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The Thought That Counts
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.

Croatoan

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 Union, 01/31/04

"HUD controls Dare units," Brian Nearing, Albany Times Union, 01/17/04

"Dare's venture nearing the brink," Brian Nearing, Albany , 11/08/03

"League's demise closes services," Lydia Polgreen, Albany Times Union, 10/28/01

"Dare embarks on new venture," Lydia Polgreen, Albany Times Union, 09/28/01

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 Union, 02/11/01

"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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Copyright (c) 2006 by Carola Von Hoffmannstahl-Solomonoff. This material may be freely distributed subject to the terms and conditions set forth in the Open Publication License. This license relieves the author of any liability or implication of warranty, grants others permission to use the Content in whole or in part, and insures that the original author will be properly credited when Content is used. It also grants others permission to modify and redistribute the Content if they clearly mark what changes have been made, when they were made, and who made them. Finally, the license insures that if someone else bases a work on this Content, that the resultant work will be made available under the Open Publication License as well.


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