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Why Run a Slum If You Can Make More Money Housing the Homeless?

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The courtyard at 941 Intervale Avenue in 2010.   

“It’s literally the biggest policy mistake of the Bloomberg administration,” said Patrick Markee, a senior analyst for the Coalition for the Homeless, which opposed the shift from Section 8 vouchers. “It’s the keystone of why family homelessness has exploded.”

The cluster system has been the target of persistent criticism, in part because it appears to create more homeless people. In June 2012, Torres found a letter taped to the door of her apartment saying that her lease was about to be terminated. The letter was written in legalese, but it seemed to say there was a problem with her Section 8 eligibility. Soon afterward, an eviction action was filed in court.

There is little doubt that this was a strategic decision. Last year, a federal bankruptcy proceeding related to a dispute between the Podolskys and the mortgage holder on another building in the Bronx cluster offered an unusual glimpse into the workings of their shelter business. Lapes filed a sworn affidavit, disclosing that he was the president of a company called We Care Housing. It appears that We Care’s only purpose is to take over leases on vacated units, serving as a pass-through for monies from DHS. The vast majority of this income, the affidavit disclosed, went directly to We Care and its owners: the Podolsky wives.

“We Care was essentially a start up with no assurance of long-term success,” Lapes wrote. But he said the company had excelled, taking over 55 units, about half the building, and further expansion was projected as the city increased placements. The company, Lapes claimed, had become “a stable business with a good future.”

In our conversations, Lapes declined to explain the justification for this ornate financial ­structure. But the comptroller’s office has repeatedly investigated the confusing flow of funds to shelters owned by the Podolskys. In October, Comptroller John Liu cited their nonprofit administrators for an “appalling record” and “repeated failures to account for millions of dollars spent,” singling out undocumented payments to the Bronx cluster.

In 2011, the Bronx cluster spent nearly $10 million of public funds, 75 percent of which went to rent—a proportion that is typical for Podolsky properties, but unusually large by industry standards. Little of the money appears to be reinvested in the buildings’ upkeep. Liu’s most recent audit found that since last December, Housing Solutions’ cluster units failed DHS inspections more than 80 percent of the time, typically for “hazardous conditions.” Some tenants say they suspect the landlord cultivates disorder. “It’s the same pattern as the eighties,” says housing activist Larry Wood, of the Goddard Riverside Community Center. Once again, buildings are emptying—but this time, the government itself is playing the role of vacator. “They are forcing out people,” Torres said. “I think they are making lots of money.”

Residents of the Intervale Avenue shelter say its security has always been lax. One Sunday evening last December, a child playing with matches ignited a dirty mattress stowed beneath a first-floor stairwell. The blaze quickly spread through the building. There were no hallway smoke detectors, DNA Info reported, and residents found that fire extinguishers were empty or broken. Six people were injured, two severely. In the chaos, thieves made off with the few valuable belongings many of the homeless families had.

The Websters, along with the other homeless clients, were relocated. (After Andrew graduated, he took a job at Starbucks, and his family found a new apartment.) But as Carmen Torres stood in the cold night, her bare feet singed, she knew she had little choice but to return. “I don’t have a place to go,” she told me soon afterward. “A little apartment is $1,400.”

After the fire, Torres brought her dilemma to Rafael Salamanca, the district manager of the local community board, who called a public meeting. At it, he projected pictures of her charred hallway for an audience that included an executive from Housing Solutions. “These are not livable conditions,” Salamanca said. He said that the city had “refused to let me know who the landlord is.”

“I’ll find out,” the executive promised. “I have a contact person.”

But Salamanca never got an answer. ­Torres’s lease termination, notarized by one of the Podolskys’ office attorneys, was signed by the building’s registered manager, Nate Follman. But when Salamanca sought out his office address, at another shelter, he got nowhere. It later turned out that Torres had met the elusive Mr. Follman, who had offered to buy out her lease, but she knew him as “Mike.” Jae London, the former hotel manager, told me that Podolsky shelter employees are encouraged to use “fake names and fake e-mails” in order to conceal their affiliations. “They are terrified of DHS finding out that Alan Lapes doesn’t own any of the properties, that it’s still being handled by Jay Podolsky,” London said. “Alan says that the Podolskys are out of the business, they have nothing to do with it, which is a lie. They never went anywhere.”


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