August, 15, 2016
By Neal Tepel
New York, NY – New York City Comptroller Scott M. Stringer has released a report extremely critical of a process that allowed New York City to sell valuable property to a private company at a tremendous loss to the city.
The organization that acquired the property landed a $72 million profit in February 2016. The Comptroller’s Office found that multiple City agencies and dozens of City officials were involved in deliberations about the removal of two deed restrictions that previously limited the property’s use. The Rivington House property was allowed to slip away because of poor execution of City processes.
Despite 48 City staff meetings and hundreds of emails and phone calls, lapses in the oversight of the deed removal process allowed Joel Landau, principal of the Allure Group, to secure the removal of the Rivington House deed restrictions at the same time that he was working to “flip” the property into luxury condominiums.
This deal resulted in patients losing their homes, healthcare workers losing their jobs at the site, a neighborhood losing a vital community asset, and the City losing its power to ensure that the property was used for a public purpose “in perpetuity.”
City Hall was told as early as January 2014 that Department of Citywide Administrative Services (DCAS) was poised to remove the deed restrictions on Rivington House, yet after City Hall reviewed alternative uses for the property, it failed to communicate a clear policy direction to DCAS
In January 2014, City Hall was informed by a representative of VillageCare, the health care operator of Rivington House until February 2015, that “DCAS has agreed to remove the deed restriction” at Rivington House. City Hall explored alternative uses for the property and found that it could support up to 276 units of supportive or 188 units of mixed-income housing, but did not involve DCAS in the bulk of those discussions. Ultimately, the First Deputy Mayor decided the preferred use for the building was a healthcare facility, but City Hall never clearly communicated that decision to the agency.The City missed opportunities to provide transparency or accountability in removing the deed restrictions at Rivington House:
Consequently, when Joel Landau approached DCAS in April 2015 to formally request the removal of deed restrictions on the property, DCAS had no clear guidance from City Hall as to its preferred policy outcome and was unaware that his request should be denied. As a result of incompetence and the absence of clear direction from City Hall Joel Landau exploited the deed restriction process.
In pushing to have both deed restrictions lifted at Rivington House, in late 2014 Joel Landau strategically lobbied local stakeholders by promising to maintain the property as a healthcare facility when in fact he was already exploring other luxury uses.
“No individual should be allowed to profit off the loss of vital community resources,” Comptroller Stringer said, “But what’s worse is that the checks and balances in place to avoid this kind of outcome were mismanaged. We have to make sure our government operates with the highest level of accountability to guarantee this never happens again.”