May 14, 2006: Broome County, in the south central "Southern Tier" section of
New York State, is home to the seamless triple city stretch of
Binghamton, Johnson City, and Endicott. Endicott is where IBM
was born, from several companies that made business machines in
the early 20th century. Eventually, IBM became a god. Though its
facilities expanded far beyond Endicott, IBM maintained a massive
home town presence for almost a century. Not tucked away in
some industrial neighborhood on the edge of town, or on the
waterfront, but smack dab in the middle of the city. Endicott's
main drags lead to IBM; the town's neighborhoods surround it.
Some climb the hills behind the company, others spread toward
the Susquehanna River below. An aerial photo of Endicott shows
IBM sitting like an 1.4-million-square-foot temple, at the
center of a city that worshiped the economy it provided.
But that was then, and this is the now of New York State's
post-industrial Angkor Wats.
IBM in Endicott isn't as dead as that doornail; the company
has a skeleton crew of employees which continues to shrink
while hiring in India increases. And 4 years ago, a conglom
of politically connected old boys from BC (Broome County, not
Before Christ) launched Endicott Interconnect Technologies (EI).
EI took over some of IBM's microelectronic manufacturing chores,
as well as a chunk of its unwanted real estate. Local private
entities invested in EI, while taxpayers kicked in millions via
federal and state assistance. Including Community Development
Block Grant (CDBG) funds from HUD, and financial support from the
Empire State Development Corporation (ESDC) for the "purchase"
of IBM's real estate. Tax and energy breaks were also granted.
And why not? The BC boys promised to save, and eventually create,
jobs. And though an existent company with a local presence was
said to be interested in taking over IBM's microelectronic biz,
they were also said to be planning to move it out of Broome
County. Public officials who bestowed public money on Endicott
Interconnect (and its spin-off, SureScan) declared the BC boys
local saviours of local jobs. As did the boys themselves.
After the boys grabbed the remains of IBM's reign, they began
firing people. In groups and in drips and drabs, over a period
of years. Those fired ran the gamut from skilled technicians to
maintenance workers. The number of jobs the BC boys were expected
to save/create in return for public money haven't materialized.
Neither have projected profits.
When it comes to taxpayer jacked economic development and job
retention or creation, it's the thought that counts.
In New York State, the weak or non existent official consequences
of miscalculation, mismanagement, or malfeasance re public
funded projects, helps keep the line between thought and reality
blurred. As does the will to believe. Particularly in regions
suffering the effects of industrial decline, inner city poverty,
and shrinking tax bases. And when public money floats too much
of the economy, there's a reluctance to risk the flow by drawing
attention to flubs or frauds. The result is a culture of impunity
which works to the advantage of self protective old boy (and
girl) networks of regional cronies. Some of whom are not old at
all-- they've just mastered the retro style.
In 1587, Virginia Dare was the first child born to English
parents in the new world. Her parents were part of a small
colony on Roanoke Island. Virginia Dare was the granddaughter
of Governor John White. Shortly after her birth, Governor White
sailed to England for supplies. When he returned to Roanoke
three years later the entire colony, including his granddaughter,
had disappeared. The only trace left was the word "Croatoan"
carved on a tree. Eventually the missing colony became a source
of legend. As did Virginia Dare.
Some 420 years later, in New York State's upper Hudson Valley,
in the capital city of Albany, another "Dare" disappeared
mysteriously. Leaving only the words "multimillion dollar
government backed loans" and "HUD foreclosures" carved on
newspaper pages. But this time, the lost has been found.
In 1996, Aaron R. Dare became president and CEO of the Albany
based Urban League of Northeastern New York. A native Albanian,
Dare was in his late 20's, with a background in banking and
telecommunications. Under Dare's leadership, the Urban League
widened its focus from job training and education to real estate
development. The development projects were advanced via a number
of subsidiaries of the Urban League. The most ambitious project
Dare generated was a $40 million residential and commercial
development combo (Gateway Commons) in Arbor Hill, one of
Albany's inner city neighborhoods.
The development of Gateway Commons was financed by loans from
local banks, and city, state and federal funding. The U.S.
Department of Housing and Urban Development (HUD) underwrote much
of the project. Because Gateway Commons mixed private and public
financing, involved plans for a charter school, and promised
welfare-to-work opportunity, Dare was seen as an innovative, up
and coming inner city savior. By the late 90's, New York Governor
George Pataki, Vice President Al Gore and HUD head Andrew Cuomo
were among Aaron Dare's admirers. Washington D.C. think tanks
such as the Brookings Institute and Heritage Foundation also
weighed in favorably.
The largest commercial tenant of Gateway Commons was to be the
National Finance Corporation (NFC), a sub prime mortgage and
refinance lender based in suburban Clifton Park. NFC teamed with
Dare and the Urban League to develop the Millennium Technology
call center (aka the Millennium Building) which would house a
telemarketing office at Gateway Commons. NFC promised to provide
Arbor Hill residents with 300 jobs. Ones which NFC, according to
Governor George Pataki, "had originally planned to create outside
the state." In 1998, Pataki's "Built On Pride" welfare-to-work
pilot program, administered by the state Department of Labor,
had delivered its very first grant to Gateway Commons.
At the end of 1998, the Urban League's financial filing with
the state attorney general's office showed the League to be
1.3 million dollars in debt.
In 1999, NFC went bankrupt and its founder pled guilty to
criminal charges related to diverting $5.6 million in loan
payments owed Bear Stearns & Co, into NFC operating expenses.
Without the telemarketing center, Gateway Commons lacked a main
anchor. Plus, NFC didn't repay an unsecured loan of $2.2 million
from The Commons, LLC., an Urban League subsidiary. Driven by
overall mismanagement, the League's debt was piling up. And
Aaron Dare had diverted $450,000 worth of state and federal
withholding taxes from Urban League employees in order to cover
expenses. In 2000 the League was hit with a $525,830 federal tax
lien, interest and penalties adding onto the bill. The weight of
debt and tax lien forced the League to fire all its employees.
In late 2001, the Urban League of Northeastern New York, an
organization which evolved from another group founded in 1928,
and had once been a solid inner city resource, closed forever.
On the bright side, the Millennium Building in Arbor Hill did end
up serving the public. The property was bought from a subsidiary
of the Urban League by the city of Albany for use as a public
safety headquarters; command central for the police and fire
departments, and a home for the department of Buildings and Code
Enforcement. Though the price ($2.1 million) seemed steep to
some, others touted the up-to-date telephone system.
In September 2001, State Attorney General Eliot Spitzer filed
a report re the Urban League of Northeastern New York. Spitzer
cited Aaron Dare's mismanagement of the League's development
projects and his having "misdirected" state and federal taxes.
Though the League's board of directors (which included the vice
president of an upstate New York supermarket chain, the Bishop
of the Albany Catholic Dioceses, and the chairman of the state
Racing and Wagering Board) apparently hadn't been aware of Dare's
doings, Spitzer chided the board for poor oversight. While
acknowledging Dare had misled them. Spitzer also opined no
financial benefit would be gained by filing a lawsuit against
either the board or Dare. However, the Attorney General did
penalize Dare-- by barring him from working in a financial or
policy making role in New York State charities for 10 years.
Luckily, Aaron Dare had other irons in the fire to keep his mind
off being put on the naughty spot. He'd created a string of real
estate corporations (including Emerge Construction, Emerge Real
Properties, LLC, and Emerge Historic Residential Community I, II
and III) and planned to focus on inner city development and
renovating historic buildings into "affordable" housing
Though some on the local financial scene felt a tad dubious about
Dare using state and federal low income housing funds to further
his plans, no bells seemed to ring at HUD local or central. With
7.4 million dollars of HUD backed mortgage money, Aaron Dare
bought three major multi-family historic properties in early
2001. Two in Albany and another in nearby Schenectady. One of
the properties covered blocks of downtown Albany. Combined, the
three properties involved hundreds of condo and rental units.
Some housed low income residents receiving HUD subsidies.
At the time of Dare's purchase, the Gateway Commons fiasco was
a matter of public record. In February, 2001, the assistant
district inspector general for audit from HUD's New York City
regional headquarters, reviewed the records of the Albany
Community Development Agency (ACDA). Among the examined
transactions was an ACDA loan of Community Development Block
Grant (CDBG) funds to the Urban League, during the period when
the organization was spiralling downward. According to the ACDA,
the $180,000 loan was used to help meet the Urban League's
payroll and its consulting fees. The CDBG loan was never repaid.
Though the Albany Housing Authority, which partnered with Dare
and the League on several projects, was said to be planning to
repay $50,000 of the funds.
In January 2003, Aaron Dare stopped making payments on his
historic properties. In 2002, Dare had turned their management
over to Robert Bove, a convicted real estate crook from nearby
Rensselaer County. Dare had been planning to sell the properties
to Bove and his company, Statewide Management Group, but the
relationship turned acrimonious. Then the law caught up with Bove
for a scam from another time and place. Aaron Dare claimed to
know nothing of Bove's background and said Bove tricked him
into the sales agreement and had misdirected mortgage payments.
Meanwhile, the historic properties slid into disrepair. Essential
services, such as trash pick up, snow removal and building
repairs ceased. Condo owners and tenants tried reaching Dare at
his myriad places of business (including Ascension Holdings!)
but got nothing but run arounds from minions, or disconnected
phone numbers. Ditto when trying to contact Bove. When HUD
finally foreclosed on Dare's properties in early 2004, it was
a relief to the residents-- as it was to the Maryland mortgage
lender HUD ultimately reimbursed.
The only people who received little relief were taxpayers. When
HUD resold the foreclosed properties in late 2004, the price fell
short of what Dare "paid" by 1.8 million dollars. On the local
front, Emerge Real Properties owed $167,000 in back taxes, and
left a number of creditors holding the bag.
Prior to foreclosing, HUD attempted to contact Aaron Dare. They
wanted to know why he'd stopped making mortgage payments. HUD's
letters piled up in Dare's mailboxes and calls fell on
disconnected ears. Newspaper stories increasingly contained the
phrase "Dare could not be reached for comment". Prior statements
by Dare about plans to move to New York City were referenced.
By mid 2004, Aaron Dare had dropped out of sight in the Capital
Region and his "whereabouts could not be determined".
It was all very mysterious. Had Aaron Dare joined Virginia
Dare-- and the lost civilization of Angkor Wat-- in the realm
of inexplicable disappearance?
But no. Aaron Dare has returned. Actually, he may have been in
Albany all along-- albeit under another corporate name. He's been
buying and selling properties in inner city neighborhoods. And
such transactions take time, even when blessed by quick
turnovers. Apparently, Dare's new deals have been blessed. So
much so that he now drinks cognac costing 900 dollars a bottle
when hanging at the Noche Lounge in downtown Albany. Which is
where Dare was spotted in late April.
The sighting occurred in a tragic context. Aaron Dare was seen
in the company of his business partner. A highly respected police
officer, who later that night died in an automobile crash. The
accident led the Albany Times Union to retrace the officer's last
evening. Dare emerged almost as a footnote. There were no details
about whether or not Dare has reimbursed taxpayers for the monies
lost on Gateway Commons and/or his historic foreclosures.
Ultimately, Aaron Dare's story may bear no relation to that
of Virginia Dare. Instead, Dare may be a walking refutation of
F. Scott Fitzgerald's oft quoted dictum that there are no second
acts in American lives. It's hard to say what happens in the rest
of the country but in Albany, and some other New York places,
the show goes on and on and on.
Carola Von Hoffmannstahl
"They who hide always know where to find."
John Rhode, Face of the Verdict, 1936
"Dumb lending always has its consequences."
Warren Buffett, "Buffett Predicts a Housing Bubble Burst At Annual Meeting," Matthew Borghese, All Headline News, 05/07/06
Sources include but are not limited to:
"Fuller picture of cop's crash emerges," Brendon Lyons, Albany
Times Union, 04/28/06
"Reality tempers Endicott Interconnect's big dreams," Jeff Platsky,
Binghamton Press & Sun-Bulletin, 04/23/06
"Former Dare properties sold for $5.6M," Brian Nearing, Albany
Times Union, 09/26/04
"Ad concerns members of Albany neighborhood," Brian Tafte, Capital
News 9, 08/04/04
"Dare's plans ending in foreclosure auction; Albany Ex-Urban
League leader losing 3 apartment complexes," Brian Nearing, Albany
Times Union, 07/21/04 @ Fannie Mae Foundation Inc.
"Man sentenced in property sale case," Tim O'Brien, Albany Times
"HUD controls Dare units," Brian Nearing, Albany Times Union,
"Dare's venture nearing the brink," Brian Nearing, Albany , 11/08/03
"League's demise closes services," Lydia Polgreen, Albany Times
"Dare embarks on new venture," Lydia Polgreen, Albany Times Union,
Statement by Attorney General Eliot Spitzer regarding the Urban
League of Northeastern New York, Office of New York State
Attorney General Eliot Spitzer, 09/27/01
"Former Urban League CEO heads new ventures," Albany Business
Review, American City Business Journals, Inc. 04/24/01
"HUD studying agency's records," Darryl Campagna, Albany Times
"Gore's visit casts spotlight on Arbor Hill," Elizabeth Benjamin,
Albany Times Union, 02/12/99
"Governor Pataki Announces Statewide 'Build On Pride' Initiative,"
Office of New York Governor George Pataki, 01/19/99
"Dudley's new owners will talk to tenants," The Albany Business
Review, American City Business Journals, Inc., 09/22/98
"Emerge Real Properties, Statewide Management Group, Aaron Dare,
and my Security Deposit," www.koszuta.net
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