Affordable Housing Institute : US

A price of fame is heightened scrutiny.  So it has emerged that UN Secretary-General Kofi Annan, who as a small perquisite of his job is provided a Sutton Place apartment rent-free, for many years maintained an affordable rental apartment on Roosevelt Island.  Or did he? 

 

Did he or didn’t he?

 

Tenacious Claudia Rosett, who’s made something of a specialty of plumbing the UN’s murkier depths, in a New York Sun article reveals that the Secretary seems to have hung on to an apartment to which by all rights he is no longer entitled, passing it along through his extended family:

 

As Secretary-General Annan prepares to leave his post at the United Nations, a mystery is surfacing surrounding his apartment on Roosevelt Island, subsidized by New York taxpayers, which is still in use by the family of his brother, Kobina Annan.

 

To me the story’s interesting not so much as it concerns the outgoing UN Secretary General, about whom most people have long since made up their minds one way or another, but rather because Ms. Rosett’s inferences are entirely plausible since the behaviors they describe are very representative of the practical challenges of designing and maintaining means-tested or income-targeted housing affordability, especially in tight markets like New York City:

 

The apartment was where Mr. Annan and his wife lived before 1997, when he became secretary-general.  The Roosevelt Island home is part of an estate of low-rent state-regulated housing.  

 

The whole complex was developed in the mid-1970s

 

For years, the Annans saved considerable sums by occupying an apartment meant to help financially strapped low- to moderate-income New York families.

 

One question Mr. Annan has never addressed is why he and his wife felt comfortable availing themselves of this generous arrangement.

 

This kind of apartment, part of a state-regulated housing development program called Mitchell-Lama, is subject to strict eligibility requirements, involving family size and financial ceilings on combined family income. There is also a requirement that the leaseholder make continuous use of the apartment as a primary residence.

 

Let’s consider the Annan apartment as a microcosm of the program design challenges, all of them arising out of two factors:

 

·         Affordability is a bargain to the lucky household, and householders like to give it to their friends.

·         An affordable tenancy lasts many years, during which household composition and income profile change.

 

More bedrooms needed

 

Initial certification and household composition.  Sustainable affordable housing does not exist in economic nature; it costs money, and the benefits conferred can be substantial:

 

The effective New York state subsidies for such an apartment appear to be large. Roosevelt Island sits in the East River, with a view of the United Nations. The residences are part of a quiet enclave with a riverside promenade, just a few minutes from high-rent Midtown. The apartment in question, a three-bedroom unit on the ninth floor, appears from the outside to have a river view looking out on Manhattan. At market rates, according to local real estate agents, a three-bedroom apartment on the island currently rents for about $4,500 a month.

 

A subsidized apartment, like the one linked to the Annans, rents for less than half that amount, or just under $2,000 a month.  While some allowance might be made for wear and tear, the current effective taxpayer subsidy for the Annan apartment could, by a conservative estimate, amount to upward of $10,000 a year, or even as much as twice that, which, over a decade, adds up to a significant sum.

 

When government funding is involved, most programs desire consciously to deliver the affordability to worthy (low or moderate-income) residents.  What constitutes the initial household, and how is the household’s income established? 

 

Mr. Annan and his second wife, Nane (Lagergren) Annan

She is an heir to Sweden’s famous Wallenberg family

 

Do household assets, or those of the extended family, count in the income eligibility determination?  Under most HUD programs, spousal income counts but family assets do not.

 

Over-income residents.  Once a resident has moved in, his or her family circumstances may change, and the breadwinner may secure a promotion.  Mr. Annan has worked for the UN since 1962, most of that time in New York:

 

Telephone records show that Kofi Annan first moved into Mitchell-Lama housing around 1978, which suggests that by the time he moved out in 1996, he may have secured state subsidized rental rates for himself for a period as long as 18 years — depending on what he did with the apartment while working in Switzerland for part of the 1980s.  

 

Due to Mr. Annan’s hard work and good fortune, his income rose:

 

New York telephone directories show Kofi A. Annan listed at the Roosevelt Island address, [Island House — Ed.] 575 Main Street, as far back as 1978, with the phone number 212-759-5576. For some years in the 1980s, he worked for the United Nations in Geneva, Switzerland.

 

Island House, 575 Main Street, New York

 

And his household composition also changed:

 

He married his second wife, Nane [Lagergren] Annan, in 1984 and returned with her to New York. He then appeared in the New York telephone book at the same Roosevelt Island address, but with a different listed telephone number, 212-355-6938, through 1992. Then Kofi Annan’s name disappeared from the directory — about the time he was promoted from U.N. financial management to peacekeeping, where in 1993 he arrived at what was then the world body’s second-highest rank of undersecretary-general.

 

Throughout these moves, including these lengthy postings abroad (e.g. Geneva), Mr. Annan apparently remained a Roosevelt Island resident, until he became Secretary General in 1997, when he moved into the rent-free 14,000-square-foot Sutton Place apartment.

 

Transfers of tenancy.  Once Mr. Annan moved out, shouldn’t the apartment have reverted to the next eligible waiting-list resident? 

 

Those low- to moderate-income New York families for whom such accommodation was built face a four-year waiting list [for Mitchell-Lama apartments].

 

It’s certainly a valuable rental space:

 

Over the decade since he moved out, this reporter suggests that a conservative estimate of the effective New York taxpayers’ subsidy for whoever has held the lease there during that time would add up to well over $100,000.

 

Yet even today it appears that a member of Mr. Annan’s extended family lives there:

 

Another is how it is that, since Mr. Annan and his wife left that Roosevelt Island apartment 10 years ago to move into the rent-free residence on Sutton Place supplied to the secretary-general, their former low-rent apartment was handed over to be occupied by the family of Mr. Annan’s brother.

 

Exact details are hard to come by. Mitchell-Lama authorities, while willing to disclose rental rates, said the identities of individual leaseholders are confidential.  The various Annans involved, including the secretary-general, his brother, and his sister-in-law, have refused to answer all but a few questions related to the apartment.  Queries to Kofi Annan’s U.N. office asking for such details as whether and when he gave up the lease and how the apartment passed to his brother’s family elicited no reply beyond an email from the secretary-general’s spokesman saying Mr. Annan “has always lived within his means” and that during Mr. Annan’s many years in New York, “he has always been a law-abiding resident.”

 

Not exactly helpful or responsive.

 

 

Does that answer your question?

 

[Mr. Annan’s brother] Kobina Annan, reached last week by phone at the Ghanaian embassy in Rabat, Morocco, was briefly willing to talk, saying, “That’s my apartment. I still live in New York, and I go on and off.”

 

He added: “While I’m not there, my son lives there.” But when then asked how long he had held the lease, he abruptly hung up.

 

At the time of that conversation, the ambassador’s wife, Ekua Annan, was in Ghana, according to an assistant who put through the call to the ambassador. But shortly after Kobina Annan hung up the phone, Ekua Annan called to say her son, Kobina Annan Jr., lives in the apartment, that she is the leaseholder, and that she is “in the U.S. every one to two months.” Asked when and how she obtained the lease, she, too, hung up the phone.

 

A call that same day to a number currently listed in a New York telephone directory for Ekua Annan at the Roosevelt Island apartment was answered by a man who refused to answer any questions and quickly hung up the phone.

 

Don’t hang up the phone when Claudia Rosett calls …

 

Ms. Rosett’s article then connects various other documents related to the Oil-for-Food scandal into inferences that Mr. Annan has maintained his residency throughout.  Still, it’s conceivable that he and his wife were living there with Mr. Annan’s brother and his wife:

 

Mitchell-Lama regulations specify that in some cases a lease may be turned over to family members such as a brother or sister-in-law if they have lived continuously for two years previous to the handover in the same apartment, using it as a primary residence. Before moving out, did Kofi and Nane Annan share their Roosevelt Island apartment full-time between 1994 and 1996 with Kobina or Ekua Annan?  If so, this information has not surfaced in interviews with either Kofi or Nane Annan to date.

 

Over-housing.  Even as household configurations change, so too change the number of people in the household.  Under most programs such as Section 8 vouchers, changes in household size occasion a change in permitted apartment, and when households are becoming larger, the family typically can in to a new larger unit.  When the household shrinks — children move away from home, say, or a couple divorces — administration seldom catches up.  Many tenants become ‘over-housed,’ occupying space to which they would not be entitled on move-in but which nobody is asking them to vacate:

 

The questions multiply. Did Kofi Annan ever give up the lease on his old Roosevelt Island apartment?  If he did, how did it end up in the possession of his brother’s family?  Why does the nephew appear to be the chief occupant today of an apartment that under Mitchell-Lama guidelines is meant for a low- to moderate-income New York family of between 5 and 6 people?

 

Nobody’s talking

 

Ms. Rosett is understandably both skeptical and deeply cynical:

 

Mr. Annan, after announcing a new policy of U.N. financial disclosure as part of his reforms over the past year, has refused to disclose to the public his own financial records. When Paul Volcker’s investigation into the U.N. Oil-for-Food scandal took a confidential look at Kofi Annan’s financial affairs last year, investigators declared them clean. But Mr. Volcker provided almost no specifics, releasing none of the underlying documents.

 

Unfortunately for those of us who care about affordable housing, one can observe that in systems with a restricted supply of cheap apartments whose occupants are not actively means-tested, there is a discouraging tendency for the apartment to migrate from the needy to the politically or socially connected. 

 

The enclave is known for its heavy concentration of U.N. staff, many of whom receive U.N. housing allowances on top of whatever savings they might enjoy at the expense of New York state taxpayers. One of Kofi Annan’s former special advisers, Italian businessman Giandomenico Picco, lived on Roosevelt Island in the late 1990s, and documents seen by this reporter, including a power of attorney, show him at 531 Main Street, another Mitchell-Lama building, until at least until 2001.

 

Although much of Roosevelt Island is dedicated to low- and middle-income housing, many of its current residents are U.N. employees or foreign diplomats.  Among them is a recent influx of North Korean diplomats, who have been seen on the island in cars bearing official emblems of the communist state.

 

It becomes another perk of membership in the incumbents’ club.  Small wonder that some New York Republicans wasted no time in fulminating:

 

State and city legislators have expressed outrage over the Annan family’s use of the Roosevelt Island apartment — which Mr. Annan lived in before becoming U.N. secretary-general 10 years ago — calling it “corrupt” and “unreal.”

 

Years ago, when Cambridge had rent control, its opponents delighted in pointing out that the then-mayor (Ken Reeves) lived in a rent controlled apartment, as did the Crown Prince of Denmark. 

 

Ken Reeves, the mayor of Cambridge until 1994, who used to advertise his rent-controlled status on his campaign literature, was still living in the apartment he rented as a Harvard law student in 1973.  [Another example of extended tenancy across improved financial circumstances. — Ed.] He finally bought a home when rent control was abolished.

 

Even worse for rent-control defenders, once these individuals were pointed out, they were stout in their defense of their right to occupy under the rent control system, which only increased voter antipathy in western Massachusetts town.  Something similar might happen here:

 

No one is saying that any of the Annans have broken the law; the regulations for Mitchell-Lama housing allow a certain amount of flexibility once applicants have obtained a lease. But the issue is pertinent because Kofi Annan, whose wife comes from one of Sweden’s wealthier families, has spent years lecturing Americans on how the well-heeled have obligations to those less fortunate.

 

I do think that those who have more have a moral duty to help others — and those in power have a moral duty to be upright.

 

Purer than Caesar’s wife

 

This makes obstructive and evasive answers all the more depressing:

 

The Sun sent a list of detailed questions about the apartment for yesterday’s article, but Mr. Annan’s spokesman, Stephane Dujarric, limited his response to two blanket statements. The outgoing secretary-general “has always lived within his means,” Mr. Dujarric said, and during his many years in New York, Mr. Annan “has always been a law-abiding resident.”

 

A final depressing coda.  Even as Mr. Annan was as a parting gift signing new regulations tightening UN procurement procedures:

 

UNITED NATIONS — In his last U.N. press conference, Secretary-General Annan yesterday sidestepped a question about how the lease of a sought-after low-income residence he once lived in came to be held by a member of his family.

 

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