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Cash-Strapped Abyssinian Has Made More Than $100M From Building Sales

By Gustavo Solis | November 24, 2015 6:08pm
 The troubled Abyssinian Development Corporation has sold nearly 40 buildings in the last five years.
The troubled Abyssinian Development Corporation has sold nearly 40 buildings in the last five years.
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DNAinfo/Jeff Mays

EAST HARLEM — The financially struggling Abyssinian Development Corporation has made more than $100 million from selling off part of its real estate portfolio since 2006, city records show.

The majority of the sales have come in the last four years, after the Abyssinian Baptist Church's real estate and social services arm stopped filing mandatory federal financial disclosure forms. In 2014, it sold two buildings — the Renaissance Ballroom and the Pathmark Building — for more than $50 million in two separate deals.

The property sales come at a difficult time for ADC. The Rev. Calvin Butts, longtime pastor of Abyssinian Baptist, claims ADC is so cash-strapped it cannot afford to pay its employees. Tenants have called ADC a "slumlord," and the City Council speaker has accused it of “throwing this community under the bus.” The city recently froze $3 million in contracts, and the state’s attorney general is investigating its finances, according to the Daily News.

In a recent interview with Crain's New York — ADC ignored multiple interview requests from DNAinfo New York — Butts blamed the financial woes on the 2008 stock market crash and mismanagement. He said ADC is selling off properties to cover mortgage payments and to continue to provide social services.

But his critics are skeptical, saying ADC was losing money before the financial crash and the $100 million it's made from building sales should be more than enough to cover its debt.

“Everybody wants to know where the money went,” said Derrick Taitt, a board member for East Harlem Triangle, the nonprofit that co-owned the Pathmark building with ADC.

It has been more than 18 months since the $38 million sale, but East Harlem Triangle said it has not yet been paid. Taitt said EHT never even got the paperwork from the sale, which it needed for its 2014 tax filing.

Taitt accused Butts of orchestrating the Pathmark sale behind closed doors, not telling anyone about it until it was too late to block.

“I don’t ever want to see Butts on the East Side again,” he said. “He should’ve never been given this authority over Harlem.”

Abyssinian is currently suing the city — which owned 49 percent of the Pathmark building — to try to keep all of the profits from the sale, according to the lawsuit filed the same month as the sale.

DNAinfo reviewed records for the sales of 42 buildings that Abyssinian has sold since 2006, most of them in the last three years. According to deeds filed with the city, those buildings have sold for $102.3 million. Abyssinian originally paid either $1 or $10 for each building from the city, records show.

Based on IRS 990 filings from 2009 to 2011, ADC consistently spent far more than it took in. Its combined three-year revenue was $55.8 million, with expenses of $66.3 million.

“Basically it’s extreme mismanagement,” said a person with first-hand knowledge of ADC's finances who declined to be named.

“Crash or no crash they were spending too much money. When you look at how real estate developers function they usually have a very small staff. You are not spending all that money on office space. I’m still not sure that accounts for the amount of money that’s flowing through them particularly when they’ve sold the Renaissance, they’ve sold the Pathmark and they haven’t paid the partners.”

In 2011, ADC paid more than $1 million to seven staff members, including $190,000 a year to then CEO Sheena Wright, records show.

The Abyssinian Development Corporation has also drawn criticism from City Hall. In September, the city froze $3.1 million in contracts because the nonprofit hasn’t submitted tax filings in three years.

Last week, City Council Speaker Melissa Mark-Viverito publicly criticized ADC for selling the Pathmark building last year without notifying the community. She also said that none of the $39 million from the sale had been given to the city, which owned 49 percent of the property.

“Abyssinian is contesting the city’s portion of it, so it’s in litigation,” she said. “Until it’s resolved, the portion that would be the city’s portion — the 49 percent — hasn’t been divvied out yet.”

In the lawsuit, ADC claims it bought the city’s share for $1 in 2006. The city, however, said it never sold its share and that no contract was ever completed. The city won the initial lawsuit, but ADC has appealed that decision. 

In a brief submitted to the Appellate Court, lawyers representing the city said the suit was “an opportunistic lawsuit without any basis in law.”

ADC still owns more than $166 million in real estate, according to its 2011 filings. As it continues to sell more properties, residents want to know how the profit is being spent.

“Where is all the money going?” said Michael Henry Adams, a local historian and preservationist. “They got $100 million of profit. They got more than $100 million worth of properties. If they incurred more than $100 million in debt, they need to be shut down by the attorney general.”