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City Hall’s Inaction Led to Rivington House Sale, Report Finds

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A report issued by the Department of Investigations unpacks the controversial sale of a Lower East Side nursing home for luxury condos

The Department of Investigations has issued their report about the problematic sale of former Lower East Side nursing home Rivington House to a condo developer, and have found that city hall is largely at fault. In a report unpacked by the New York Times, the Department of Investigations found that the actions of city hall, including its indifference, led to the controversial sale of the property from nonprofit care provider Allure Group to a consortium of developers with plans to convert the property into luxury condos.

The report found that City Hall officials were clued into the sale and took no interest, and even less action, in preventing it. The report also claims that, once the sale was formally announced and the DOI began its investigation, the city’s Law Department attempted to impede their inquiries into the transactions.

The report pinpoints a fault in communication by the Citywide Administrative Services’s asset management staff as the root of the issue. In a March 11, 2015 meeting with DCAS, Allure advised the agency that they wouldn’t be able to pay $16.15 million to lift the deed restriction and also retain the property as a nursing home, and would instead consider converting it into a luxury apartment building. DCAS failed to pass that detail onto first deputy mayor Anthony Shorris, who has been involved in talks concerning Rivington House since 2014. While memos concerning the property’s sale did make it to Shorris’s desk, he said he missed them. (It pays to be organized, folks.)

A month after the meeting with DCAS, Shorris and the city’s other deputy mayor’s met to discuss the Rivington House deal. A memo prepared following the former meeting read that the "city’s perspective on first, best use" would be to modify the deed to allow for a nonprofit developer to create retail and "mixed units above which can include supportive housing." Following the meeting, Shorris had a change of heart and told his staff to alert DCAS that Rivington House should remain a nursing home. In a familiar pattern, that decision was never passed on. No other city employee could corroborate Shorris’s point for the memo.

An email chain cited by the report involving the developers who moved to purchase Rivington House also makes clear that the developers attempted to obscure their objectives concerning the site. "Do not discuss this deal," a representative for one of the developers, Slate Property Group, wrote in a May 2015 email, noting that Allure Group was concerned that if the sale was flagged with the city, the city would thwart it. The email from Slate’s representative continues in reference to the deed restriction, "Once he has it removed...we can do whatever we want."

Allure maintains that they acted lawfully and was always transparent about their inability to maintain the property as a nursing home.

The report doesn’t indict Mayor de Blasio as a figure in the sale; BDB told the Times that "[t]he report makes quite clear that I did not know about it." He continues, "I think it’s clear that the right hand and the left hand were not coordinated. There wasn’t a good flow of information, and people were adhering to an old and mistaken policy. But that’s the extent of it."

The DOI is now considering appropriate enforcement.