Gothamist De Blasio's Deputy Mayor Admits LES Rivington House Deal Was A Failure by Josh Keefe
First Deputy Mayor Anthony Shorris appeared before the City Council on Thursday to speak for the de Blasio administration in its handling of a deed restriction on 45 Rivington Street—a $72 million fiasco that resulted in an elder-care provider flipping a Lower East Side nursing home to a luxury condominium developer. Shorris admitted mistakes in the handling of the deal, while blaming a "duplicitous" and "conspiratorial" developer and insisting that the administration had since implemented procedures to make sure the mistake could not be repeated.
"I recognize that what happened here was not the right outcome—for the community, for the taxpayers—and nor was it consistent with the policy goals of the de Blasio administration," Shorris said. "The process here was a flawed process."
Until the fall of 2015, the six-story Rivington House was under a deed restriction that required it to remain a nonprofit residential healthcare facility "in perpetuity." The 118-year-old building on the corner of Forsyth Street served first as a public school, and then, from 1993, as an HIV/AIDS hospice. In 2014, Rivington House shut its doors amid decreasing demand for in-patient HIV/AIDS treatment. The next February, Village Care, the non-profit running the facility, sold the property to a non-profit arm of Allure Group for $28 million. In November 2015, Allure paid the city $16 million to lift the deed restriction, with the expectation that the site would be converted into a for-profit nursing home. But in February 2016, with the deed restrictions gone, Allure sold the property for $116 million to Slate Property Group, a real estate developer with plans to turn the property into luxury condos.
City, state and federal authorities have launched investigations into the deal, and to date no one in the mayor's office has been accused of misconduct, a point Shorris reiterated to the council, which had its first opportunity to directly question a member of the mayor's staff about a saga the city's own Department of Investigations blamed on a "complete lack of accountability within City government regarding deed restriction removals" and "significant communication failures."
"Something went very wrong here," said Councilmember Ben Kallos, Chair of the Council Committee on Governmental Operations. "We must address the issues of mismanagement, communication failure and outside influence."
Councilmembers questioned Shorris on communication within the administration (asking why Shorris didn't regularly read the numerous weekly memos sent to him by the agencies he oversees), and his relationship with lobbyist and de Blasio fundraiser James Capalino—a man who represented the nursing home's initial seller and final buyer (he has denied any involvement in the deal). They also asked why Stacey Cumberbatch left her position as commissioner of the Department of Citywide Administrative Services (DCAS), the city agency responsible for deed restriction removal, in January—shortly before news of the Rivington sale went public. ("She took another opportunity," Shorris said.)
Just as Shorris was being sworn in Thursday, City Hall announced that it is investing the $16 million the city made from the initial restriction removal into a property less than a mile from Rivington House. The property, currently owned by the Department of Environmental Protection, will be turned into a 100-bed nursing home (Rivington House had 200 beds). The city will issue requests for proposals for the new facility in 2017.
The community has been adamant that Rivington House be restored to a public facility, and Councilmember Margaret Chin, who represents the Lower East Side, reiterated this on Thursday. Shorris said the city is looking into the possibility.
But overall the council seemed less concerned with replacing lost nursing home beds than understanding how a developer was able to fool the city, and how an administration so focused on affordable housing could pave the way for a valuable piece of property to be turned into luxury condos amid an ongoing housing crisis. Shorris said the removal of deed restrictions, which the mayor froze after the Rivington House deal was widely reported on, had not been a topic of concern for this or previous administrations.
"Deed restrictions in any form generally did not rise to the level of City Hall review either before or after that time until this issue arose," Shorris said, adding that the deed restriction removal process was a "mechanistic" one aimed at generating revenue for the city, and had been since 1992. Shorris added that the Rivington property only came to the administration's attention because "of its scale, its potential impact on the community" and its ability to deliver "services for a vulnerable population."
"It was a failure on our part, as you currently point out, to introduce our values into that process," Shorris continued, insisting that, moving forward, deed restrictions will be "elevated to a policy making conversation... deed restrictions will be much more formally discussed."
The council is also moving to change the deed restriction removal process. Councilmember Margaret Chin, who represents the Lower East Side, introduced a bill that would create a publicly available database of all city deed restrictions and require public notice of any deed restriction modification or removal, with public hearings in advance of the restriction removal.
"The community could've been alerted," Chin said. "But we didn't even know that this discussion was happening."
Councilmember Kallos returned frequently to communication issues, suggesting the organizational structure of the administration may have led to the city's fleecing by developers. After asking Shorris how many agencies he oversaw as first deputy mayor ("approximately 30") Kallos noted that the last two administrations had deputy mayors of operations, a position which de Blasio consolidated into the role of first deputy mayor.
"Do you feel you've been able to effectively manage these 30 agencies so mistakes don't happen like this?" Kallos asked.
"Councilor, I'm extremely proud of the record of this administration—" Shorris began, before Kallos cut him off.
"Are you proud of Rivington?"
Shorris answered that he was not.
Protestors outside yesterday's City Council hearing (Josh Keefe/Gothamist)
Outside the hearing, by the City Hall gates, a small group of approximately 20 protestors representing half a dozen community groups demanded more than just an apology. Standing beside a hand-painted banner that read “Return Rivington House,” James Rodriguez, a community organizer with GOLES (Good Old Lower East Side) said it wasn’t enough that the administration admitted the deal was a mistake.
“Refusal to correct the mistake makes you complicit,” Rodriguez said.