Follow the Money: Mayor Struggles to Explain Rivington House Debacle

Mayor de Blasio with former DCAS Commissioner Cumberbach.

Mayor de Blasio with former DCAS Commissioner Cumberbach.

There’s now a money trail leading from Rivington House to Mayor de Blasio. The former nursing home for AIDS patients was sold for $116 million to luxury developers after the city’s Department of Administrative Services (DCAS) lifted a deed restriction.

The Daily News reports that influential lobbyist James Capalino “steered $50,000 in donations to Mayor de Blasio after pressing the city for a deed change that allows one of his clients to turn a building restricted for use as a nursing home into luxury condos.” And according to the Wall Street Journal, the former property owner, Joel Landau, contributed $4950 to the de Blasio campaign in 2013.

City officials said they did not know before lifting the deed restriction that The Allure Group had already signed a deal to sell the property, profiting more than $70 million. Scott Stringer, the city’s comptroller, is investigating the transaction. On Friday, the mayor’s spokespeople announced, that the city’s Office of Investigation is also looking into the matter. “The mayor is deeply concerned about the result of what was clearly a flawed process,” First Deputy Mayor Anthony Shorris told the Journal.

45 Rivington St.

45 Rivington St.

Here’s the timeline that’s emerging from the controversial transaction on the Lower East Side:

Jan. 2014: Capalino & Company was hired by VillageCare, the not-for-profit organization that operated Rivington House from 1995-2014. Between February and July of 2014, Capalino met with DCAS employees and other unnamed city staffers three times. “Based on what I have been able to obtain,” mayoral spokesperson Karen Hinton told the News, “no one remembers anyone from the mayor’s office attending any meeting with Allure or Capalino on this deal.”

Feb. 19, 2014: Capalino sent a letter to DCAS Commissioner Stacey Cumberbach “regarding a potential sale of the Rivington House property without the deed restrictions imposed by the City.”

July 2014: VillageCare announced that it planned to close Rivington House.

Sept. 2014: VillageCare officials appeared before CB3’s human services committee. Matthew Lesieur, director of public policy, said the organization was focused on changing the terms of the deed, asking the city to drop the not-for-profit requirement. “There are a lot of health care providers,” he explained,  “but they are profit driven, throughout the country, who would readily grab and buy the building and maintain it as a nursing home.” Members of the human services committee expressed reservations about turning the facility into a for-profit venture. They passed a resolution calling for a collaborative effort with local elected officials to keep Rivington House as a community asset.

Oct. 7, 2014: At a public meeting, community board leaders indicated that about a half dozen companies responded to VillageCare’s request for offers to purchase the building. A winning bid had been selected, although it was not disclosed which company came out on top.  Later in the month, the board passed a resolution in support of dropping the building’s “not-for-profit” status. It also called for keeping Rivington House open as a skilled nursing facility.

Oct. 2014: Per the Journal, Joel Landau of The Allure Group wrote an email to a city official in which he outlined plans to buy the building, advocated for the deed change and promised to maintain the property as a nursing home. In the email, he highlighted the community board’s support for the changes.

Nov. 2014: Rivington House closed after its residents were transferred to other facilities.

Feb. 9, 2015: VillageCare sold the building, located at 45 Rivington St., to The Allure Group for $28 million. A short time later, Rivington House reopened as the Rivington Center for Nursing & Rehabilitation.

April 2015: Slate Property Group hired Capalino, but the lobbyist’s spokesperson, Risa Heller, said he “did not represent Slate” on the Rivington House deal.

April 27, 2015: The Allure Group applied to lift the deed restriction.

May 2015: Capalino wrote a $10,000 check to Campaign For One New York, de Blasio’s not-for-profit fundraising organization.

May 11, 2015: Slate and The Allure Group signed a contact for the sale of the Lower East Side property. “At the time,” Slate executive Martin Nussbaum told the Journal, “there was a deed restriction on the property, but our contract was to purchase a property that was of residential use. To the extent that it was not residential use, we would not have purchased the property.”  The sale was contingent on the deed change.

June 24, 2015: A public hearing was held on the proposed deed change. While notice of the meeting was published in the City Record, local elected officials and the community board were not notified.

October 2015-Present: Capalino “collects $40,000 in checks for de Blasio’s 2017 re-election bid,” according to the News.

Nov. 11, 2015: The Allure Group paid the city $16 million and, in return, the deed restriction was lifted. According to officials cited by the Journal, “Mr. de Blasio’s administration didn’t have a written contract or other documentation forcing Allure to keep the property a nursing home and didn’t limit changes when it removed the deed restriction.”

Dec. 2015: The Allure Group closed the nursing home. An Allure executive told CB3 that the property had not yet been sold and that the nursing facility would reopen elsewhere on the Lower East Side. The reason for the closure, the executive claimed, was that state Medicaid reimbursements could not be obtained for the property. According to CB3 District Manager Susan Stetzer, Allure’s Joel Landau said he had no knowledge of a deal with Slate Property Group. Residents in a neighboring building were reporting that a rep of Slate had approached them about construction issues.

Jan. 2016: DCAS Commissioner Cumberbach was reassigned to another city agency.

Feb. 2016: The Allure Group finalized its agreement, selling the property to Slate and partners China Vanke Co. and Adam America Real Estate for $116 million.

On Friday, the administration said it would be changing its procedures, sending all deed modification proposals to the  borough president, appropriate City Council member and community board. De Blasio says he will return the 2013 campaign donation from Landau.