The Real Deal New York

No good deed

As scrutiny on Rivington deal intensifies, a look at the hushed role of deed restrictions

October 01, 2016
By Marynia Kruk

Rivington House and recent news headlines

Rivington House and recent news headlines

Seven months ago, few could have guessed that NYC’s arcane procedures over deed restrictions would become the stuff of headlines, much less the source of a political scandal that was set to be at the center of a City Council hearing late last month. But that’s exactly what happened when questions arose in March about the city’s involvement in the Allure Group’s TRData LogoTINY $116 million sale of Rivington House, a former nursing home on the Lower East Side, to condo developers. Prior to the sale, the city lifted the property’s deed restriction, which had mandated that Rivington be used only for a nonprofit purpose. Mayor Bill de Blasio has denied any knowledge of the deal, but several investigations are ongoing and at least one other similar case has surfaced. Some have argued that the process is inherently flawed. “If you view the removal of a deed restriction as a significant zoning change, then the change ought to be reviewed like a zoning change,” said Stewart Sterk, a professor at the Benjamin Cardozo School of Law.

$16M

The fee the Allure Group paid to the city to lift Rivington’s deed restriction after it acquired the building for $28M in 2015. The company then flipped the property to Slate Property Group, Adam America Real Estate, and China Vanke, for a $72M profit.

1992

The year that the city placed a deed restriction on 45 Rivington Street, limiting the property’s use to a “residential health care facility” operated only by a nonprofit organization. It was later sold to VillageCare, a charitable provider of chronic and rehabilitative medical care, for $1.6M.

BTN-folders80,000

The number of documents that City Comptroller Scott Stringer’s office reviewed over the course of its five-month investigation, including communications among Rivington’s sellers and buyers and city officials. Investigators also interviewed administration members who worked  on issues related to the deal over a two-year span.

25

The percentage of a property’s value, after a deed restriction is lifted, that the city collects as a fee for the removal. The rule was adopted in 2010 under Mayor Michael Bloomberg and is now being reexamined by the de Blasio administration. Basing its analysis on real estate sales data from two years earlier, the city appraised Rivington House at $65M, roughly half of what it eventually sold for.

9

The number of deed restrictions that have been modified or lifted by the city since Mayor de Blasio took office in 2014. Most involved vacant lots in areas undergoing redevelopment, includings stretches along First Avenue. At the time the Rivington scandal broke, there were 14 pending applications for deed modifications or removals. All have since been put on hold.

Ashley-Murphy-and-Taurean-Green0

The number of people who showed up to testify at a 2015 hearing on removing the deed restriction on a lot at 152nd Street and St. Nicholas Avenue owned by the Dance Theater of Harlem and reserved for nonprofit use only. The city accepted $875K to lift the restriction. BRP Companies, a de Blasio donor, later bought the parcel for $3.1M.

5

The number of agencies investigating the Rivington deal: the U.S. Attorney’s office in Manhattan, state Attorney General Eric Schneiderman’s office, the state Health Dept., the NYC Comptroller’s office, and the city’s Department of Investigation.

$126,000

The amount Chinese developer Fosun International paid top lobbyist — and de Blasio donor — James Capalino in 2015 and 2016. The list of requests included asking the city to change the deed on Fosun’s Chase Manhattan Plaza property, which has a height restriction over its plaza.

eric-schniederman1948

The year the U.S. Supreme Court ruled that race- and religion-based deed restrictions on resales of property were unenforceable. Such restrictions were widespread before WWII. They remain in the records, but title companies do not inform buyers for fear that doing so might perpetuate discrimination.

40

The number of City Hall staffers who reviewed the plans for Rivington House before lifting the deed restriction and thus failing to preserve the property for the public, “something [the City] had the legal authority to do,” according to the City Comptroller’s report. Among those in the know were First Deputy Mayor Tony Shorr and Deputy Mayor for Housing and Economic Development Alicia Glen.

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