has moved from ‘stable’ to‘negative’. The “positive news” is that Clarkstown has an “affluent property tax base that has not been fully tapped.” Clarkstown raised 2014 property taxes on residents by 3.5% and on businesses by a whopping 17% while promising it could pull another rabbit out of its hat. It now looks like the seniors are the ‘rabbits’ which will be pulled out of the Town’s ‘Middlewood Hat.’

At the March Town Board meeting some questions were directed to Councilwoman Lasker given that as the formerly most liberal Democrat and the longest serving member of the Town Board she would be the last person who would ‘sell out seniors’ even if others might be prepared to ‘sell them down the river.’  But given her record with the last ‘Great Clarkstown Giveaway’ we were quite apprehensive about whether she would want to step into any briar patch. Here is the verbatim transcript of my exchange with her on this issue:

Hull:  Councilwoman Lasker, as you know the Town of Clarkstown has been running a structural deficit for a number of years and has been depleting its reserve fund to make up for that deficit. Last year the Town lost a $20 million tax cert case to the owners of the Palisades Mall.  $15 million of that had to come out of the School Board’s reserve fund which placed its finances in a near ‘belly-up’ crisis.

The Town was unable to pay the $5 million dollars, that was its share of the settlement, out of the reserve fund without damaging the AAA bond rating and so it added the $5 millionsit owed to its already $100+ million of bonded debt.  The town is in need of a multimillion dollar shot of cash or Moody’s will probably downgrade the Town’s rating.  The question that everyone who examines financial statements asks is where will that cash come from to rebuild those reserves?

I want to direct your attention now to an article of February 15, 2014 in the Journal News which reported that residents of Middlewood Senior Citizen Park were very worried that the Town was planning to sell their housing complex.

The Town has been the owner of that unit since the 1970s.  It is maintained by a town-hired management company, it is self sufficient and the residents do not want the town to sell it.  Addie Powell who lives with her husband at the complex said: “We’re 77 years old. When I moved here 11 years ago, our plan was, ‘This is it.’ We don’t want them to sell it”.

It is common knowledge that the Town is trying to persuade the residents at Middlewood that there may be some advantages to them in acquiescing with the Town’s desires. The Town Attorney was quoted in the article as saying: “Town officials felt obligated to look into options that would benefit both the residents as well as the town’s taxpayers.”

Councilwoman Lasker, you are the longest serving elected official on this Town Board.  I presume you are well aware of the Town Attorney’s comments and I wonder if you are one of the officials who “felt obligated” to look into options to sell the complex?  Accordingly, I want to ask you four questions.  

1) In what way does selling this complex and putting several millions of dollars into the Town’s reserve fund have any advantage to either the senior residents of the complex or to the taxpayers in general?

2) Are you prepared to fix the Town’s cash reserve problem and its Moody’s rating problem on the backs of a group of the Town’s senior citizens?

3) Are you prepared to vote, at some future date and against the wishes of the Middlewood residents, to sell this property?

4) Does the Town need more Middlewood-like housing options for our senior citizens or less of them?

Thank you for your response. 

A frequent problem with this Town Board is that when asked a question about the Town’s deficit and bond debt Supervisor Gromack invariably wanders off topic and presents an analysis of the County’s overwhelming deficit and bond debt while leaving one with impression that the Town of Clarkstown has only necessary levels of bonded debt, has a ‘surplus’ and therefore does not have a deficit.  Further, the elected official to whom the question is addressed is not permitted by the Town Supervisor to answer until the Town Attorney has bespoken.

One might expect that if a councilperson needed to bring in the Town Attorney for clarification purposes it would be their call to do so. But in the Chambers of Clarkstown’s Imperial Senate,Supervisor Gromack seems to consider that the four elected councilpersons are simply some sort of necessary Town Board ornaments. Accordingly, Supervisor Gromack directed my question away from Councilwoman Lasker to the unelected Town Attorney, Amy Mele, who launched into a meandering explanation that explained nothing with relevance to the questions I asked of one of our longest serving elected officials.

Mele’s comments indicated that some as yet-unnamed party is going to pay millions of dollars for a property investment in which nothing will change but more of the investor’s money will be plowed into the property.  I don’t know about Ms. Mele but if I invest in something there has to be a substantial return and if there is a substantial return that can be made from Middlewood then the question returns in circular fashion as to why the Town would wish to sell an asset that is capable of providing an attractive return if not to avoid a fiscal catastrophe?

Town Attorney Mele:  First of all I just want to make clear to everyone that the Town Board has not made any decision to sell Middlewood. The HUD mortgage was coming due at the end of 2014 and like any owner of one of these complexes … and by the way …..(at this point the Town Attorney wandered off seeking illumination of her subject with a fast diminishing flashlight) …. the Town has an ownership just in Middlewood by virtue of a very strange set of circumstances that happened back in the 70s.  So in Monterey Gardens and New City Gardens the Town does not have any ownership interest in any of those and those are proceeding the way that they have always been which is subsidized Section 8 housing because that was how the developers financed their businesses and that’s what 40 year pilots with the State of New York require …… (from which she eventually emerged with her light extinguished to offer) ….. So in fact in Middlewood we are in a bit more of a position toensure your destiny than we are with any of those other complexes where we don’t have an ownership interest. 

So we simply hired a firm that has an expertise in these types of housing complexes to solicit some information and present the Town Board with some options.  I don’t know if you were present ma’am but myself and Supervisor Gromack and Councilwoman Hausner did come to a meeting – we will be there again – to report more information when we have it.  But I said at that meeting and I will say it again in front of all of these people the directive to those brokers was to only market to peoplethat were going to continue that complex exactly how it is as a subsidized Section 8 housing complex.  That can be accomplished in a number of ways; it is not a new concept. There are convents and municipalities, churches, other non-for-profit organizations that have done the same thing where they have their residents there and there are legal mechanisms to insure that it stays what it is.  In fact what you will most likely see is more money plowed into the property and more improvements to the property.  

But, again I can’t say, you know, why we are taking a certain action because the Town Board hasn’t taken any action yet.  We recognize .. you know .. you are our seniors, you are our residents, you are the parents of our residents and I think I can represent that this Town Board is not going to do anything that jeopardizes the way that you live and the program that you currently exist under.  It’s just not going to happen.

Presumably because of her ‘ornamental status’ Supervisor Gromack did not then follow up with Councilwoman Lasker to see if she would like to respond further or differently. Instead he moved on to answer questions posed by others.  However, having been asked several questions by other people during the meeting Lasker later included a response to my four questions among her responses to the others. What she said is as follows:

Councilwoman Lasker:  I would like to say to Mr. Hull that the Town is in great fiscal shape.  It has a Triple A bond rating and a lot of your questions have been answered over and over again. You don’t like the answers that you have been given and you keep asking the same questions.  I understand that!

That concluded the answer given by the longest serving member of the Town Board to four questions that neither I nor anyone else has ever asked before. Truth be told I didn’t expect that the answer I would receive was “Off With His Head!”

The March 12 edition of the Our Town newspaper had a scathing rebuke of the way information was being provided about Middlewood.  Appearing on WRCR and speaking with Steve Possell, the editor of Our Town, Art Aldrich, described the situation as follows:

Aldrich: This is a major story – Middlewood – the Section 8 housing project in Clarkstown. It is the one housing development that is Town-owned. Clarkstown’s Town Board attorney is denying that there are any definite plans to sell but Anne Phyllis Pinzow reports that bidders are already vying for the property. Where there is smoke there is fire and we don’t know whether the Town Board is going to decide as a policy decision they don’t want to own rental property – that is certainly a legitimate policy decision on the part of the Town Board – but the people in the Middlewood development are left in the middle and it is an uncomfortable place to be. This is because their rents are subsidized partly by Federal Section 8 funds.  They don’t pay separate electric bills.  The Town has just paid off the mortgage on this property so they are under no compulsion to sell.  

If the Town has not decided whether they are going to sell why are there 20 firms bidding for this property which theoretically is not for sale?  The Town will not disclose any details about the bids or even the names of the firms that are bidding.  Not only that but when our reporter went to Arco Management, which runs the property (for the Town), she was told: “That is all you need to know”.  Now that is like waving a red flag.  Nobody tells a reporter “that’s all you need to know” because Middlewood is public property and the contracts with Arco are public information and we (Our Town) do not appreciate being dismissed. 

Arco manages a number of properties in Rockland County – they are a competent management firm but they don’t like to give out information. Taxpayers own Middlewood and Arco has a contract with the Town of Clarkstown.  Any document in the Town is public information and has to be disclosed.  So don’t brush us off with “that’s all you need to know”. 

There is Freedom of Information – that’s a tactic – you see this going on in New Jersey with the ‘Bridgegate’ – nobody wants to reveal anything – public officials do not willingly reveal information. You have to go and dig it out.   But that is why we have reporters. 

A lot of the residents at Middlewood are very concerned about the future, the future of their rents. The rents are subsidized as a Section 8 development which means that even if Clarkstown does sell it Federal rules will still govern it.   There is no set rent for every tenant because HUD makes up the difference between what is paid the owners by the renters and what the market rate would be.  It’s affordable (for the seniors) which is the intent of the development and that is the value of the housing because it is affordable for seniors to live and it is below market rates. 

The residents there are caught in the middle – they are very distressed.  We find the fact that there is no information forthcoming is actually just as distressing as we and the tenants are being left in the dark. 

According to Pinzow’s report in order to weed down the number of responses a second round of bids has been requested that were due in a week ago.  Town attorney Mele as usual offered theobligatory self-serving comparison to the County by saying that Rockland County was “financially compelled” to sell the Summit Park Nursing Home and Hospital while “Clarkstown has no such compulsion – we just want to see what the market has to say”. She continued that there will be no sale of Middlewood “unless it is advantageous to both the Town and the residents of Middlewood”.  One can guess that as Editor Aldrich points out “perhaps the Town could use an infusion of cash from a sale to rebuild its budget reserves” and that therefore the decision about the “advantage” to the residents of Middlewood will not be made by them but by Supervisor Gromack with the help of his two Democratic colleagues, CouncilwomenHausner and Lasker.

As Aldrich so astutely observes, the reason Supervisor Gromack, Councilwomen Lasker and Hausner wish to sell Middlewood is that the Town needs an urgent cash infusion into its reserve fund or it will lose its cherished AAA bond rating.  This is self-evident given the Town could not pay for the $5 million it owed to the Palisades Mall and resorted to borrowing that payment with interest on the backs of senior taxpayers like myself.  The reason 20 people want to buy Middlewood is that they can make a ton of money from the difference the renters are paying and the going market rate for similar rentals in this area.

Basically, Clarkstown is selling an asset and its future revenue stream in order to get itself out of its insolvency crisis.  Clarkstown is running a structural deficit and has been doing so for the past several years and it has been covering its excess spending by tapping into the Town’s savings account which is now at a critically low level. 

The facts that Councilwoman Lasker and Supervisor Gromack refuse to recognize are that without substantive changes in how the Town is preparing its annual budgets, the Town is looking at tax increases of three to four times the tax cap within the coming 5 years.  Given the present level of budgeted spending the Town cannot touch its already critically depleted reserves and the Town is also in danger of having the reserves drop below what are required by law within a year or so.

Anyone who cares to examine Open Book New York or the NY State Controller’s website will discover some disconcerting things in a section that describes the New York State Fiscal Stress Monitoring System. You will find that Rockland is ranked the highest stressed County in the State.  Ramapo is rated as the highest-stressed town while Suffern is thehighest-stressed village.  Of all of the towns (Ramapo being a big outlier) Clarkstown is the highest rated, i.e. more fiscally stressed than Orangetown, Haverstraw, and Stony Point.Clarkstown is rated at 32% for 2013 which is acceptable all other things being equal i.e. having a healthy reserve fund, having a budget that does not have a structural deficit (Clarkstown does) and having a level of bonded debt that can be supported by keeping property tax growth below the tax cap.

But guess what?  The New York State Controller’s website shows Clarkstown’s situation is trending upwards towards a higher fiscally stressed rating and the trend shows that Clarkstown’s fiscal stress number will go up by 5 points (a 15% increase in its level of fiscal stress) within the next few years.

Councilwoman Lasker leads me to believe by her dismissiveresponse she is unaware that New York has a Fiscal Stress Monitoring System and it is frowning at what is going on with the finances in the Town of Clarkstown.

Winston Churchill once remarked “As scarce as truth is, the supply always seems to exceed the demand. People occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened.” 

Therefore to Councilwoman Lasker I say that the questions I asked you remain unanswered. Are you prepared to fix the Town’s cash reserve problem, its Moody’s rating problem, and its deteriorating fiscal stress rating, on the backs of a group of the Town’s senior citizens who live in the Middlewood complex?  Are you going to vote to sell Middlewood for several millions of dollars and place the funds in a town reserve account to satisfy the Moody’s rating requirements?

Paraphrasing your reply, Councilwoman Lasker, the Town is “not in great fiscal shape”.   The NY State Controllers Fiscal Stress ratings show that Clarkstown’s trend is rising not falling.  Clarkstown’s budget cannot be sustained without either animmediate cash infusion or a future tax increase.   A lot of my questions have been avoided over and over again and you may not like the questions I ask and you may wish to keep giving the same non-answers.  I understand that but I will continue to ask these questions.

“The truth is incontrovertible. Malice may attack it and ignorance may deride it, but in the end, there it is.” –Winston Churchill“

This blog is authored by Michael N. Hull, a retired senior citizen.