NYS awarded Hempstead's public housing authority $20M in tax breaks despite discrimination finding

Gov. Kathy Hochul's administration greenlit $20 million in tax breaks to subsidize a Town of Hempstead Housing Authority redevelopment with a private developer, despite knowing that federal officials determined the authority engaged in fair housing violations, documents obtained by Newsday show.

The Hochul administration defended its move by stating it was following suit after approval of the redevelopment project from the Trump administration’s Department of Housing and Urban Development.

"The state, as per procedure, deferred to HUD to approve the disposition of the property," state Homes and Community Renewal spokesman Brian Butry said in a statement.

But the records showing the state approved of the tax credits — despite the authority’s violations of HUD’s anti-discrimination regulations — drew criticism from fair housing experts, who questioned whether government officials prioritized a partnership with a developer over protecting disabled persons and people of color from discrimination on Long Island.

HUD had found the Town of Hempstead Housing Authority systematically discriminated against people of color and persons with disabilities through a waiting list's point system that prioritized the elderly. Its actions benefited white seniors and facilitated "acute racial segregation," according to the HUD findings completed during the Biden administration.

One week after Newsday reported on the HUD findings in August, then more than 600 days old, the federal agency withdrew the investigation because of a "decision to prioritize enforcement activities that address alleged injuries by bona fide complainants."

The probe into the housing authority did not stem from someone on the waiting list alleging they had been discriminated against based on their disability or race. HUD, in its withdrawal, argued the investigation was based on regulations that "prohibit discriminatory effects" but not an actual case of harm.

The redevelopment is slated for Dogwood Terrace in Franklin Square. The 104-unit complex was built in the 1970s.

Years prior, neighbors unsuccessfully fought against the demolition and reconstruction of the property as a four-story building. Engineers have found the current campus to be beyond repair, with cracked and sinking buildings.

Dogwood Terrace has functioned as a property for seniors, even though HUD's findings said it also is intended for working-age people with disabilities. The racial makeup of the housing is less diverse than the neighborhood surrounding it, according to HUD's findings.

A spokeswoman for Hochul said the tax breaks mean the state "now has a direct role" for the first time.

"By moving this project forward under new private stewardship, we are delivering the housing quality current and future tenants have long deserved and are safeguarding their fair housing rights," spokeswoman Kristin Devoe said in a statement.

Butry, the state housing spokesman, said the future affordable apartments — which also will be eligible to relatively wealthier seniors than just those who are eligible for public housing — will be "marketed and filled in accordance with fair housing laws."

Butry said by funding the new development, it will be subject to the state's fair housing rules.

Elaine Gross, founder of ERASE Racism, a Syosset-based nonprofit that works on fair housing issues, called the state’s decision to provide tax breaks for the redevelopment in light of the discrimination finding "unacceptable."

"There are only two explanations for this decision," Gross said. "Either [the state agency] does not care about their mandate to further fair housing, or the approval process for awarding subsidies is deeply flawed.

"Both of these explanations are unacceptable and further harm the very persons protected from discrimination under the fair housing laws and statutes," she said in a statement.

Ian Wilder, executive director of Long Island Housing Services, a Bohemia nonprofit that investigates fair housing complaints, said the state should have paused the tax credit application after disclosure of HUD's findings.

"It appears to be a total failure," Wilder said.

Michael Venditto, one of the town housing authority’s lawyers, said the authority maintains the federal government’s findings are unfounded.

"The authority does not believe that the [Fair Housing and Equal Opportunity Office] matter prohibited it in any way from participating" in the tax credit program, said Venditto, a former Republican state senator from Nassau County.

The authority does not believe that the [Fair Housing and Equal Opportunity Office] matter prohibited it in any way from participating [in the tax credit program].

— Michael Venditto, Town of Hempstead Housing Authority attorney

The plan approved by HUD and the state is underway. Most of the dozens of remaining residents have recently been moved out to clear the way for demolition. They have been told they have a right to return when the new building is complete.

The rebuilding is being undertaken by affordable housing developer David Gallo of Georgica Green Ventures, of Glen Cove. Gallo has not returned requests for comment.

The new Dogwood Terrace will be for seniors only, creating a designation the housing authority long sought but never received from HUD because of concerns of discrimination and lack of replacement of units for working-age people with disabilities.

The state did not carve out apartments in the new complex specifically for those with disabilities who are younger than 62.

In its state tax credit application, the developer describes the redevelopment as a "preservation project" because Dogwood Terrace has been regulated by HUD since 1971 "to provide affordable housing to low-income seniors."

The state did not answer questions about whether it was aware the existing complex, according to HUD, was to include people with disabilities of any age. Butry said the development was eligible to apply for preservation of affordable housing, regardless of HUD’s particular designation.

Asked whether the state should have required units in the redevelopment to be earmarked for those with disabilities of working age, Butry said the developer is to work with "income-eligible households."

The state’s response did not address how it would replace the existing public housing units for working-age people with disabilities with its new senior-only building. The Biden-era HUD administration warned in 2024 that, if achieved, it would "take away future housing opportunities from persons with disabilities."

Edward Cumming, Town of Hempstead Housing Authority executive director, wrote in a tax credit application to the state that the authority expected fair housing violations found by HUD would be resolved and it would "continue to abide by current HUD guidelines."

In 2024, HUD denied the Town of Hempstead Housing Authority’s pitch to demolish and rebuild Dogwood Terrace, citing "civil rights concerns."

A few months later, in the waning days of the Biden administration, HUD finalized its findings of civil rights violations.

By 2025, HUD under the Trump administration approved the redevelopment. It cited the dilapidated structural conditions at Dogwood Terrace.

The state would go on to approve the tax credits, too. The approval came despite the town housing authority's executive director, Edward Cumming, disclosing the existing civil rights problems in a question about existing government investigations.

"On Dec. 16, 2024, FHEO [Fair Housing and Equal Opportunity] sent a letter of its findings, which we fully expect to be resolved voluntarily between the parties," Cumming said.

No voluntary compliance agreement was reached.