City Council Votes to Tighten Regulations After Rivington House Scandal

The City Council passed a bill yesterday that will tighten rules surrounding the removal of deed restrictions after a shady deal led to a Lower East Side nursing home being flipped for luxury condos.

A city-issued deed restriction on Rivington House, which specifically treated AIDS patients, mandated that the building be used for non-profit healthcare services. Its operator, Village Care, sold the building to for-profit healthcare company Allure in early 2015. Allure later paid the city $16 million to remove the restriction, under the guise of operating the facility as a for-profit health outlet, and then flipped the property in a lucrative $116 million deal to the luxury condo developers Slate Group, much to the outrage of longtime neighborhood residents and their elected officials.

The new bill creates a three-pronged approval process before a deed can be removed. First, officials from various city agencies will independently review and approve any removal request, including the Department of Citywide Administrative Services, which currently evaluates the requests. Then a series of public hearings, impact studies and input from community boards will be considered before the request is sent to Mayor de Blasio, who will have final say.

Additionally, the bill requires the creation of a public, searchable database of all city properties under deed restrictions going back as far as 1996.

The Rivington House scandal sparked multiple investigations and an hours-long grilling of top officials from Mayor Bill de Blasio’s administration. Despite repeated insistence that his administration was not to blame, a Department of Investigation report found a “complete lack of accountability” behind the deed removal and included emails sent to deputy mayor Anthony Shorris demonstrating that the administration should have seen the flip coming.

City Comptroller Scott Stringer, whose report further highlighted City Hall’s incompetence, said that Joel Landau, a principal of the Allure Group who brokered the sale, was “plotting a payday from the beginning.”

In June, the New York Times reported that a federal investigation into the matter was pending. A spokeswoman from U.S. Attorney Preet Bharara’s office declined to confirm or deny the existence of the investigation.

The bill will not subject deed removals to the city’s Uniform Land Use Review Process, a move both Manhattan borough president Gale Brewer and Councilwoman Margaret Chin, a sponsor of yesterday’s bill, have pushed for. Speaker Melissa-Mark Viverito told The Observer that change may be coming down the line.

“The people of the Lower East Side, who were cheated out of a prized community asset… demanded that their elected officials act to ensure that this never happens again to another community,” said Chin. “We have answered their call, as well as that of millions of other New Yorkers worried about the future of their neighborhoods.”

Mayor Bill de Blasio is expected to sign the bill into law.