Subsidies for developer accused of racism
Editor’s note: This is the final of three stories triggered by the filing of a lawsuit Monday that accuses the Clover Group of discriminating against Blacks in the placement of senior apartment complexes. Monday’s story focused on the lawsuit. On Tuesday we profiled Clover’s CEO, Michael Joseph.
The Clover Group — the target of a federal lawsuit accusing the company of “racist and illegal practices” — grew its business in Western New York with the help of millions of dollars of tax subsidies and low-interest government loans.
The public assistance to the company owned by Michael Joseph, a generous donor to numerous politicians, included $1.67 million in property tax abatements from local industrial development agencies and $11.8 million in low-interest loans from the state. Clover has also received assistance of undetermined value from Erie County and the City of Buffalo.
Reacting to news of the lawsuit, IDA and government leaders said they found the allegations of racism “disturbing” and “troubling” but noted there were no signs of trouble when they provided assistance to Clover.
Four local IDAs — in Erie and Niagara counties and the towns of Hamburg and Lancaster — subsidized six early Clover Group projects with $1.4 million in property tax breaks.
A fifth agency, the Broome County IDA, whose service area includes Binghamton, granted Clover tax breaks worth $239,000 in 2011.
In total, the property tax breaks amount to $1.67 million since 1997.
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Those seven subsidies break down as follows:
- In 1997, the Erie County IDA granted $178,175 of property tax breaks to Clover Group’s Union Square Senior Apartments in West Seneca.
- In 2003, the Niagara County IDA granted $208,547 of property tax breaks to the company’s Sandra Lane Senior Apartments in North Tonawanda.
- In 2006, the Hamburg IDA granted $232,269 of property tax breaks to the firm’s South Pointe Senior Apartments.
- In 2007, Clover Group went back to the Erie County IDA for $395,155 in property tax breaks for its Crestmount Square Senior Apartments in the Town of Tonawanda.
- In 2008, the Lancaster IDA granted $224,723 in property tax breaks for Clover Group’s Lancaster Commons Senior Apartments.
- In 2009, the Erie County IDA subsidized Clover Group for a third time. That agreement netted the company $401,579 in property tax breaks for its Brighton Square Senior Apartments in the Town of Tonawanda.
- And in 2011, the Broome County IDA granted Clover Group $239,484 in property tax breaks for its Reynolds Pointe Senior Apartments in Johnson City.
In every project, the apartments were built in areas where Black people make up 3 percent or less of the population, according to Census data.
According to state records, those seven projects created a total of 15.5 full-time equivalent jobs. That’s an average of $128,000 per FTE.
In addition, Clover Group’s Jill Joseph Tower — located west of Main Street in the University Heights neighborhood — has benefited from federal Low-Income Housing Tax Credits, low-interest loans from New York State, and a payment-in-lieu-of-taxes deal from the City of Buffalo and Erie County.
It’s not clear how much federal money was used to build the Jill Joseph Tower — a federal database does not list a dollar amount for the subsidy — but they were granted prior to Clover Group purchasing the property in 2019.
The subsidies continued to flow once Clover Group took ownership. Agreements reviewed by Investigative Post show Clover Group qualified for $11.8 million in low-interest loans to renovate the apartment complex. Both loans — one for $7.4 million and another for $4.4 million — came from Homes and Community Renewal, the state’s affordable housing agency.
Buffalo and Erie County also granted property tax breaks to Clover Group for the Jill Joseph Tower in June 2019. The agreement, and payments-in-lieu-of-taxes, take effect this year, according to Peter Anderson, a spokesperson for Erie County Executive Mark Poloncarz.
The value of the agreement is unclear, and neither Anderson nor a spokesperson for Buffalo Mayor Byron Brown answered questions about the value of the deal.
The Jill Joseph Tower project is one of the only apartment buildings owned by Clover Group that’s located in an area with a significant Black population. The 14214 ZIP code in which it is situated is 32 percent Black and 48 percent white.
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The Clover Group was founded in 1987 by Joseph, the company’s president and chief executive officer. According to its website, the company has purchased or developed more than 10,000 apartment units and 800,000 square feet of commercial space in seven states. The company says it currently manages about 7,000 rental units and its website advertises more than 50 apartment complexes in seven states marketed to senior citizens.
It is unclear whether Clover has received any subsidies for its out-of-state projects.
Peter Rizzo, the former Clover employee who filed the lawsuit Monday, was fired after just six months with the company. Rizzo said Clover told him he was being let go because the company was having financial trouble. In his lawsuit, Rizzo claims he was fired because he objected to Clover’s use of racial demographics to judge the suitability of potential development sites.
The lawsuit describes Clover executives using the terms “Canadians” and “the Canadian factor” as a code for discussing the number of Black people living in proximity to a proposed development site. If the surrounding population was more that 20 percent Black, the lawsuit claims, that was sufficient cause for Clover to reject the site.
Rizzo surreptitiously recorded Clover executives using the coded language, acknowledging the meaning of the code, and explaining that building in communities the executives considered “heavily Black” was “tough” because there might be an “issue with residents paying their rent.”
The lawsuit asks the court to affirm Rizzo’s contention that Clover’s practices violate federal and state law. Rizzo also asks for $15 million for back and future pay lost, as well as “pain and suffering and punitive damages.”
Charni Sochet, a spokesperson for Homes and Community Renewal, called the allegations against Clover Group “disturbing.” Sochet declined to comment further, citing the pending lawsuit.
Poloncarz, in a statement, said the allegations against Joseph and other Clover Group executives are “deeply troubling.” Joseph chaired Poloncarz’s transition team prior to the start of his first term in office. He and his company have also donated $34,000 to the county executive’s campaign over the years.
“I have known Michael Joseph for more than a decade,” Poloncarz said. “At no time have I ever heard him make a statement with any racial animus or discriminatory motivation. I sincerely hope Mr. Joseph was not aware of this activity at his company and that he takes appropriate action in light of this whistleblower complaint.”
IDA leaders had similar responses.
Andrea Klyczek, assistant director of the Niagara County IDA, said the agency is “extremely concerned about the allegations being set forth in the lawsuit regarding a project that dates back to 2003.” She noted, however, that the allegations raised in Rizzo’s lawsuit are “well beyond the scope of any IDA review” and defended the project the agency’s incentives subsidized.
“The NCIDA has an anti-discriminatory policy when it comes to supporting projects and awarding incentives that we take very seriously,” Klyczek said. “We rate all projects on standard criteria, including their benefit to our community. This particular project filled a vital need for senior housing.”
John Cappellino, CEO of the Erie County IDA, said his agency wasn’t aware of the allegations against the Clover Group until reports about the lawsuit were published by Investigative Post and The Buffalo News.
“The ECIDA condemns racism in all its forms and all forms of discriminatory business practices,” Cappellino said. “Our agency prioritizes creating inclusionary economic opportunity for all residents of Erie County.”
He added that at its last meeting, the IDA adopted a new “economic inclusion program” that offers larger subsidies for companies willing to commit to hiring specific numbers of women and non-white employees, take on diversity, equity and inclusion initiatives, and grant contracts to women- and minority-owned businesses. Cappellino also noted that all three of the IDA’s subsidies for Clover Group projects have expired.
Sean Doyle, executive director of the Hamburg IDA, also noted that his agency’s subsidies for Clover Group have expired and said the agency wasn’t aware of the company’s practices when it granted incentives in 2006.
“The Hamburg IDA staff and members have a strong commitment to diversity and inclusion,” he said in a statement. “These racist allegations were not made public until 2023, 17 years after the tax discount was granted. There has been no tax discount on the senior housing project since 2020.”
Spokespeople for Brown, as well as the Lancaster and Broome County IDAs, refused to comment on the allegations made against Clover Group.
In addition to his political activities, Joseph has been board chair of Roswell Park Cancer Institute since 2010. In the past eight years, Roswell Park has been hit with at least 15 lawsuits alleging race and gender discrimination in the workplace. The hospital has been criticized by several of its board members for its response to allegations of racial and gender discrimination.
Joseph also serves on the board of the AKG Art Museum, formerly known as the Albright-Knox.
On Wednesday, the Buffalo Common Council member in whose district the Jill Joseph Tower is situated called for the AKG and Roswell Park to remove Joseph from their boards.
“I’m appalled,” University District Council member Rasheed Wyatt told WGRZ’s Kelly Dudzik, in response to the allegations leveled at Joseph’s company.
Wyatt said he frequently received complaints from the complex’s residents — “many of whom are African American,” he noted — about poor living conditions. He said he’d tried to work with Clover’s management team to get their complaints addressed, to little avail.
“Now I’m understanding why [their issues] have not gone addressed,” Wyatt told WGRZ.
Joseph and other Clover executives have not responded to interview requests from Investigative Post. Instead, the public relations firm E3 Communications issued statements on behalf of the firm that dispute the claims made in the lawsuit and make note of charitable contributions Joseph has made to nonprofits that serve the Black community.
“Clover does not make business decisions on the basis of any unlawful criteria,” according to one statement. “The company intends to defend itself vigorously.”
In addition: “Michael Joseph has dedicated himself to extensive philanthropic activities that benefit others including the African American community.”