PUBLIC TESTIMONY
Testimony by Pat O'Connell on Private Equity Involvement in Homeless Shelters
3:07:28
·
129 sec
Pat O'Connell, a resident of the Upper West Side, testified about the concerning involvement of private equity firms in the homeless shelter system. He highlighted how these firms are making substantial profits from city-funded shelter contracts, potentially at the expense of effective shelter services.
- O'Connell provided a specific example of a building sold for $15 million, where a private equity firm stands to make $28 million over 9 years.
- He emphasized that this practice is occurring in multiple locations, with some firms potentially making hundreds of millions of dollars.
- O'Connell urged the council to consider this "elephant in the room" when addressing issues in the shelter system.
Pat O'Connell
3:07:28
Thank you very much, council member Brewer and all other council members for the hearing today.
3:07:33
My name is Pat O'Connell.
3:07:35
I've been living and working in New York City for 41 years.
3:07:39
Currently live in the Upper West Side here representing a number of neighbors who are on the street, where an old school building was recently purchased by a private equity company that is starting to make tens of 1,000,000 of dollars on a small investment.
3:07:55
So the way I see the problem is what I call an arm's length relationship between the city and these private equity funds.
3:08:03
So my heart was breaking today when I heard, the commissioner as well as this lady here, you know, the people about the challenges in the health or in the shelter business, I should say.
3:08:15
But I think we're not really discussing what the what I call the elephant in the room, which are that some of these private equity fund, firms making, you know, collectively 100 of 1,000,000 of dollars.
3:08:26
So specifically, would I mention any company or any place, but you have a combination of, real estate companies selling buildings to private equity companies under one guise, and then the private equity company does a deal with one of the shelter providers.
3:08:43
And in this particular case that I'm talking about, the building was sold for 15,000,000.
3:08:50
The private equity company put on 5,000,000 with a, mortgage of 9,600,000 and they're gonna stand to make something like 28,000,000 in 9 years.
3:09:01
So not only will they get the pay off their mortgage, they'd also be able to, you know, get back their investment, but they're making, you know, essentially $28,000,000 and 5,000,000 investment.
3:09:13
As best we know, this company is doing this in multiple places in the city.
3:09:19
So this one private equity firm stands to make 100 of 1,000,000 of dollars.
3:09:25
And I don't blame anybody here, but it's a case of inadvertently the city is giving money into private hands.
3:09:32
So I would just ask you to think about that as you look at other issues.
3:09:35
And thank you very much for your attention.
