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Healthcare Union Played Major Role in Rivington House Deal

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The Wall Street Journal today is taking a closer look at a powerful labor union’s role in persuading the de Blasio administration to lift deed restrictions at Rivington House.

1199SEIU (United Healthcare Workers East) lobbied the city on behalf of the Allure Group. The property owner led people to believe that changing a “not-for-profit” restriction would allow the home to remain open. Instead, the Rivington Street building was sold to luxury condo developers for $116 million.

According to the Journal, recently released documents show just how much power the union wielded:

The emails and other documents, which were produced as part of the city comptroller’s investigation into the Rivington House deed change, underscored the outsize influence 1199 has in Mr. de Blasio’s administration and the degree to which city officials assess the union’s interests when making policy decisions.

At the time Rivington House was being discussed, administration officials were asking whether the deed issue was of critical importance. In one email referencing the union, an aide to First Deputy Mayor Anthony Shorris, responded, “Very critical b/c it involves 1199 jobs and they want this done.”

As the Journal noted:

The union was one of the two largest contributors to the Campaign for One New York, a now-disbanded political nonprofit supporting the mayor. The nonprofit received $500,000 from 1199, records show. Federal investigators are looking at whether the mayor traded government action for donations to the nonprofit, people familiar with the matter said. Mr. de Blasio has denied any wrongdoing.

Documents show that Allure Group executive Joel Landau was in regular contact with Kevin Finnegan, former political director of 1199.

In late 2014, mayoral aide Emma Wolfe (a former 1199 employee) wrote an email indicating that union officials were unhappy about the Rivington House situation. She “urgently” requested the administration’s help in getting Landau what he needed, reported the Journal.

As we have previously reported, it was apparent to Community Board 3 from the outset that 1199 was playing a key role in the Rivington House negotiations. In Sept. of 2014, executives with VillageCare (then operator of Rivington House) briefed board members about their predicament. Here’s part of our story following that meeting:

This week representatives from VillageCare went before the human services committee of Community Board 3 to explain what will potentially happen to the converted school building at 45 Rivington St. that has served as Rivington House since 1995.  Matthew Lesieur, director of public policy, said the organization sought, unsuccessfully, to turn the center into an assisted care facility for AIDS patients. Legislation making the conversion possible was approved by the State Legislature three years ago but vetoed by Governor Cuomo. The state also blocked a proposal to convert Rivington House to a nursing home for the general population. The governor has pledged to reduce Medicaid-supported nursing home beds by 5,000, creating an inhospitable environment for institutions in need of a lifeline.  It’s part of a strategy to support home-based care for more seniors, rather than relying on large nursing home facilities.

Just a month later, however, government officials (at both the city and state levels) had a remarkable change of heart. Our report from Oct. 8, 2014:

At last night’s human services committee meeting, community board members suggested the state’s posture on the matter has now changed. The panel’s chairperson, Justin Carroll, indicated that about a half dozen companies responded to a request for proposals put out by VillageCare. It now appears an operator has been selected, although the deal has not been finalized.  To navigate the restrictions, the operator would purchase the Rivington House building as a “not-for-profit” and then petition for a deed change. At that point, the new owner hopes to run the nursing home as a for-profit venture. One reason for the approach, said Carroll, is to avoid laying off the center’s employees, who are represented by the powerful labor union, 1199SEIU.  If the deal is approved, the union would lose some administrative fees but workers would retain their salaries and benefits. A closure of Rivington House would trigger $20 million in pension payments by VillageCare.

Union officials declined to comment for the Journal’s story.

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