Over the upcoming 18 years, Greenwich builder Richard Harris figured to make $8 million off the public affordable housing asset sitting vacant for the past 20 months in the woods at Westchester Community College’s campus in Greenburgh.
With the strength of his partnership with The Richman Group, one of America’s leading housing organizations, the Greenburgh Town Board voted unanimously this week to work out a long-term lease with Harris’ company, Group MRH, LLC.
But my colleague Greg Shillinglaw on Friday discovered that Harris’ partnership with Richman was non-existent. The truth came out, thanks to Tax Watch readers, who contacted me with what they hearing on the street: that Richman and MRH were not partners in the WestHELP deal.
I’d reached out to Richman on Wednesday, when I was writing my Tax Watch posting on the Greenburgh Town Board vote. I left messages at several extensions, and emailed the public relations contact, to no avail. On Thursday, after hearing from our tipsters, I called again, leaving messages about Richman’s supposed role in the deal. In the pro-forma of expenses through 2032 obtained by Tax Watch, MRH would funnel $2.2 million to Richman “to help us manage with paperwork involved in dealing with the rules and regulations of affordable housing.”
By early afternoon on Friday, a Richman spokesman called to alert me that the company had sent a letter to Greenburgh, but declined to release it, saying it was up to Greenburgh to produce it.
We’re still waiting for the letter, but the gist of it became known later in the day. Richman was not involved in the deal. But it didn’t bother Greenburgh Supervisor Paul Feiner, who I reached by phone on Saturday afternoon while he was riding his bike uphill on the lovely spring afternoon.
Feiner had touted MRH’s connection to Richman in letters to civic association presidents, announcing the decision to select MRH as the WestHELP operator.
“I got the letter from Richman’s lawyer, and they didn’t even tell Harris about it,” Feiner said, will riding his bike with one hand, and speaking on the phone with the other. “They told us to cease and desist. But I had another letter – on Richman stationary on April 27 – that Harris showed us that was proof he could do it. I still to talk to Richman’s attorney.”
The pending contract is the latest chapter in a longstanding Westchester housing saga that dates back to the late 1980s, when housing activist Andrew Cuomo proposed building housing for the homeless on six acres on the college campus. To assuage Greenburgh opposition, Cuomo forged a 40-year deal that turned over the housing to Greenburgh to rent for affordable housing once the homeless center was no longer needed. Greenburgh got the keys in October 2011 but has left the units vacant since then.
Feiner told me that Harris’ lack of experience in managing rental housing – and Richman’s departure from the deal – was of no concern to him. Experience, he said, was overvalued.
“Just because someone has experience doesn’t mean they are good,” Feiner said. “Sometimes people who don’t have experience don’t mess up. Sometimes people with experience screw up.”
Feiner said he liked how Harris was “aggressive” in winning the competition.
“Harris has the money, he is persistent, is focused, and is determined to do a good product,” he said.
What made Harris stand out for Feiner was the fact that he was unknown in Westchester.
“I personally like the fact that he has no political connections,” said Feiner. “I would prefer using somebody who is not familiar with Westchester politics. He’ll get the housing built and not make contributions to anybody.”
That statement characterized the town of Greenburgh’s stewardship of this most precious of Westchester assets – 108 units of affordable housing – that are owned free-and-clear by county taxpayers. Feiner isn’t concerned about how the complex would be managed, and how the provision of housing to low- and moderate-income tenants would occur.
Foremost in Feiner’s mind is the money coming into town coffers. MRH’s promise of $500,000 was more than Community Housing Innovation’s $350,000 and Marathon’s one-time offer of $2.5 million.
Feiner wants the town to move forward quickly to sign a long-term lease with MRH – a company that had never managed rental housing for low- and moderate- income tenants, and has misrepresented its partnership with Richman.
“We have made a commitment to affordable housing, and I’ve put it on the fastest track possible,” Feiner said. “If the county tries stopping it, we’ll go to the federal monitor. We are going to play hardball. We will litigate. We want to get the contract in place quickly.”
But an outspoken Greenburgh critic, Robert Bernstein, said town officials need to reconsider their relationship with Harris.
“The entire process is corrupt,” said Bernstein, an Edgemont civic leader who has closely watched the WestHELP issue for the past seven years. “Feiner is prepared to put a public asset in the hands of someone who has no idea what to do with it, and falsely represented he was a partner with someone who did. And this doesn’t trouble the town government? I find this astounding.”
Harris has not returned phone messages.
It all sounded so good if you scanned the proposal Harris submitted to Greenburgh in November, 2012, which was sent from his office in the Riverside section of Greenwich. Group MRH had a partner in the Richman Group, the highly regarded company, also based in Greenwich.
Here’s what MRH-Richman proposed: “Group MRH LLC, along with its Partner, The Richman Organization, would enter into a 19-year triple net sublease with the town of Greenburgh for the property named WestHELP.”
Back then, the MRH Group-Richman proposal was in the mid-range, offering $350,000 a year to the town. But to make that number, MRH wanted to build an additional six family units in the administration building.
But in April, after Andrew Cuomo made it clear that he would not allow the WestHELP housing he built to be demolished by Ferncliff Manor’s wrecking ball, the MRH-Richman proposal rose to the top. Harris told me he’d gotten a call from Feiner, asking him to submit a new bid. By then, the request-for-proposals process had turned into an auction of sorts, with Feiner urging the competitors to up their offers.
“I spoke to everybody and said: ‘Give us a better offer,’” Feiner said. “CHI gave us a better deal, but no one came close to Harris’ offer.”
In April, MRH-Richman had dropped its proposal to build the six additional units, which would have brought in an estimated $100,000 a year. Nevertheless, MRH-Richman upped the annual rent payment to Greenburgh by 43 percent to $500,000. That put MRH ahead of Community Housing Innovations, the well-respected affordable housing operation that is working with the town of Greenburgh at its Ardsley Water Wheel development, which had offered $350,000 a year.
The annual payment for MRH was included in the pro-forma presented to the town that projected $25.7 million in revenue, with the 108 apartments at 100 percent occupancy for 18 years. MRH would get $120,000 a year to manage the complex, while Richman would receive a similar amount to handle the project’s paperwork. MRH’s profit would be $6 million over 18 years.
The deal looked plausible, when you read the document titled “resume” that was submitted to the town for “Group MRH LLC & The Richman Organization.” This document stated that MRH and Richman had invested more than $10 billion in more than 1,300 communities. In 2012, MRH and Richman expected to invest $950 million in housing. There was nothing in the resume regarding Group MRH’s experience doing anything.
The resume conflates MRH and Richman as one, and uses the pronoun “we” to describe their relationship in the housing business.
Here’s what the resume stated:
“Group MRH, LLC, and The Richman Group Affordable Housing Corporation is one of the nation’s leading investors in affordable housing with a portfolio which spans 49 states, Puerto Rico, US Virgin Islands and Guam. Over the years, we have invested over $10 billion in the production of over 1,300 communities, providing quality affordable housing for some 115,000 families. In calendar 2012 alone, we expect to invest an additional $950 million.
By possessing comprehensive and integrated development and financial capabilities, Group MRH LLC and The Richman Organization has become a leader in the development of high quality luxury and affordable rental and for-sale housing products, serving both families and senior citizens.
We look forward to the opportunity to renovate and operate the 108 apartments located on the “West Help” property in your town.
Thank you – Rich Harris, managing director”
MRH’s connection to Richman provided Harris with the housing management expertise that he so obviously lacked. In an interview on Wednesday, Harris said he hadn’t done rental-housing management.
“I’m mostly on the development side,” he said. “We do construction management and so forth. That’s one of the reasons I’ve brought Richman into the mix. I want to make sure I’m doing the management and compliance right.”
Harris even had a letter from Peter McHugh, vice president, The Richman Group Affordable Housing Corporation, dated April 27, touting Richman’s desire to work with MRH.
“MRH has asked TRG to provide property management and tenant compliance oversight for the affordable housing aspect of the 108 rental units at the 1 West Help Drive property,” he wrote.
“We look forward to working with the development team on this endeavor.”
He concluded with his professional opinion that Harris and Group MRH were well-qualified. Calls to McHugh were not returned.
“I have known Rich Harris and Group MRH LLC for over 10 years,” he wrote. “I strongly recommend Rich Harris and MRH. MRH has development and property management expertise to make the 1 West Help Drive project a success.”
A closer look at McHugh’s letter reveals problems. According to Delaware corporation records, Group MRH was incorporated in 2011, just two years ago, far shorter than the decade McHugh touted in his letter. He also fails to say what The Richman Group’s answer was to MRH’s request that it provide property management and tenant compliance oversight.
Greenburgh received that answer from Richman on Friday. It stated: No.