Controversy Rages on Regarding Bialystoker Synagogue-UJC Land Deal

Bialystoker Synagogue, 7 Willett St.

Bialystoker Synagogue, 7 Willett St.

You might remember a high-profile feud that spilled onto the pages of the New York Post last December, pitting members of the Bialystoker Synagogue against one another over a controversial property transaction.  It concerned the $28 million sale of the Orenstein senior apartment building, which was co-owned by the synagogue and the United Jewish Council of the East Side (UJC).  Days after the story broke, a lawsuit filed against the leaders of both organizations by two other prominent Bialystoker members was dropped at the urging of an influential Manhattan rabbi.  Months later, however, the turmoil has come to the surface again.

A week ago Sunday, a meeting of the congregation was held to address lingering concerns about the sale, as well as to discuss plans to sell another parcel on Pitt Street that the synagogue has owned since 1977.  In recent weeks, a petition was circulated, demanding more information about the terms of the deal made with developer Ruby Schron’s Cammeby’s International for the senior building. And a notice sent to members stated:

bialystoker meeting notice

The Orenstein building is located at 15-17 Willett Street on a lot adjacent to the synagogue.

The Orenstein building is located at 15-17 Willett Street on a lot adjacent to the synagogue.

The 126-unit affordable complex, located within the former Seward Park Urban Renewal Area, was funded by the federal Department of Housing and Urban Development. For most of the past three decades, it was jointly run by a housing development fund company (HDFC) created by the United Jewish Council and the Bialystoker Synagogue.

In 2012, Cammeby’s agreed to purchase the building. In a complex arrangement, Ruby Schron’s prolific firm obtained a new mortgage from HUD, paid off the original mortgage and agreed to operate the building as low-income senior housing for the next 30 years.  The proceeds were placed in a special restricted fund, earmarked for building new affordable housing and programming for seniors.  Some members of the congregation, including board members, believed the synagogue would have access to at least some of the money for maintenance projects at their 1826 landmarked building.  They were shocked to learn, after the fact, that the funds were out of reach.  

The letter sent to synagogue members asked for answers to a variety of questions, including:

bialystoker questions

Last year’s lawsuit was filed by two board members, Baruch Singer, himself a real estate developer, and Lenny Greher.  In the suit, they named Heshy Jacob, a fellow board member, as well as Board President Shlomo Hagler, a state Supreme Court judge, and Bialystoker Synagogue Rabbi Zvi Romm.

In addition to his leadership role at the shul, Jacob is the longtime board chairman of the United Jewish Council. His name appears on all of the Orenstein building sale documents.  In an interview last week, Jacob said the HDFC had the sole authority for deciding what was in the best financial interest of the senior building. “Lots of people are disturbed because we are adhering to the rules… The shul cannot take the money the federal government gave for the building,” he asserted.  As a result of the sale, Jacob added, Cammeby’s spent millions of dollars to renovate the facility and guaranteed the preservation of affordable housing for decades to come.

According to the UJC’s 2012 tax return, the state attorney general approved the sale with the understanding that “90% of the proceeds (would be) set aside for a low-income housing fund, including $4 million for a new senior center and $ 1 million for “two current United Jewish Council housing projects.” The remaining 10% of the proceeds were made available for “social service programs.”

Jacob said the UJC is holding the money and has not yet decided how it will be spent.  The attorney general will review all expenditures after the fact, he added.  As for the Pitt Street parcel across from the fire station and the shul’s air rights, Jacob said they have not yet been sold, but they are, he explained, available for purchase “at the right price.”  He acknowledged that the synagogue could end up partnering with the neighboring New Eastside Nursing Home (formerly the House of Sages Nursing Home) to sell the lots together as one development site.  If a contract is signed, proceeds from the Pitt Street lot would also be restricted and under the supervision of the attorney general, Jacob said.

Development parcel located at Pitt and Delancey streets. That's the New East Side Nursing Home on the left and the Orenstein building on the right.

Development parcel located at Pitt and Delancey streets. That’s the New East Side Nursing Home on the left and the Orenstein building on the right.

Jacob was not at the meeting.  But others with whom we spoke characterized the morning gathering as contentious but “not over the top” by Lower East Side standards.

The meeting happened on the same weekend that the New York Times published a lengthy report regarding two high profile shul members, State Assembly Speaker Sheldon Silver, and former Met Council head William Rapfogel, who was charged last year in a $7 million alleged embezzlement scheme. The article, examining their behind-the scenes efforts “to promote specific plans and favored developers” in the Seward Park Urban Renewal Area, also highlighted the connections between the two men and the United Jewish Council. The UJC is an affiliate of the Met Council.  The piece even made reference to the Orenstein project.  While there was no new bombshell in the story, it once again brought unwanted attention to the local Jewish community. The Rapfogel scandal has been a cloud hanging over the congregation since his firing by the Met Council last summer.

There are some who believe the controversy is overblown, that the HDFC made the best decision possible under the constraints of a 30-year-old agreement with the federal government.  One member told us, “we ultimately found what I consider a Godsend–a purchaser who is keeping Orenstein in the low-income housing program, and even upgrading the facilities.  The UJC gets money it needs to maintain its services, and the community maintains over a hundred units of low-income senior housing.”

But others contend the deal was a bad one for a financially strapped synagogue.  They say the terms of the agreement were definitely not made clear to the congregation.  A better option, they argue, would have been for the synagogue and the UJC to have refinanced the building on their own, without involving a private developer.  “The congregation was misled,” one member argued.  “We would have never gone along with the plan if we had known the terms.”  Others have pointed to the potential of conflict between the Bialystoker Synagogue and the United Jewish Council, with some of the same people serving on the boards of both institutions.  They note that the UJC lost a lot of funding a few years ago when the governor put an end to discretionary grants by individual lawmakers, including the powerful Speaker.  The UJC, they conclude, had far more to gain from the Orenstein sale.

So what happens now?  First off, the UJC must decide how it intends to use the money in its new low income housing fund.  After the original mortgage was paid off, there was around $20 million at the organization’s disposal. Jacob said the continuing conflict has delayed the UJC’s efforts to come up with a plan.  Second, the synagogue and the UJC will be working to sell the Pitt Street development parcel, as well as an additional site behind the Orenstein building.  If the proceeds are restricted, as Jacob indicated they would be, a new battle within these historic institutions is virtually certain.