By Maria Rocha-Buschel
The Board of Standards and Appeals accused developers of getting ahead of themselves in a rush to get a new apartment building started before the deadline for a lucrative tax break in the project at the old Peter Stuyvesant Post Office on East 14th Street between First Avenue and Avenue A.
BSA chair Margery Perlmutter said in a hearing this past Tuesday that Benenson Capital Partners and Mack Real Estate Group (MREG) “went ahead and, at enormous expense, installed foundation slabs even though their project wasn’t necessarily viable.”
The developers’ attorney John Egnatios-Beene, of Stroock & Stroock & Lavan, argued at the hearing that the extra cost for building out the foundation was partially due to the construction of a full basement and the difficulties that resulted in building it due to the ground conditions. This rationale was given in addition to the developer’s previous argument that additional apartments were needed to make the project economically viable due to apartments that would be rented below market rate because of the building’s participation in the 421a affordable housing program.
The developers argued that their hand was forced by the expiring program, forcing them to complete the foundation before the program expired last June, but the BSA commissioners said they should have stopped work on the project until a variance was approved for the site.
“We had to race to finish the foundation work to meet that deadline,” argued Randy Torres, managing director at MREG. “In order for us to justify building a rental, we needed to continue with the foundation that would be necessary (for a taller building) and not lose more time.”
But Perlmutter, citing 305 letters of opposition to the plan, criticized the developer’s decision to continue building the foundation without first getting a variance.
“The basis for the variance is that a site is infeasible,” she said. “In the absence of a variance then you don’t go ahead and spend millions in anticipation of (getting) a variance. If it’s an infeasible project, why would anyone spend millions on building a cellar that can’t support an as-of-right project?”
Egnatios-Beene denied his clients had usurped regulations by completing the foundation saying they were prepared to finish the foundation and cease all work on the site until market conditions become more favorable.
“The original work wasn’t done on the basis of getting a variance,” Egnatios-Beene said. “We are under the impression that the site has unique conditions that would qualify for a variance and the (initial foundation element) work was completed to comply with the 421a program. The construction of the initial foundation element starts the clock on 421a, which is not subject to continuation or extension to pursue a variance process.”
Perlmutter, however, wasn’t convinced that the water conditions created an unforeseeable hardship for the project.
“Is (this situation) unique?” she said. “The site next door didn’t have these conditions and you could easily get this information. Everyone knows there’s a high water table here. You could’ve asked me and I would’ve told you.”
Adrienne Plotch, a resident of 425 East 13th Street, which will be adjacent to the East 13th Street side of the new building, said in her testimony at the hearing that she was also confused about the extra space the developer said was necessary for the new building’s basement since buildings on the same block had fairly large basements that had been built without the need for special variances.
Plotch included photographs of Immaculate Conception Church’s basement, which is down the block from the site of the old post office, and Perlmutter agreed that the larger basement size for the new building needed a stronger justification.
Benenson has owned the property at 432 East 14th Street since the 1940s. In January 2015, the owner filed demolition plans for the post office building and another small retail building on the site. MREG then partnered with Benenson on a plan to develop a new eight-story, mixed-use building with 114 apartments. The owner hired Robert Laudenschlager of SLCE Architects to design the building, and began work on the foundations.
However, when an engineering report found that the site suffered higher than normal groundwater levels that added to the costs of building foundations, the developers went back to the city and requested a variance to their original plan to add four more stories to the development.
Benenson and Mack also hired at Mueser Rutledge Consulting Engineers (MRCE) to analyze the groundwater levels on the East 14th Street site. Associate partner Tony Canale confirmed to the BSA that the high water levels in the ground created a number of expensive engineering issues. While water levels are typically higher in “middle Manhattan,” he said there was a specific condition on the north and west parts of the site that required stronger, deeper foundations.
The new plan would see the project become two buildings, one eight stories and one 12 stories, with 43 studio apartments, 82 one-bedrooms and 30 two-bedrooms for a total of 155 units. Out of those, 31 (20 percent) would be designated affordable under the city’s 421a tax abatement program that grants a developer reduced property taxes for a set amount of time.
Egnatios-Beene said that the four extra stories were planned for the East 14th Street building, arguing that the “Lower East Side character” is strongest on East 13th Street but that due to Stuyvesant Town being across the way, East 14th Street “doesn’t feel like the East Village.”
Opponents at the hearing said the height and bulk of the newly-proposed building was out of context with the neighborhood’s low-rise character and variance would set a “dangerous precedent” for future development. Pointing to Extell’s seven story development at 500-524 East 14th Street, Perlmutter questioned the developer’s ability to build to code in the same neighborhood.
“The point is that I’m very much a data driven person,” Perlmutter said. “If you show me situations where additional height has worked in this neighborhood, I have somewhere to go, but here I don’t have anywhere to go. You can almost walk across the rooftops in this area like Oliver Twist. The argument has to be more persuasively made for any height increase.”
She requested the developers submit further evidence of the hardship created by the soil conditions on the site by March 8 and reconvene on March 28.