New York CIty Council Member Ben Kallos

City Land Court Orders Developers To Lose 20 Stories in Upper West Side Condominium Development by Jason Rogovich

Court Orders Developers To Lose 20 Stories in Upper West Side Condominium Development

Advocates applaud decision while developers find decision deeply flawed. On February 15, 2020, the Committee for Environmentally Sound Development and the Municipal Art Society of New York,  won an Article 78 case regarding the construction of a 668 foot, 52-story condominium building located at 200 Amsterdam Avenue on the Upper West Side of Manhattan. New York County Supreme Court Justice W. Franc Perry’s ruling requires the developers, SJP Properties and Mitsui Fudosan America, remove up to potentially 20 floors of the development.

The developers, in order to build higher and larger than what is normally permitted “as-of-right,” sought a transfer of development rights through a Zoning Lot Merger. A Zoning Lot Merger is not technically a transfer of development rights, but a shifting of development rights within a unified zoning lot. In many cases, but certainly not all cases, zoning lots can be contiguous to the tax lots. In this case the developer entered into agreements to transfer the development rights from two tax lots and portions of four other tax lots, resulting in a 39-sided zoning lot. On September 27, 2017, the Department of Buildings issued the developer a building permit to construct the high-rise condominium building with the additional development rights.

The Committee for Environmentally Sound Development and the Municipal Art Society (“MAS”) took issue with the way the developer amassed the additional development rights, believing the zoning lot was “gerrymandered,” and in violation of the Zoning Resolution’s definition of “zoning lot” and thereafter challenged the issuance of the permit at the Board of Standards and Appeals.  On July 17, 2018, BSA issued a resolution upholding the building permit on the grounds that partial tax lots used to transfer development rights could be considered a “zoning lot” under the City’s Zoning Resolution. In the midst of the BSA appeal, the Department of Buildings issued a draft bulletin dispelling an earlier Department of Buildings memorandum interpreting the definition of “zoning lot.” The more recent interpretation did not allow partial tax lots to be included in a “zoning lot.” BSA did not view the first memo as being rescinded/superseded by the draft bulletin, and BSA did not agree with the draft bulletin’s statutory interpretation of “zoning lot.”

The Committee for Environmentally Sound Development and MAS filed an initial Article 78 petition and won on the grounds that BSA’s interpretation was plainly incorrect. The court credited the Department of Building’s second interpretation, disallowing partial tax lots to be included in the definition of a “zoning lot.” The case was remanded to BSA in March of 2019 because the court chose not to interpose itself in the interpretation of the Zoning Resolution and because DOB already resolved the statutory interpretation issue in their draft bulletin. The court order advised BSA to review the approval “in accordance with the plain language of the [Zoning Resolution]” and with the material contained in the decision.

In June 2019, BSA issued a second resolution upholding the legality of the building permit and their original interpretation of “zoning lot.” BSA reasoned that the plain language of the statute led to the same conclusion and the first Department of Buildings’ interpretation was still not superseded by the draft bulletin’s second interpretation. The Committee for the Environmentally Sound Development and MAS brought this second Article 78 action, re-challenging BSA’s “amended resolution.”

In proving the second Article 78, the Committee for Environmentally Sound Development and MAS were required to prove that the BSA acted arbitrarily and capriciously in re-approving the building permit. In stout language Justice Perry wrote “DOB properly exercised its authority by identifying an erroneous interpretation of the Zoning Resolution and by publishing a proposed amendment to the error. BSA, however, balked in its Duty,” adding “BSA sidestepped this issue twice… As such, this issue remains unsolved, and as it presents a question of pure legal interpretation, this court is empowered to make this determination.”  Justice Perry again found BSA’s interpretation incorrect based on the plain text reading of the statute, and was again persuaded by Department of Building’s draft bulletin interpretation of “zoning lot.” According to the court, the statutory interpretation of “zoning lot” cannot consist of partial tax lots because it would render the word “unsubdivided,” superfluous. Therefore, the partial tax lots could not be included as part of the zoning lot and eligible to transfer the development rights to 200 Amsterdam Ave.  Justice Perry also noted that BSA “wholly ignored” the prior Article 78 decision, thus BSA’s revised resolution was not entitled to substantial deference.

The court not only nullified BSA’s resolution, but Justice Perry also ordered the developer to remove all floors exceeding what is permitted under the zoning resolution. The fact that construction was almost complete gained little sympathy from the judge. According to the judge, the building’s construction had not “proceeded past installation of the building footings” at the time the first appeal was filed. Additionally, the decision states the owner acknowledged the challenges to the permit’s validity in a court stipulation, yet completed “much of the construction work” by the time the first decision was entered. The court stipulation prohibited the developers from claiming hardship but did not prohibit the developers with going forward with construction.

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Council Member Ben Kallos said that “developers should be on notice… If you want to get one over on the public, there are committed elected officials and organizations like The Committee for Environmentally Sound Development and the Municipal Art Society who will hold developers accountable,” he added, “if you want to build housing, build it affordable or if you’re going to build market rate housing, make it affordable for all New Yorkers.”

CityLand reached out to the City for comment and Nick Paolucci, Law Department spokesman, advised that the City is “evaluating its legal options.”

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