Brooklyn Bensonhurst Community Protests Homeless Shelter Plan at 2501 86th Street has been ongoing for 247 days, with recent developments emerging. According to the loan agreement signed between the owner of 2501 and the bank, the owner is not allowed to demolish existing buildings without the bank’s approval. Recently, the bank has taken legal action to protect its own interests.
According to an official letter from the New York City Department of Homeless Services (DHS) to the Buildings Department dated December 6, 2023, DHS is collaborating with the non-profit organization “VIP Community Service Organization” to construct a 150-bed shelter for single adults at 2501 86th Street. Per the long-term contract requirements between DHS and the non-profit organization, the shelter must be operated by the non-profit organization, while the land ownership must be transferred to the “Housing Development Fund Corporation” (HDFC) meeting certain conditions and controlled by the non-profit organization.
The plot was sold for $4.8 million to Indian-American new owner Sandhu in February 2023. However, as Sandhu’s company is not a non-profit organization, the land needs to be transferred to HDFC that meets the requirements. After HDFC obtains site control certification, they need to hire engineers to design architectural drawings that meet shelter standards and apply for new construction permits from the Buildings Department. Only after these conditions are met one by one, will the government approve the P&I contract and secure project funding to ultimately advance shelter construction and operation.
Following the land acquisition in February 2023, the owner secured a $3.5 million loan from “Columbia Capital II Inc.” The loan agreement clause 4 states that “without the consent of the loan bank, no alterations, demolitions, or damages to any buildings inside the property are allowed.” Additionally, clause 14 of the loan agreement stipulates that if the borrower violates this term, the loan bank has the right to demand immediate repayment of the entire principal and interest.
New court documents indicate that on February 20, 2025, the loan bank, “Columbia Capital II Inc.,” sued the owner of 2501, Sandhu, citing that based on the promissory note terms, the loan was originally due on February 14, 2024, but was extended to August 14, 2024. However, on February 20, 2025, the bank initiated a lawsuit, demanding the immediate repayment of $3.5 million principal and interest; otherwise, accumulating default interest at 24% per year (2% per month) under the breach clause and seeking attorney fees.
The lawsuit has three key points: (1) Loan default with no further extension: The owner was supposed to repay by February 14, 2024, with the bank agreeing to extend only until August 14, 2024, then formally suing on February 20, 2025, indicating no intention to further extend the loan but to pursue repayment of principal, interest, and default fines.
(2) Full repayment sought by the bank: The bank demands immediate repayment of $3.5 million principal, adding default interest (annual rate of 24%), default fines, and attorney fees. The bank states that as of January 31, 2025, the total amount owed by the owner is $3,866,478. From August 14, 2024, accumulating interest at $2,333.33 per day, plus attorney fees and related legal costs.
(3) Default exacerbates financial pressure: If the owner fails to settle the debt, they will face accumulating default interest of 2% per month (annual default rate of 24%). The lawsuit could also lead to the bank seizing the land, further impacting the development plan for the shelter.
Currently, the demolition permit (work paper) for 2501 86th Street has expired, and the owner has been unable to sign an “Access Agreement” with four neighboring property owners, hindering the start of the demolition project. These factors pose obstacles to the demolition plan for the old building and provide residents with more advantageous conditions during protests.
The core concern of protesting residents is that once the old building is demolished, the shelter plan will progress more smoothly, with opponents shifting from private developers to government or government-authorized non-profit organizations. Therefore, the demolition of the old building becomes a crucial defense line, while the bank’s legal actions present a new obstacle, making the project’s advancement more challenging.
If the Indian-American owner fails to complete the demolition project, the government will not approve the P&I (principal and interest) contract, nor secure project financing, affecting the construction and operation of the shelter.