Incensed local politicians and the chairperson of Community Board 3 gathered across the street from the former Rivington House on Forsyth Street on the morning of April 6 to decry a stealth deal that saw a longtime nonprofit AIDS hospice on the Lower East Side sold to a private developer for market-rate housing conversion.
The story has exploded in the past several weeks, with coverage in all the major print media, so it wasn’t surprising that the politicians were encircled by a large scrum of reporters.
To allow the deal to move forward, a deed restriction on the Rivington House property — requiring it to be used as a nonprofit nursing home — first had to be lifted by the Department of Citywide Administrative Services. That restriction had been in place since 1992, when the former public school was taken over by VillageCare, which turned the five-story building into the country’s first residential AIDS treatment facility.
Sold by VillageCare, new owner got deed restriction lifted, then re-sold
However, the deed restriction was quietly lifted this past November. The only notice was a small listing for an opportunity for public comment in the City Record.
The city received a $16 million payment from Allure Group in exchange for lifting the deed restriction, after which Allure then went on to flip the property mere months later, selling it to a luxury developer for $116 million.
At last week’s press conference, Borough President Gale Brewer, City Councilmember Margaret Chin, and Gigi Li, the CB3 chairperson, called on Mayor Bill de Blasio’s administration to “compensate” the Lower East Side community for the loss of Rivington House. They were joined by State Senator Daniel Squadron, Councilmember Rosie Mendez, and local low-income seniors who are struggling to find adequate housing in their golden years.
In light of the shocking sale, Brewer and Chin are calling for reforms to prevent similar losses of community assets by creating transparency requirements when the city is considering lifting any deed restriction. They said advance public notice must be given to local community boards, borough presidents, and city councilmembers in these cases. In addition, they said, a searchable online database of all properties subject to city-imposed deed restrictions must be made available.
“Mayor de Blasio has said he’d have blocked the city actions that led to the loss of Rivington House if he’d known about them, and I take him at his word,” Brewer said. “But admitting to a mistake is only the first half of owning up to it. If this deal is not reversed, we want the money in the community, to create a new community facility and replace the beds lost in the sale of Rivington House. And we must all work together to reform how the city handles deed restrictions, so this never happens again.”
The community had been aware that VillageCare was trying to lift the deed restriction when it sold the building to Allure Group. However, many were under the impression that it would become a for-profit nursing home — not a luxury condo project. A for-profit nursing home was something the community, in fact, supported.
Before Allure Group’s sale of the building to Slate Property Group was announced, Brewer, Chin, and CB3 all expressed concerns to de Blasio administration officials regarding the lifting of the deed restriction — wanting assurances that it would not allow market-rate residential development.
The former AIDS facility is in Chin’s Council district and she spoke passionately about her disappointment about the secret real estate deal.
“At the beginning of last year, we were celebrating,” Chin said. “We thought we had kept Rivington House… The community has the right to know why and how this happened.”
Chin and Brewer have called for the city to give them all documents relating to the lifting of Rivington House’s deed restriction and the circumstances surrounding the sale. City Comptroller Scott Stringer previously subpoenaed all of these documents, and is now doing an investigation. In addition, State Attorney General Eric Schneiderman and the city’s Department of Investigation have opened their own inquiries.
Brewer and Chin say they just want the same documents that have been provided to Stringer. So far, however, they have been stonewalled.
“I will continue to fight for the answer,” Chin vowed of her efforts to find out how the shady deal went down. “But I am also focused on getting back what we lost. We don’t need an apology! We need action! That’s why I am introducing legislation to make sure this never happens again.”
CB3 chairperson Li noted that the community has been suffering a drain of nursing homes, including Cabrini and Bialystoker before this one.
“This community has lost 355 beds that could be serving seniors,” she said. Li added that the mayor must either “reverse this deal or make sure this is a community facility.”
“We have to make sure that what happened here never happens again,” declared Councilmember Mendez.
Brewer and Senator Squadron both stressed that the disposition of Rivington House didn’t have to involve and “either or” choice between a nursing home and high-end housing.
“You can sell it to another nonprofit or a for-profit that could have beds for others’ uses,” Brewer explained. “It could be for assisted living, not just people with AIDS.”
“The idea that it’s that or this — it just doesn’t pass the laugh test,” Squadron said, referring to the AIDS hospice and the expected market-rate development.
Squadron acknowledged that he and CB3 had supported lifting the deed restriction — but with modifications, so that the property would not become market-rate housing.
“VillageCare was working with us,” Squadron noted.
Press reports indicate that both de Blasio officials and state officials believe they were misled by Allure Group, which apparently made representations that it planned to run a for-profit healthcare facility at the Rivington House site — before it flipped the property.
The mayor, however, has been criticized in the press for not voicing sufficient outrage about what transpired.
Asked about that, Brewer said, “I hope he’s outraged — particularly in this neighborhood, where gentrification is so rampant.”
She added that a public-private partnership also could have been an option to preserve a community use at the property.
K Webster, president of the Sara Roosevelt Park Community Coalition, said her group — which includes local nonprofits, residents, and businesses — had worked diligently on the Rivington House issue to try to help keep it as a nursing home.
“The building was given to VillageCare with the understanding it would continue this mission,” she said. “That’s why you have a deed restriction.”
She said it was her understanding that VillageCare wanted to sell to the highest bidder.
Webster said that during April 16 press conference an elderly local man who has dementia walked up and listened in.
“He’s getting kicked out of his apartment. We thought he was going to live here,” she said of Rivington House. “He helped build up the community in the 1980s, when the Parks Department didn’t even want to come here.”
Webster said it was tough seeing the AIDS patients moved out of the facility toward the end of Rivington’s operation. She’s often in the park, where she is an active member of the M’Finda Kalunga Garden.
“The AIDS guys used to come to the turtle pond,” she said of the garden. “They have a plot in there.”
Also in the crosshairs of the viral news story has been Jim Capalino, a leading lobbyist at City Hall and a friend of de Blasio’s. He was hired by VillageCare to get the city to lift the building’s deed restriction.
In an interview, Capalino noted that the building had been underused. Due to advances in AIDS treatment, the place was only filling about one-eighth of its 219 beds. VillageCare also wanted him to get the city to waive a payment in return for lifting the deed, he noted. The normal procedure is for the city to require a payment, since the property’s value soars after the restrictions are lifted. This money, in turn, goes toward the city’s general finances.
Meanwhile, 100 percent of the money VillageCare reaped from the property’s sale would be used to deliver health services throughout the Lower East Side community, Capalino explained.
However, he was unable to get the city to lift the restriction before the end of the Bloomberg administration, leading VillageCare to become frustrated with him and end its contract with him on October 31, 2014, he said.
Capalino said that after that date, he had no involvement whatsoever with the Rivington House property, its sale, or the lifting of the deed restriction.
Capalino said he was as much in the dark about the building’s sale as anyone.
“I read about the sale in the newspaper,” he said.
The property’s new owner, Slate, has been a Capalino client, though, involving Brooklyn properties.
“We have had three separate engagements with them,” he said. “None of them involved properties in Manhattan. We were never involved with Slate with this building.”
