Hudson nonprofit, Common Council in dispute over affordable housing tax breaks

Galvan Foundation threatened legal action after resolution raised questions

Photo of Roger Hannigan Gilson

HUDSON — Controversy has erupted over a nonprofit developer’s attempts to get tax breaks for two planned apartment blocks as the city of 6,200 deals with an escalating affordable housing crisis.

The Galvan Foundation's request for two Payment in Lieu of Taxes (PILOT) packages for the duel projects would allow the developer to forgo an estimated $8.5 million in property taxes over the next 30 years on the lower- and middle-income apartments.

Some members of the Hudson Common Council have pushed back at the foundation and its requests, and questioned whether the apartments will truly be affordable for a large enough percentage of Hudson residents.

The city's shortage of affordable housing has become acute: Rents tripled between 2000 and 2019 with an influx of new residents, and rental prices jumped 20 percent as COVID-19 sent downstate residents fleeing from the pandemic’s epicenter last year.

While the members of Hudson’s Common Council are unified in their desire to see more affordable housing in the city, some members do not agree Galvan should be the one to develop it.

Hudson Fourth Ward Alderman John Rosenthal said he supports PILOTs for affordable housing in the city.

“My suspicions aren’t about the idea of PILOTs in particular,” he said. “It’s just about the operator.”

Galvan insists that its business practices follow the letter of the law, and recently threatened legal action against Common Council members for suggesting otherwise in a scuttled resolution on the PILOT proposals, which are currently being considered by Hudson's Industrial Development Agency.

It’s hard to overstate Galvan’s influence in Hudson. The firm and its affiliates own at least 89 parcels in the city; collectively, they are worth more than $38 million, according to property tax rolls, making the company Hudson's largest property owner.

The company's name combines those of Eric T. Galloway and Henry van Ameringen, who were married before the latter’s death at age 89 last year. The pair were listed as the Galvan Foundation’s board of directors — with Galloway as president — as well as on the boards of Galvan’s other nonprofit affiliates, according to tax filings.

Van Ameringen was the son of Arnold Louis van Ameringen, a founder of International Flavor and Fragrances, according to his obituary in the New York Times. That company was most recently valued at $35.8 billion, according to Bloomberg.

The Galvan Foundation’s purpose is to direct efforts “toward the promotion of affordable housing and related services to low-income and otherwise disadvantaged persons” in and around Hudson, according to tax filings.

A major row erupted in April between Galvan and the Common Council after questions arose about the relationship between the Galvan Foundation and the for-profit Galvan Partners LLC as the nonprofit began its push to secure PILOTs for the two proposed apartment buildings. 

Rosenthal introduced a resolution supporting the PILOT for Galvan’s proposed affordable apartment block, which promises 67 units — including one-bedroom apartments with monthly rents between $580 and $1,375 —  but rejected the PILOT for the apartment block with middle-income rents.

The resolution also alleged there was “a potential, ongoing, and significant conflict of interest” in the Galvan Foundation due to its use of Galvan Partners LLC as "its sole construction manager and general contractor for building projects in Hudson since 2004.”

After the resolution was introduced, the Common Council received a scathing seven-page cease and desist letter from Galvan’s attorneys, the prominent firm Whiteman Osterman & Hanna, that called the resolution “nothing more than a defamatory and unfounded personal attack on the Foundation and Mr. Galloway.”

Among other points, it noted that the proposed projects would be handled not by Galvan Partners but by a Poughkeepsie-based firm, R.L. Baxter Construction, and that the Galvan Foundation wasn't founded until 2012.

The letter demanded that Rosenthal and any other council members who made such statements recuse themselves "from any deliberations or discussions" about Galvan's projects in the future, and that the Common Council scrap the resolution.

The resolution was withdrawn by Common Council President Thomas DePietro before a vote was held.

This is Galvan’s second attempt to build an affordable housing block. In August 2020, Galvan abruptly withdrew its application for a PILOT and mothballed the project during its negotiations with the Common Council.

The council had voted down an earlier version of the proposed PILOT the month before, after which Galvan adjusted the terms of the tax breaks before ultimately withdrawing it.

“We cannot continue to risk precious foundation resources on this initiative until the city provides clear guidelines on the standards and requirements for supporting affordable housing,” according to a letter Galvan Vice President Dan Kent sent to the council at the time.

First Ward Alderwoman Jane Trombley said the current housing project was “essentially no different” than the withdrawn PILOT proposal that was presented to the Common Council.

She compared Galvan's decision to put the PILOT requests before the Industrial Development Agency as “sort of like, ‘Mommy said no; I’ll go ask Daddy.’” 

Trombley said she was not in favor of either of the current PILOT proposals because, in her estimation, many of the apartments would be unaffordable to most Hudson residents.

Rents on both apartment blocks would be decided as a percentage of Area Median Income (AMI), which is set by the U.S. Office of Housing and Urban Development. Seventeen of the units in the less expensive block would be affordable to someone making up to 40 percent of the AMI, with rent for a one-bedroom set at $580 a month. Other apartments are priced for those making up to 50 or 80 percent of the AMI, with 21 apartments considered "middle income" for those making up to 130 percent of AMI, which comes out to $1,375 for a one-bedroom unit.

Rents in the more expensive building would come to between $1,159 and $1,375 for a one-bedroom unit.

The AMI amount used to calculate rents in the proposed projects, however, takes into consideration incomes from Columbia County as a whole, which are on average higher than income levels in Hudson.

Though not a perfect equivalent, census data lists the median household income in Columbia County as $66,787, while the median household income for Hudson is $39,346.

The nonprofit Galvan Foundation employed its for-profit affiliate on a construction project as recently as this year.

The Galvan Foundation used the for-profit Galvan Partners LLC, which that lists Eric T. Galloway as its principal, as its general contractor for the project, according to the minutes of a meeting by the state Housing Trust Fund Corporation (HTFC).

The HTFC was considering giving a state grant of $1.15 million to Galvan to turn the basement of Hudson’s public library — which Galvan already owned — into a day care center. 

The 2019 HTFC grant application states Galvan Partners LLC "serves as construction manager" for the Galvan Foundation. (The grant was awarded.)

Galvan Foundation Vice President Dan Kent said Galvan Partners LLC provides its services to the Galvan Foundation on a no-fee basis, and that neither Galvan Partners nor Galloway made any money from the arrangement.

Albany Law Professor David Pratt reviewed copies of the HTFC minutes and other publicly available financial documents along with his colleague Professor Ted Barbieri at the request of the Times Union. They concluded there is no “absolute prohibition against a nonprofit hiring a contractor with which it has some relationship.”

“However, that would generally require that the relationship be fully disclosed to the board of the nonprofit, and the nonprofit would also have to comply with whatever is required by its conflict-of-interest policy,” Pratt said.

The board of the Galvan Foundation consisted of just Galloway and van Ameringen the year it applied for the $1.15 million grant, according to 2019 tax filings.

Though the relationship between the Galvan affiliates during the day care project was legal, Pratt said the “basic question” the documents raised was “whether it was prudent of them to give the contract to the affiliated for-profit corporation — did they pay too much, did the corporation have the capacity to do the job well?”

In response to questions by the Times Union about the relationship between its for-profit and nonprofit affiliates, Kent pointed to Galvan’s charitable work. The scores of properties now owned by the Galvan Foundation were mostly purchased by for-profit affiliates, including Galvan Partners LLC, before being gifted to the nonprofit. 

The foundation also contributes money through its charitable trust, which gave out about $174,000 in 2019, according to its most recent available tax filings, though $100,000 was donated to other nonprofit Galvan affiliates. The remaining $74,000 was contributed to 15 other organizations, including $1,000 to a Civil War cemetery in the Bronx and $500 to a Boy Scout troop in Newburgh.

Kent also sent a sheet on Galvan’s work in Hudson that highlights the 225 units of housing they have rehabilitated in the city. The units are either rented out or sold after construction is complete.

Political opposition towards Galvan is far from universal in Hudson. Common Council President DePietro took the middle road, saying he would form an opinion on the PILOT based on an independent financial analysis being undertaken on behalf of the IDA.

DePietro said he realized the necessity of PILOTs for affordable housing projects.

“We’ve looked into it, and there’s almost no developer ... that is going to build affordable housing at any level of AMI without a PILOT,” he said.

The independent analysis of the PILOTs came back last week and was discussed at Wednesday's meeting of the Hudson IDA. The analysis found the terms of one of the PILOTs was unnecessarily favorable to Galvan and suggested a new PILOT schedule that decreased the total property tax breaks from $8.9 million to $8.4 million.

The IDA passed a resolution adopting the new PILOT schedule, which Kent said the foundation would agree to.

The agency has yet to vote on formally accepting the PILOT, a decision that will be made after a public hearing tentatively scheduled for Aug. 8.

Note: This story has been updated to correct the misspelling of Hudson Common Council President Thomas DePietro's surname.