After luxury condominium developers purchased 45 Rivington Street on the Lower East Side for $116 million in March, members of the community were incensed to learn that the deed restriction requiring it to act as a nonprofit residential healthcare facility had been quietly lifted in November 2014, after the city collected a $16.5 million fee.
Today the NY Times reports that at the same time the 45 Rivington deal was coming together, a similar negotiation was underway in Harlem: The Department of Citywide Administrative Services (DCAS) accepted $875,000 to lift a 70s-era restriction on a corner lot at St. Nicholas Avenue and 152nd Street owned by the Dance Theater of Harlem.
That lot, previously preserved for nonprofit cultural organizations, eventually sold to a developer for $3.1 million last May.
A source close to the Harlem negotiation told the Times that the city has been in talks with purchaser BRP Companies about constructing two dozen below-market rate apartments on the site, although no permits have been filed.
45 Rivington's owners initially approached local Community Board 3 about altering that deed restriction, putting the community on high alert. The Harlem deed change was stealthier—neither the community board, nor local Council Member Mark Levine, nor Borough President Gale Brewer were informed.
"We found out after it was lifted by just looking up the deed," a community board member told the paper.
The Rivington and St. Nicholas negotiations have significant parallels. Lobbyist James Capalino, who works for 45 Rivington purchaser Slate Group, has bundled $50,000 in donations to Mayor de Blasio (a spokeswoman for Capalino has since stated that he did not represent Slate Group in the deal); BRP Companies in 2014 contributed $10,000 to the Putnam County Democratic Committee—coinciding with the Mayor's push to support Democratic Senate candidates through New York county committees. The Mayor's campaign donation habits are currently under federal scrutiny.
In response to questions about the Harlem deed restriction lift, DCAS stated, “The city is in the process of reviewing its policy on the lifting of deed restrictions.”
The Dance Theater of Harlem issued a statement Friday.
Dance Theater of Harlem issues statement on deed change that allowed them to sell a protected lot to developers pic.twitter.com/W7ku5GAaUp
— J. David Goodman (@jdavidgoodman) May 13, 2016
The Rivington deal is currently being investigated by the Department of Investigation, Comptroller Scott Stringer's office and the State Attorney General's office. The City Council is also planning to hold a hearing on the process for lifting deed restrictions in a few weeks, and DCAS was questioned during a Finance Committee hearing on Friday.
Despite the investigations, Capalino attended at fundraiser for de Blasio last night at Brooklyn Bowl.
In March, the NY Times reported that at least nine deed restrictions had been modified or lifted since de Blasio took office, primarily on vacant lots. In three deed negotiations since 2014, the city didn't accept any money.
DCAS Commissioner Lisette Camilo said on Friday that the agency has "about 13 or 14" deed restriction modification negotiations on hold, and that about four deed restrictions are lifted per year.
She declined to comment on the process by which DCAS determines the monetary value of a deed restriction lift or alteration:
All of the process is being reviewed. Everything used to be done on a case-by-case analysis. I can't speak to what factors weigh in. There was a process that has been established for many years, and… I can't speak to what factors contributed.
She added, "In the case of Rivington, no one is happy with that outcome and we are looking at how we can do things better."
DCAS also promised the City Council today that it would hand over a list of all of the deed restrictions it's lifted in the last five years with associated payments.
Legislation proposed last month by councilmembers representing the Lower East Side would mandate radical transparency in all deed negotiations that could change a city-imposed restriction on a building's use. It would require public notice well before the city considers lifting a deed restriction, and mandate a new online database including property records for all NYC buildings that are subject to the City's deed restrictions.
Until recently, announcements of deed restriction negotiations were only listed in the City Record. In the case of 45 Rivington and St. Nicholas, the NY Times reports, public notice of a hearing on the deed changes was listed in the Record for one day.
According to the Mayor's office, DCAS mandated on March 1 that going forward, notice will be made "not only in the City Record but to the affected Borough President, Council Member, and Community Board."
"Really, it needs to be the law," Manhattan Borough President Brewer challenged last month. "We need to do more. I can't tell you how many properties there are in this City with deed restrictions, or where those buildings are. Transparency is needed."