New York CIty Council Member Ben Kallos

New York Times Developers Friendly With the Mayor Meet Their Match: Upper East Siders by Matthew Haag

Developers Friendly With the Mayor Meet Their Match: Upper East Siders

In New York City, when someone wants to build something, there’s almost always a fight — over luxury high rises in Queens, a homeless shelter in Midtown Manhattan and even a dog run on the Upper West Side. But rarely has there been a battle as vicious as the one unfolding in one of New York’s wealthiest neighborhoods — the Upper East Side.

At issue: the New York Blood Center, one of the country’s largest independent blood suppliers, which is seeking city approval to replace its three-story brick headquarters in the Manhattan neighborhood with a 16-story glass tower in partnership with a Boston developer. The center would occupy parts of the first five floors, while the developer would lease the upper floors to life science companies.

In short order, community groups mounted opposition. Nearly every local politician, including the City Council member who represents the neighborhood, joined in. It would be too big on a low-rise residential block, they said, and cast shadows on a park across the street.

The city has also proposed granting tax incentives over 25 years to the developers that could exceed $450 million, according to an analysis of documents obtained by The New York Times. Just a handful of recent developments in New York City have received larger tax incentives of this kind, including Hudson Yards on the Far West Side of Manhattan.

The campaign to defeat the proposal — which has been waged for over a year — reflects a deepening anti-development movement across the city over projects believed to offer few community benefits, particularly in its most politically active neighborhoods. Where once such fights were largely concentrated in more upscale neighborhoods, they have now spread citywide.

Protests have thwarted other building projects in recent years, including those meant to provide some affordable housing in a city with a pressing need for it, and have shaken the city’s powerful real estate industry, which is not accustomed to organized resistance.

This chorus, it seemed, would be enough to doom the Blood Center building. But then, momentum swiftly shifted — and the situation got uglier.

Days before the proposal reached the City Council in November for a series of final approvals, Council members from outside the neighborhood vowed to advance it despite the resistance and negotiated a private deal. In doing so they bucked longstanding tradition to honor the wishes of the local member.

Black and Latino members intimated that a “no” vote would hurt the city’s residents of color, taking away job opportunities at companies that would be attracted to the new development. Labor unions lobbied members, stressing that the project would create jobs for an ailing construction industry during the pandemic.

The project’s opponents claimed that some members had been swayed only after a weekend getaway with lobbyists in Puerto Rico. They accused Mayor Bill de Blasio, who supports the development, of having a conflict of interest because of his outstanding debt to a law firm that also represents the Blood Center. (Mr. de Blasio said the allegations were “inappropriate, unfair.”)

Proponents of the Blood Center development have argued that it could help propel New York toward becoming a national hub for scientific research and provide an economic boost as the city seeks to recover from the pandemic.

It would also fulfill a yearslong effort to redevelop the property on East 67th Street by the Blood Center, which has occupied the squat three-story building since the nonprofit was founded in 1964. The Blood Center and the Boston developer, Longfellow Real Estate Partners, have spent about $1.6 million to lobby City Hall and Council members on the project since 2016, according to city records.

Without city approval, the Blood Center would be limited by zoning rules to constructing a building no taller than 75 feet.

City officials said no commitment had yet been made about the incentives. An executive at the Blood Center said, “This incentive will allow us to take a site that currently pays no taxes to the city and create a life sciences center that will pay millions in taxes over the next 25 years, create hundreds of good jobs and give the city a new Blood Center.”

City Councilman Ben Kallos, who represents the Upper East Side, has led the opposition. “The overall narrative everyone is giving is like, ‘Oh, this is all about NIMBY, this is about a nonprofit and this is about shadows,’” he said. “At the end of the day, this is about an 16-story tower that is somehow 233 feet tall that is a glorified office space for wealthy people.”

Mr. Kallos noted that the Blood Center, under current zoning, could construct a building on the site exceeding 200,000 square feet without additional city approval, more than the amount of space the center plans to occupy in the proposed tower.

The Blood Center has said that such a building would cost $460 million — more than it could afford on its own — and that it cannot use its endowment fund, valued at $380 million, for construction projects.

Despite a late flurry of barbs and behind-the-scenes negotiations, it appears that the City Council will ultimately approve the rezoning request this month, allowing the project to move forward at an estimated cost of $750 million.

“The mayor has been talking about life sciences for all of 2021,” said Mitch Schwartz, a spokesman for the mayor. “This is the type of project he would support.”

James Parrott, an economist with the Center for New York City Affairs at the New School, said the tax incentives were similar to those that the city considered in the early 1990s for the then-emerging biotech industry.

But the city ultimately shelved those plans over concerns that they would largely benefit the companies receiving them and not the broader city economy, he said.

Mr. Parrott, who reviewed the proposed tax incentives for the Blood Center development, said the deal would be one of the largest of its kind in city history, potentially reaching $450 million over 25 years, the typical term for incentive deals.

“It’s a tradition that has been widely questioned in the past and will continue to be, even though the city has arguably greater economic needs at this point,” Mr. Parrott said. “This looks like a really sketchy deal providing a hugely costly subsidy for a very uncertain result.”

While New York is in its name, the Blood Center expanded beyond the city long ago and now operates in more than a dozen states, running a collection of blood banks and laboratories mostly in the Northeast and the Midwest. The center supplies about 80 percent of the blood in New York City hospitals and reported more than $592 million in total revenue in 2019, including donations.

A major concession by the developers — trimming the building’s height to 233 feet from 334 feet, which would reduce some of the shadows — won over some critics. The Blood Center also agreed to give $3.6 million to the nearby park, St. Catherine’s, which would also get another $7 million from the city for upgrades. The center would also provide $2 million to the Julia Richman Education Complex, a public school across the street.

“Our vision for a state-of-the-art life science facility will not only ensure the nonprofit Blood Center continues to provide safe, affordable blood services to the region’s hospitals,” Rob Purvis, an executive at the New York Blood Center, said in a statement, “but enable the center to significantly expand its lifesaving research on Covid-19 and blood-related diseases in collaboration with institutions and biotechnology partners all under the same roof.”

Rafael Salamanca, a Bronx council member who rallied fellow members in support of the project, said the Blood Center’s expansion was crucial.

“I find it irresponsible to vote no on this application because you have a community complaining about shadows,” Mr. Salamanca said. “I cannot consciously vote no on a project that does sickle-cell research, stores blood of New Yorkers.”

Gale Brewer, who as the Manhattan borough president reviewed the proposal and recommended against city approval, said that the height reduction led her to change her mind. Ms. Brewer, who has waged many battles during her tenure against high-rise developments, said this fight had become extraordinarily bitter.

“There was so much ugliness,” said Ms. Brewer, who won a seat on the City Council in the November election. “They said it was the rich, that they always complain.”

There still might be one last hurdle.

The Blood Center’s property overlaps slightly with a luxury condominium building at the corner of East 66th Street and Second Avenue. The building’s majority owners recently filed a protest against the center’s rezoning request.

Their protest is made possible by an obscure city provision — thought to be used just twice in New York City since 1943 — that allows property owners like them to require the City Council to approve a rezoning request not with a simple majority but with three-quarters of the members voting “yes.” That is generally not an easy task.

One of the condo owners is Mark Epstein, the brother of the disgraced financier Jeffrey Epstein. He owns 156 of the building’s 202 residential units.

“You’re being forced into a rezoning to increase the value of property next to yours and the subsequently lowering of the quality of life and value of your own building,” said Paul Garziano, an urban planning consultant who assisted the condo owners in filing the protest. “It’s pretty outrageous.”

Get involved to make your voice heard.

Get monthly updates with the information you need to make a difference.