Archdiocese Cleans Up on $24 Million Deal Near Grand Central

Last spring, Kevin Haggarty got a phone call from a priest. Like any good Irishman, he took it.

The voice on the line belonged to the Reverend Monsignor Eugene Clark, the pastor of the Church of St. Agnes, on East 43rd Street near Grand Central Terminal. Mr. Haggarty is an executive managing director at the real estate brokerage Insignia/ESG’s Capital Advisors’ Group.

Msgr. Clark had a business proposition. Over lunch with Mr. Haggarty, he explained that his parish had once operated a boys’ high school out of a six-story building behind the church, facing 44th Street. The school moved uptown in 1990, and the building had been converted into a drop-in center for the homeless, operated by the Grand Central Partnership.

“He asked, ‘Is there a development play here?'” Mr. Haggarty remembers.

Was there ever.

With the midtown real estate market “as hot as a pistol,” as Mr. Haggarty put it, the priest and the broker formed an unlikely partnership that would make the Archdiocese of New York and the church $24 million richer. It also provided the developer Adam Rose a prime site for a new 48-story luxury apartment building.

What it didn’t provide was space for a homeless drop-in center run by the Grand Central Neighborhood Social Services Corporation. Last spring, Msgr. Clark broke the news to Jeff Grunberg, the center’s executive director. The group had been paying $100,000 a year to use the former school building. The center for the homeless would need to find a new home.

A year later, it’s still looking.

The same booming real estate market that fostered the St. Agnes–Rose deal is preventing the homeless center from finding suitable and affordable space in the neighborhood. And lest this sound like just another top-of-the-market sob story: Mr. Grunberg believes his dilemma is, in part, one of his own making.

“I like to think that our work allowed for the renaissance of midtown,” Mr. Grunberg said. “Remember, in ’88 and ’89 there were hundreds and hundreds [of homeless] living around the terminal.”

Since the school building came down, the homeless center has been operating out of cramped temporary quarters in St. Agnes’ church basement. Meanwhile, Mr. Grunberg has looked at more than 100 properties and gotten plenty of advice from board members of the Grand Central Partnership, which includes some of midtown’s biggest landlords. “Everyone’s a real estate agent,” he said. Still, he hasn’t found anything.

“Homeless people,” he said, “don’t tend to shop in the sushi bars.”

St. Agnes has tried to be accommodating but frankly, the Rose family made an offer the church couldn’t refuse. According to Mr. Haggarty and others from the parish, the church’s share of the money-about $6 million-will be used to replenish church coffers left bare by a 1992 fire which burned its old red-brick church to the ground. It has since been rebuilt in limestone.

The school building, which, according to the church, was erected in 1892 as a grammar school, was demolished last fall. Mr. Rose and his partner, the Benenson Capital Company, have already poured the foundation for their 361-unit apartment building, the Lexington Belvedere.

Church officials would provide no details of the deal. Told that Msgr. Clark was the only person authorized to speak on the record, The Observer placed half a dozen calls and visited the rectory. On May 26, a secretary said Msgr. Clark was out of town for several weeks and could not be reached. Nonetheless, he said Mass on Sunday, May 28. Joseph Zwilling, a spokesman for the Archdiocese of New York, said he would not comment on an individual church matter.

Mr. Rose, through a spokesman, also declined to comment.

Sales Opportunity

A decade ago, when the St. Agnes Boys Catholic High School, its enrollment well below the aging building’s capacity, moved to 555 West End Avenue, at 87th Street, the church tested the real estate waters. The response was tepid. Part of the problem was a glut of residential and office space at the onset of a recession.

Part of the problem was the neighborhood itself. Grand Central was a dump. Vagrants were everywhere. In 1987, a young homeless woman had shot herself on the church’s steps.

Instead of selling, the church allowed the newly established Grand Central Partnership, which was already running programs for the homeless in the evenings out of the building, to take it over full-time.

The center has since become the largest of its type in the country, Mr. Grunberg claims, catering to 200 to 300 of the streets’ hardest cases every day. But since the church sold its old building, it has been operating out of a space in the church basement less than one-fifth the size.

“We’re not happy campers, but we’re camping,” Mr. Grunberg said recently at the center. It was dinnertime, and the room was hot and crowded. A handful of men and women sat at plastic dinner tables, eating lo mein off paper plates. A few dozen more sat in plastic chairs lined up before a giant-screen television set. Many were nodding off, or asleep. The Knicks game would be showing on the television later, Mr. Grunberg said.

“I’ve got to believe that with the value we have to the community, we’re going to get the help we need to get resettled eventually,” he said. “Nobody wants to see homeless people back on the streets of midtown, least of all us.”

In contrast to city shelters, which require that boarders be evaluated, separated and sent to locations as far away as Camp LaGuardia in Orange County, the drop-in center offers a convenient place for the homeless to sit down-no beds, just chairs-get a warm meal and while the time away.

Since virtually no one is refused, the center tends to be populated by those who are “screened out” of other programs, administrators say: drug abusers, the mentally ill, the antisocial.

“We like to call them the young and the restless,” said Brady Crain, the program’s associate director.

Consequently, the old school building housed centers for drug and alcohol treatment, mental and physical health care, even legal services, though many of the services left or scaled back since the move to smaller quarters.

“We solved the riddle,” Mr. Grunberg said, of helping those homeless who resist help. “In the end, homeless people go into the programs they want to go into.”

The approach has earned it plaudits from conservative groups like the Manhattan Institute. But on the streets, the center was nicknamed St. Madness or St. Agony. And homeless advocates have criticized it for warehousing, not helping, the homeless.

Five years ago, the Coalition for the Homeless sued the group, claiming it didn’t pay minimum wage to homeless workers whose labor the partnership contracted out to local businesses, and said the group employed homeless “goon squads” to clear vagrants out of A.T.M. lobbies and other public places. A federal judge found the Grand Central Partnership owed hundreds of thousands in back wages; the group recently appealed the decision. As for the goon squad claim, Mr. Grunberg called it a lie.

An organization prospectus offers the center’s side of the story: In more than 10 years, 800 clients have secured permanent housing, 2,000 transitional housing and 400 have gotten full-time jobs.

“This is a good place, it helps a lot of people, it attracts a lot of people,” said one client, Ronald Shelton, who was on the street for six years before recently finding housing in the Bronx.

Even Mary Brosnahan of the Coalition for the Homeless said “the drop-in centers play a vital role.

“I find it completely scandalous that people with these types of resources collectively,” she said, referring to the partnership’s board, “cannot come up with some kind of space for these people to relocate.”

Mr. Grunberg said a number of plans are being considered, including moving some facilities to Harlem, where rents are cheaper. But he resists.

“We have to be close enough to the terminal that people can come in,” Mr. Grunberg said. But finding the right space at the right price, he said, “means the opposite of peanuts-gold nuggets.

“Monsignor Clark would like us out, I think, yesterday,” Mr. Grunberg said, “but he’s had a lot of patience.”

Indeed, the church delayed closing the sale for several months while the partnership looked for new space, offering its basement when it could no longer wait.

Tough Negotiator

The church’s decision to sell, according to Mr. Haggarty and others involved in the decision, was born of circumstance and economic necessity.

On the afternoon of Dec. 10, 1992, an electrical short in St. Agnes’ organ set off a fire that swept through the old Norman Gothic church. A throng of parishioners and gawkers, including John Cardinal O’Connor and Mayor David Dinkins, gathered along 43rd Street to watch as stained glass shattered and the church was devoured by flames.

The church was founded in the 1870’s to cater to the families who were settling around the railway terminal Cornelius Vanderbilt was erecting at 42nd Street. When skyscrapers replaced apartment buildings, St. Agnes’ found a new identity as New York’s “commuter church,” offering quick masses to the white-collar faithful. These days, St. Agnes draws about 800 churchgoers on weekdays, almost as many as it does on Sundays.

Its heyday probably occurred in the 50’s, when the Good Friday sermons of Archbishop Fulton J. Sheen, the Emmy-winning television preacher, drew thousands to 43rd Street to listen on loudspeakers. The strident anticommunist, a supporter of Franco and an opponent of Freudian psychology, died in 1979. Supporters are now pushing him as a candidate for sainthood.

But in the 80’s, as the neighborhood faded, so did the St. Agnes Boys Catholic High School. The church looked to unload the simple brick building, said Carol Pieper, district manager for Community Board 6 for 12 years. “This has always been imminent.”

Msgr. Clark made his move at the top of the real estate market. Mr. Haggarty said there was great interest, given the prime location and bonus of church air rights, amounting to about 280,000 buildable square feet. Would-be buyers found a surprisingly able negotiator in Msgr. Clark, Mr. Haggarty said.

“It didn’t take very long before all of a sudden you’d see from their body language that they were thinking ‘We’re not dealing with Barry Fitzgerald here from the old Bing Crosby movie,'” Mr. Haggarty said, referring to Going My Way .

The church settled on Mr. Rose’s family, Mr. Haggarty said, in part because of the family’s tradition of philanthropy. Frederick Rose, Adam Rose’s father, who began negotiating the deal and died in September just after it closed, gave generously throughout his life; the American Museum of Natural History’s new planetarium is named for him and his wife.

“We had to bring it past the Cardinal and everyone else, and everyone was very comfortable with who they were,” Mr. Haggarty said. “Plus, they were the best price.”

“We got a great price for the whole property,” said the Reverend Monsignor Florence D. Cohalan, a nonagenarian priest in residence at the church.

The $24 million, parish sources said, will be split among the archdiocese, which gets half, and St. Agnes Church and high school, which each get a quarter. The church’s share will go toward recouping some of the costs of rebuilding from the fire.

The church opened its new building, to the blessing of Cardinal O’Connor, in 1998. The $5 million limestone structure, funded in part by insurance money, in part by private donations, was built in the Italian Renaissance style and features high-vaulted ceilings, frescoes and chandeliers salvaged from the old church.

On Memorial Day, the Rev. Kazimierz Kowalski, clad in vestments of white and gold, celebrated Mass there before 50 or so faithful. When it was time for his sermon, he strode to the pulpit and opened an atlas to illustrate the journeys of St. Paul through Turkey and along the Aegean.

As he spoke, a man with a scraggly beard, wearing an ill-fitting blue sweater, a green stocking cap and earphones, swayed. Afterward, the man took Communion, crossed himself and disappeared into the streets.