THE state Appellate Divi sion — the same folks who recently clobbered Tishman Speyer by ruling that deregulating rent-stabilized apartments at Stuyvesant Town and Peter Cooper Village was illegal — just helped Vornado Realty Trust and Clarett Group get out of a pickle with their own tenant antagonists.
The development partnership, known as Madave Properties SPE, had been stymied by two different court cases before the same judge in its quest to vacate 220 Central Park South in order to demolish it and replace it with a new apartment tower.
But last week, the Appellate panel unanimously reversed a lower-court ruling that could have indefinitely stalled the already behind-schedule razing of the 22-story rent-stabilized, white-brick apartment building between Broadway and Columbus Circle.
Vornado and Clarett bought 220 CPS in 2005 for $131.5 million, with plans to knock it down and replace it with a 41-story, glass apartment tower. Under state law, the Division of Housing and Community Renewal may permit a landlord to deny lease renewals to rent-stabilized tenants in buildings to be razed as long as certain requirements are met.
The developers began buying out tenants and sought the DHCR’s blessing not to renew leases of those still at 220 CPS in May 2006. But the agency held off while an unrelated lawsuit involving DHCR and similar applications at certain buildings owned by a different developer wended its way through the courts.
In that case, first heard by Manhattan Supreme Court Justice Paul G. Feinman, tenants claimed DHCR’s rules did not adequately define what was meant by the word “demolition” — and Feinman agreed with them.
The Appellate Division reversed Feinman last June, but the delay had by then cost Vornado and Clarett a year. Then, during the same month, Fein man sided with 20-odd remaining tenants of 220 CPS in a suit they filed in 2007, ar guing that DHCR should produce an environmental impact statement before allowing Madave to deny lease renewals in preparation for demolition.
Although Feinman’s ruling didn’t require DHCR to get an EIS, it would have allowed the tenants to continue pressing their claim to make the agency do so — a process that could have delayed the project for years more.
The developers opposed the decision for obvious reasons. DHCR also took issue with it on the basis that the agency lacks expertise to conduct an environmental impact study and that environmental review is not part of its mission.
But Madave, represented by Rosenberg & Estis’ Luise A. Barrack, and the DHCR, repped in-house by Sandra A. Joseph, won on appeal last week.
The Appellate judges said DHCR’s discretion in granting a non-renewal application is limited to matters specifically cited in rent-stabilization law — such as whether a developer has the money to complete demolition and whether it complies with rules regarding relocation and compensation for stabilized tenants.
Barrack called the decision “a ray of hope for owners and developers” of all rent-stabilized buildings staggered by the appellate court’s ruling last month against Tishman Speyer at Stuyvesant Town — a case that hung on interpreting J-51 tax-abatement rules — and by various anti-destabilization bills pending in Albany (see item below).
She said DHCR is handling about 40 applications from landlords seeking approval not to renew stabilized leases at locations they plan to raze and rebuild.
The 220 CPS tenants’ lawyer, Jack Lester, said, “The issue is significant enough” for them to try persuading the Appellate judges to let the case go to the Court of Appeals, the state’s highest — a step rarely allowed when an Appellate ruling is unanimous, as it was in this case.
He said DHCR’s lack of expertise in environmental matters shouldn’t mean the agency — or the developer — should not be required to call in an outside consultant to do the job.
Reps for both Vornado and Clarett declined to comment.
Interestingly, two of the Appellate judges on the 220 Central Park South case — Leland G. DeGrasse and Eugene Nardelli — were among those who sided with tenants and against Tishman Speyer at Stuyvesant Town.
*
Just in: Stuyvesant Town landlord Tishman Speyer will get another day in court.
The New York State Appellate Division is expected to announce today that it will grant the company’s request to go to the Court of Appeals, the state’s highest, in a bid to reverse a ruling that blocked Tishman Speyer from decontrolling rents at some Stuy Town apartments.
The Appellate judges ruled unanimously last month that the destabilization was illegal because the complex receives a J-51 tax abatement — a decision based on interpretation of ambiguous housing-law language, and one that shocked owners of stabilized apartment buildings all over the city.
The Appellate Division rarely permits a case to be taken to the higher court when its own decision was unanimous — but in this case it seems to be making a wise exception.