Bloomberg Business NYC Developer Races Against Rules That Would Cut Tower in Half by Oshrat Carmiel

Bloomberg Business
Bloomberg Business
NYC Developer Races Against Rules That Would Cut Tower in Half
Oshrat Carmiel
10/10/2017

Laboring in a hole in the ground on Manhattan’s East 58th Street, Gamma Real Estate’s construction crews don’t quit for the weekend. They’ve been working Saturdays since June, trying to outrun New York City’s bureaucracy.

Gamma is excavating for a planned 799-foot (244-meter) condominiumtower near the corner of Sutton Place, and is racing to finish the foundation before a potential rezoning can disrupt its plans. The building’s height is legal under current laws that govern the area. Neighborhood residents, who say it’s too tall for the sliver of Midtown close to the East River waterfront, are trying to change that.

The base of the planned tower for East 58th Street.

The push by the East River 50s Alliance -- which would cut the stature of Gamma’s tower by about half -- is gaining traction after more than a year of effort. A fresh proposal, drafted with input from members of the city planning department, is scheduled for public hearing on Oct. 18, paving the way for a possible approval by the city council in November, said Ben Kallos, a councilman who is one of the applicants seeking rezoning.

Should the new rules be approved, Gamma’s development plans would be foiled -- unless the developer can complete the building’s foundation beforehand.

“Time is not on our side at this point,” said Jonathan Kalikow, president of Gamma, which has already scaled back an earlier plan to make the building almost 1,000 feet. “We will absolutely not be finished with the foundation” by the middle of next month.

A change to the zoning would mean a full work stoppage and months of delays, and its ramifications would extend to the broader development community, he said.

“The chilling effect this would cause on all of New York real estate is huge,” said Kalikow, whose planned 67-story tower is known as Sutton 58. “If I go and buy a property upon which I want to do a development -- and I can do it as of right -- I’m now not assured of that.”

The new zoning designation -- which would cover the areas from 52nd to 59th streets, east of First Avenue and to the edge of the East River -- would require builders to spread wider, rather than higher. As much as 50 percent of their allowed square footage must be built in a structure that is no taller than 150 feet. The remaining square footage can be used to build vertically, atop that base, said Alan Kersh, president of the East River 50s Alliance, who also helms the co-op board of the building across the street from Gamma’s project.

“We’ve been told that this would result in a building that would be about 35 stories,” Kersh said in an interview. “It will be significantly lower than the height the developer wanted and more than the community asked for, so that seems to be a compromise.”

Gamma is the second developer of the tower in question, after the original builder, Bauhouse Group, put the project into bankruptcy. Gamma, the lender, took over the property in a December foreclosure auction.Kalikow said the group, as a lender, invested about $200 million in the project and then spent $16 million more to complete the purchase of the air rights.

Gamma has secured after-hours variances from the buildings department allowing work at the site to continue on Saturdays. That extra day might not be enough to complete the foundation, should the city want to fast-track the rule change, Kalikow said.

“All along, this has been a race to the finish,” Kallos, the councilman, said in an interview. “I hope to vote on it as soon as possible. Communities want a say in how their neighborhoods are developed.”

Issue: 
Land Use