How To Steal A Building, A Primer

Promises Made To A Financially-Strapped Catholic Fraternal Organization That Cannot Be Kept

First Some Background:

The Knights of Columbus owns its building at 56 West Broad Street in the Village of Haverstraw through a non-profit holding company set up to hold title to the building for the Knights’ benefit. Members of the holding company are members of the Knights, including the Grand Knight and four other high-ranking members. The holding company has the right to dispose of the property by a vote of its board and with the approval of either the New York State Attorney General or the Court.

Last year, the Knights voted unanimously to sell their land and building to a Westchester-based affordable housing developer for $2.4 million. Part of the deal entitled the Knights to a $1/year lease in the new building for as long as they wanted to remain. The developer would build about 100 units of affordable housing, construct a parking deck on Village-owned land, and continue to provide space for community use in the new building. The Knights of Columbus would have a permanent home in the new building and have more than $2 million available to it to continue its charitable and religious missions.

The development team held a series of meetings with the Knights addressing the questions and concerns raised. The Village was supportive of the project. A LOI (letter of intent) was executed. Contracts were drawn up and ready for signature. But, there was a change in the leadership of the Knights. A new Grand Knight took the place of the former Grand Knight who had led the original negotiations with the affordable housing developer.

Town of Haverstraw Steps In:

The new Grand Knight and the Haverstraw Town Supervisor opened a dialog about the pending deal. The Knights were in financial trouble, struggling to pay its bills or meet its expenses. In a series of meetings held with Town officials in private, a new deal was hatched. The Knights’ holding company would scrap the $2.4 million dollar deal with affordable housing developer and enter into a series of agreements with the Town of Haverstraw that would: (1) provide the Knights with a short-term financial boost to cover all of the Knights’ ongoing expenses; and (2) result in the Knights donating its property to the Town of Haverstraw. The donation was subject to approval by the New York State Attorney General Charities Bureau which is charged to make sure that non-profit organizations that disgorge themselves of their main assets receive fair market value for their property.

First, the short-term financial boost. The Town of Haverstraw had been paying the Knights about $2,500 per quarter ($833/month) for the Town to use part of the Knights’ building for meetings with seniors. The new short-term deal boosted that rental amount to $7,000 per month (an 840% increase) for the same use, and although the agreement was hatched in June of 2024, the Town agreed to pay the rent retroactive to January of 2024. Payment was made in one lump sum to cover the back rent and payments continue going forward. The payments cover all of the Knights’ expenses from phones, water, electric, insurance, pest control, landscaping, insurance and most importantly, property taxes due back to the Town. (Should the NYS AG’s office reject the donation, the rent would automatically reset from $7,000 per month down to $2,000 per month.)

The donation would be from the Knights’ holding company to the Town of Haverstraw but the terms of the deal provide that the Knights could remain on the property in perpetuity, but its occupancy would be limited to its office, conference room, and a storage closet. The deal also allowed the Knights exclusive use of other parts of the property on a detailed schedule but precluded the Knights from allowing third-parties to use the space for a fee.

In other words, the Town would own the building as municipally-owned property and provide exclusive space in the town-owned property to the Knights, a Catholic fraternal organization. The Town would pay all of the Knights expenses. And, to make sure that the deal would go forward, the Town selected, hired and paid for both a law firm and a lobbying firm (at $400 an hour) to advise and represent the Knights in its application to the Attorney General.

The town also agreed that the Knights could continue to display their religious regalia on the property after the town takes title.

Here's The Problem:

A municipal government can neither fund nor provide exclusive space in perpetuity to a religious organization in a town-owned building. A town cannot pay an inflated rent to a religious organization as a subsidy to facilitate its religious mission and operating expenses. A town cannot provide an exclusive arrangement to one religion to display religious regalia, nor can it provide sanctuary to a chosen religion over others on town-owned property.

The Knights are walking into this deal (donation) with the Town under the mistaken belief that it can have all of these things in the future – free space in perpetuity, exclusive rights to hold events, the ability to display its religious regalia, payment of its expenses, its lawyers and lobbyists paid for by taxpayers, and an inflated subsidy conditioned on Attorney General approval.

The law is pretty clear that government cannot fund religious organizations or provide them with free space in government-owned buildings. The government cannot prefer Catholicism over other religions in the use of a town-owned building. The government cannot use taxpayer dollars to pay lawyers and lobbyists for a Catholic fraternal organization.

If the Attorney General approves the donation, it will only be a matter of time before a suit is brought by taxpayers or residents of Haverstraw objecting to government support of a religious organization.

The Freedom From Religion Foundation (ffrf.org - a national non-profit that advocates and litigates church/state constitutional issues) has already alerted the Town of Haverstraw to its violation of the law and demanded that the Town rescind the donation. Evidence has been provided to the FFRF showing the details of the Town’s financial support for the Knights. Copies of text messages between Town Supervisor Howard Phillips and Grand Knight Joe Vargas have been shared with FFRF counsel. The lawyers hired by the Town to represent the Knights surely must see the problem. The Knights’ lawyer is either okay with the risk or unaware of it. If a lawsuit succeeds, the Knights will be ousted from the building, its religious regalia removed, its exclusive access revoked. It will have given away its building with nothing received in return and no recourse.

Had the Knights gone through with the deal with the affordable housing developer, it would have millions of dollars to pursue its charitable purposes and space in perpetuity. The Village would have had a valuable property on its tax rolls and a new parking deck. The community would have had public space and new desperately-needed affordable housing units.

The only winner here is the Town of Haverstraw who has orchestrated the donation without regard to the future of the Knights, its religious and charitable purposes, or its continued viability as an organization. The Knights will be the losers. So will the Village of Haverstraw which will lose much-needed affordable housing in the Village.

That’s how you steal a building – by making fuzzy promises that cannot be kept. Taking advantage of a financially-strapped organization with short-term funding. Misusing taxpayer money – knowing that in the end of the day, a court will be blamed for upholding the law. Town officials will say that they didn’t see the separation of church and state issue, and of course there is nothing that it can do about it now.

The only hope for the Knights is that the Attorney General, Charities Bureau sees the folly of the deal and rejects the donation – seeing that the Knights are getting less-than-nothing for their donation.

That’s how you steal a building.