Report: City official who OK'd Rivington House deed lift fired

Ricardo Morales, a deputy commissioner at the Department of Citywide Administrative Services (DCAS), who approved lifting deed restrictions at the Rivington House on the LES, was fired last night, The Wall Street Journal reported this afternoon. (Subscription required.)

The dismissal came hours after Mayor de Blasio was interviewed by the feds at the office of Manhattan U.S. Attorney Preet Bharara.

As the Journal noted: "Mr. Bharara’s office has been examining the Rivington deal as part of a broader investigation into whether Mr. de Blasio’s administration gave special favors to donors."

A DCAS spokesperson said, "These changes have been in the works for some time and have nothing to do with the mayor’s or City Hall’s cooperation with the U.S. Attorney."

In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November 2015, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Early in 2016, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

Previously

Sen. Squadron calls for False Claims investigation against group who sold Rivington House for condos

Via the EVG inbox...

State Sen. Daniel Squadron released a letter (see the PDF here) to letter to Attorney General Eric Schneiderman and Corporation Counsel Zachary Carter urging an investigation into the Rivington House deed restriction removal and purchase by the Allure Group under the State and City’s False Claims Acts.

At the City and State level, the False Claims Act provides authority to take civil action against those that defraud the government. The City has indicated it was misled by the Allure Group during the deed restriction removal and sale of the Lower East Side nursing home.

“The closure of Rivington House stunned the community and highlighted major flaws in the process that governs deed restrictions,” he wrote. “The role of government is to protect the public interest and to be transparent; but that role is undermined if government is misled, as may have been the case at Rivington House. But, it is also vital that we hold those who violate the public trust accountable.”

The Daily News has more on Squadron's press conference from yesterday here.

In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November 2015, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

Last summer, the Department of Investigation released the results of an inquiry, which didn't reveal any corruption, but rather inattention and incompetence by the de Blasio administration.

Previously

[Updated] On today's grill menu: First deputy mayor Tony Shorris

First deputy mayor Tony Shorris is testifying today at a City Council hearing about the controversial sale of Rivington House on the Lower East Side to condo developers.

As Politico New York noted, this "will mark the highest-profile public airing of the controversy surrounding the sale of Rivington House"

Back in July, Shorris answered questions during an often contentious 2.5-hour interview with an investigator working on behalf of City Comptroller Scott Stringer.

Through a Freedom of Information Law request, Politico obtained the 114-page transcript of that session.

Here's an excerpt from Politico's coverage:

It also seems clear, although Shorris never says so directly, that he did not have a particularly robust or effective mode of communicating with Stacey Cumberbatch, who was commissioner of DCAS until January of this year.

Cumberbatch informed Shorris through a routine memo about the potential sale of Rivington House, which had been a city-owned building before being sold to a nonprofit running an AIDS residence in the 1990s.

Shorris explained that he did not read the memo and that some time during the latter portion of his first year on the job, he stopped reading these memos in their entirety because they were too time-consuming.

Instead, he expected commissioners to use their judgment and inform him in person or over the phone of priorities and problems. But that evolution in communication strategy was never made clear to Cumberbatch, Shorris acknowledged during questioning.

And here's how the Post covered the July 27 Shorris meeting with investigators:

First Deputy Mayor Tony Shorris suffered numerous memory lapses about the Rivington Street nursing-home fiasco, telling investigators more than two dozen times that he couldn’t recall incidents, ­emails or details, records show.

Mayor Bill de Blasio’s right-hand man claimed he couldn’t remember a meeting with Stacey Cumberbatch, a city commissioner, or the content of any conversations they had about Rivington in 2014.

When investigators tried to press Shorris over the memory lapse, his lawyer, G. Michael Bellinger, repeatedly intervened, the Post notes.

In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city.

Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

Updated 9/30

Read more about what transpired during the six-hour hearing at DNAinfo... Daily News ... The New York Times...Politico... the Post...Village Voice ...

Meanwhile! As The Lo-Down reported, the de Blasio administration plans to create affordable senior housing on the Lower East Side to make up for the loss of Rivington House. The facility will be on Pike Street.

Scott Stringer's audit blasts City Hall for inaction in Rivington House deed lift

Here's a look at part of the report via the EVG inbox...

New York City Comptroller Scott M. Stringer released a report today detailing the findings of a five-month investigation into actions taken by the City of New York that allowed Rivington House – a nursing home on the Lower East Side of Manhattan – to be sold for a $72 million profit in February 2016.

The Comptroller’s Office found that multiple City agencies and dozens of City officials were involved in deliberations about the removal of two deed restrictions that previously limited the property’s use to a not-for-profit residential health care facility.

The Comptroller’s investigation found the Rivington House property was allowed to slip away because of poor execution of City processes that were intended to elicit public opinion and protect the City’s best interests. This deal resulted in patients losing their homes, healthcare workers losing their jobs at the site, a neighborhood losing a vital community asset, and the City losing its power to ensure that the property was used for a public purpose “in perpetuity.”

Over the course of the investigation, the Comptroller’s Office reviewed more than 80,000 documents, including communications among the Rivington House sellers and buyers and City officials and interviewed Administration officials who were engaged over a two-year period with issues related to this deal.

Investigators found that, despite 48 City staff meetings and hundreds of emails and phone calls, lapses in the oversight of the deed removal process allowed Joel Landau, principal of the Allure Group, to secure the removal of the Rivington House deed restrictions at the same time that he was working to “flip” the property into luxury condominiums.

“No individual should be allowed to profit off the loss of vital community resources,” Comptroller Stringer said, “But what’s worse is that the checks and balances in place to avoid this kind of outcome were mismanaged. We have to make sure our government operates with the highest level of accountability to guarantee this never happens again.”

You can find a PDF of the full report here.

U.S. Attorney General Preet Bharara and New York Attorney General Eric Schneiderman are also investigating the removal of the deed restriction.

Previously

[Updated] Community forum tomorrow about the Rivington House

An EVG reader shared this photo of a flyer spotted near the former Rivington House on the Lower East Side.

The sign is for a press conference and community forum tomorrow (Monday!) at 11:30 a.m. Location: Speyer Hall at University Settlement, 184 Eldridge at Rivington.

The event is sponsored by the recently formed Community Voices To Save Rivington House.

To the usual recap: In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

The state attorney general, city comptroller and city Department of Investigation are all investigating the Rivington House deal. You can find the most recent development here.

Updated 6/27

Gothamist has a report on the rally hosted today by Community Voices To Save Rivington House.

"We want the place back," said Tessa Huxley, president of coop adjacent to Rivington House, where she's lived since 1981. "I don't need anyone to be punished, just give us back our facility. It's been a complete, deafening silence from the mayor."

Meanwhile, the petition campaign to "return the Rivington House to the LES" continues. You can sign the petition here.

Today in (possible) Rivington House mis-deeds

More headlines about the controversial sale of the former Rivington House on the Lower East Side.

Another top de Blasio aide was also involved in talks concerning Rivington House as early as January 2015 (New York Post)

LES resident quizzes de Blasio about the Rivington House during Brian Lehrer's "Ask the Mayor" segment (The Lo-Down)

The Mayor must now sign off on any future deed lifts (The New York Times)

To the usual recap: In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

Today in the Rivington House deed scandal

More headlines about the controversial sale of the former Rivington House on the Lower East Side.

The Daily News reports that New York Attorney General Eric Schneiderman’s office was misled about the sale.

The attorney general’s office signed off on the sale of the property in October 2014, not knowing the buyer, Allure Group, was going to push the city to lift the deed restriction that required the property to be operated as a nursing home, an official said.

The Allure Group turned around then and sold the property to a developer for $116 million.

Meanwhile, the Post reports that "panicked officials at the highest levels" of Mayor de Blasio's administration were working to undo the deal they made to life the deed restriction for 45 Rivington St., the former Rivington Center for Nursing & Rehabilitation.

On Feb. 24, Deputy Mayor Alicia Glen’s chief of staff frantically offered a $16.1 million refund to The Allure Group, which had paid the fee to get a deed restriction lifted on the property at 45 Rivington St. The deed change allowed Allure to sell the property to a luxury-condo ­developer for $116 million.

In return for the refund, Allure was told, the city sought a long-term care facility or affordable housing, according to a source close to the negotiations and evidence reviewed by The Post.

And The Wall Street Journal takes a look at the previously little-known municipal agency that wields "vast power."

The Department of Citywide Administrative Services oversaw the deed modification, which allowed the Allure Group to sell the building for a $72 million profit. The Journal names the senior official within the Department who approved the modification.

Also, per the Journal:

At the time of the deed modification, the department’s commissioner was Stacey Cumberbatch, who was appointed by Mr. de Blasio in 2014. She resigned in January. No reason was given for her departure, and she moved to an administrative job with the public hospital system NYC Health + Hospitals.

Previously

Moneylowball: City appraiser underestimated value of former Rivington House by $51 million

Another day, another ridiculous revelation in the ongoing investigation into 45 Rivington St. City officials reportedly lifted deed restrictions on the Lower East Side building based on an appraisal that valued the property at $65 million, $51 million less than its sale price.

According to The Wall Street Journal, who broke the story yesterday:

Some private appraisers in the city are shaking their heads, wondering how the city came up with such a low valuation in New York’s robust real-estate market.

Robert Von Ancken, chairman of Landauer Valuation & Advisory, who has been an appraiser in the city for about four decades, said the rule of thumb is to value development opportunities such as 45 Rivington at $800 a square foot — at minimum.

The city appraisal valued Rivington House, at 45 Rivington St., at $433 a square foot. The city appraisal process “really must have messed up,” Mr. Von Ancken said.

[Via The Wall Street Journal]

To the usual recap: In February 2015, the Allure Group paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

To date, city officials have repeatedly declined to identify the appraiser or specify the amount of the appraisal, the Journal reports.

An EVG reader who was a patient at the facility early last year previously shared this about 45 Rivington:

"The building is incredible with 12-foot ceilings and a penthouse floor that has a view from the UN to all of Midtown and Downtown. I knew it was doomed to have developers all over it from the first day I got there."

The investigation continues by a group that includes Preet Bharara, U.S. Attorney for the Southern District of New York, and New York Attorney General Eric Schneiderman.

Report: U.S. Attorney Preet Bharara now looking into deed lift at 45 Rivington St.

Preet Bharara, U.S. Attorney for the Southern District of New York, is the latest official to probe the sale of the former Rivington House on the Lower East Side, Politico New York reports.

The deal under the de Blasio administration's watch in November is already under investigation by Attorney General Eric Schneiderman, the city Department of Investigation and City Comptroller Scott Stringer.

To recap: In February 2015, Allure paid $28 million for the property, promising that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In November, a city agency lifted the the deed in exchange for the Allure Group's $16 million payment to the city. Earlier this year, Allure then reportedly sold the property for $116 million to the the Slate Property Group, a condo developer who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park.

The mayor has said he was unaware of the transaction until last month. City officials have accused Allure of misleading the administration about its intentions.

The Wall Street Journal reports that Bharara's office "is also examining whether donors to the Campaign for One New York, a nonprofit supporting Mr. de Blasio’s agenda and run by his allies, have benefited from favorable treatment from the mayor’s administration, people familiar with the matter have said."

A de Blasio spokesperson told the Journal that the administration didn't have any knowledge of a federal probe but would cooperate fully with any investigation.

[Updated] New York state AG's office investigates Rivington House; city orders full Stop Work Order on the demolition

The New York state attorney general's office is in full-on subpoena mode in its investigation into the sale of the Rivington House to a residential developer, The Wall Street Journal reported last evening.

Attorney General Eric Schneiderman's office sent out subpoenas — via the Medicaid Fraud Control Unit — last week to several players involved in the deal.

Karen Hinton, a spokesperson for Mayor de Blasio, said the city welcomes any investigation.

"I don’t know if anyone in City Hall received a subpoena, but we will cooperate with the AG’s investigation, any investigation, because we want to get to the bottom of what happened," she told the Journal.

As previously reported, a city agency removed deed restrictions on the former Rivington Center for Nursing & Rehabilitation last November that limited the building’s use to a not-for-profit residential health-care facility.

Several months after paying the city $16 million to lift the deed restriction, the building’s owner, the Allure Group, sold the property to a developer for $116 million. The developer, the Slate Property Group, plans to create 100 luxury residences on the property that overlooks Sara S. Roosevelt Park on the Lower East Side.

Last week, the city OK'd a partial demolition permit for the building...



However, that was short-lived...Yesterday, the Borough Commissioner placed a full Stop Work Order on the property...


[Click for to go big]

Meanwhile, this morning at 11, Manhattan Borough President Gale Brewer, City Council member Margaret Chin and CB3 chair Gigi Li are holding a news conference outside the building at 45 Rivington St. (at Forsyth).

Per The Lo-Down, the three "will be calling on Mayor de Blasio’s administration to compensate the Lower East Side community for the loss of Rivington House."

The Lo-Down has really been all over this story. They spoke with powerful lobbyist James Capalino, a key player in this story to date.

Updated 3 p.m.

DNAinfo has coverage of today's press conference here. ... and Curbed's coverage is here.

The growing scandal over 45 Rivington St.

[Aerial view of 45 Rivington via Google Maps]

On March 22, New York City Comptroller Scott Stringer launched an investigation into the de Blasio administration's decision to lift deed restrictions on the Rivington House at 45 Rivington St., a move that netted the nursing home operator, the Allure Group, a $72 million profit off the property's sale to condo developers.

In the days that followed, many more details emerged in the media, such as that James Capalino, a de Blasio friend and fund-raiser, had been lobbying for two years for the prior owner to have the deed restriction lifted. Capalino's firm earned a record $12.9 million lobbying City Hall in 2015, according to the Times.

The Allure Group had promised that 45 Rivington — the former Rivington Center for Nursing & Rehabilitation — would remain a health facility. In February 2015, Allure paid $28 million for the property. The deed was reportedly changed in exchange for the Allure Group's $16 million payment to the city.

Allure then reportedly quietly sold the property for $116 million to the the Slate Property Group, a condo developer (and Capalino client) who plans to create 100 luxury residences in the building that overlooks Sara S. Roosevelt Park on the Lower East Side.


[Via The Wall Street Journal]

Here are some developments about the sale and investigation from this past week...

TUESDAY

Op-ed — To catch a thief: Solution needed for de Blasio real estate deal whodunit (Daily News)

Op-ed — Why isn’t the mayor furious at this rancid deal? (New York Post)

WEDNESDAY

CB3 Sent Written Plea to Mayor on Rivington House Jan. 27 (The Lo-Down)

How New York Allowed Gentrification for $16 Million (The New York Times)

Two pols demand info on deal to turn Lower East Side nursing home into condos (Crain's)

THURSDAY

Nursing home deal, and City Hall response, raises questions (Politico New York)

And an excerpt from the Times article on Wednesday:

“I’m not happy that it happened,” Mr. de Blasio, a Democrat, told reporters on Monday. “I’m not happy about the fact that I didn’t hear about it in advance, before it became public.”

On Jan. 27, however, the local community board sent a letter to Mr. de Blasio requesting “information as to what transpired as to this transaction.” The letter was remarkably prescient; it warned that Rivington House could be converted into free-market housing, “as has been made possible by the lifting of the deed restriction.” The building was sold in February; city officials never responded to the letter, according to the community board, and Mr. de Blasio never saw it, said Karen Hinton, a spokeswoman for the mayor.

Today, the Post reports that, despite de Blasio's apparent anger over the sale, no one in his administration has taken the fall.

Also today, the Post reports that the Allure Group, "a cadre of young, seemingly disparate entrepreneurs," owes more than $6 million in back taxes on two properties in Brooklyn.

Previously on EV Grieve:
What next then for 45 Rivington St.?

Report: Developers buy former LES nursing facility for luxury housing

Report: Comptroller Scott Stringer looking at city's decision to lift deed at the former Rivington House

[EVG file photo]

New York City Comptroller Scott Stringer is examining the de Blasio administration's decision to lift deed restrictions on the Rivington House, a move that netted the nursing home operator a $72 million profit off the property's sale to condo developers, The Wall Street Journal reports. (Subscription required.)

Per the Journal:

In early 2015, the Allure Group, a for-profit nursing care provider, purchased the building for $28 million, and months later paid the city $16.15 million to remove the restrictions that limited the building’s use, records show.

About three months after the city lifted the restrictions, Allure sold the building for $116 million to a residential developer that plans to convert it into luxury condominiums, over the objections of some community leaders.

Officials in the mayor’s office and at the Department of Citywide Administrative Services, the agency that lifted the deed restriction, had understood at the time that the property would be turned into a for-profit nursing home, Austin Finan, a spokesman for Mr. de Blasio, said Tuesday.

[The Wall Street Journal]

Here's more from The Lo-Down, who has been following this story, from back on Feb. 29.

The building is at 45 Rivington St., which overlooks Sara D. Roosevelt Park on the Lower East Side.

Previously on EV Grieve:
What next then for 45 Rivington St.?

Report: Developers buy former LES nursing facility for luxury housing

Report: Developers buy former LES nursing facility for luxury housing

Developers have purchased 45 Rivington St., the former Rivington Center for Nursing & Rehabilitation, for $116 million. Their plan? Luxury housing, as The Wall Street Journal first reported.

Here's more from The Lo-Down, who has been following the saga:

[T]he sale was anticipated after the Allure Group, a private nursing home operator, closed the building in December. The company, which purchased the property last year for $28 million, has stated that the failure to obtain state Medicaid reimbursements forced the closure. The Allure Group also paid the city $16 million for the deed, which had previously restricted the building’s use to a “Not-for-Profit Residential Health Care Facility.”

Community Board 3 and City Council member Margaret Chin supported efforts to lift the deed restriction because they thought it meant the 200-plus-bed nursing facility could continue to operate as a for-profit entity. They were furious with the de Blasio Administration for allowing the building to slip into the hands of luxury housing developers.

A rep for the developers told the Journal that they plan to house upwards of 100 luxury units in the building, which overlooks Sara D. Roosevelt Park. (You can read more about the deal at BoweryBoogie.)

Late last year, an EVG reader, who had been a patient at the facility, heard the news from staffers about the impending closure of the building between Eldridge and Forsyth ...

Said the reader:

"The building is incredible with 12-foot ceilings and a penthouse floor that has a view from the UN to all of Midtown and Downtown. I knew it was doomed to have developers all over it from the first day I got there."

What next then for 45 Rivington St.?

There has been a rumor that the Rivington Center for Nursing & Rehabilitation will be closing its doors by Dec. 11. The Lo-Down got confirmation of this impending closure yesterday. (Read their article here.)

For nearly 20 years the Rivington House operated as a nursing home for AIDS patients here at 45 Rivington St. between Forsyth and Eldridge on the Lower East Side. Let's go to The Lo-Down for some background:

Its previous owner, VillageCare, closed the location and sold the building to The Allure Group, a for-profit nursing care provider. The idea was to run the 215-bed center as a nursing home for the general population. The Rivington Center for Nursing & Rehabilitation opened this past February with a limited number of patients. But it has now become apparent that the bureaucratic hurdles of making the facility work are insurmountable.

The Allure Group reportedly plans to open another facility nearby.

An EVG reader told us about the closure this past weekend. The reader had actually been a patient there for a period of time earlier this year, and heard the news from staffers who will be reassigned to other Allure-owned facilities.

So what's next?

Public records show that on Nov. 10, The Allure Group paid $16.15 million for the deed from the city. As The Lo-Down notes, "As part of that deal, the city administration lifted a restriction in place since 1992 requiring the property to operate as a not-for-profit residential health care facility." In addition, The Lo-Down hears from residential neighbors who are "anticipating a market rate residential conversion of the building."

Back to the EVG reader: "The building is incredible with 12-foot ceilings and a penthouse floor that has a view from the UN to all of Midtown and Downtown. I knew it was doomed to have developers all over it from the first day I got there."

What developer around here would buy a nursing home for use as luxury housing? We can think of one for starters.