EXHIBIT I

News

May opening date likely for BRC 25th St. facility

BY WINNIE McCROY
Published: Wednesday, March 9, 2011 1:38 PM CST

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The spring opening date of the Bowery Residents Committees 12-story vertical campus facility at 127 W. 25th Street will likely not be hampered, despite a recent request from City Council Speaker Christine Quinn that the project not move forward until all lawsuits are resolved and public reviews are complete. I dont want to leave the impression that we are moving forward without being mindful of the fact that we need to talk with the community about this, but our partners [BRC] have had extensive discussions with the Speakers office, public hearings on the project, and it has been an open and transparent process, said NYC Department of Homeless Services Commissioner Seth Diamond, the recipient of Quinns request. In a February 22 letter to BRC Executive Director Muzzy Rosenblatt and Commissioner Diamond, Quinn voiced some misgivings about the project, noted the ongoing nature of the citys SEQR/CEQR and Fair Share Review Act, and requested that the project stop until these issues were resolved. The lawsuit filed against the city and DHS remains unsolved. This creates a significant level of uncertainty about the future of this project, she wrote. Diamond did not see the lawsuit as an obstacle, saying, Judges have had the opportunity to stop it, and that has not happened. There is substantial community support for [the shelter], there is not unified opposition to it by any means, and I am encouraged by that, and have a very responsible provider who has met with members of the community and made modifications based on their input. In the letter, Quinn also shares her previously voiced opinion that a 328-bed shelter is too large for the neighborhood, and notes that the shelter under construction will not meet the DHS demands for winter housing. I ask that this project not move forward until the result of this lawsuit is clear and the public has had ample time to review the Environmental Assessment Statement, writes Quinn. Anything less would be an attempt to subvert transparency. When questioned about what exactly he thought Quinn meant when she requested that the project not move forward, Rosenblatt said, Im not going to comment on the letter. You should ask the person who wrote it. Asked whether Quinns request would alter his present timetable, Rosenblatt said, We are moving ahead with plans for opening in the spring, and we are making great progress. We look forward to a successful and smooth transition. On March 8, Rosenblatt told Chelsea Now that he expects the facility to be open in May. Interviewed on

February 24, Diamond cautioned that as with any construction project, any given time frame could be delayed. But, he said, I think this is the kind of project that advocates for the homeless have been asking for, one that integrates a variety of services and provides good programs for the people living in the shelter to get counseling and job training. I do not believe it will have a negative impact on the community. Daniel Connolly, lawyer for the Chelsea Flatiron Coalition (CFC), expressed misgivings with Diamonds statements that the community had been given ample time to review the project, and had given their overwhelming support. I would only say that the issues and concerns being raised by the community in connection with this proposed project need to be seriously addressed by DHS. And if not by DHS, by the courts, said Connolly. When questioned about whether he was surprised by how quickly Diamond had shot down Quinns request to stop the project, Connolly paused, then said pointedly, Im not commenting on that. Said Quinn, in a March 7 statement, In light of the pending litigation, I urge the Department of Homeless Services and the Bowery Residents Committee to wait for the result of this court action before advancing on this project. The project does have the support of some community groups, such as Save Chelsea and Chelsea West 200 Block Association. And Community Board 4 District Manager Robert Benfatto said that his organization also supported the shelter, with a vastly limited number of beds. If [Commissioner Diamond] used CB4 as an example of support hes right, but not as far as the number of beds. We said we support the shelter with 128 beds, and thats still the boards position, said Benfatto. Questioned as to whether he believed the shelter project had widespread community support, Benfatto said, The community is very broad and hard to define. If he means the community within a two-block radius of the center, then no we know they dont support it because they are suing. But I doubt people in other areas of the community even realize it is being built. Benfatto also restated CB4s wish to see environmental reviews and the Fair Share Review Act, saying, The board would like to see that done, and for there to be a public discussion of it before the opening of the shelter. That hasnt changed.

Lawsuits from both sides continue On March 1, lawyers for the BRC and CFC went before the commissioners of the Bureau of Standards and Appeals at 40 Rector Street to argue the CFCs claim, made in their lawsuit, that the Department of Buildings interpretation that the proposed use was a transient hotel. The CFC maintains that the shelter violates the areas M1-6 zoning district, which does not permit medical facilities. In a September 2010 Chelsea Now article, Rosenblatt noted that the DOB had ruled that the building was not a medical facility. Its a transient hotel. The Building Department has reviewed our plans and they are the experts and has determined that what we are building and what was designed has two components: a transient hotel component, and an office component. And so what weve designed is consistent with zoning regulations and building codes for a transient hotel and an office use. In that same article, Connolly explained that the BRC had created a firewall that split the building in two halves, with two separate entrances, with one side housing residential units for the 328 clients, and the other side housing the medical services, treatment facilities and substance abuse counselors. Although the BRC keeps talking about a fully-integrated vertical facility, the residences will use the definition of a Group 5 transient hotel, while the other side will work under the Group 6 professional offices, said Connolly in the article. They are calling them professional offices, but really they are Group 4 use medical offices, which are not permitted in this zoning area.

Much of the BSA hearing was spent defining this distinction, and determining whether any doorways connected the sleeping areas and medical/social services. If this were the case, the building would likely be considered Use Group 3-4, defined by the Department of City Planning as community facility use, and prohibited in this zoning district. The long and short of it is that they asked BRC and the DOB to submit a post-hearing brief, which is due March 8, and then they asked us to respond to whatever the city and BRC submits by March 15, said Connolly regarding the hearing. The BSA is scheduled to reconvene on the matter on April 5. Can BRC find the cash to finish the project? The Bowery Residents Committee may have hit a roadblock in accessing promised funding for construction of the homeless shelter. In February, they served papers against the landlord, Daniel Shavolian, for failure to provide millions originally agreed upon for construction, and for restricting access to the 11th floor of the building. The case was brought before Judge Joan Madden on February 22. An argument quickly arose between Shavolians lawyer, Claude Castro, and the BRCs attorneys, Thomas C. Lambert of Lambert & Shackman, PLLC, and John Hadlock and Neil Underberg of Winston & Strawn, over the BRCs right to contest the notice and seek a Yellowstone injunction, used to challenge a landlords claim of breach without risking eviction and forfeiture of lease rights. The case was permitted to be withdrawn per stipulation on February 22, but on March 1, the case was filed again under index number 650358-2011E. According to a court clerk, the new hearing has not yet been scheduled. No bank will give us financing for this project if there are no valid permits, countered Shavolians attorney, Claude Castro, after the initial February 22 hearing before Judge Madden. What if the judge stops construction? Thats why we had asked her to hold it in abeyance, an agreement to suspend funding until the case is resolved. During the February 22 hearing, BRCs attorneys told the judge that construction on the building was 80 percent completed, but maintained that the contractors had not been paid. Lambert indicated that the BRC was seeking alternate funding through Lance Capital. Research revealed that Lance Capital, based in Reno, Nevada, is a hard-money lender that charges 20 percent interest on loans. BRC has given no indication they will borrow money from Lance Capital, or if so, how much money they will borrow. But according to BRC lawyers estimates in court, they are experiencing a shortfall of $8 million, originally promised by Shavolian. Chelsea Now asked Diamond whether the cost of these high interest rates would be passed on to the taxpayer. That is nothing I know anything about, he said. That was not something presented to us. We have a contract were moving forward with, and we have an established rate we pay. If there are complications for the provider [BRC], they will have to work that out. We have not adjusted the numbers. But with the majority of expenses for the project coming from city coffers, it remains to be seen who will ultimately foot the bill for these additional costs. Notwithstanding any financial problems that may still exist, the project is moving forward as planned. Obviously the landlord isnt funding it, but the contractors are moving forward, there is a bevy of activity in there with the work crews, and everything is looking great, said Rosenblatt. We cant wait to move in and hope for the best in terms of timing. We are not concerned at all about completing the project.