Comptroller’s Office Cites Mayor’s Management Failures in Rivington House Fiasco

45 Rivington St.

45 Rivington St.

New York City Comptroller Scott Stringer released a report today showing that Rivington House was lost as a community facility due to communication breakdowns and inattention by the de Blasio administration. The five-month investigation, however, did not explore allegations of corruption in the lifting of deed restrictions on the former nursing home facility. It also did not offer any hope for the local community, which has been desperately trying to wrest control of the building from luxury condo developers.

In a press release, the comptroller’s office summarized its findings:

This (Rivington House) 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.”

The report highlighted news coverage in The Lo-Down regarding the sale of the Rivington House building. We broke the story Dec. 2 of last year. The article caused community activists, the local community board and elected officials to start sounding alarm bells with city officials. Those warnings went unheeded for months.

At the beginning of December 2015, residents of the Lower East Side began contacting the Mayor’s Community Affairs Unit (CAU) expressing concern and disbelief about reports that Rivington House was going to be sold to a housing developer for conversion to luxury condominiums. On December 1, 2015, a Lower East Side community member emailed a CAU staff member, stating “we hear some deal is being brokered, out of sight of the Community Board and of the neighborhood” resulting in “market rate housing over use by low income nursing care patients.” The next day, the CAU staff member received an article from a Lower East Side neighborhood website reporting that “the nursing home formerly known as Rivington House, . . . will shut down by the end of next week, soon after the last residents are transferred to other homes.” The article also stated that the Rivington House deed restrictions had been lifted for $16.15 million, and that a construction firm working with the Slate Property Group (Slate) expected the property to be converted to market-rate housing.140 Following publication of that article, community members continued to express their concerns and displeasure to CAU. However, notwithstanding the community’s efforts to bring the matter to City Hall’s attention, the evidence produced to the Comptroller’s Office reflects that City officials did not speak with Mr. Landau about Rivington House directly until February 24, 2016, eight days after his sale of Rivington House had closed. Similarly, the Office of the Comptroller found no record of any attempt by the City to contact Slate or its partners in Rivington Street Investors. In addition, no documents provided to the Office of the Comptroller during this investigation indicate that staff informed the Mayor of the issue at any time between December 1, 2015 (when CAU was explicitly notified) and February 11, 2016 (when Mr. Landau sold Rivington) – a period of 72 days.

More to come…

UPDATE 5:53 p.m. Here’s a sampling of the news coverage that followed the release of today’s report. The investigation, reported the Wall Street Journal, did not turn up any evidence that the mayor personally knew about the deed change.

A City Hall spokesman on Monday noted that the mayor had announced changes to the deed-removal process. “The report proves once again that the mayor was unaware of this transaction, that the first deputy mayor was not consulted about the conversion to luxury condos, that the developer hid his intentions from City Hall, and that this decades-old process needed reform,” spokesman Eric Phillips said.

Stringer saved some of his harshest words for Joel Landau, who he called a bad actor. Bloomberg talked with a spokesperson for Landau’s Allure Group, who disagreed with the comptroller’s assessment:

An attorney for Allure, Andrew Levander, contradicted Stringer’s characterization of Landau as dishonest. Landau told the city that its demand for $16.15 million to lift the deed restrictions would force him to develop housing or flip the property, a statement recorded in the report, Levander said. “Allure never lied to or misled city officials,” Levander said.

The mayor has announced reforms meant to prevent any Rivington House-style disasters from happening in other communities. He contends that outmoded policies inherited from previous administrations were to blame for what happened on the Lower East Side.  Stringer differs on this point, as the Observer pointed out in its story this afternoon:

…today, Stringer insisted Rivington wasn’t lost because of the process, “but because of poor execution of those city processes.” … “This is not about process or deed restrictions that were in place. Yes, we do think the deed restriction process should be improved,” Stringer said, “but in this particular place it wasn’t the process, it was the mismanagement at DCAS and City Hall.” Asked whether someone at City Hall should be held accountable for that mismanagement, Stringer demurred. “That’s really up to the mayor, to manage City Hall and his office. What I’m hoping is that they will look at our report learn from some of the things we uncovered,” Stringer said.