Shadow #14
October/November, 1990

LES Sleaze and the HUD Scandal
By Nashua

Community Board Three (CB3) member and Lower East Side development Czar Luis E. Nieves (605 Water Street, Apt. #17, NYC 1_0002, Telephone Number: 406-0971) is a busy man when it comes to housing development and now it’s gotten him in deep trouble. On August 25, 1986, Nieves signed the incorporation papers for the newly formed Lower East Side Mutual Housing Association, Inc. (LESMHA) with the purpose of operating and "maintaining housing units on a non-profit resident-sensitive basis."

In 1987 Nieves came before the Joint Planning Council (JPC) to ask for an endorsement of a development site coveted by LESMIIA located at 195-199 East Second Street, and 8-12 Avenue B, on the Lower East Side. A JPC member says that Nieves "did not reveal that he was on the board of this organization, he kept his interest hidden."

In order to avoid having to meet stringent rules that a large percentage of the occupants of government-funded projects be welfare recipients, Nieves told JPC that, the project would be developed solely with private money. A former CB3 member says LESMHA avoided taking government money at first because they "didn’t want poor or welfare people."

Soon afterward, LESMHA appeared before C113 to inform them that they couldn’t raise enough private money to build the proposed 48 unit project. Regardless, CB3 allowed LESMHA to continue the project as "mixed income."

Under the agreement between LESMIIA and CB3, 40% of the housing in the East 2nd Street and Ave. B projects are for people making up to $48,000 per year. Some one bedroom units will rent for $713 per month and a number of three bedroom units will rent for $1,000 per month. The city considers these rents "middle income" because they maintain that the "market rent" for three bedroom units would be $1,763 per month.

The $4.6 million funding for the construction of the 48 units comes from three sources: New York State Housing Trust Fund "Turnkey" program is providing $3.2 million, the Community Preservation Corporation, a consortium of banks that is a major lender to private rental housing in New York City, gave an additional $635,000 and the Neighborhood Reinvestment Corporation is providing $789,000.

The development cost comes to $96,000 a unit. An amount many construction people believe is "obscene."

According to LESMHA director Eric Kolbe, the construction is being financed in part through $2 million in Congressional demonstration grants delivered by Republican Representative Bill Green to the Neighborhood Reinvestment Corporation, the group that set up LESMIIA in 1986 with the help of Luis Nieves.

While Green tries to cultivate the image of a liberal he is a firm supporter of the U.S. military build-up in Saudi Arabia as are most CB3 members. Nieves was seen at a reception for Green in 1987 along with CB13 manager Martha Danziger, former CB13 chair Ann Johnson and right wing CB3 member Julia Sanders.

Sources say that in early 1988, while he was chairman of CB3, Nieves would come to meetings of CB3’s Disposition committee as the CB3 members were voting on the issue. The effect of his presence was to intimidate board members who "didn’t want conflict" with Nieves into approving the LESMIIA project. Carol Watson, an influential CB13 member, said Nieves’ behavior amounted to a "conflict of interest" with LESMHA.

Another member of the LESMHA board of directors is Mark Parilla, the nephew of Luis Nieves.

Even the New York Times admits that New York State Turnkey projects have been an "extravagant use of subsidy money" because property owners won’t be able to sell at a higher price than what the construction cost. The Times goes on to say that "turnkeys are likely to be occasional demonstration projects. They will do little to meet the larger issue for low income housing.

State Commissioner of Housing Richard Higgins says that the turnkey requirement that 30% of the housing go to welfare-rent levels restrains the scope of the program. Higgins suggests that it’s difficult to sell middle class people on housing that includes poor people. An argument also made by Luis Nieves to JPC in the early stages of the LESMHA project.

LESMHA’s next target are the poor and formerly homeless people living in Umbrella House, a well known and successful long time squat building now housing people once forced to live in Tompkins Square Park.

In 1987, also while he was chairman of CB13, Nieves was also director of a development group called Lower East Side Coalition Housing Development (LESCHD). After Nieves left the job, he was replaced by CB3 member Antonio Pagan, who gained initial notoriety when, shortly after the bloody August 6-7, 1988 police riot in Tompkins Square Park, he called a press conference in the name of CB3 to support the police violence.

Nieves is also a director of Casa Victoria, a development group sponsored by LESCHD while Nieves was its director. Casa Victoria has been linked to the Housing and Urban Development (HUD)/Senator Alfonse D’Amato Scandal. Casa Victoria’s proposed elderly housing project would have destroyed an important neighborhood park and cultural center at 9th street and Avenue C known as La Plaza Cultural.

Neighborhood residents successfully stopped Casa Victoria with a federal lawsuit last spring. Residents say they wouldn’t oppose construction of the elderly housing on any site in the neighborhood other than La Plaza Cultural. However, reports of corruption within HUD led a federal judge to stop all HUD-financed elderly housing on the Lower East Side,

In a recent Newsday article, columnist Sydney Schanberg laid the blame for the Bush administration’s Justice Department failure to prosecute D’Amato to the fact that "D’Amato has run a number of dirty political errands for Presidents Ronald Reagan and George Bush…. [D’Amato] voted against the attempt to override Bush’s veto of the civil rights bill. That override failed by only one vote. It looks like part of D’Amato’s protection racket".

Both Antonio Pagan and Luis Nieves were involved in the hiring of JOBCO to build the Casa Victoria project. JOBCO is a construction company that donated tens of thousands of dollars to the senate campaign of Alfonse D’Amato and in return got $20 million in contracts from HUD. A spokesperson for the White Plains Housing Authority said that JOBCO was "forced down our throat" by D’Amato when they accepted federal money for senior citizen housing. According to the spokesperson, JOBCO’s work was "incompetent."

Sydney Schanberg says that "according to credible source's D’Amato used HUD and in particular the New York office [of HUD] as his private campaign trough. He allegedly selected the projects to be approved, and the recipients of this largesse dutifully provided the campaign checks."

Now both Pagan and Nieves want to take on the responsibility of rehabilitate the squat buildings on East 13th Street. (After the squatters are evicted by the city of course). Sounds like the old story of letting the fox into the chicken coup.

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