De Blasio’s Rivington Street Condo Debacle Is a Scandal That Just Might Stick
This block-long property seems set to become yet another luxe condo building after a deed restriction was lifted.
Three years ago, Bill de Blasio was the little-known mayoral candidate who wouldn't budge. Police wanted him and several other protesters to clear away from the front of the State University of New York's midtown headquarters. De Blasio — the audacious leader, standing his ground, preventing SUNY from closing Long Island College Hospital and converting it to luxury condos — was handcuffed. He was out of jail a few hours later.
That theatrical act of civil disobedience helped catapult de Blasio to City Hall. But now the progressive Democrat is drowning in scandals. At least one of those is probably just political ax-grinding: The dubious fundraising for state senate candidates is likely defensible in the end. And the alleged quid pro quo revolving around de Blasio's haphazard attempts to ban horse-drawn carriages was more peculiar than insidious. But if there's an Achilles' heel here that could cripple the mayor, it's Rivington House — the unseemly land deal that may...turn a healthcare facility into luxury condos.
The basic facts of the Rivington deal reek of old machine politics: In the course of several months, Village Care, which operated the hospice for AIDS patients on the Lower East Side, was permitted to sell the building for $28 million to the Allure Group, a for-profit healthcare provider. That low price was a function of the fact that a deed restriction dating back to 1992 required that the block-long property remain a nonprofit residential healthcare facility in perpetuity. Once the sale was complete, however, Allure paid $16 million to the city to lift the deed restriction and proceeded to flip the Rivington building to Slate Property Group, a condominium developer, for $116 million.
With that, an institution of precisely the sort the city badly needs was turned into the sort it most certainly does not. And, as if this tableau couldn't get any seedier, a top de Blasio fundraiser and the city's leading lobbyist, James Capalino, at various points represented Village Care and Slate during the sale.
Federal, state, and local investigators are now scrutinizing the 2015 deal. And even if the de Blasio administration, which signed off on the lifting of the deed restriction for $16 million is found not to have broken any laws, the failure to keep this deal from happening in the first place will haunt him for the rest of his term. Of course, in a bureaucracy as vast as New York's, mistakes happen, and it's impossible for a mayor to be omniscient. But it is possible for a mayor to acknowledge a catastrophe and do everything in his power to fix it. De Blasio hasn't.
To date, no one has been held responsible for the Rivington fiasco. In January, a woman named Lisette Camilo was named to head up the Department of Citywide Administrative Services (DCAS), the agency that oversaw the deal, after her predecessor was quietly relocated to the city's hospital system, a move de Blasio claimed was unrelated. De Blasio has insisted he knew nothing of the deal before the investigations began — but Camilo, the former head of the Mayor's Office of Contract Services, certainly knew of the sale, according to documents obtained by the Voice. In a letter dated May 29, 2015, Matthew Berk, the executive director of strategic real estate initiatives at DCAS, wrote to Camilo that the agency intended to remove the deed restriction on Rivington House because it was in the "best interest" of the city. In the letter, Berk also requested a public hearing on the matter for June 24, 2015. A June 29 memo — from the deputy commissioner of asset management at DCAS to Camilo, then still at Contract Services — confirms the hearing took place and mentions the cost, $16,150,000, to lift the deed restriction. "If approved by the Mayor of the City of New York, the Department of Citywide Administrative Services shall be authorized to modify this deed," reads an addendum to the memo.
Even if she was promoted before de Blasio learned of the Rivington deal, why is Camilo still heading DCAS? The mayor laughably said that Camilo "did a wonderful job" as director of his office of contracts — how is that actually possible, given that it appears she had to be notified and never warned anyone else?
Karen Hinton, de Blasio's outgoing spokeswoman, defended Camilo by saying she "signed off on the deed restrictions in a very pro forma way." Hinton added that the city has frozen all lifting of deed restrictions until the Department of Investigation completes its inquiry. "Going forward, all agencies with relevant oversight related to the lifting of a specific deed restriction must approve it — so there will be much more oversight," she said.
That's good to hear. But it doesn't answer the question of how the administration opted to allow Allure to scrap the deed restriction on Rivington House for just $16 million — a pittance in the context of Manhattan real estate. There's been no accounting for how such a number was first arrived at. Such restrictions are rarely lifted at all, and the massive profit Allure realized through the building's subsequent sale — reportedly over $70 million — is disturbing.
Gigi Li, the chairwoman of Community Board 3, said she was seeking many more answers from City Hall. If lifting a deed restriction is relatively rare, why this one — and why for $16 million? Why was the only public notice a single hearing advertised in the little-read City Record?
"There is concern, knowing what we know now, how this would obviously have required approval from people very high up in DCAS to happen," Li said.
Getting answers, Li added, has not been easy. "The city has not made any additional effort to engage or give information to the community board throughout this process."
In a March New York Times story, when Stringer had already opened his inquiry, a de Blasio spokesman said the city settled on $16 million using "longstanding valuation practices." What are these practices? When the Voice reached out to the de Blasio administration for additional information, a spokesman for the city's Law Department said the ongoing investigations prevented them from offering an actual answer.
But there was plenty of time before the overlapping investigations to offer some kernel of information to the public. De Blasio, who promised to run the most transparent administration in the city's history, failed egregiously on this count. Meanwhile, Camilo is still running DCAS and Stacey Cumberbatch, Camilo's predecessor there, is collecting an ample $200,000-plus salary at NYC Health + Hospitals. Randal Fong, an assistant DCAS commissioner who oversaw the Rivington deal, has likewise kept his job. De Blasio, who closes ranks with the best of them, is as slow to fire as he once was to hire.
A stop-work order is currently slapped on the Rivington property. The Department of Buildings found Slate's plans called for some significant alterations that the construction permit doesn't cover. The DOB is waiting for a new application, de Blasio's spokeswoman said. Perhaps it's not too late.
Had the Rivington scandal occurred under Michael Bloomberg, a less nimble administrator than his mythology would have you believe, the outcry would've had a different flavor. For one, the media, in the thrall of someone professing to be a non-ideological technocrat (despite governing as a pro–Wall Street Democrat), was less ready to pounce. The flipping of an old property to a condo developer was just what we expected from a man whose rapid-fire rezonings catalyzed gentrification as in few other cities in the world.
De Blasio, however, thanks to his self-created hype, must bear the cross of saving urban liberalism. Standing on his moral high ground, wearing the hair shirt of lefty piety, he will be doubly scrutinized for any deviations from it. This is someone, after all, who once got himself arrested, in the middle of a mayoral campaign, to keep a Brooklyn hospital from being turned into luxury condos. They're being built anyway.
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