In April 2019, this blog discussed Committee for Environmentally Sound Development v. Amsterdam Avenue Development Associates, LLC, 2019 WL 1206357, 2019 N.Y. Slip Op. 30621(U) (Sup. Ct. New York Co., March 14, 2019), a case in which the New York County Supreme Court granted an Article 78 petition to annul a 2018 resolution by the New York City Board of Standards and Appeals (BSA).  The 2018 BSA Resolution upheld the issuance of a building permit by the New York City Department of Buildings (DOB) to Amsterdam Avenue Redevelopment Associates (Developer), for the construction of a 52-story residential tower at 200 Amsterdam Avenue based on the DOB’s historical interpretation of the New York City Zoning Resolution (Zoning Resolution).  The interpretation relied on was set forth in a 1978 Departmental Memorandum of Acting Commissioner Irving Mishkin, which provided, among other things, that “a single zoning lot may consist of one or more tax lots or parts of tax lots.”  Petitioners asserted that the BSA erred in upholding the building permit because the 39-sided zoning lot that the Developer assembled from partial tax lots is not a proper zoning lot within the meaning of Section 12-10(d) of the Zoning Resolution.  During the pendency of the litigation, the Developer commenced construction based on the challenged building permit.  In March 2019, the Supreme Court annulled the 2018 BSA Resolution and remanded the matter to the BSA with instructions to review the issuance of the building permit in accordance with the plain language of the Zoning Resolution and the Court’s decision.

Following the remand, the BSA issued a revised resolution in 2019 (2019 Revised Resolution) which, once again, upheld the DOB’s issuance of the building permit.  The BSA concluded that the Zoning Resolution allowed the Developer to include partial tax lots in its declared zoning lot based on the DOB’s long-standing interpretation of the Zoning Resolution.  In July 2019, the petitioners commenced a second Article 78 proceeding to vacate the 2019 Revised Resolution and, by this time, the Developer had already “topped out” construction at the 52nd floor.

In a decision with harsh consequences that garnered significant attention from real estate developers, as well as the attorneys who represent them, the Supreme Court annulled the 2019 Revised Resolution and ordered the DOB to revoke the building permit and compel the Developer to remove about 20 floors of the building that exceeded the bulk allowance under the Zoning Resolution.  The Developer, the DOB and the BSA all appealed.

In a significant victory for the Developer, this closely-watched legal battle recently ended with the Appellate Division, First Department, reversing the Supreme Court’s latest decision, and allowing the Developer to proceed with the completion of the tallest skyscraper on New York City’s Upper West Side.

The Appellate Division’s decision was based on a finding that the BSA, in its revised resolution, had rationally interpreted the Zoning Resolution’s undefined and technical terms and its interpretation should have been given deference.  As a justification for this deference, the Court held that “the BSA is the ultimate administrative authority charged with enforcing the Zoning Resolution” and is “comprised of experts in land use and planning, who not only possess technical knowledge of New York City’s reticulated zoning regulations and their operation in practice, but also are uniquely equipped to assess the practical implications of zoning determinations affecting the City’s eight million residents.”  The appellate ruling noted that the Zoning Resolution was “not entirely clear and unambiguous when read as a whole” and highlighted several technical terms that were not defined and, therefore, subject to interpretation.  It concluded that the BSA’s interpretation of the Zoning Resolution to allow a zoning lot to include partial tax lots was “neither irrational, unreasonable nor inconsistent with the governing statute” and that the BSA also properly considered the Developer’s reliance on the Department’s long-standing memo and the fact that certificates of occupancy had been granted for other buildings on the block that included partial tax lots.

In a particularly devastating blow to the petitioners, the appellate court also concluded that the proceeding was moot because the building was substantially complete and the petitioners failed to seek injunctive relief at every step.  In the construction context, a significant factor in evaluating a mootness claim is a challenger’s failure to seek preliminary injunctive relief or otherwise preserve the status quo to prevent construction from commencing or continuing during the pendency of the litigation.  Here, the Court found that while the petitioners moved for injunctive relief in April 2019, the Supreme Court denied that motion and allowed construction to continue.  Although the petitioners took an appeal from that decision, they later abandoned their appeal.  By the time this case reached the Appellate Division, the Developer had expended millions of dollars in construction costs.  After noting that the petitioners failed to pursue their appellate remedies and finding that the building was now substantially complete, the Court dismissed the proceeding as moot.

The death knell to the three-year protracted litigation sounded when the petitioners’ request for leave to appeal the Appellate Division’s decision to the Court of Appeals was denied.  While it remains to be seen whether this decision will have future ramifications for other New York City development projects, this particular residential tower is now complete with units being sold for some of the highest prices per square foot on the Upper West Side.