A state judge’s decision to revoke a building permit for an Upper West Side condo tower could affect more than 20 buildings across the city, lawyers for the project claim.
SJP Properties CEO Steven Pozycki
The stunning ruling last week sided with community groups who argued the city should not have let developers SJP Properties and Mitsui Fudosan America use a gerrymandered 39-sided zoning lot for the 668-foot tower at 200 Amsterdam Avenue.
The developers may now be forced to remove up to 20 floors of the tower, which is almost complete. But first an appeal will have to play out, which will likely take many months.
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“The application of the decision retroactively was not only bad policy, but by doing that, the judge exposed every building in this city that was involved in a partial tax lot to have its certificate of occupancy invalidated,” said Kramer Levin attorney Paul Selver, who is representing the project.
Mitsui Fudosan America CEO John Westerfield
He pointed to Tishman Speyer’s MetLife Building at 200 Park Avenue and the Lincoln Square Synagogue as examples of developments that utilized partial tax lots.
It is uncertain whether challenges to buildings completed long ago would be brought. But Council member Ben Kallos, who is fighting to reduce the size of Gamma Real Estate’s under-construction skyscraper at 430 East 58th Street, told the New York Post he viewed the ruling as an opportunity. “We’re going to file a motion to [re]argue based on this,” he said.
The Amsterdam Avenue project has been the subject of controversy for many years — and the courts have been playing ping-pong with a lawsuit over it.
Developers purchased the property near 69th Street in late 2015 for $275 million, and later secured $460 million in financing from Japanese bank Sumitomo Mitsui Trust. In 2017, the Committee for Environmentally Sound Development challenged the Department of Buildings’ approval of the project to the the city’s Board of Standards and Appeals, and was joined by the Municipal Art Society in filing a lawsuit against the developers that sought to halt construction until the city’s BSA made a decision. Eventually, an agreement was reached that allowed construction to continue under certain conditions.
Then, in July 2018, the BSA sided with the developers, and the community groups filed an Article 78 challenge, which sent the case back to the BSA. The groups appealed the BSA’s second decision, handed down in 2019, to the State Supreme Court.
Richard Emery, the lawyer representing the towers’ opponents, said the latest ruling showed how important it was for developers to get the community on board before starting construction.
“They can’t be arrogant like these developers were if they have a very questionable cobbling together of a zoning lot that they are attempting to exploit,” he said.
However, Sever defended the decision to continue construction while the litigation was underway, noting the DOB and BSA had sided with the development team, and the court had several opportunities to stop construction, but did not.
“There was a very strong basis to believe that ultimately the decision would be rendered in favor of the project going forward,” he said.
“Even if the determination was that the zoning lot was improper, there was so much history to the interpretation that we were relying on that the decision would not be retroactive,” he added.
It’s unclear whether the city will join the appeal to defend the DOB’s decision to approve the project. Law Department spokesman Nick Paolucci said the city is “reviewing its legal options.”
Both sides appear to agree that the ruling plunges the project into uncharted territory, raising questions about its future and the possibility of deconstruction.
“The financial viability of this project has to be in question given that they can’t possibly sell apartments to anyone, and nobody’s going to move in there until it’s been resolved,” Emery said. “It’s going to take at least six months to a year to resolve.”
Lawyers for the project declined to address questions about the project’s finances or say how many units in the building are in contract.
A copy of the building’s offering plan shows that buyers were made aware of the risks posed by the litigation. An amendment to the document that outlined the dispute said the “sponsor intends to continue its lawful construction of the condominium” as the litigation plays out, and will update the plan as new developments come to light.
Real estate attorney Bruce Cohen, who represents several buyers, said his clients are not happy about the decision but are taking the time to digest it. All of them are in contract for units at the higher floors, he said, and so far none has walked away.
Eddie Small contributed reporting.
Write to Sylvia Varnham O’Regan at so@therealdeal.com