Speaking out on Westbeth board of directors secrecy
By Carl Stein
The article on Westbeth in the Oct. 19 issue of The Villager (A.G. looking into conflicts complaint at Westbeth) provides an excellent summary of a 35-year saga. Based on my 15-year association with this landmark center for the arts, I would like to add some background and to correct one implication of the story. This history is important because the issues which are now before the A.G. are directly related to fundamental changes in the board structure which occurred in 2003.
The controversies which shook Westbeth in the 70s and 80s were largely the result of having a relatively disinterested board of directors, a secretive management company and key building staff members who were incompetent at best and possibly dishonest. In the late 80s, pressure from within the building encouraged a total reformation of the board, the organization on which I had the honor to serve. Together we achieved some remarkable successes. Working only with the revenues generated by the rents, we brought the building out of default. We lowered operating costs and created an operating structure in which the management company reported to the entire board at each meeting, approximately every six weeks. Most important, we made significant strides in reestablishing a positive relationship between the board and the Westbeth community.
This is not to say that everyone in Westbeth agreed with the boards actions or, for that matter, that there was unanimity within the board. There was a significant history to be overcome. Further, at times the board had to make decisions based on a view toward the long-term well-being of Westbeth rather than the residents immediate preferences. A fundamental criterion was establishing a balance between maintaining affordable rents and insuring that Westbeths bricks and mortar (and roofs, and windows and elevators, etc.) would be around for the next generation of artists. We worked in a context of rising prices for energy, fuel, supplies, wages and taxes, all of which impacted Westbeth. This was also a period of great change in the West Village.
We sought to shield the Westbeth community from the pressures of real estate development and opted for a pay-as-you-go approach to building upgrades, reducing long-term obligations and maximizing options for subsequent generations.
One of the first actions of the reformed board was to hire a new management company, one with a longstanding commitment to low-cost, affordable and HUD-sponsored housing. One of their primary responsibilities was to prepare a summary of all relevant issues for each board meeting. Service on the board was entirely voluntary and levels of involvement varied depending on outside commitments; however, everyone on the board had access to all building data. Activities of committees or individual members were reported and discussed and, if necessary, voted on. All significant expenditures were reviewed and approved or rejected by the board. Management, with its deep experience in HUD housing, worked proactively to alert the board to programs both HUD and private which could potentially offset certain building costs. When the board adopted positions, it did so as an informed body. I raise this to contrast my experience during the 12 months between when I stepped down as president and when I resigned from the board, and especially to correct any impression that the ouster of Christine Maile, Jack Davidson and George Cominskie was because they were simply disgruntled. The issues were far more profound.
At the end of 2002, I stepped down as president of the board and Ben Green was elected. In the spring of 2003, the board undertook a major recruitment effort, and that summer, eight people were nominated. A number of the board members including myself expressed concern that if all of the nominees joined the board at one time, a majority would have little or no experience with the operations of Westbeth. Despite our concerns, all were elected. Also at that time, virtually all of the boards functions were placed into committees.
Because so many of the activities of Westbeth were interrelated, I suggested that there be a transitional period in which the committees would operate together, thereby insuring that each knew what the others were doing. Although this would have been inefficient in the short run, it would have allowed all of the committees, and particularly the new, inexperienced members, to understand how their activities fit into the whole. This was rejected with Mr. Green stating that he would be the liaison among the various committees since he, as president, sat on them all.
Within a month, several of us felt that we were being asked to ratify major decisions without being given the background necessary for an informed choice. We also learned that a number of actions affecting the financing, indebtedness structure and management arrangements had been initiated without notice to or review by the board as a whole. Even more distressing was the fact that some members of the very committees responsible for these activities had been kept in the dark while these activities were pursued by other members of the same committee. Requests for more complete explanations were rejected or ignored. It was during this period that Mr. Green insisted that all of the board members sign broadly drawn confidentiality letters.
At the same time, issues of potential conflicts of interest began to appear. One of these involved a board member who, it turned out, had an ongoing business relationship with a company being considered for a substantial contract with Westbeth. This was not disclosed to the board until five minutes before the matter came up for a vote and then it was with the admonition that immediate action was required. Under this pressure, the board voted to hire the company in question, although with significant dissent. While the company may have been qualified, a number of us were deeply disturbed about the process.
The selection of an attorney to represent Westbeth in its lease negotiations with New School University, as reported in The Villagers Oct. 19 article, had similar issues. Initially, several law firms were interviewed by an ad-hoc committee. The committee reported that they were not particularly enthusiastic about any of the candidates. At that time, I volunteered that I had been on the board of an environmental nonprofit with Martin Gold, an attorney specializing in real estate. I described to the entire board my relationship with Mr. Gold and recused myself from any discussions regarding Mr. Golds selection or fee. On Feb. 9, 2001, at the committees request, I introduced Mr. Green and another board member to Mr. Gold in the offices of Sidley Austin, Brown and Wood, then on the 56th floor of the World Trade Center. Shortly after that, Mr. Green and the rest of the committee recommended Mr. Gold to the board. Mr. Gold represented us throughout what developed into a protracted negotiation lasting until early 2003.
At some point after I had left the board, I learned that Mr. Green had been an employee of Sidley Austin while these negotiations were underway. I still dont know whether this was the case when the committee recommended Mr. Gold, or began during the period when Sidley Austin was representing us. In either case, that Mr. Green did not see fit to inform the board seems poor judgment at the very least. Although I feel that Mr. Golds services were excellent, this does not mitigate the problems with Mr. Greens undisclosed relationship with a company working for Westbeth.
The incidents cited here are representative of the conditions which led me, with strong regrets, to resign from the board at the end of 2003. I found it impossible to take part in a process where I was being asked to endorse major decisions without having access to important underlying facts. Other board members with similar views opted to stay and continue to seek change. My reason for reporting this history is to correct an impression left by your article. Stephen Levitt, the boards current attorney, is quoted as saying that the complaints about the board appear to have been authored by disgruntled former resident members
. This trivializes the level of concern of the vocal minority within the board, concerns which were repeatedly and unpopularly raised by board members Christina Maile, George Cominskie and Jack Davidson and which were the same concerns that led me to resign. Further, I believe that their continued outspoken objections to the practices of secrecy and factionalism brought about their ouster. In my 15-year experience with the board, these were three of Westbeths most involved and hardest-working board members. They were not a disgruntled faction harping on petty issues but rather committed and responsible board members raising fundamental concerns regarding the most basic principles of the operation of Westbeth.