State Attorney General Makes a Deal With Allure Group Over Rivington House Debacle

45 Rivington St.

45 Rivington St.

State Attorney General Eric Schneiderman this afternoon announced a settlement with the Allure Group after a lengthy investigation of the Rivington House debacle on the Lower East Side. It requires the for-profit nursing home company to open a new facility on the LES and to pay $1.25 million to Lower East Side non-profit groups.

Allure sold the former nursing home for AIDS patients in February of 2016 for $116 million after the city inexplicably lifted deed restrictions on the building at 45 Rivington St. The new owners are planning to convert the property into luxury condos.

The AG’s investigation covered the closures of Rivington House, as well as the CABS Nursing Home in Brooklyn. In a statement, Schneiderman said:

The processes that led to the closure of Rivington House and CABS never should have happened – this settlement ensures they won’t happen again, while addressing critical healthcare gaps in the impacted communities. We’re requiring Allure to open new healthcare facilities in Brooklyn and the Lower East Side, and make major improvements to its Harlem facility, while also providing $1.25 million to non-profits serving vulnerable New Yorkers.

In a press release, this is how the attorney general described Allure’s new commitments on the Lower East Side:

The Allure Group will create a Lower East Side healthcare facility at a new location to fill healthcare gaps caused by the closure of Rivington House. Allure is required to fully fund a new skilled nursing facility or other healthcare facility primarily providing long-term care to the elderly or disabled; there will be a restriction on the future sale or closure of that facility for at least eight years from commencement of services. Pursuant to the agreement, Allure will also pay $1.25 million to Lower East Side non-profit organizations that provide healthcare services to vulnerable members of the community.

There were no details offered regarding the number of beds that must be included in a new facility, where it will be located or which local non-profits will be receiving funding. The settlement also requires Allure to pay $400,000 in penalties under the Not-for-Profit Corporation Law and $350,000 to cover investigative costs.

In a related settlement, three members of the Rivington House board of directors (Heshey Licht, Ben-zion Scharf and Aaron Porges) will be barred from serving on other boards for at least five years.

The attorney general is requiring the appointment of a new independent compliance consultant who will report to the New York State Department of Health. According to the AG, “Allure will be required to inform the Department of Health about circumstances that might lead to the closure of any Allure Group facility.”

UPDATE 5:21 p.m. Allure’s attorney, Andrew Lavander, provided the following statement to The Real Deal:

(Allure Group is) pleased that, following a careful review, both the New York Attorney General and the Department of Health have not only approved The Allure Group’s acquisition of the Harlem Center for Nursing and Rehabilitation, but are encouraging and supporting Allure’s future investments in healthcare facilities in the Lower East Side and in Brooklyn.

Lavander noted that, in the settlement agreement, Allure did not admit or deny any of the allegations made by the attorney general.

UPDATE 6:16 p.m. Here’s a statement from Neighbors to Save Rivington House, an organization advocating for the return of the building to the local community:

We are grateful for the rigorous work that the AG’s Office undertook. Countless hours and much know-how was put to this effort to get long-range justice for some of  New York State’s most vulnerable people. We are also grateful for the level of compensation that all of these affected low-income and/or of color communities will garner. And that the Allure Group will be under scrutiny due to past practices. And, importantly, it is problematic to invite Allure to run another facility – anywhere. But this is a systemic New York State-wide issue that allows a business like Allure to be endorsed as an organization with “character and competence” by the Public Health and Health Planning Council. That is the larger fight to end the preying upon vulnerable NYers for profit. We will continue to advocate for the meeting with the buyers Adam America, Slate Property Group, and China Vanke promised by the Mayor to our local Council Member. Because Allure was just one group of men who profited off of people who had little ability to fight back. Why? A longtime neighbor and community activist, who lives around the corner from Rivington House will likely be forced to move far from his network of friends this month. He’ll end his days with few visits. It keeps the reality of the damage caused here fresh.
The settlement agreement summarizes the AG’s investigation and spells out Allure’s commitments.
It refers to the city’s decision to lift deed restrictions at 45 Rivington St. after Allure agreed to pay a $16 million fee:
As detailed in a report by the New York City Department of Investigation, City officials, including high-level officials at City Hall and DCAS, were aware of the deed restriction removal months in advance, yet raised no objection or took any step to ensure that the property would continue to serve the community or a public purpose.
Many people in the local community have hoped that the AG would be able to find a legal means of forcing Slate Property Group, the new majority owner of 45 Rivington St., to return the building. But the document from Schneiderman’s office states that Slate’s, “title to the property as a bona fide purchaser is not subject to effective legal challenge.” It then goes on to essentially make a case for the settlement agreement: “The proceeds of the sale of the Rivington Street property are sufficient to fund projects in the public interest.”
As part of the agreement, Allure has agreed to dissolve the non-profit board that was set up to acquire the former community facility. It will then transfer $1,250,000, “to one or more charitable organizations, approved by the Attorney General, that provide healthcare services to low income residents of the Lower East Side.”
Here’s what the agreement says regarding the establishment of a new health care facility:
The Allure Group shall use commercially reasonable efforts to establish (including by purchase of an existing facility from a third party) and operate a skilled nursing facility or other healthcare facility primarily providing long-term care to the elderly or disabled, or such other facility as licensed in the discretion of the Commissioner of Health, at a location south of East 7th Street and east of Broadway to Houston Street and south of Houston Street and east of West Broadway in the Borough of Manhattan.