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Lobbyist Tied to Shady Hospice Sale Made $250K Pushing Other Deed Changes

 James Capalino, who lobbied to have the deed restriction lifted at the Rivington House, was paid more than $250,000 in the past two years by three clients to get deeds modified.
James Capalino, who lobbied to have the deed restriction lifted at the Rivington House, was paid more than $250,000 in the past two years by three clients to get deeds modified.
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Facebook/James Capalino

FINANCIAL DISTRICT — The powerful lobbyist involved in a controversial deed switch that turned an AIDS hospice facility into a future luxury condo development made more than $250,000 in the past two years pushing for deed changes at three other properties in the city, records show.

The lobbyist, James Capalino, pushed city agencies to either lift or modify deed restrictions at a landmarked skyscraper in Lower Manhattan, an industrial site in College Point and a transitional shelter in the East Village.

Capalino is also a top fundraiser for Mayor Bill de Blasio. But despite his clout in City Hall, his firm earned mixed results for the three clients.

For example, Capalino + Company struck out getting a deed restriction lifted at the East 10th Street shelter in 2014.

And his efforts to modify the deed for the landmarked skyscraper were stalled after federal and state investigators opened probes into the lifting of a deed at the AIDS hospice Rivington House, which allowed the facility to be sold to luxury apartment developers and evoked negative headlines.

In fact Fosun International, owners of the skyscraper at 28 Liberty St., stopped using Capalino's firm on the deed modification because of its connections to the Rivington House drama.

Fosun had paid $120,000 to Capalino’s firm since January 2015 to lobby the city’s Department of Citywide Administrative Services to modify its deed in order to change parts of its public plaza and to build ground-level storefronts.

But Fosun asked Capalino to stop lobbying DCAS in the first week of April, shortly after the Rivington House sale began making news and being scrutinized by the city comptroller’s office and investigators.

“We have managed this deed modification process internally for the past few months and will continue to do so going forward," Erik Horvat, a managing director at Fosun, said in a statement.

However, Capalino’s lobbying did help Fosun get the Landmarks Preservation Commission to sign off on changes to 28 Liberty St., which was formerly known as One Chase Manhattan Plaza.

GLASS PAVILIONS

In August 2015 the commission granted the modifications, which will accommodate Fosun’s plans to create more than 175,000 square feet of retail space at its ground level and underground.

The modifications include the construction of three glass pavilions on the plaza that will serve as entrances to the underground retail businesses. The entrances will include escalators and elevators, providing access to people with disabilities.

Fosun still needs the Department of Citywide Administrative Services to approve the deed modification.

However, DCAS spokeswoman Cathy Hanson said any action related to the deed is on hold after de Blasio called for a review of the process of how the city approves deed changes.   

Fosun said that it has been transparent throughout its dealings with LPC and DCAS, meeting with the local community board throughout the process.

The majority of Community Board 1 members voted to support the project after Fosun presented its design to them before obtaining LPC’s approval, records show. However, Fosun didn’t include the glass pavilions in its presentation to the community board, according to Diana Switaj, CB1's director of planning and land use. The board only learned of the pavilions after the LPC process, she said.

Community Board 1 member and architect Alice Blank criticized Fosun for not being fully forthcoming with its plans.

"The glass pavilions are not a minor modification, these are structures that could potentially compromise the plaza. It's important we know exactly what these pavilions will truly look like, how high they are, what kind of space they will take up," Blank told DNAinfo New York.

Fosun said it also plans to meet again with the Community Board 1 in July.

"Fosun is seeking a small modification to the restriction to enable the creation of glass pavilions that will facilitate handicap access to lower-level retail," Horvat said.

"Fosun has embraced the community throughout the project’s approval process, including with Community Board 1 and the Landmarks Preservation Commission, and we will continue to pursue a fully transparent effort."

Capalino, a former commissioner of the Department of General Services, the predecessor to DCAS, has been a big booster and longtime supporter of de Blasio. He has raised nearly $45,000 for the mayor’s re-election campaign.

One real estate lawyer who spoke to DNAinfo on the condition of anonymity said Capalino's close ties to the mayor are why the lawyer directs his clients to hire the lobbyist if they have business before the city.

The tight relationship with City Hall has paid off. Capalino + Company made nearly $13 million in business in 2015, more than any other lobbyist firm in the city.

Normally a behind-the-scenes powerbroker, Capalino gained unwanted publicity with the Rivington House sale.

Village Care, the nonprofit that operated Rivington House, hired him in 2013 and 2014 to lobby DCAS to remove a rule that required the property be used as a nonprofit healthcare facility.

DCAS eventually lifted the deed restriction after Village Care sold the property to the for-profit nursing home Allure Group. Allure paid a $16 million fee to DCAS for the restriction removal, but then it flipped the property, selling the building for $116 million to developers.

A spokeswoman for Capalino declined to comment for this story.

'WAREHOUSE' OR 'STORE'

Real estate developer Miriam Chan, who co-owns two vacant industrial sites in Queens, at 32-22 College Point Blvd. and 125-12 31st Ave., said her company hired Capalino in 2014 because of his knowledge about city government.

“We wanted to understand the processing procedure,” said Chan, whose firm has paid Capalino $104,000 in the past two years.

EDC sold the sites to her and her partner, Bill Cheng, in 2004 for $761,985 for the construction of a sign design and printing facility, but the project faced complications due to a decline in the printing industry.

In 2012 EDC agreed to modify the deed to allow for any industrial use permitted by the area’s zoning, excluding storage facilities or other noxious uses, officials said.

The deed modification also extended the dates for commencing construction on the project to spring 2016.

One of the permitted uses includes a warehouse distribution facility, which Chan and Cheng set out to construct. But so far, the company has only done foundation work on the site. However, the deadline for construction expired in the spring.

Since 2014 to the present, Capalino has been lobbying EDC to continue the deed modification after the expiration date.

EDC officials declined to disclose who at the agency met with Capalino or his staff or what he specifically lobbied them about. They say there have been no modifications to the deed since 2012.

Chan said the project is stalled due to a disagreement with her partner and some issues regarding tenants at the site that she declined to discuss in detail.

She said her plans for the site include “professional office space” and “higher-end warehouse space.”

Cheng said he had different plans for the space.

“Before I was doing a warehouse, now I’m doing a store,” Cheng said.

But approvals have not been granted.

“We are still working with the city,” said Cheng.

EDC, which does have the right to reclaim the properties, declined to discuss future plans for the site.

“EDC is currently evaluating its options,” officials said.

TRANSITIONAL SHELTER

Georgia Lerner, the executive director of the nonprofit Women’s Prison Association, said her organization hired Capalino in 2013 when it wanted to sell its transitional shelter at 347 E. 10th St. to a real estate developer.

The nonprofit, which works to find alternatives to incarceration for women, purchased the East Village property from the city for $1 in 1991. After getting state funding, it promised to deliver low-income or homeless housing at the property for 25 years.

The property also has a deed restriction through the Department of Housing Preservation and Development that states the units in the building are subject to rent-stabilization regulations.

Three years ago, facing a financial crunch and having no money to make major capital improvements to the shelter, Women’s Prison Association decided to sell the property in hopes that the proceeds would fund the purchase of a more affordable space in another part of the city.

“If I were looking for a place to set up a program now, the East Village is not where I would look,” Lerner said of having a shelter in the gentrified neighborhood “where real estate goes for $1,000 a foot.”

In June 2013, the nonprofit signed a tentative deal to sell the property to Glacier Global Partners that hinged on the deed restriction being lifted.

Capalino lobbied HPD in 2013 and 2014 to lift the deed, setting up meetings for Lerner with city officials.

But the Bloomberg administration denied the request in December 2013 because it wanted to preserve homeless shelters that provided housing to families with children, according to HPD.

HPD said that in 2014, Women’s Prison Association and Capalino came back with a revised development plan that included affordable housing in exchange for additional density on the building. But HPD again shot down the request.

After that denial, Women’s Prison Association stopped using Capalino and lobbying for the deed change.

However, Glacier Global Partners, which has the option of purchasing the shelter until 2018, continued reaching out to HPD about a deed change in 2015 and 2016.

HPD said it has since stopped engaging with the developers. 

Glacier Global Partners did not respond to a request for comment.