A new brick apartment complex was supposed to add 134 units of much-needed housing to the Williamsbridge section of the Bronx when it opened earlier this year. To help ease development and make the building more profitable, the city gave the owners a hefty, 35-year property tax break.
But before tenants moved in, the owner turned more than 90 apartments into temporary shelter units for homeless families this past summer. The nonprofit running the shelter got a $44 million city contract, with a portion going to the landlord.
Critics of the arrangement, including community leaders, housing experts and neighbors, question why city officials approved the shelter conversion amid a dire housing shortage. They say the project developer has repeatedly converted potential apartments into temporary shelters, and is now exploiting a loophole in a tax break program meant to provide permanent housing.
“You keep hammering us about affordable housing, but you build a building and turn it into a homeless shelter,” said George Torres, district manager for local Community Board 12. “It doesn’t make any sense.” Many experts also say adding a shelter instead of permanent apartments is not a long-term solution to the affordable housing shortage.
The eight-story building at 739 East Gun Hill Road is owned by subsidiaries of the Stagg Group, a private developer that employed Adolfo Carrión until Mayor Eric Adams appointed him to his current role as the city’s housing commissioner in 2022. Stagg Group and Carrión previously faced scrutiny for turning another planned housing development in the Bronx into a temporary homeless shelter in 2017. Earlier this year, the company also purchased a residence owned by Manhattan College and turned it into a temporary shelter for newly arrived migrants.
Stagg Group is receiving a property tax break through a state program meant to ease costs for building owners who set rents for middle-income tenants in a portion of the new units. The Department of Housing Preservation and Development, administers the tax break and oversees the affordable apartments listed on the city’s housing lottery. An agency spokesperson said Carrión had nothing to do with the shelter deal.
Spokespeople for Stagg Group and the city’s housing agency also say the East Gun Hill Road property meets the minimum requirements to receive the tax break because they are leasing 30% of the apartments with rents capped for families and individuals earning up to $250,000 annually. The company says this conversion helps simultaneously tackle the housing shortage and need for shelter space.
But the conversion benefits Stagg Group as well. Shelter contracts often offer a bigger payday for property owners — at times, up to $3,666 per month for each unit — than rents, with no risk of tenants skipping out on payments. The nonprofit receives the city funding, then issues a portion to the landlord to lease their apartments.
“Stagg does this because they know they’re going to get more money [from a shelter] rather than a rent roll,” Torres said.
Stagg Group spokesperson Michael Brabazon said the company did not initially set out to lease the space as a shelter but is “open to all options provided to us by city, state and local officials.”
Brabazon said officials from the Department of Social Services approached Stagg Group about renting the space for use as a shelter last year.
The city’s Department of Social Services is contracting with the nonprofit Acacia Network, another politically connected firm, to run the shelter. Spokespeople for City Hall, the Department of Social Services and Acacia did not respond to questions about how much Stagg is making from the deal. Gothamist has requested a copy of the contract through a formal records request.
Brabazon also declined to say how much the company is getting from the contract, but said the building nevertheless complies with the rules of the tax break program because of the affordable apartments.
The building was listed on the city’s affordable housing lottery last summer, with 41 units deemed “affordable.” Rents range from $2,155 for a studio to $3,200 for a three-bedroom, according to the listing.
Median rent in and around Williamsbridge was $1,420 a month in 2022, according to an analysis by NYU’s Furman Center.
Brabazon said the building is now addressing two problems by renting out a handful of apartments to permanent tenants, and providing needed shelter space to homeless families.
“We feel like we’re tackling this on both fronts,” he said. “We’re making living conditions better and making New York City a better place to live.”
A spokesperson for the city’s Department of Social Services said the agency needs capacity to house homeless families, with nearly 33,000 children staying in a city-run shelter each night last week. The homeless shelter population has declined in recent months, as fewer newly arrived migrants seek temporary accommodations, but continues to hover around a record high. Building a new shelter from scratch can prove difficult because the projects often face community opposition.
The Department of Social Services referred additional questions about the switch from housing to shelter, and the property tax break, to the Department of Housing Preservation and Development.
Ilana Maier, a spokesperson for the housing agency, said they only oversee the income-restricted units built in exchange for the tax break. But she added that the shelter space will help families who are experiencing homelessness.
“For New Yorkers who struggle with homelessness, the best thing we can do is to create more housing, but in the meantime it’s imperative that at minimum we are meeting our moral responsibility to provide immediately accessible, safe, livable shelters — especially for children and families —which can be a lifesaving step towards stable, permanent and affordable housing,” Maier said.
Other problems between the city, developers and tenants are already emerging at the building.
The Stagg-owned limited liability company listed as the building’s landlord has filed to evict tenants in 10 of the building’s 41 apartments for not paying their rent on time, according to court records. At least five tenants responded in court saying their government assistance programs were late making a portion of their rent payments. Tenant advocates have previously named Stagg on an annual “worst evictors list.”
Housing policy researcher Samuel Stein has studied the use of tax breaks to incentivize housing development with his organization, the Community Service Society, and said the arrangement amounts to a double subsidy for Stagg, which gets the property tax break plus the shelter cash. In at least some cases, the company is also receiving rent payments through a city-funded assistance program, according to eviction filings.
“We need both more housing and more emergency shelters,” Stein said. “But we’ll never make our way out of the homelessness crisis if the housing we build becomes shelters.”
Jenny Akchin, an attorney at the nonprofit Take Root Justice, said the city could make better use of its funds by placing families in the 91 apartments with housing vouchers and permanent leases.
“It’s such bad business for the city and for these families because it’s keeping them in limbo,” said Akchin, who previously worked with the advocacy group Picture the Homeless. “It’s a real missed opportunity.”
The imposing red-brick building rises across from the Gun Hill Houses and sits less than two blocks from the Gun Hill Road 2 and 5 train station. Tenants and shelter residents who came in and out of the building Wednesday morning described the building as clean and well maintained, but declined to give their names.
Outside the building, neighbors said they were surprised by how the building was being used during a housing shortage.
Retired social services worker Ian Quarless said he wasn’t surprised after seeing rental listings. He said the rents were far too high for the neighborhood, and could discourage people from moving in.
“When I saw that, I said ‘Whoa, that’s crazy,” Quarless said.
Doris Johnson, who lives nearby, stopped to talk while passing the building on her way home. Johnson, 77, said she understands the need for shelter space for homeless families, but was surprised to learn the new building became a shelter because low- and middle-income New Yorkers need permanent homes.
“There are poor people who need housing,” Johnson said. “The city pays big bucks for those shelter contracts.”
