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When Affordable Housing Becomes a Money Pit

Matthew Hall in Bricks & Bucks

Rockaway Beach

Zombie Condos

Your tax dollars at work: the result of alleged shoddy construction at Waters Edge at Arverne (photo courtesy Lenny Yarde)

A city-sponsored affordable Rockaways housing development is at risk of becoming “zombie” condos if the board loses a $60 million lawsuit against developers and architects. That’s the fear of Lenny Yarde, board president of Waters Edge at Arverne, a 130-unit complex made up of 65 two-story buildings completed in 2009 amid much fanfare from the Bloomberg administration.

The lawsuit, which seeks $10 million for repairs and $50 million in punitive damages, was filed by the condo board against developers and sponsors Briarwood Organization and its principals, including Raymond, Vincent, and James Riso, and AIA Architects and Associates. The suit claims the complex is plagued by numerous construction defects, including improper installation of roofs and gutters, corroded electrical pull boxes, water damage to windows and doors, inadequate boilers, and lack of access to electrical panels and water shut off valves. The board hired an engineer to document the alleged defects.

“My feeling is that we have been duped,” says Yarde, who claims no entity involved in the complex’s construction – from the City of New York to the developer – will take responsibility.

“How does the city hand over $12.8 million to a developer [to complete the project] and not have oversight on what’s going on?” Yarde says. “It seems to be that as soon as we have raised money to purchase and the developer has that money, he can ride off into the sunset.”

According to the Waters Edge board, issues have been present for at least six years, and the past 24 months have been spent in fruitless negotiations with Briarwood Organization.

The city’s Department of Housing Preservation & Development (HPD) and the Department of Buildings did not respond to requests for comment. In an email, HPD advised the office of City Councilman Donovan Richards that Waters Edge should “explore any and all legal remedies it has against the contractor/developer, particularly with respect to any warranties.”

Florence Ferguson, the board secretary who bought into Waters Edge in 2010, says she is particularly angered by the lack of accountability and oversight of the project by the city. “The developer obviously has no integrity and is going to walk away,” Ferguson says. “They don’t care. This developer got $12.8 million from the city – from people’s taxes.”

The average cost for a Waters Edge two-bedroom unit is $188,000, with three-bed units topping out at $300,000, with HPD subsidies.

If the lawsuit is not successful, many unit-owners fear that some units will foreclose and will not be resold.

“This can become a zombie complex because people will be forced out of their homes,” Yarde says. “You can’t pay common charges or your mortgage if you are priced out of your home [by the repairs]. If this can happen to us, it can happen to anyone who purchases affordable housing. That is not the American dream. That’s the American nightmare.”

Briarwood Organization did not respond to a request for comment.

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