New York Times New York City Council Delays Scrutiny of Deed Changes by J. David Goodman
Credit Caitlin Ochs for The New York Times
When New York City agreed to remove a deed restriction on a nursing home on the Lower East Side in exchange for $16.15 million, it did not foresee all the complications that would follow.
The property, known as Rivington House, was then sold at great profit to a condominium developer — leading to questions about the arrangement, a moratorium on new deed changes, and state and federal investigations.
More scrutiny was to come from the City Council: Melissa Mark-Viverito, the Council speaker, suggested there would be a hearing specifically addressing the city’s handling of deed restrictions.
“There’s room here to do some oversight,” Ms. Mark-Viverito, a Democrat, told reporters in early April.
But the hearing, which was tentatively scheduled for this week, was postponed until the fall.
And several Council members said they were recently told by Ms. Mark-Viverito’s office that when the hearing does occur, the Council would not be delving into the events surrounding how the nursing home came to lose the deed restriction, which had prevented any use for it other than nonprofit residential health care.
One said the speaker’s office was concerned that the hearing would give renewed attention to an issue that has been problematic for Mayor Bill de Blasio, a Democrat whose administration approved the deed change that allowed the Allure Group, a nursing home operator, to sell the building to the condominium developer for $116 million. Each requested anonymity in order to discuss the private exchanges.
“I want to get to the bottom of what happened at Rivington, St. Nicholas and other sites,” said Councilman Ben Kallos, an Upper East Side Democrat whose committee oversees the Citywide Administrative Services Department, which grants deed restrictions. “The Council has a responsibility to hold an oversight hearing on deed restrictions.”
In preparation for a hearing, the de Blasio administration on June 15 released to Ms. Mark-Viverito’s office a list of 14 properties around the city that it said had pending applications for deed modifications or removals when the Rivington House deal came to light. The city halted new deed changes shortly after.
The list of pending deed changes spans every borough but Staten Island and varies from a small lot overgrown with trees on a residential street in St. Albans, Queens, to a yeshiva in Williamsburg, Brooklyn, to the site of an affordable housing project in the Bronx neighborhood of Morrisania. Nine have been requested since 2014; one dates to 2005.
At least one had a connection to James F. Capalino, the city’s top lobbyist and a fund-raiser for Mr. de Blasio, who at one point pressed for the removal to the deed restriction on Rivington House.
Nearly half of the properties are owned by limited-liability corporations, masking the identities of those seeking to change the restrictions and their reasons for doing so.
“I opened the corporation and that’s it,” said Stewart Sternbach, a Long Island lawyer listed in state records as the contact for a company, Marom Holding L.L.C., that bought a narrow, deed-restricted lot in Harlem in 2013. According to the city’s list, the pending application for a deed change there began in 2005; it was not immediately clear if any action had been taken recently.
Three properties belong to churches.
“It had no bearing on our project,” said Matthew Gross of Lettire Construction, a for-profit affordable housing developer that is working with the Thessalonia Baptist Church in the Bronx to build a pair of apartment buildings on land owned by the church. The city’s records show that in 2007, the church requested that the city alter the deed on an empty lot that restricted it to “not-for-profit use.” Though that request was still pending, the records show, Mr. Gross said the buildings — set to include 120 apartments, all of which would be designated as affordable — could be built there regardless of a deed change.
“We were never actually going to lift any deed restriction,” Mr. Gross said, adding that at one point there had been a discussion of altering the deed to clarify that affordable housing would constitute a nonprofit use. But the church is no longer requesting the modification because, as Cathy Hanson, a spokeswoman for the administrative services department, explained, “The city has determined that affordable housing falls within the scope of the current deed restriction.”
Photo Credit Caitlin Ochs for The New York Times
In six cases, the deeds restricted the properties to nonprofit use; in six others, the use of the property was restricted to providing an accessory, such as a parking lot, or an enlargement for an existing building. One property on the list, in Forest Hills, Queens, has been restricted to “Little League” purposes since 1965; the city was asked to change it to include soccer.
Another, the Chase Manhattan Plaza in Lower Manhattan, has a height restriction over its public plaza dating to 1957. The Chinese developer that bought the property, Fosun International, paid $126,000 to Mr. Capalino’s company to lobby the city in 2015 and 2016, including pressing for the deed change to construct entrances for new retail space below the plaza. The developer stopped using Mr. Capalino to lobby for the deed change after the Rivington deal became public, a spokesman for the lobbying company said. The severing of ties was reported by the news site DNAinfo.
Each of the pending changes was postponed by the administrative services department on March 1, after the agency learned of the sale of Rivington House to developers and the same day that the city’s Investigation Department has said it opened an inquiry into the transactions. More than three weeks later, Mr. de Blasio said he first learned of the situation from news reports.
The process for granting such changes is opaque and takes place mostly away from public scrutiny, a state of affairs that both the Council and Mr. de Blasio have vowed to change. In the case of Rivington House, none of the elected officials or local residents who had lobbied to keep a nursing home at its Lower East Side location were told of a public hearing held in June 2015; as a result, no public testimony was heard.
Of the 14 pending deed modification requests, the city has completed appraisals in 11 cases, though they “remain subject to review,” Ms. Hanson said. She declined to provide the appraised values.
The disclosure of the list of pending requests for deed changes came after a Council budget oversight hearing in May for the citywide administrative agency. Mr. Kallos, who pressed for the information to be released, shared the list with The New York Times.
One of those sites, the United Talmudical Academy on Wythe Avenue in Williamsburg, had been trying for at least five years to construct additional floors despite a deed restriction that limited its height to one story. Its construction application was denied by the Buildings Department in 2011. In November 2014, according to the city records, the school sought the removal of the deed restriction.
“From what I have seen, there appears to be a legitimate need for increased space for this yeshiva,” said the local councilman, Stephen Levin, a Democrat. But the school has so far balked at paying the city to remove the restriction, he said. The city offered its price in July 2015, Ms. Hanson said. A representative of the school did not return several calls seeking comment.
The administrative services department also released a list of deed modifications granted over the last five years, including Rivington House and, the same month, a plot of land owned by the Dance Theater of Harlem on St. Nicholas Avenue that has since been sold to developers. During the Bloomberg administration, one Downtown Brooklyn site had a height restriction removed in 2012 for $3.2 million; a plot of land on Staten Island had its nonprofit restriction lifted in 2013 for $1.345 million.
Another property, belonging to the nonprofit organization God’s Love We Deliver in SoHo, had its “community facility use” restriction removed from part of its property in 2013 for $765,000. The deed change allowed the nonprofit to sell development rights to the builder of an adjacent luxury condominium tower, where a penthouse is on the market for $15.75 million.
The Council is considering legislation to require greater disclosure, tracking and public notice when the city moves to lift deed restrictions, which are often imposed by the city when it sells its land in order to protect nonprofit uses of valuable land.
Eric Koch, a spokesman for Ms. Mark-Viverito, said the Council “will be having a hearing regarding deed restriction legislation and process,” adding that it was still in the process of gathering information.
Eric F. Phillips, the mayor’s top spokesman, said that a hearing “down the road, with meaningful information we can share” after a continuing internal review is finished, would “ultimately give the public more information.”
When the hearing does take place, questions for the de Blasio administration about Rivington House and other past deed changes are still likely to come from some on the Council.
“Usually, no matter what hearing you have, everything comes up,” said Gale A. Brewer, the Manhattan borough president and a backer of the deed restriction legislation. “You know that Rivington is going to come up and Dance Theater of Harlem is going to come up. And they can say no comment if they want to.”