State Attorney General Schneiderman launches investigation into Rivington House deed controversy [Updated]

By LOUIS FLORES

Updated 06 April 2016 09:15 a.m. ⎪ The office of State Attorney General Eric Schneiderman (D-New York) has initiated an investigation into the process that lifted the deed restrictions on a former AIDS nursing home on the Lower East Side.

The investigation by the State Attorney General’s Office into the changes to the deed to Rivington House were first reported by The Wall Street Journal. A request for an interview made by Progress Queens to a spokesperson of the office of the State Attorney General was not answered.

The investigation by State Attorney General Schneiderman will now compete with at least two other investigations, those by each of the office of Comptroller Scott Stringer (D-New York City) and the New York City Department of Investigation, which is headed by Commissioner Mark Peters.

The escalation of investigations, from municipal authorities to the office of the State Attorney General, come as the administration of Mayor Bill de Blasio (D-New York City) has continually issued denials or qualifications about who knew what and when about the controversial changes to the deed to Rivington House.

Changes made to the deed to Rivington House allowed its previous owner, Allure Group LLC, to sell the one-time nonprofit healthcare facility to a consortium of real estate developers seeking to convert the former AIDS nursing home into luxury condominiums. The speculative sale was made possible, because Allure Group LLC made a one-time payment to the New York City Department of Citywide Administrative Services in the amount of $16 million that was approved by the de Blasio administration. That payment was based on an appraisal of Rivington House that materially undervalued the complex.

Metropolitan Valuation Service, the appraisal firm responsible for calculating the undervaluation, was amongst the parties, which received a subpoena from the office of the State Attorney General, according to the latest report from The Wall Street Journal.

Even though Manhattan Community Board 3 each of noted that the lifting of the deed restrictions were effected in November 2015 and passed a resolution in January 2016, demanding, in part, that the de Blasio administration disclose the process through which the deed restrictions were lifted, Mayor de Blasio has steadfastly claimed that he was not aware about the land use changes surrounding Rivington House until a news report made the issue public on March 22. Mayor de Blasio has continued to assert his ignorance about Rivington House, even as administration officials, including First Deputy Mayor Anthony Shorris, have admitted to knowing about the deed changes.

The planned luxury condominium conversion of Rivington House follows the controversial $1 billion luxury condominium and townhouse conversion of St. Vincent’s Hospital, a move which largely led to the spectacular loss by former New York City Council Speaker Christine Quinn (D-West Village) in the 2013 mayor Democratic Party primary. Besides being an example of a real estate developer snatching a key nonprofit healthcare facility from the public, it became a symbol of the corruptive influence of money in politics. Former Council Speaker Quinn had accepted over $30,000 in campaign contributions from the beneficial owners of Rudin Management Company, the real estate developer, which converted the former nonprofit hospital into luxury housing. The size of the donations sparked outcries from the community that former Speaker Quinn faced a conflict of interest, yet former Speaker Quinn did not recuse herself from the land use review of that luxury condo conversion plan.

The process that led to the lifting the Rivington House deed restrictions included, at one point, lobbying by James Capalino, who heads the city’s highest-grossing lobbying firm. Mr. Capalino is a generous contributor and bundler of campaign contributions to various campaign committees of Mayor de Blasio. Reports have estimated the size of his contributions and bundling at $50,000.

A report published by the news Web site Forward noted that Solomon Rubin is the CEO of Allure Group LLC, the real estate developer that applied for and received the changes to the deed. Mr. Rubin is a member of Brooklyn’s Hasidic community, which has close political ties to Mayor de Blasio.

As the news media have reported the rapidly unfolding developments surrounding the luxury condominium conversion of Rivington House, Mayor de Blasio’s aides have expressed worry about his exposure to the Rivington House controversy, The Wall Street Journal reported on Friday.