A.G. looking into conflicts complaint at Westbeth


By Albert Amateau

Westbeth, the federally regulated nonprofit artists residence in the West Village, has had a complex and contentious existence since it was converted 35 years ago from 13 adjacent industrial buildings that served as the home of Bell Laboratories.

Conceived in 1967 by West Village activists including Jane Jacobs and the late Rachele Wall and sponsored by the National Endowment for the Arts and the private J. M. Kaplan Fund, Westbeth was completed in January 1970 as a low- and moderate-income residence for artists.

Despite controversies over corporate governance, rents and maintenance, Westbeth has been a unique home for artists with limited means, and the waiting list is about 20 years long.

But with a federal mortgage and operated as a nonprofit housing corporation under New York State law, its corporate structure has been as Byzantine — and at times as uncertain — as the bricks and mortar of its 383 studio apartments and its many commercial spaces, small and large, that were created by the conversion designed by the prize-winning architect Richard Meier.

The board of directors is a self-perpetuating entity whose mostly nonresident members elect their own replacements. Directly responsible for Westbeth operations, the board has often been in conflict with residents and within itself over the years. And of course, Westbeth residents, feisty and independent, are also often at odds with each other as well as with the board.

The original tenant organization, the Westbeth Artists Residents Council, dates from the beginning of Westbeth. It was itself incorporated as a nonprofit corporation about 10 years ago.

Controversies over the years include a rent strike by residents in 1971 when rents increased precipitously, according to Jessie McNab, one of the original tenants. In the 1980s, efforts by some tenants to covert Westbeth into a co-op were ended in 1984 when the state attorney general ruled against it. Nevertheless, despite assurances to the contrary from a federal Department of Housing and Urban Development official in 2003, many residents still fear that a co-op conversion, which would be too costly for many of them, is still a threat.

Problems with the physical conditions have always caused concern among tenants and board members. The constituent buildings date from 1861 to the 1890s and the first decades of the 20th century, the latest built in 1929.

The complex even had a railroad running through it — the New York Central’s elevated High Line, built in 1933, went through the third floor of the Bell Labs Washington St. building. It remained in Westbeth until the early ’90s when the Rockrose development group dismantled the elevated line from Bank to Gansevoort Sts. The dismantling caused damage to the Westbeth building and became the subject of a protracted and costly legal action that lasted until 2004.

Problems with the day-to-day management, deferred maintenance of the buildings and a recent round of rent increases have also been outstanding concerns.

Under the leadership of Ben Green, a board member for several years who was elected president of the board in May 2003, the directors replaced TUC, Westbeth’s management company for 12 years, with a new management firm, Argo. Although many residents were upset at the replacement, there were many who praised the move, blaming TUC for a series of rent increases, surcharges imposed on residents and Westbeth’s deteriorating physical structure.

Last April, the Westbeth Artists Residents Council, whose president, George Cominskie, had been a member of the Westbeth governing board himself until he was voted off last year, authorized a letter of complaint to the New York State attorney general’s office charging the board and Green with conflicts of interest. The letter also charged the board with violating the “principles of transparency and accountability” by requiring board members to abide by a confidentiality agreement about board proceedings.

At a residents council meeting on June 14 outlining the complaint, Cominskie said, “We are not accusing anyone of illegal activities, but we’re asking for an investigation of our concerns.”

A spokesperson for the state attorney general’s office, Brad Maione, confirmed last month that that the letter of complaint had been received and was under review, but he would not comment further. Maione said the attorney general’s policy is not to comment on complaints under review.

The residents council contends that Green’s conflict is about his undisclosed employment by the law firm of Sidley, Austin, Brown & Wood while he was a member of the Westbeth board. At the same time, he supported hiring the Sidley firm to negotiate a long-term commercial lease of the Westbeth theater space to the New School’s Actors’ Studio program in 2003, the complaint says.

Cominskie said the issue was not whether the New School lease was advantageous to Westbeth but that Green should have disclosed that he worked for Sidley when he urged the board to engage the firm.

Green, however, said the complaint was merely an effort by Cominskie, a former board member, and other resident board members to get back at a board that voted them out.

Green acknowledged in an interview with The Villager that he was and still is employed by Sidley, Austin Brown & Wood but only as a part-time clerical employee.

“I didn’t have any financial benefit from the firm’s selection by the board,” he said. “I wasn’t even the person who brought in Sidley,” Greene added. The former president of the Westbeth board, Carl Stein, in January 2001 suggested Martin Gold, a Sidley partner, as a potential negotiator for the theater, Green recalled.

Another issue involves a discrepancy between a draft bill and a final bill by Sidely for the New School lease negotiation. Mark A. Feinberg, a Westbeth board member who resigned from the board in June 2004 after a disagreement with Green, discovered the discrepancy shortly before he quit the board.

In a May 27, 2004, letter to the board, Feinberg, a certified public accountant, said a draft bill from Sidley dated May 30, 2003, was for $285,842 while a revised bill with the same date was for $375,642. Feinberg said he met with Gold, the Sidley partner, about the $90,000 discrepancy, but that shortly thereafter, Green ordered Feinberg to cease negotiations with Sidley. Feinberg told The Villager that he would not comment on the matter because of the board’s confidentiality agreement, even though he had resigned as a director.

The complaint also suggests that a conflict was involved in the election of Arnold Warwich, a Village real estate broker, as a Westbeth director because Warwick had brought the New School to Westbeth for the theater lease. But Warwick said there was no conflict. “The New School was good for Westbeth and they [the board] later asked me to join because they thought I could be a help to Westbeth,” he told The Villager.

The complaint to the attorney general also cited a jump in Westbeth’s professional and legal fees. In 2002, professional and legal fees were $374,000 and two years later in 2004 the fees totaled $707,000.

Green attributed the huge increase in 2004 to the legal expenses involved in the claim against Rockrose regarding damage from the High Line demolition more than 10 years ago finally came to arbitration. “We got a judgment from it but I don’t want to say how much because we don’t have the money yet and it may change on appeal,” Green said.

The complaint was drafted on behalf of the Westbeth Artists Residents Council by Dan Kurtz, a former lawyer on the attorney general’s staff and now a partner with the law firm of Holland & Knight. At the June 14 residents council meeting, Kurtz told members that the board’s confidentiality agreement was unprecedented.

“I’ve never heard of a confidentiality agreement for board members so broad,” he said. “Confidentiality may be useful regarding a specific negotiation, but as a broad strict board policy it leads to secrecy,” Kurtz said.

But the Westbeth board’s counsel, Steven L. Levitt, wrote a response to The Villager’s inquiry about the residents council’s complaint. He said he knew of “no wrongdoing by the board or Ben Green.” The board, he said, “is composed entirely of unpaid volunteers who work tirelessly for the benefit of Westbeth.”

Levitt said the complaint “appears to have been authored by disgruntled former resident board members who had conflicts of interest between their duties as board members and their obligations to the tenants’ council. As a result, those people either resigned or were voted out.”

In addition to Cominskie, Jack Davidson, a Westbeth resident, was voted off the board of directors in 2004. Christine Maile, also a resident, resigned from the board last year saying that she was excluded from information she needed to fulfill the position of board member.

Stein, an architect in the Village and Westbeth board member for 15 years, was board of directors president before Green. He remained as a board member for a few months after Green took over and resigned from the board at the end of 2003. In a letter to the board at the end of December 2003, Stein said he had significant issues with the way the board reached a number of decisions. He criticized what he called “operating in a constant crisis mode” and said committees were making major decisions “while significant portions of the board remain in the dark.”

Nevertheless, Westbeth board counsel Levitt said members of his firm have been attending most board meeting for the past several years and that they are not aware of any financial discrepancies. “Boards are not required to conduct business on the basis of a popularity contest,” he added.

Levitt said that the residents council never provided him with a copy of the letter to the attorney general’s office. While Cominskie and attorney Kurtz outlined the letter at the June 14 meeting, copies of the letter have not been available. Tenant McNab, noted that while Cominskie and Mae Gamble, another member of the residents council, urged tenants to contribute to the legal cost of the attorney general complaint, they refused McNab’s request for a copy of the letter.

Green and the eight other members of the current board have other defenders among tenants.

The Westbeth Artists Committee, represented by Stewart Brisby, Ed Eichel and Kate Walter, has issued an open letter denouncing the residents council’s request for funds without offering copies of the letter.

The artists committee contends that the “real agenda” of the residents council is to reinstate TUC as the management company, a charge that Cominskie denies. The artists committee letter credits the current board and Green with rolling back recent rent increases and working to keep rents affordable.

Both the residents council and the artists committee are urging tenants to forward opposing form letters to the attorney general’s office. The residents council letter urges the attorney general to “conduct a full and thorough investigation into the board’s operation.” The artists council’s letter says the calls for investigation are from a small group and that “the current board and management staff are the best that Westbeth has ever had.”