As city and state investigators continue to probe the Rivington House fiasco, more details are emerging about the Allure Group’s maneuverings on the Lower East Side during the past few months. After the city inexplicably lifted a deed restriction, the health care consortium flipped the longtime community facility earlier this year. At least three inquiries are now underway.
Allure executives told community members and staff of the nursing home that there was little choice but to shutter the center because Medicaid reimbursements could not be obtained for the facility’s 200-plus beds. Joel Landau, an executive with the firm, also spelled out plans to open a new nursing home in the neighborhood, alongside the Confucius Plaza housing complex in Chinatown.
These assertions are, for obvious reasons, now being looked on with suspicion. Last week, Community Board 3 District Manager Susan Stetzer said Landau lied in December, insisting he’d never heard of the Slate Property Group. We now know that Slate and its partners signed a contract to purchase the building for $116 million seven months earlier. Now there are more questions about Allure’s explanation for the closure and its promises of a new facility in the community.
The original owner of Rivington House, VillageCare, filed a petition in state supreme court to sell the building in the fall of 2014. According to legal documents, a contract was signed with Allure Group executives Joel Landau and Marvin Rubin Oct. 9, 2014 for $28 million. On Dec. 11, VillageCare filed more papers, pleading with the judge for “emergency relief,” saying it was costing more than $1 million per month to keep the AIDS hospice open. All but two patients had been relocated. The judge approved the sale on Dec. 16.
The Allure Group had been given permission from the state health department to run a nursing home for the general population (rather than an AIDS-specific facility) with 204 beds. According to former staff members, they admitted close to 30 residents. But before long, it became apparent that not all was right at the nursing home, which had been renamed the Rivington Center for Nursing & Rehabilitation.
Allure management told employees that they could not accept Medicaid patients because VillageCare did not transfer its contracts to the new company. This was the same explanation Landau gave to CB3’s Susan Stetzer and that Elazar Krieger, the center’s administrator, gave to community activist K Webster during a June 2015 meeting. While Landau acknowledged in a conversation with Stetzer that Allure Group would be selling the building, he said a site for a new nursing home had already been identified. Landau added that the state health department had pre-approved the transfer of the beds from Rivington Street.
The new location was purportedly to be on land controlled by Confucius Plaza Housing. Board President Justin Yu told us over the weekend that Confucius Plaza representatives spoke with the Allure Group on two occasions, most recently about two months ago. They also visited Allure’s Hamilton Park nursing home in Brooklyn, and were generally impressed with its management. But Yu said no deal has been struck to build a new home in Chinatown.
Allure’s representations don’t appear to add up in other ways. According to a spokesperson at the health department, nursing home beds are not transferable from one location to another. If an operator wants to open a new home, it must demonstrate a need for the beds and present a financial plan. The Allure Group has not made a request to the state. The spokesperson also said that the Rivington Center was eligible right away to bill for a “geriatric Medicaid bed rate,” but that Allure sought a higher rate. The firm’s plan wasn’t allowed under regulations. The spokesperson indicated that repeated attempts to resolve the situation were rejected by Allure.
The former staff members said the center was partially occupied until Dec. 11 of 2015, when the last patients were transferred. A few days later, state health inspectors showed up for a re-certification survey and were surprised to learn that the building had been emptied. According to the health department, Allure then submitted a closure plan (it’s a violation of state and federal requirements to hold a nursing home license with no residents). The spokesperson said that, in light of recent developments, the department is reviewing all legal options related to the nursing home and its operators.
Last week, Allure’s Marvin Rubin released a statement saying, “We tried to make Rivington House viable as a for-profit skilled nursing facility. When it became clear that this was not possible, we followed all proper protocols and sold the building.”
Below we have posted some of the legal documents that were filed with the court.
They show that the sale price was agreed upon based on an on Oct. 2014 appraisal by Jerome Haims Realty. He found that the “fair market value” of the building was $22.9 million. The property was being sold, “as a not-for-profit skilled nursing facility with restrictive covenants as to use.”
As previously reported, VillageCare was unwilling to pay the city $16 million to lift the deed restrictions. The following November, the Allure Group paid the fee and then profited $72 million three months later in selling 45 Rivington St. to luxury condo developers. The city’s Department of Citywide Administrative Services has, of course, come under heavy criticism for changing the deed. A mayoral spokesperson told Politico New York that a city appraisal was conducted in late 2014 but there was no new valuation of the property a year later when the transaction was officially approved.
The documents also show that Allure Group agreed to pay $28 million for the property, which included taking responsibility for debts in the amount of $17.7 million. The remainder was transferred to VillageCare in the form of a grant to “support and benefit the chronically ill, with an emphasis on HIV/AIDS services.”