Questions
From my reporting, it seems that a number of mistakes were made in how this grant was handled.
Chief among them, several buildings that Habitat purchased had been occupied just months prior. As
you know, the NSP2 grant required that buildings be vacant – but these buildings were made vacant. I
have talked to many former tenants, all of which said they were forced to leave their homes against
their will. At least three tenants were put on the streets and had to sign into homeless shelters. All of
them noticed the large Habitat signs that went up soon after they were kicked out.
HABITAT-NYC RESPONSE:
Habitat for Humanity-NYC is proud of its accomplishments through the NSP2 grant program, which
financed our ability to help 105 New York families in need of affordable homes become homeowners.
At no time was Habitat aware of any tenant occupying any of the properties acquired for the NSP2
program. In accordance with the NSP2 program design, Habitat-NYC required all properties to be vacant.
Moreover, Habitat-NYC did not enter into or continue a conversation with a seller if we became aware
any property was even partially occupied, and documents and correspondences demonstrate that we
walked away from several properties that were found to be occupied.
As part of the due diligence process, all sellers of all properties were required to sign an Affidavit called
the Seller’s Occupancy Certification, which confirmed that the property was vacant and the seller had
complied with specific federal laws, including the American Recovery and Reinvestment Act of 2009 (the
authorizing statute for NSP2), regarding applicable protections for tenants. This specifically included the
requirement that eligible tenants be given notices about their rights under those laws.
In addition, Habitat-NYC delivered to the sellers written notices outlining certain federal requirements
with respect to any existing tenants and requiring that sellers inform Habitat-NYC immediately if there
were any existing tenants. Importantly, these notices instructed the sellers not to order any existing
tenant to move in order to deliver the property vacant; these notices were acknowledged in writing by
the sellers.
A staff representative from our real estate department visited each property to examine the property
and to confirm vacancy. In no instance did we find a property even partially occupied. As an additional,
unrequired measure of due diligence, Habitat-NYC retained a building inspection and engineering firm,
KOW BUILDING CONSULTANTS (NYC), which confirmed particular buildings’ vacancy. If we learned that
any property had been “made vacant” to facilitate the purchase, we declined to proceed with
negotiations.

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 Habitat also partnered with Isaac Katz, a Brooklyn developer with a criminal past in real estate fraud.
In one case, Habitat purchased a property from Mr. Katz that he had only bought earlier that same
day (203 Marion St.) That day, Mr. Katz made a profit of over $200,000. Meanwhile, Habitat worked
for months to carry out its due diligence for the property, even though the seller did not own what he
was selling. I’ve seen internal emails were you mention saying that Habitat would not buy any more
properties from Mr. Katz. Yet, soon after that email, Habitat purchased three more properties from
him for $2 million each.
Isaac Katz
Attached are emails that show Habitat for Humanity’s concern with the criminal background of Isaac
Katz, who received no less than $8.4 million from Habitat’s NSP2 project. How did Habitat first come
into contact with Mr. Katz? Why did Habitat decide to enter into a business relationship with him?
Concerns were only raised after a number of properties had already been bought from him. Why did it
take so long to do a background check on him and why did Habitat continue to buy properties from
Mr. Katz?
After much consideration, our staff and board decided to purchase severely distressed properties
owned by Mr. Katz – after subjecting them to a heightened due diligence process – in order to return
them in significantly improved condition to low-income homebuyers from the community.
After the first purchase of a vacant building from Isaac Katz, the Habitat-NYC staff and board expanded
our search beyond Mr. Katz’s available properties. This search process included looking at
clearinghouses of foreclosed listings; meeting with banks, local nonprofits and faith groups; engaging
real estate brokers; and tasking Habitat-NYC real estate staff with walking every single block of every
census tract within our designated NSP2 geography in Central Brooklyn. However, we were unable to
find any vacant or foreclosed properties that qualified for the program and also met requirements
established for the special 2% fixed interest rate Habitat for Humanity mortgage product offered
through the State of NY Mortgage Agency.
At that point, Habitat asked external legal counsel to conduct a full review of Mr. Katz’s legal history,
and learned that he had completed a monitoring period and was permitted by the NYS Attorney General
to do business in NYS. On learning this, the Habitat-NYC board voted to purchase certain additional
properties from Mr. Katz, with provisos that we would undertake due diligence above and beyond what
was required by the grant.

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 203 Marion
This property was bought by Habitat from Isaac Katz on the same day that Mr. Katz bought it from its
longtime owners – Lena and Percy Spellman. In fact, Habitat signed a contract to buy that property
before Mr. Katz owned it. Just by looking at the property deeds you can see that Mr. Katz made over
$200,000 in one day thanks to that sale. When I talked to one of the Spellmans’ sons, he asked
multiple times: why didn’t Habitat buy the home directly from them? What did the title review,
executed prior to purchase, show? Were any red flags raised?
HABITAT-NYC RESPONSE:
The 203 Marion St property was under contract between Isaac Katz and the seller prior to Habitat-NYC
learning of or considering the property; there was no legal way Habitat-NYC could have directly
purchased the property from the Spellmans.
Habitat-NYC’s legal counsel confirmed at the time – and has recently reconfirmed – that the two-step
transaction to acquire the Marion St property is not uncommon in New York City; speculative buyers
generally acquire properties with the goal of disposing of them after closing to minimize carrying costs,
and often arrange for sales before the initial closing occurs. This two-step transaction was reviewed by
legal counsel at Habitat-NYC and Habitat for Humanity International, and was not deemed irregular or
inappropriate in any way. Legal counsel also confirmed that Habitat-NYC’s due diligence was in line with
similar purchases of properties under contract.
The deeds for these properties would not have been available in the public record until after the
closings. Consequently, Habitat was wholly unaware of any profits made by Mr. Katz, and they are
unrelated to Habitat-NYC’s acquisition.
Additionally, Habitat-NYC retained an independent third-party appraiser to determine a market value
for every property we acquired under the NSP2 program, including 203 Marion Street, and we never
paid above market value. This policy was implemented not only to ensure good stewardship of funds,
but also helped to establish and maintain the homes as affordable for the homeowners.

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 These three properties, located on Madison Avenue, were also renovated by Mr. Katz to Habitat’s
specifications, before the purchases closed. This is detailed in emails and memos, which also discuss
how this setup would allow Habitat to sidestep the prevailing wage requirements mandated by its
NSP2 grant.
Davis Bacon
Given the receipt of NSP2 funds, Habitat for Humanity was required to pay prevailing wages to its
construction workers. But in the case of the 782-786 Madison properties, email discussions show that
Habitat officials found a way to sidestep Davis Bacon requirements by having the seller, Isaac Katz,
renovate the properties to Habitat’s specifications. Why was that? Were these outsourced
renovations up to code?
HABITAT-NYC RESPONSE:
It is inaccurate to characterize the purchase of the 782-786 Madison properties as “sidestepping”
prevailing wage requirements. Habitat-NYC confirmed with external legal counsel that properties
acquired with the NSP2 funds were in full compliance with prevailing wage regulations.
The NSP2 program required participants to complete a significant number of housing units
simultaneously, and Habitat-NYC’s acquisition of properties with less rehab work required after closing
allowed it to manage these projects efficiently. Moreover, a Letter of Completion from the Department
of Buildings was issued certifying that all work done was up to code. This is the letter issued for all
building rehab projects.

Attached are also public records obtained from the city’s Housing Department that detail complaints
made by former tenants of these buildings. These are dated just months prior to Habitat’s purchase
under the NSP2 program. Due diligence usually takes 60 days. In several cases, according to Habitat’s
own memos attached, this period was extended significantly.
Why were these above mentioned properties chosen for NSP2? None of them were in foreclosure,
which was the grant’s target. What was Habitat’s knowledge of their occupancy history when
negotiations began? Were these buildings vacant or made vacant at the time Habitat pursued them?
How long did it take from identification to closing the sale? What considerations were taken to ensure
that displaced tenants would be treated appropriately? Were procedures under the Uniform
Relocation Act triggered at some point?
HABITAT-NYC RESPONSE:
Habitat-NYC did not pursue a contract on any occupied properties as part of the NSP2 program and
conducted a thorough, multi-step review to verify that all properties were vacant. This process included
staff visits, consultant examinations of the property, and legal affidavits from the seller affirming the
property was vacant. Notably, this process led Habitat to walk away from potential acquisitions after
finding they were partially occupied. At no point were we aware that any tenant had been forcibly
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 moved or incentivized to move out of their homes in properties we were intending to purchase.
Moreover, we would condemn the use of any such tactics.
The NSP2 grants targeted neighborhoods impacted by high rates of foreclosure, abandonment and
vacancy. One of the grant’s specific goals was to turn eligible properties back to productive use; other
goals included arresting decline and stabilizing neighborhoods, creating long-term affordable units, and
building energy efficient and accessible homes for low-income households.
Eligible properties for purchase under NSP2 included vacant and abandoned properties, as well as
foreclosed properties. These were three distinct and independent types of eligible properties, and there
was nothing improper in seeking out vacant properties as defined by the terms of the NSP2 grant.
Department of Building filings
I have attached documents filed with DOB by Habitat regarding renovations for 203 Marion and 849
Halsey. These filings are dated weeks before Habitat bought those buildings. In the case of 203
Marion, they were filed unbeknownst to the Spellmans while they were still owners of the building.
Why did Habitat file and sign these documents, representing itself as the owner, when it was not yet
the owner? What arrangement was made between buyer and seller to justify these filings?
HABITAT-NYC RESPONSE:
At the time Habitat-NYC first began looking at 203 Marion, the property was under contract to Isaac
Katz. Subsequently, Habitat-NYC agreed to acquire the property from Mr. Katz, conditioned upon the
closing on his contract. Consistent with common practice by real estate developers in New York,
Habitat-NYC filed the appropriate forms to enable it to proceed promptly after the closing, with
necessary health and safety renovations. Legal counsel has advised that this is customary practice to
ensure the rapid procession of any work being conducted at the time of closing.
Bernard Niederman
How did Habitat for Humanity come into contact with the landlord Bernard Niederman? Were
concerns raised about buying a $2 million property from him?
HABITAT-NYC RESPONSE:
Bernard Niederman’s property came through a broker Habitat-NYC had retained. Habitat-NYC felt – and
continues to feel – that through NSP2, we were able to take properties that otherwise would have been
sold as market rate properties, including those from Mr. Niederman, and provide affordable, quality
homes to families that were living within Central Brooklyn.

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 General questions
What have been the successes and failures of the NSP2 program as implemented by Habitat NYC?
Has Habitat been able to find buyers for all of the units it renovated? If not, why not?
HABITAT-NYC RESPONSE:
Habitat is dedicated to transforming lives by building decent, affordable homes in partnership with lowincome families and uniting all New Yorkers around the cause of affordable housing – and our
participation in the NSP2 program played an important role in helping us to advance this mission.
Through the program, Habitat was able acquire 105 affordable-housing units in Central Brooklyn, all of
which found buyers and remain occupied.
What prior experience did Habitat NYC have handling federal money?
HABITAT-NYC RESPONSE:
We receive funding in the form of subsidies from multiple city, state and federal sources. Habitat-NYC
has accessed the HOME federal program since 2001, with all HOME funds administered through New
York State and passed through to Habitat-NYC. Additionally, we receive federal funding from
CNCS/AmeriCorps. These funds are administered by Habitat for Humanity International. Similarly, the
NSP2 funding from HUD was administered through Habitat for Humanity International.
Was NSP2 the first time Habitat NYC bought properties in the open market?
HABITAT-NYC RESPONSE:
To the best of our knowledge, the NSP2 program was the first instance when Habitat-NYC directly
participated in open-market purchases. Habitat-NYC received substantial advice and counsel
throughout the acquisition process and, indeed, the entire program. Our model is successful in part
because of the participation of high level, professional volunteers who give of their time and talents on
our board of directors and our committees.
How much money involved in the “100 Homes for Brooklyn” project did not come from NSP2?
HABITAT-NYC RESPONSE:
The total project cost was $42.9 million, of which approximately $21 million was funded by the
HUD/NSP2 funding. The remainder of the project cost was funded by non-federal sources.

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 Has Habitat NYC or Habitat International ever investigated its handling of NSP2? If they did, what
conclusions were reached?
HABITAT-NYC RESPONSE:
In 2012, Habitat for Humanity International received a small number of anonymous complaints about
the purchase process for certain properties in Brooklyn bought by Habitat-NYC under the NSP2 program.
Upon learning of the complaints, Habitat for Humanity - New York City immediately retained outside
legal counsel to investigate, which conducted a thorough review and found no evidence of any
wrongdoing. Habitat for Humanity International’s legal team also reviewed the investigation and
concurred with its finding.
Habitat is committed to the highest standards of integrity and take all complaints very seriously to
ensure that we continue our mission to transform lives by building decent, affordable homes in
partnership with low-income families and uniting all New Yorkers around the cause of affordable
housing.
Who are the buyers? I’m interested in hearing about their backgrounds.
HABITAT-NYC RESPONSE:
Through Habitat’s participation in the NSP2 program, Habitat was able to help 105 families in need
become homeowners. Families in our target group often pay upwards of 50% of their monthly income
towards shelter costs. Habitat-NYC’s programs adhere to general affordability standards of 30%. The
Furman Center reported last year that approximately 55% of families in our area median income (AMI)
band are rent burdened and pay more than one-third of their income for housing. Ten percent are
paying more than 50% of their income.
While the buyers are as varied as their number, we have included below the biographies of two families
that provided us with their history and an overview of their relationship with Habitat. To protect their
privacy we have removed last names, which we cannot provide without the expressed written consent.
Sample Bios:
Rita
Prior to moving into her Habitat NYC home in Brooklyn, Rita and her 19-year-old daughter Kate were
living in a nightmare situation. Their apartment was surrounded by drug dealers and drug users, and
massive rats frequently paraded in front of her apartment. She was frequently woken up at 3 a.m. by
neighbors yelling or blasting music and she often felt as if she was living in a prison. Inviting friends over
to her home was out of the question, and her daughter often spent nights with friends and other family
members to avoid the apartment. Her previous apartment was tiny and didn’t have a hallway, and she
couldn’t open the windows for fear of the rats coming in. It was near a boiler as well, so it always felt
hot. The building wasn’t well kept, and she didn’t feel a sense of neighborhood where she lived.

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 When she saw a Habitat-NYC flyer in her building, she felt it was too good to be true. Initially, she didn’t
plan to attend Habitat-NYC’s informational session, but changed her mind at the last minute: a decision
that forever changed her life.
Although she initially thought the idea of owning a Habitat NYC home wasn’t possible, she soon heard
stories of people just like her who’d made their dreams come true.
“I met people just like me who were a part of Habitat’s program. They’re regular people with regular
jobs and regular lives. If they could do it, I could do it.”
She left the information session feeling motivated. Although she jokes that normally she’s a
procrastinator, she immediately got all of her documents together and applied to the program within
two days. “It was that important to me,” she says.
Shortly after applying, Rita learned that she was accepted into Habitat NYC’s program. “I cried when I
heard. I was so happy. This program will get me so much more than a house.”
Soon, she visited what would be her future home and instantly knew it was for her.
Rita immediately dedicated hours toward her sweat equity requirement. One of her main volunteer
projects was helping out at Habitat NYC’s information sessions, which gave her a unique opportunity to
meet other people interested in the program. “I love helping at the information sessions. It’s so great to
help show people that their dreams can come true. I loved being able to spread the word. I helped make
people realize that owning a home was possible with Habitat.”
Rita also enjoyed the concept of helping build the homes of her neighbors – and that other family
partners helped build her home. “It makes you feel like a part of your home. I never viewed sweat
equity as a chore. It gave me something to be a part of. It was a great connection.”
“I have my own property now, for not much more than I paid when I was renting. When I rented, my
home wasn’t mine. This is mine. To have this after living in such an awful place… I can’t tell you what it
means to me. I felt like I’d let my daughter down since we didn’t have a nice place to live. If Habitat
didn’t come into my life, I wouldn’t have this happy ending.”
“If you want to better your life and you’re willing to work at it, Habitat will help you. It’s a great fit,” she
says. “If it weren’t for Habitat, I’d still be living near rats and surrounded by drug users.”
Some of Rita’s friends tried realtors, often spending two years looking without luck. “I’m glad I went the
Habitat route. I didn’t have any of those problems,” Rita says.
Rita admits that sometimes the process is difficult, but she always felt it was worth it. Upon moving into
her home, she felt safe and knew she had something to show for all of her years of hard work.

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 “Don’t think you can’t do it – you can. Partnering with Habitat is the best thing I’ve ever done. I used to
dread going home – I never even called it a home, actually. Now I love going home. It’s my home. I have
a house that I love and it affects my entire state of being.”
Rita says that Habitat was there for her every step of the way. “They held my hand. It’s a great team. I’m
so grateful for everyone who helped me during the process.”
One of Rita’s favorite moments was shortly after she and her daughter moved into their new home. “My
daughter turned to me and said ‘You did good. I love our new house,” she said.
Kate and Rita often did their sweat equity hours together, helping to paint and lay tile alongside each
other. They consider it a bonding experience – working together to improve their situation. “We got to
really like each other as part of the process. She really respects what I did to make this possible, and that
means so much to me,” Rita says.
“Habitat is not only what I wanted, but it’s also what I thought I’d never be able to have. It changed my
life.”
She always had wanted to own a home, but doubted it was possible. She thought the only way she could
do it was if she was married. It didn’t really seem possible for her as a single parent before Habitat.
Juan
For Juan, a bus driver with the New York City Metropolitan Transit Authority, the answer to his prayer
came when a traffic light stopped him at the corner of East New York Avenue and Saratoga Avenue on
his usual route through Brooklyn.
Looking up, Juan saw a large banner announcing “Affordable Housing for New Yorkers” and listing the
website for Habitat for Humanity - New York City.
The banner hung from a fence surrounding the construction site of the St. John’s Condominiums
Residences in the Ocean Hill-Brownsville neighborhood of Brooklyn.
Juan lived with his wife Sara, who is pursuing a criminal justice degree and their two daughters, in a
small two-bedroom apartment. Their landlord recently notified them that he plans to sell the building
and will not be renewing their lease. The housing situation in the nation’s largest city left them asking,
“Will there be any decent apartments available, and can we afford it?”
That’s when they applied to Habitat-NYC and were accepted into our program.
The couple worked together on their sweat-equity hours doing finishing work inside the building. Their
joy is palpable.
“Every single day I would drive by and get more excited,” he says. “I’d be thinking, ‘Now they are
installing the windows; now they are sealing the roof.’”
Juan and his family now live in their new home and pay an affordable monthly mortgage.
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