Politico: Real estate industry concerned over Two Bridges decision

By Janaki Chadha.
August 5, 2019

Plans for four towers that would transform the Lower East Side waterfront have been thrown into flux by a court ruling requiring they be subject to City Council approval. It was an unexpected victory for those fighting the plans and a turn of events that is concerning to the real estate industry.

Last week’s decision elated elected officials and residents who felt a project of that scale — it would bring 2,775 apartments to the area, known as Two Bridges — should undergo a standard public review process that empowers the Council to negotiate significant changes with developers.

It’s not the first time developments that don’t require that public review process have been challenged, and developers are concerned about the implications of requiring government input on projects that were previously determined not to warrant that oversight.

“You’ve seen a couple of really high profile instances where the fundamental rules of the land use process are being challenged and changed at whimsy,” said Jordan Barowitz, vice president of public affairs at the Durst Organization. “Government establishes a regulatory scheme through an open and fair process and then you abide by it, but if the rules change in the middle of that process, what’s the point of having that process?”

Paul Selver, land use co-chair and partner at the law firm Kramer Levin, questioned the future impact of this decision, which the builders are planning to appeal.

“What this decision does is muddies what was formerly a clear line, because it suggests that if your project is big enough, it may have to be considered a major change requiring a ULURP no matter what its legal status,” Selver said, referring to the process known as Uniform Land Use Review Procedure.

The de Blasio administration had determined the towers, planned for a working-class enclave in Manhattan between the Manhattan and Williamsburg bridges, constituted a “minor modification” to a 1970s development plan for the area, and could therefore bypass the ULURP process, which gives the City Council final say over many larger development projects.

A subsequent lawsuit, filed by Manhattan Borough President Gale Brewer and the City Council last December, disputed the assessment of the changes as “minor” and argued that the towers — one of which would exceed 1,000 feet — would have too great an impact on the surrounding community to move forward without more input.

The debate hinged on differing interpretations of the governing plan for the neighborhood. State Supreme Court justice Arthur Engoron ruled, in a decision made public last week, that the size and impact of the towers require more government involvement, trumping the Department of City Planning’s technical argument that the existing zoning of the area did not require that oversight.

“These are huge towers,” Engoron said at a hearing on the lawsuit in June. “I’ve lived in the city my whole life. You can’t just do this because the zoning allows it. I just can’t believe this is the case.”

The ruling comes on the heels of other efforts to control projects considered “as of right,” meaning they can move forward without city approvals.

On the Upper East Side, a community group has been embroiled in a multi-year fight with the developer of a planned skyscraper at Sutton Place. The well-funded group proposed a rezoning for the area to block the “as of right” project, which passed the City Council in November 2017. The Board of Standards and Appeals, however, ruled last year that the project should be exempt from the new zoning rules.

On the Upper West Side, residents and elected officials have been fighting a planned development known as 200 Amsterdam, arguing the project violates zoning law due to the way land was pieced together for the development lot. In this case, too, the BSA sided with the developers, voting earlier this year to allow the project to move forward.

Another Upper West Side building being developed by Extell faced similar pushback, with elected officials and preservationist groups charging that a 160-foot mechanical void space in the building violated the zoning code. The city threatened to revoke permits from the building, but allowed the project to move forward after the developer tweaked plans for the void space.

The City Council recently passed new zoning rules cracking down on excessive mechanical space in residential towers, but they will not impact the Extell building.

Observers say these types of neighborhood challenges have increased in recent years.

“I’ve been in this business for almost 40 years, and I have never seen as many challenges to development projects as I am seeing recently,” said Howard Goldman, a partner at the land use firm Goldman Harris.

Tom Angotti, a Hunter College urban planning professor who has been critical of the city’s zoning practices, said neighborhood opposition to such projects is a symptom of developers manipulating the zoning code to build taller and taller buildings.

“There’s been an overly elastic interpretation of zoning rules in order to rationalize this new type of super-tall building,” he said. “This has been an abuse of zoning, and it’s outraged a lot of community, neighborhood and preservation groups.”

Paula Segal, a lawyer representing another case against the Two Bridges projects on which the judge has yet to rule, said the recent ruling is “certainly a word of caution for anyone who’s looking to add buildings to any of the dozens of ‘large scale’ development plans in the city,” referring to the technical term for the 1970s plan in place in the Two Bridges area.

Brewer, Council Member Margaret Chin and Council Speaker Corey Johnson celebrated Engoron’s decision, while a law department spokesman lamented the loss of affordable housing and other public benefits attached to the projects, which included nearly 700 units of income-restricted housing, upgrades to a local subway station and funds for a New York City Housing Authority complex in the neighborhood.

James Whelan, president of the Real Estate Board of New York, an industry lobbying group, echoed that sentiment, saying in a statement, “The recent ruling should trouble all New Yorkers concerned with our housing crisis and the need for the continued growth of our city.”

Meanwhile, the fight isn’t over for community groups opposing the towers. They are looking to push through an neighborhood-wide rezoning proposal that would limit the scale of new development in Two Bridges and the surrounding area.

“If the developers decide to pull this application and put another one in and follow the correct process, there’s nothing stopping them from building the exact same project or something similar,” said Julian Morales of the advocacy group Good Old Lower East Side. “A rezoning is a long term fix.”


This story was originally published in PoliticoPRO.