City Hall missed opportunities to stop Rivington House sale: Report

According to a new report, city officials allowed the sale of Rivington House, a Lower East Side nursing home and health care facility, for a $72 million profit in a condo development deal after the removal of the formerly not-for-profit property’s deed restrictions.

On Monday, New York City Comptroller Scott M. Stringer released a report that outlined how the health care facility was eventually sold after a series of questionable oversights took away the city’s ability to ensure that the property remain used for a public purpose. The result was that, for a payment of $16.15 million, the city removed the Rivington House’s deed restrictions, which led to its eventual sale to a luxury condo developer, according to the report.

“No individual should be allowed to profit off the loss of vital community resources,” Stringer said, “But what’s worse is that the checks and balances in place to avoid this kind of outcome were mismanaged.”

Despite 48 staff meetings and hundreds of emails and telephone conversations among city officials, Joel Landau, principal of the Allure Group, was able to secure the removal of the not-for-profit restrictions on the Rivington House’s deed while he was working to flip the location into condos, Stringer’s report stated.

On Feb. 9, 2015, Landau acquired the facility from VillageCare for $28 million, according to the report. In November of that year, he paid the city $16.15 million to have the property’s use restrictions removed, despite missed opportunities for city oversight in the form of a public hearing by the Mayor’s Office of Contract Services, an undervalued appraisal from the Department of Citywide Administrative Services (DCAS) and the mayor not receiving communications from his staff indicating that the Rivington’s deed restrictions had been lifted.

“City Hall and DCAS had every opportunity to prevent Rivington House from being sold to luxury housing developers,” Stringer said. “We must ensure that our deed restriction protocols are updated, but also that procedures are properly executed by city staff to ensure the interests of the city, and its residents, are always protected.”

On Feb. 11, 2016, Landau’s sale of the Rivington House property to Rivington Street Investors closed for $116 million, Stringer’s report stated.

The comptroller outlined several steps to ensure that such a sale would not happen again, including strengthening mayoral oversight in the form of a more active Office of Contract Services, ensuring public input by better advertising and notifying community members of public hearings and expanding the city’s definition of “best interest,” according to the report, which is included below.

“We have to make sure our government operates with the highest level of accountability to guarantee this never happens again,” Stringer stated.