East Side Tenements hold on to protected status News

Two tenement buildings on the Upper East Side will retain their protected historic status in a decision handed down by the New York Supreme Court.

Stahl York Avenue Co., LLC has sought for decades to demolish its First Avenue Estate property, two six-story buildings bounded by York Avenue and First Avenue on East 64th Street and East 65th Street. FAE is made up of 15 light court tenement buildings, two of which, at 429 East 64th Street and 430 East 65th Street, are at the center of Stahl’s legal battle.

City and Suburban Home Company originally built the complex between 1898 and 1915 to address a need for low-income housing at the turn of the century. At the time, the tenement was one of the largest in the world and was the first to be built with private funds. The complex, and a similar one further uptown called the York Avenue Estate, are the only existing full-block light-court tenement developments in the United States. Light-court tenements were a progressive answer to the dark and poorly ventilated tenements of old, and featured natural light in each room through the use of windows and internal courtyards.

Stahl bought the property and an unrelated property on York Avenue in 1977 for $5.72 million.

This most recent proceeding is the latest in a string of efforts by Stahl to get the two buildings at FAE removed from historic rolls so they can replace the tenements with a high rise condominium building. FAE’s 15 buildings were all designated as landmarks in 1990 by the LPC. That same year, however, the then-existing Board of Standards and Appeals excluded from designation the two buildings in question, a decision that in recent court papers was described as an “inappropriate politically motivated action made under intense political pressure from a powerful real estate developer.”

Since at least 2000 Stahl has been letting vacated units remain empty in anticipation of eventually developing the property. In 2004 they obtained Dept. of Buildings permits for façade work and window replacement. In his Jan. 8. decision, Justice Michael D. Stallman references an LPC finding that said the work was done to “prevent the LPC from re-designating the buildings as landmarks.”

“The LPC found that Stahl stripped the buildings of their ornament, installed new and inappropriate windows, stuccoed the buildings, and painted them a garish reddish pink color,” Stallman wrote of LPC’s findings.

Nevertheless, Community Board 8 passed a resolution in 2004 to amend FAE’s landmark designation to include the two Stahl buildings. In 2006 the LPC unanimously approved the amendment, which was affirmed 47-0 in the city council in 2007.

Stahl challenged that decision in New York State Supreme Court, which found in favor of the LPC. In 2010 Stahl brought a hardship application to the LPC, claiming the buildings could not generate enough profit and that the company should be allowed to demolish and build over them. After a series of hearings that stretched over three years, the LPC denied Stahl’s application, writing in their May 20, 2014 decision, finding that Stahl had, “failed to establish to the satisfaction of the commission that the [buildings] was/were not capable of earning a reasonable return.”

Rachel Levy, Executive Director of Friends of the Upper East Side Historic District, which fought against the two FAE buildings being removed from designation, said her organization as well as many elected officials and preservation organization successfully demonstrated that had Stahl not been warehousing vacant affordable units and had instead maintained and updated them throughout the years, that the company would be able to make more than a six percent return on the property, the threshold for a hardship application.

Stahl filed an Article 78 proceeding against the LPC in state and federal court alleging that in denying their 2010 hardship application, the city, in the form of the LPC, prevented them from exercising their property rights without due process of law. Stahl’s suit sought a payment of the fair market value of the buildings in 2006, plus interest, a figure that they put around $200 million, as well as the vacating of LPC’s decision to deny Stahl their hardship application, and attorney’s fees.

Judge Stallman threw the case out, saying Stahl did not adequately demonstrate LPC acted arbitrarily or capriciously (the basis for Article 78 proceedings) or in violation of law by denying the company’s hardship application.

“Stahl has not set forth a cause of action for an unconstitutional taking and thus has no viable claim for money damages, costs or attorney’s fees.”

The federal court action was also thrown out on the grounds that Stahl “failed to state a constitutionally protected property interest,” which would bring the case into federal purview.

Stahl officials did not return a request for comment. An attorney for the company, Alexandra Shapiro, told the Daily News that her client will appeal the decision.

Levy applauded the court’s decision.

“Stahl York Avenue has exhausted nearly every possible legal avenue related to this issue, but the LPC decision preventing the organization from tearing down these two historic structures has been upheld,” said Levy. “We will continue to fight against the landlord’s efforts to demolish the First Avenue Estate.”

Councilmember Ben Kallos also applauded the decision, and said Stahl has been warehousing affordable units since at least 2007. He put the number of vacant affordable units at the two FAE buildings at 110 out of 190 units.

“Preservation has won out over development and self-imposed hardships,” said Kallos in applauding the court’s decision. “I hope to see 100 units of affordable housing back on the market as soon as possible and end this generation’s long fight and finally make this landmark available for what it was intended for, which was to house low income New Yorkers in a respectable way.”

Kallos argued in a letter from 2014 that the hardship Stahl is trying to claim is self-imposed.

“Over the past seven years, rather than renovating, maintaining and leasing existing units in keeping with a landlord’s duty to mitigate damages, Stahl has left units vacant,” Kallos wrote two years ago as the newly elected councilmember for the 5th District. “And while these units remained vacant, they were subject to damage by the elements, from which they would have been protected had they been occupied.”

Levy, in a later interview, reiterated that Friends would fight any future attempts by Stahl to remove the FAE buildings’ historic designation. “It’s historically been a source of affordable housing on the Upper East Side…and we’d like to keep it that way,” she said.

Advocates say the warehousing of affordable housing units is a problem citywide. The Dept. of Housing Preservation and Development has declared New York City to be in a “housing emergency” since 2011, when they released a report claiming the rental vacancy rate citywide is 3.12 percent. That rate drops to 2.8 percent in Manhattan, according to the 2011 report.

“It’s pretty common that warehousing as done as sort of a lead up to demolishing and rebuilding on a site,” said Emily Goldstein, a senior campaign organizer with the Association for Neighborhood and Housing Development. “Were losing rent stabilized housing at a rapid rate, particularly in neighborhoods like the Upper East Side where there’s very little affordable housing stock.”

Goldstein said loopholes in rent stabilization laws and enforcement afford developers a number of ways to negatively affect affordable housing stock.

“There’s a lot of incentive for developers to speculate on affordable housing…there’s a lot they can do to remove the building from its restrictions,” she said. “There’s just an enormous return for them, an enormous amount of profit to be made.”

“The punishment even if they are caught is a drop in the bucket, and can be written off as the cost of doing business,” she added.