The scandal-scarred shelter operator barred by outgoing Mayor de Blasio from receiving city contracts after two children were killed by a leaking radiator at one of its sites came within a breath of receiving millions more in city funds right under the mayor’s nose, The Post has learned.
The money would have flowed through a $38.7 million deal to operate and renovate a decrepit four-story shelter owned and formally operated by the Bushwick Economic Development Corporation on Chauncey Street in Brooklyn.
The BEDCO exile, for allowing the fatal scalding of the children, who were sleeping right next to the radiator when it exploded, meant the shelter operator could no longer receive contracts directly, but it still stood to benefit handsomely from the complex’s overhaul and continued operation as its landlord.
Records show the deal only unraveled because the Sheriff’s Office seized the building from BEDCO as part of an ongoing legal dispute over unpaid debts — not a moral objection to doing business with the firm again via a proxy, officials acknowledged.
“The city should not be reopening any business with BEDCO and they should not be doing any new business with BEDCO,” said outgoing Councilman Steve Levin (D-Brooklyn), who chairs the homeless services committee.
“There’s no reason in the world that BEDCO should even be a landlord for a city program.”
BEDCO’s list of sins was long.
The Department of Investigation notified DHS in 2019 that the non-profit’s chief, Frank Boswell, paid himself $651,000 — much of it unreported — as the group failed to perform needed maintenance and even pay the rent on its buildings.
Those findings came two years after City Hall moved to nix BEDCO’s contracts to run cluster and hotel shelter operations following the gruesome scalding deaths of 2-year-old Ibanez and 1-year-old Scylee Ambrose.
Its brick-and-mortar shelter operations — including Chauncey Street — were also placed under a 90-day review. But BEDCO continued to operate the shelter for another three years because DHS struggled to find a new operator for the building.
The replacement selected by officials?
CORE Services Group, which lost its city contracts this year after The Post and The New York Times published twin investigations that detailed rampant self-dealing by CEO Jack Brown.
BEDCO’s arrangement with CORE Services — to be paid for by taxpayers through DHS — fit the pattern, too, giving Brown another opportunity to cash in.
The building’s needs were immense, according to an evaluation by an architecture firm. Its boiler didn’t work, most radiators were missing their protective covers and knobs, some of the fire doors in the staircase were “defective”, several rooms were missing doors, the lighting was insufficient and the fire alarm panel was glitchy.
The report estimated it would take $1 million to bring the building up to snuff.
The lease between BEDCO and CORE specified the contractor that would lead the renovation — a for-profit owned by Brown.
It also specified the $1 million estimate “shall not be considered a maximum guaranteed price” for the project and provided up to $6.5 million by allowing Brown to rebate $30,000 per month from the rent for the life of the lease, which could last 18 years.
The Department of Homeless Services typically covers all costs associated with the operation and maintenance of a shelter, but refused to say how much it would have paid BEDCO to rent the building via CORE Services.
Officials would only say that they pulled the contract in “early 2021,” but refused to specify the date they terminated the arrangement.
A spokesman for CORE identified the Sheriff’s sale as a reason the deal fell through.
“CORE Services Group has never operated a shelter at the property in question and has no plans to do so,” said a representative. “The organization has been informed that the property is subject to a sheriff’s sale.”
DHS officials acknowledged discovering “that the Sheriff’s Office was auctioning the building due to the owner’s accumulated unpaid debt” was a factor in their decision.
But, they claimed the decision came primarily as a result of DHS’s oversight of Brown’s nonprofit.
“While a proposal was selected to operate the site with a different provider prior to the pandemic, we later determined as a result of our oversight efforts, ongoing reviews, and other factors not to move forward with the proposal – as a result, a contract was never entered let alone finalized,” claimed DHS spokesman Isaac McGinn.
The records tell a different story:
- They show that DHS sought approval in May 2020 to give CORE Services the $38.7 million contract to operate the shelter from July 2020 and June 2025;
- The request came even though DHS had launched an audit of CORE Services a month earlier, in April 2020 — a review that came three years after contracting officials first raised flags;
- BEDCO and CORE Services inked the lease in June 2021 contingent upon scoring the DHS contract;
- DHS’ own maintenance logs listed CORE Services as the operator as recently as August 2021, even though residents never returned after the pandemic struck.
That same August, the Sheriff’s Office filed paperwork to seize the Chauncey Street shelter as part of a years-long dispute over unpaid bills between BEDCO and another Brooklyn landlord.
The records show that DHS did not formally object Brown’s creation of for-profit subcontractors until August 2021.
McGinn described the entries in the logs as an error and blamed it on staff overworked by the coronavirus pandemic.
In an additional statement provided Friday, McGinn reiterated DHS’s position that it has no control over the landlords selected by nonprofits as shelter operators.
“The City has not been doing and has not intended to do business with BEDCO after we shut them down,” he added.
The story of the Chauncey Street shelter is a damning example of DHS’s struggle to oversee the non-profits it relies on and to root out graft: All told, embattled providers like CORE and BEDCO scored $4.6 billion of the $15.8 billion in DHS contracts let since Mayor de Blasio took office.
The building’s saga is also an illustration of intractability of the Big Apple’s now decades-old housing and homelessness crisis.
The building it sits in was once the Evangelical Deaconess Hospital, which was abandoned in the 1960s as the turmoil that would drag the city to the precipice of collapse first enveloped poor neighborhoods like Bushwick.
Then-Mayor John Lindsay planned to demolish Evangelical Deaconess and replace it with a community health center.
He was forced to reverse course in 1971 as his administration came under intense criticism for placing homeless New Yorkers hotels, ranging from unsafe rundown motels to the Ritz Carlton.
It would be the city’s first ‘relocation’ facility.