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The North Tonawanda Housing Authority expects to receive a proposal this week for the sale of the 250-unit, financially strapped housing development on Spruce Street.

In an update on the troubled housing development, which has gone unsubsidized by the state or city for five years and is now in a $163,000 hole, officials of the authority said they expect to see a proposed contract on which to begin privatization negotiations early this week.

Carol Steuernagel, chairwoman of the authority, and Richard A. Krause, executive director, said that once the sale contract is received, negotiations for the transfer of the 63-acre, low-income housing development from the state to a private owner, will begin.

Submitting the proposal will be the Sheldrake Organization, a private developer.

Sheldrake is top ranked among the three firms that submitted privatization proposals on the invitation of the Housing Authority. The others are Norstar and MHT Holdings.

If negotiations with Sheldrake do not produce an agreement, Housing Authority negotiators will turn to Norstar and then MHT, Krause said.

The housing commissioners ranked the three companies, using guidelines from the state Division of Housing and Community Renewal, present owner of the housing project.

Krause said the authority hopes to have negotiations for the sale to a private developer and necessary approval from the state and the city in time for a start on renewal of all of the project units by next September. The development is divided between the Scarfone Housing for the elderly and Nor-Ton housing for families.

Sheldrake has promised to spend $12 million for the apartment renovations. The shift from public to private ownership would relieve the state and the city of all financial obligations under a three-party agreement that commits all of them to funding, Steuernagel and Krause said. In addition, the developer would pay the delinquent subsidies owed to the Housing Authority and be responsible as owner for all future costs.

The authority would continue to manage the housing project for the new owners.

No one has voiced opposition to privatization of the public housing, except for some of the tenants who fear their rent would increase, a claim that Krause has repeatedly denied.

Rentals depend on the income level of the housing applicants, Krause said. They average $260 per month, including all utilities.

The authority recently was criticized by a city alderwoman for rejecting the application of a woman and placing her on a three-month waiting list, while having 45 to 60 units currently unoccupied.

Krause explained that the vacant units need extensive repairs and are unsuitable for occupancy, but the authority has neither the money nor the maintenance staff to do the job.

Mayor Mary C. Kabasakalian and some members of the Common Council were to meet with Housing Authority officials this evening to discuss the situation.

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