The Real Deal New York

Union played key role in controversial Rivington House sale

1199SEIU said it helped select Allure as the buyer in order to preserve jobs

August 05, 2016 09:00AM

Rivington House and 1199 President George Gresham

Rivington House and 1199 President George Gresham

The city’s powerful health care union played a key role in the sale of Rivington House — a Lower East Side nursing home once eyed for affordable housing that instead was flipped to the developer of luxury condominiums.

New records show that 1199SEIU played a key role in orchestrating the 2015 sale of the property to the Allure Group and its partners from the prior owner, VillageCare. Allure subsequently convinced the city to lift a deed restriction on the building and sold the property to Slate Property Group for a $72 million profit.

A trove of emails and documents show that 1199’s political director, Kevin Finnegan, helped to select Allure as the buyer, and later was in regular contact with Allure’s Joel Landau and City Hall employees, according to documents obtained by Politico.

His objective? Preserve several hundred jobs at the AIDS residence run by VillageCare, which also owed the union $18 million in pension obligations.

Ultimately, the city’s Department of Citywide Administrative Services made a deal to modify Rivington House’s deed in a $16.1 million deal. The administration also removed a lien on the property.

But while Allure requested a change in financing related to the property — which would involve waiving the $16.1 million fee — the city refused. Later, Allure’s Landau argued the fee was too steep, prompting him to flip the building.

Slate Property Group TRData LogoTINY later purchased the site for $116 million.
In a statement, a spokesman for 1199 said the union supported the sale because Allure promised to preserve jobs and services for the community.
“At no time did Allure inform 1199SEIU that its goal was to sell the facility to a luxury condo developer, and we would have vigorously opposed them had we known,” the statement said, adding that it never received any payment in exchange for supporting the sale. “Ultimately, the Allure Group only placed 38 workers out of the original 200 at its other homes when Rivington House closed. The Allure Group broke their promise to caregivers and the community.”
Earlier this week, a report by city Comptroller Scott Stringer lashed out at City Hall for creating a “vacuum” that allowed Allure to take control over Rivington House. The report found that a “lack of vigilance” by the city undervalued Rivington by at least $3 million, allowing Allure to have the deed restriction lifted at a far lower cost.

The report comes on the heels of a damning report by the city’s Department of Investigations. That report accused City Hall of impeding its investigation, and found that a Slate representative urged employees to not discuss the deal. [Politico]E.B. Solomont

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