The Real Deal New York

City Hall was “aware of” Rivington House deal before $116M sale: report

DOI probe found city had “opportunity to protect its interests but did not do so”

July 14, 2016 05:53PM

Rivington House at 45

Rivington House at 45 Rivington Street

Despite feigning ignorance over a controversial deal to sell a Lower East Side nursing home to luxury condo developers, City Hall was both “aware of and involved” in the deliberations that paved the way for the lucrative transaction, according to a probe of the de Blasio administration’s role in the deal.

The city’s Department of Investigation – which published its findings Thursday – launched the inquiry after private nursing home operator Allure Group sold Rivington House, located at 45 Rivington Street, to developers for $116 million this past February. Before doing so, Allure paid the city $16 million to lift a deed restriction on the property that required it to be operated as a nursing home.

“The city had the opportunity to protect its interests but did not do so,” according to a report of the DOI’s findings. Some officials not only knew about the deed restriction being lifted, the report said, but they also knew the building would be sold to luxury condo developers.

Even more damning, however, is the report’s allegation that City Hall tried to cover up what it knew by denying some information to DOI investigators.

“Because DOI did not receive a full production of what it requested, it is unclear what Rivington-related information remains on the City Hall servers and computers, to which DOI was denied access,” the report said.

Once owned by the city, 45 Rivington was purchased in 1992 by the non-profit nursing home operator VillageCare, which paid $1.55 million for the site. At that time, the deed had two restrictions – that the building be run by a non-profit, and be used as a medical residential facility.

In late 2014, the city was told VillageCare was considering a sale of 45 Rivington to Allure Group, a private nursing home operator, according to the report. In February 2015, Allure paid VillageCare $28 million for the building. Nine months later, the city removed the deed restrictions and Allure subsequently sold the building for $116 million to developers including Slate Property Group TRData LogoTINY, Adam America Real Estate and China Vanke.

Mayor Bill de Blasio has insisted he did not know about the deal in advance.

But according to the DOI’s findings, City Hall “knew or should have known that both parts of the deed restrictions were being lifted.” In fact, “several City employees knew the property owner considered selling the property for conversion to luxury housing.”

In particular, the Department of Citywide Administrative Services’ chief Stacey Cumberbatch and First Deputy Mayor Anthony Shorris “were notified on numerous occasions, and months in advance, that the two parts of the deed restriction would be lifted.”

In its report, DOI said the mayor, in an interview with investigators, said he did not recall a 2014 email from Shorris that mentions Rivington. He further stated that the request to life the Rivington deed restriction “should have been brought to his attention, but was not,” according to the report. Had it reached his desk, he told investors, he would have vetoed it.
Last week, the mayor proposed changes to the process for modifying deed restrictions, including more transparency and community involvement. However, Lower East Side residents have said those proposals fall short, and they want Rivington House back.
[Crain’s, DOI] – E.B. Solomont

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