De Blasio’s Management Failed in Deed Sale, Probe Says

  • NYC mayor’s staff wrongly allowed it to be sold for condos
  • Transaction enriched de Blasio donor with $72 million profit

New York City Mayor-Elect Bill de Blasio shakes the hand of Anthony Shorris after he announced him as first deputy mayor during a press conference on Dec. 4, 2013, in New York City.

Photographer: John Moore/Getty Images

New York Mayor Bill de Blasio’s mismanagement permitted the sale and conversion of a nursing home into luxury housing, according to city Comptroller Scott Stringer.

The removal of deed restrictions that required the building to be used as a health facility allowed the sale of the Rivington House on Manhattan’s Lower East Side. The purchaser was developer Joel Landau, a de Blasio campaign donor and principal of the Allure Group, a closely held Brooklyn-based group of nursing facilities and rehabilitation centers.

More than 40 officials failed to stop the sale after Landau manipulated them with dishonest assertions that he needed the restrictions lifted to obtain financing, the report found. He then sold the building to a luxury developer for a $72 million profit in 2016.

“The checks and balances in place to avoid this kind of outcome were mismanaged,” Stringer said at a news conference at which he released his office’s 28-page report.

An attorney for Allure, Andrew Levander, contradicted Stringer’s characterization of Landau as dishonest. Landau told the city that its demand for $16.15 million to lift the deed restrictions would force him to develop housing or flip the property, a statement recorded in the report, Levander said.

“Allure never lied to or misled city officials,” Levander said.

Underlings Uncontrolled

Stringer didn’t hold de Blasio directly responsible for the deal. Instead, he
said that because of the mayor’s mismanagement, his chief of staff and three deputy mayors failed to warn him about it, and didn’t understand the need to do so.

Stringer’s investigation paralleled the findings of a city Department of Investigation report last month, which found officials were repeatedly warned that the nursing home could wind up as a luxury condominium, which is inconsistent with de Blasio’s stated priority of building or preserving 200,000 units of affordable housing by 2024. The U.S. attorney for Manhattan has subpoenaed records of the transaction.  

Lobbyist James Capalino, who represented Slate Property Group of Manhattan, the condo developer, is a de Blasio supporter who has raised at least $50,000 for the mayor’s campaign and his defunct non-profit support group, the Campaign for One New York.

Community leaders expressed alarm to members of de Blasio’s administration about the lifting of the restrictions, and warned that the building would be transformed, yet the mayor wasn’t informed, Stringer said. City Hall staff didn’t speak to Landau until two weeks after the building had been sold to the developer, the comptroller’s investigation found.

“Everything was done appropriately; we followed the law,” de Blasio said Monday at a news conference when asked for his response to the Stringer report. The mayor has said he regretted his administration’s failure and is examining whether the sale could be reversed.

The deal went through partly because de Blasio’s First Deputy Mayor Anthony Shorris, who had required agency heads and commissioners to submit weekly memorandums to him, ignored the messages, Stringer’s investigation found.

(Corrects the name of building’s buyer in ninth paragraph.)
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