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Westbeth Board Sues to Conceal Numbers

“I always thought that the basic tenet of Journalism was to get both sides of the story” was the bristling challenge from sixty-one year-old Executive Director, Steven A. Neil of the forty-five year-old low rent artist enclave, Westbeth, in response to the May cover article by historian and Westbeth tenant, Catherine Revland, who repeated the tenants’ attorney’s accusation that Westbeth management had “extraordinarily” undervalued leases to commercial tenants—one as low as $4.20 a sq. ft. for ten years.

Accepting Neil’s criticism, I asked Neil to meet with Ms. Revland, but he dismissed this because he did not want to get into a heated exchange with her. We compromised—I would send him a list of Revland’s questions before meeting with him and then, to ensure accuracy, tape his answers.

On Friday the 14th after gorging myself on the expensive pastries and savories of young French chef Dominique Ansel in the Chelsea Market kitchen of Sarah Beth with David Porat of Chelsea Market Basket, I walked down to 55 Bethune Street for our meeting. A bearded Neil ushered me into a large, first floor converted apartment now serving as an office. Joining us in the conference-tabled room was the Senior Vice President of LAK public relations, Richard Edmonds. (It is very rare we get a PR man at such interviews, and it always suggests they are very nervous.)

As I took out my tape recorder and a copy of Revland’s questions, Neil said quickly “I will send you my answers tomorrow…no tape recorder,” so I did not tape the interview.

The battle (and it does seem to be a battle) is that after the millions of dollars in damage by hurricane Sandy (the basement was flooded) the tenants who have been paying one-third to one-fourth of market rent will get a rent hike, which they accept. Yet, they feel that Neil and the unpaid board have been doing “sweetheart” commercial leases and some part of the hike should fall on the broader shoulders of the commercial tenants. To argue their point intelligently, the tenants’ association needs to see the details of the commercial leases. Neil does not want to show the leases to the tenants’ association and has sued the Attorney General to prevent the release of information about the commercial leases to them.

Following are Catherine Revland’s questions and the answers provided by Steven Neil.

Catherine Revland’s question: Why is Westbeth Corporation suing the Attorney General to prevent the release of financial information that AG has said the tenants have a right to receive? Will the tenants be paying for the cost of this litigation?

Steven Neil’s response: The better question to ask is why the tenants association hired an attorney, Barry Mallin, to demand the release of data from an inquiry that started in 2005 and was closed in 2007. A decade ago, information was given to the attorney general under a confidentiality agreement in an inquiry that the attorney general closed after determining Westbeth behaved perfectly properly. Ten years later, Westbeth is suing the attorney general to stop his reneging on the agreement that he and Westbeth made in 2005 to keep confidential the voluminous amount of information, involving personal information about residential tenants as well as corporate deliberations and decisions. And, contrary to the assumption in this question, it cannot be financial information that the tenants seek because Westbeth makes full public disclosure of its finances, as required by law. Westbeth’s complete tax returns are available, from the IRS, from Westbeth, and from a website called GuideStar. Westbeth complies in every way with every legal requirement concerning financial disclosure, and is proud of its record of always having done so. Since the financial information is freely available, it is obvious that there is another motivation for seeking this information, but Westbeth is not privy to that reason. As to whether the tenants are paying Mr. Mallin, that question is best directed to the tenants association.

CR: You state in your letter that Westbeth is a “successful housing and arts center owned and run by an independent corporation.” Is it no longer a not-for-profit public charitable trust “in perpetuity”? If so, how and when was the charter changed?

SN: It is not and never has been a “trust.” It is a corporation organized under the New York Not-for-Profit Corporation Law and the Private Housing Finance Law. As a not-for-profit corporation, it holds its property “in trust” for the people of the state of New York. Its articles of incorporation are a matter of public record, and have never been amended to change its type of organization. A trust is a completely different kind of legal entity unrelated to Westbeth, its founding, or its corporate status.

CR: In your letter you disclose that the average rent of artist residents is $900 a month, and that they pay from ¼ to 1/3 the current market value rent for the neighborhood. Will you also disclose the average rent per square foot for commercial tenants and the percentage they pay of the current market value commercial rent in the neighborhood?

SN: Westbeth, although it is a not-for-profit company, does not as a matter of good business practice disclose such information.

CR: You state that there are 350 apartments for qualified artist residents. The figure has always been 384 apartments, minus the super’s apartment. What is the status of the missing 35 apartments that are supposed to be rented to qualified artist residents?

SN: There are no apartments that are “missing;” there are approximately 350 currently occupied. At the moment, there are nine apartments under active renovation, two that are being held by the estates of deceased tenants, two that are subject to long-term repairs, and seven that are being prepared for use in our new Artists in Residency program, where we hope to partner with various nonprofit arts organizations.

CR: You say that Ramscale is paying market rent, but did you not also give the owners of Ramscale a residential apartment? How do they qualify under the income and artistic requirements that everyone else must go through?

SN: The Ramscale tenants had three residential units on the 13th floor. Westbeth commenced litigation in 2008 to evict them, which was finally settled in 2014 after many years and much expense. Under the settlement, Ramscale now has strictly commercial leases for two of the units on the 13th floor, at commercially reasonable rents. They may not use the spaces for living, and are not entitled to renewal leases when those leases end. Westbeth is using the third space temporarily for the construction crews who are working on and above the 13th

floor. Westbeth will rent the third space, for commercial use at market rates, when the construction ends. As part of the settlement of six years of litigation, the parties agreed that the owners of Ramscale, who were surrendering three residential spaces, would receive one residential, Rent-Stabilized apartment elsewhere in the building, at the legal Rent-Stabilized rent.

CR: All of the local elected officials (Nadler, Brewer, Hoylman, Glick, Johnson) support the idea of the tenants voting to directly elect three of their own to represent their concerns at the board level. Why doesn’t the board honor the wishes of the elected officials and the tenants?

SN: A common misconception is that members of a nonprofit board “represent” particular interests. This is incorrect, and in fact contrary to the laws of the state of New York. Members of any nonprofit board all represent the interests of the entire corporation, and are responsible solely to the corporation and to the state of New York for its wellbeing. They have the legal duties of loyalty, obedience, and care to the corporation. One of the board’s responsibilities is to elect its own members. It is their responsibility and no one else’s, and it would be a breach of their fiduciary duty to delegate that responsibility to the tenants’ association or to anyone else.

CR: When was the last time the Board of Directors held a public meeting with the tenants?

SN: Members of the board meet regularly with the tenants association at its monthly meetings, and Westbeth staff meet almost daily with individual tenants.

CR: After hiring a broker for your commercial spaces, how is it that one of those spaces was rented to the son of a former board chair?

SN: As noted in answering question number 3, above, Westbeth doesn’t discuss its business operations in public.

CR: How much is the exterior work costing and will you be applying for an MCI to cover the cost of all of that work?

SN: The current project, which is designed to preserve and protect Westbeth’s physical assets and address years of deferred maintenance, is currently expected to cost about $6.5 million. There remains millions of dollars more work to be done on the facade and roof, and the problem of windows has barely been addressed. The Rent Stabilization Law and Code, which protects tenants in New York City from unwarranted rent increases, includes provisions designed to encourage building owners to take care of their buildings. This part of Rent Stabilization, called a

Major Capital Improvement (MCI) application, applies only to improvements to the building that are long-term, buildingwide and depreciable under the Internal Revenue Code. The Rent Stabilization Law and Code provide that an owner must submit an MCI application with detailed supporting documents, including contracts, plans, invoices and cashed checks, to justify its application. The costs are first allocated between residential and nonresidential uses in a building. Tenants are notified of the owner’s filing, and all the material in support of the application is available to the public for review. Tenants can file responses to the application in which they can support, oppose or seek a modification of what the owner requests. The state housing division then issues an order, determining the allowable increases. It is only after when the state issues its order that increases occur.

May 11, 2015

To the Editor:

I was both surprised and disappointed at the recent article concerning Westbeth in WestView. Surprised because I have always thought a basic tenet of journalism was to get both sides of a story. Your reporter contacted no one at Westbeth in the course of her reporting. I was also surprised that your reporter did not reveal that she is a long-term tenant at Westbeth until deep in the story, which would have told your readers that the writer might not be completely impartial in her views. I was disappointed because had WestView inquired, we could have shown you how Westbeth is committed to providing affordable artists’ live-work spaces and have done so for almost 50 years. We also would have explained to you that we are exploring every opportunity to achieve our mission now and in the future. Your article, “Will Westbeth be the next St. Vincent’s?” draws a baseless analogy that will only needlessly worry our tenants and stakeholders. The fate of a failing hospital run by the Roman Catholic Church has no bearing on the fate of a successful housing and arts center owned and run by an independent corporation. The article itself is locked into events that occurred 30 years ago, without acknowledging that times have changed since 1985. Westbeth has paid off its 1970 mortgage and is operating in the black, and our commercial leases subsidize our 350 residential tenants, not the other way around. And, we have spent more than $15 million since 2011 in updating and repairing our physical plant, including the current façade and roof replacements.

More important, artists want to live at Westbeth. Most of those on our waiting list have been waiting more than a decade, which is why we stopped taking new applications eight years ago. Rents for new tenants are set following federal guidelines that determine what rent is affordable to moderate-income families. Our residential tenants are all protected by Rent Stabilization or Section 8 laws. The average household in Westbeth pays $900 in rent, including electricity, approximately one-third to one-quarter the rents in the neighborhood.

We’re proud of our 50-year record of providing affordable housing to artists and affordable space to arts organizations such as the Martha Graham Dance Company and the Labyrinth Theater, and we fully intend to keep doing so for the next 50 years and beyond.

Perhaps a member of your staff would care to inquire about Westbeth; if they do, I will be more than happy to give them my time and attention.

Yours,

Steven A. Neil

Executive director

Tenants Seek Representation

Westbeth is our home, and in many cases, the source of our livelihood. Many tenants have been here since day one when we opened in 1970 and the “average” tenant has probably lived here for over 25 years. Our lives are invested in this institution.

We are grateful to all of those who serve, or have served, on our Board of Directors. Still, our board members rarely serve more than five years, with the exception of Westbeth residents on the board, and many serve less than three years. The biggest stakeholders in Westbeth are its’ artists and their families.

For over twenty-five years, the tenants’ recommendations to the Board were seated on the Board. The residents of Westbeth had people of their choosing, helping to set policy and voicing their concerns on how those policies would impact the artists and residents of Westbeth.

For the last ten years, that has not been the case. The Board now hand picks residents whom they feel will best represent the voice of the Board, not the tenants. These residents serve with distinction on the Board, but their voices have been marginalized.

New York and The West Village are ever changing, and at times, many feel that the changes are not always for the good. We understand that things will change in Westbeth as well, but we want to make sure it remains housing for artists at the lowest price possible.

We believe that the Board of Directors also has the same goal. However, we feel that it is essential that the artists and residents of Westbeth, who will have to live with the policies set by the Board, have a voice in setting those policies. All of our elected officials, Congressman Nadler, Borough President Brewer, State Senator Hoylman, Assemblymember Glick and Councilmember Johnson, support the direct election of three tenants to the Board, elected by the residents of Westbeth. The residents of Westbeth voted by a margin of 95% to 5% in favor of the direct election of three tenants to the board.

The Charities Bureau of the Attorney General’s office has ruled that the residents have the right to see documents related to our governance. Rather than comply, our Board has chosen to sue the Attorney General. It only makes us suspicious of what is in those documents.

But all of this is nonsense. Funds needed for capital improvements are being wasted on attorneys’ fees. It is time for the Westbeth Board to seat three representatives, elected by the tenants, on the Westbeth Board so we can all work together to secure Westbeth’s future for the next generations of Westbeth artists. The Board does not have to this, but it is the right thing to do, so just do it so we can move on to find solutions to our challenges.

George Cominskie, President

Westbeth Artists Residents Council

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2 thoughts on “Westbeth Board Sues to Conceal Numbers

    • Author gravatar

      Steve Neil and George Kaminsky in westbeth can go to hell. I lost 42 years of my life to hurricane Sandy. Steve Neil promised me that I could leave my instruments and one of a kind music collection upstairs in the community room or the guard room. Right before the hurricane hit he changed his mind. May he and the rest of all the people that work at West Beth can go to hell. You’re a bunch of inept motherfuckers. Also, you are a geriatric ward. The idea was to move into westbeth and once your career took off, you would leave. But based on the Quality of the art and the artist living there, no one ever moved. Because no one had to fucking talent to get an apartment based on their artistic abilities. Again, may you all go to fucking hell. I wish you nothing but ill will.

      • Author gravatar

        Tony i’m sorry for your loss of your instruments . I agree with you a thousand percent . westbeth is the riddled with corruption
        and horrible people . I was waitlisted for sixteen years and was axed and taken off the waiting list .discriminated. Westbeth violated HUDS policy . i just launched 16 a documentary. expoing westbeth streaming on youtube

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