The Villager Pike St. project will ‘replace’ Rivington House: De Blasio by Lincoln Anderson

The Villager
The Villager
Pike St. project will ‘replace’ Rivington House: De Blasio
Lincoln Anderson

Thursday was definitely one action-packed day in the ongoing saga of Rivington House on the Lower East Side.

City councilmembers grilled the first deputy mayor, as well as the corporation counsel and another top administration official, in hopes of somehow getting to the bottom of the murky real estate scandal.

Meanwhile, midway through the lengthy hearing — in fact, right after First Deputy Mayor Anthony Shorris had mercifully gotten off the hot seat — Mayor Bill de Blasio blasted out a press release, announcing that the city would be building a new senior affordable housing and healthcare facility on the Lower East Side.

This new facility, the release said, would “replace shuttered Rivington House,” the former AIDS hospice run by VillageCare that was shockingly lost when the city quietly lifted a deed restriction limiting the property to nonprofit healthcare use.

The deed restriction’s lifting, in turn, paved the way for the Forsyth St. property — a handsome former school building — to be sold, and then promptly flipped, at a huge profit, for market-rate residential development. The story quickly spiraled into a scandal that has shocked the city and damaged de Blasio.

Thursday’s hearing by the City Council’s Committee on Oversight and Investigations — co-chaired by Vincent Gentile and Ben Kallos — clocked in at a solid six hours.

Basically, Shorris and Lisette Camilo, current commissioner of the city’s Department of Citywide Administrative Services, testified that Rivington House’s deed restriction was lifted without any notification to the community because the city…well…just plain screwed up.

No one was to blame for it or was disciplined for what went down, they said. They repeatedly stressed, however, that new, improved processes have since been put in place, so that something like this won’t ever happen again.

As for the developers and how they managed to pull a fast one on everybody — allegedly, without the city ever being aware of it — Shorris repeatedly described them as “deceptive.”

Camilo previously was director of the the Mayor’s Office of Contract Services, or MOCS, when that agency, per its usual duties, officially signed off on the lifting of Rivington House’s deed restriction. She subsequently took over DCAS after its previous director, Stacey Cumberbatch, abruptly left to become a vice president at New York City Health + Hospitals. DCAS manages roughly 4,000 city-owned buildings.

Shorris testified that he had started having discussions about Rivington House early on after de Blasio came into office, in the fall of 2014. VillageCare had come to City Hall seeking help, saying the nonprofit nursing home was a financial liability, threatening to bankrupt it.

Shorris said the discussions eventually focused on it becoming a for-profit nursing home — his personal preferred future use for the property — and this is what he assumed it would become.

“At no time,” Shorris stated, “did anyone write, call, meet or discuss with me the notion that the actions being taken by [DCAS] would allow the property to be converted to luxury housing.”

Time passed and he didn’t hear about the building again until after Camilo learned of the sale and told him about it, he said.

“I did not discuss Rivington [House] again until late February 2016 when the new commissioner, Lisette Camilo, reported to me that the site had been sold to a luxury housing developer for in excess of $100 million,” Shorris said.

He said de Blasio also was totally in the dark about the Rivington House sale.

“I spent the next few days trying to understand what transpired,” Shorris said, “and then I informed the mayor as news accounts were beginning to run — the first time he heard anything about the matter.”

Camilo said after informing Shorris of the sale, she called the Department of Investigation the next day to have them look into it. Shorris said he, too, called D.O.I. to ensure that they were on it.

MOCS produces the City Record, which contains listings of city-owned properties for sale.

Camilo said the only public notice of the Rivington House property being on the market was a listing in the City Record that only identified it by its Forsyth St. address. One of the councilmembers on the committee, however, corrected her: In fact, the listing had not even been an address, he said — just the block and lot number.

“Do you know what the block and lot number is for your office?” he asked her, to which Camilo responded, no.

As previously reported by the New York Post, Camilo said she first became aware of the property’s sale this March 1, although Community Board 3 previously “had alerted her of the possible flip” in a January letter.

The new L.E.S. senior housing and healthcare facility announced by de Blasio on Thursday would include 100 apartments in a mixed-use building at 30 Pike St., a property currently owned by the city’s Department of Environmental Protection.

“Rivington House’s conversion to luxury housing never should have happened,” de Blasio said in his statement in the press release. “This community was the victim of a broken process, city error and unscrupulous developers looking to make a buck. Our reforms will prevent that from ever happening again. This investment is a reflection of our unwavering commitment to the health of this neighborhood.”

More than 1,000 city-owned properties currently are under deed restrictions, the committee members were told. Councilmember Margaret Chin and Manhattan Borough President Gale Brewer are pushing new legislation to create a database of all such properties, along with requirements for public notice and review if any change of the restrictions is being contemplated.

When the city lifts a deed restriction, the owner typically must pay the city 25 percent of the property’s assessed value — since it will now be worth so much more. In the case of Rivington House, the assessed value was $64 million, so the cost to lift the restriction was $16 million. VillageCare had retained top lobbyist Jim Capalino to try to get the administration to waive this payment, but he was unsuccessful.

The property was sold to Allure Group for $28 million last year, with the understanding it would become a for-profit nursing home, assuming the city modified the restrictions.

Allure paid the agreed-to $16 million to modify the deed — but then went on to flip the property mere months later, selling it to luxury developer Slate for $116 million — turning a huge profit.

Shorris said Allure had been able to purchase the property in the first place because it has “a nonprofit arm.”

Amid the ongoing furor over the Rivington House scandal, de Blasio in July announced that this $16 million fee would be used within the Lower East Side community for healthcare purposes. Thursday’s press release noted that this sum would be used to construct the new facility, though the release added that the project’s cost actually would exceed this amount.

However, local politicians, advocates and community members continue to stress that they “want Rivington House back” — as in, returned to the community as a healthcare facility.

At a town hall on how to address the Rivington House situation earlier this year at University Settlement, Councilmember Chin, along with Melissa Aase, the settlement’s executive director, and others repeatedly said — to the audience’s cheers — that what everyone wants is for the building to be returned to the community.

Aase noted that the old school building is really worth about $70 million, when the cost of an extensive interior renovation from a few years back that increased its usable space is factored in. In short, the $16 million does not even begin to approach the value of what was lost, Aase said.

Also testifying at City Hall Thursday was Zachary Carter, the corporation counsel, or city’s top law officer. The councilmembers interrogated him on why his department had so heavily redacted documents about Rivington House that were requested by the Department of Investigation. Carter replied he felt that only the “relevant” parts of the documents should be handed over. The councilmembers blasted this behavior as “shocking.” At any rate, under pressure, Carter eventually did fork over the un-excised papers.

Chin asked Carter what he is currently doing in terms of legal actions to restore Rivington House to the community. Carter said his department is looking at all options. He added that, depending on what is turned up in investigations, the developer could possibly be hit with “civil fraud” charges. He noted that the current investigation into the deal by Eric Schneiderman, the New York State attorney general, could possibly yield something actionable.

At the end of the hearing, a small number of members of the public — under 10 — testified, among them, Susan Stetzer, C.B. 3 district manager; K Webster, founder of Friends of Rivington House; and Annie Wilson, a former squatter from 544 E. 13th St.

For her part, Stetzer scoffed that a listing of a block and lot is not a public notice.

Webster said the nursing home’s beds being wiped out was equal to “the loss of 215 affordable homes” — which the community desperately needs back. The pledged 30 Pike St. facility, though, would only have half that number of apartments.

Comments by both Chin and Brewer about the new project were included on the mayor’s press release about the plan.

“My first wish is to return Rivington House to its previous use, a home for those who needed assisted-living support,” Brewer said. “But I look forward to working with the administration and the community to build an equal number of permanent affordable senior housing and assisted-living units in the neighborhood.”

Calling it “a win” for the Lower East Side, Chin said, “The decision to pursue a comprehensive senior health facility at this site will allow for a continuum of care that I hope will become a model for communities across our city. I look forward to working with the administration to ensure that this facility will be accessible to the growing number of low-income seniors who need more affordable housing and healthcare options in the neighborhood.”

Meanwhile, Webster, who is also a member of C.B. 3, said the Pike St. site is less than ideal, but she’ll take it — plus, Rivington House must still be returned, too.

“Yes, the community board has been trying to get that for affordable housing for a really long time,” she said of 30 Pike, albeit adding, “It’s underneath a very, very noisy subway train. Not so great for elders or those who are disabled.”

But noting that the number of homeless the city is now housing recently spiked to a record high of 60,000, Webster said, “I say — go ahead and use both sites for affordable housing!”

Good Government