Back to “Square One” at 180 Ludlow and 163 Orchard

180 Ludlow Street.

The saga of 180 Ludlow, one of the Lower East Side’s most infamous stalled building sites, is taking another strange turn.  The luxury hotel turned rental apartment building is now a hotel project again. This is, at least, the hope of developer Serge Hoyda, who has been having a very rough time winning the approval of the city’s Board of Standards and Appeals (BSA).

Last night Jessica Loeser, Hoyda’s attorney (and a public member of CB3’s land use and zoning panel) walked her colleagues on the committee through the latest strategy to close up the hulking shell of a building that has been a blight on the neighborhood since 2007.  Having recused herself from voting on the issue, Loeser explained that the application for a zoning variance (needed to convert the hotel to an apartment complex) was withdrawn, after it became clear the BSA was “not warming up to the proposal.”

In October of 2009, CB3 reluctantly approved a plan for 158 residential apartments, five of which Hoyda had voluntarily agreed to set aside for low income families. At the time, we reported on some of the reasons Loeser gave for the financial predicament in which her client found himself:

The foundation had to be excavated and a new foundation built. And contractors had to work around a very shallow subway tunnel. Then, as Loeser put it, “the world changed. The ground kind of opened up under a lot of people,” when the economy collapsed last year. When the financing dried up, Hoyda was forced to pay a steep termination fee to the firm hired to operate the hotel. “What he’s trying to do,” Loeser said, “is close up the site, make it safe, bring construction jobs into the community, bring street life back to Ludlow Street. There are two other sites right in that area that are also stalled construction. This is a way to “un-stall” this construction.”

But in spite of CB3’s endorsement, the BSA was unconvinced. Commissioners strongly criticized engineers for assuming they could build a 20 story building on top of a foundation meant to support 100-year-old tenement buildings.

So now, many months later, Loeser said Hoyda is “back to square one.”  In the wake of the financial collapse it seemed unlikely any bank would finance a hotel project.  Although financing is not in place, Hoyda is apparently somewhat more optimistic the economy has improved enough now to make a hotel viable.

But there’s a new problem. Although this section of Ludlow Street was rezoned in 2008, 180 Ludlow was exempted because its foundation had already been poured. The project, however, had to be completed by November 19th of last year. So now Hoyda needs the BSA to approve a two year extension. Last night, Loeser asked for and received unanimous support from the CB3 panel for the new plan.

163 Orchard Street.

In a separate vote, the committee also signaled its approval of another project, at 163 Orchard Street. Like 180 Ludlow, the 11-story hotel lost its financing but in this case construction was not nearly as far along. Only about 85% of the foundation had been completed when the economy tanked.

The committee signed off on a a two year extension, but members felt conflicted.  Harvey Epstein, an affordable housing advocate, opposed the project because it was “clearly in violation of our rezoning,” which limits building heights in this area to seven or eight stories.  Another member, Joel Kaplan, disagreed, saying “there were a number of projects in the pipeline when the financial world collapsed… we have the opportunity to save this project and create jobs in the community.”

David McWater, the committee chairman, said he understood both perspectives. On one hand, he said, Hoyda should have “sold some equity and made some deals” when he saw the economy faltering… why are we being put in this position?”  But on the other hand, McWater added, “I hate to see a guy wiped out.”

In passing both resolutions, the panel called on the developers to adhere to several “stipulations.” Among them: a commitment to hiring local workers, to setting aside low cost space for a community facility and to barring night clubs from leasing space in the hotels.

One panel member, Michael Zisser of University Settlement, urged CB3 to make the stipulations as specific as possible. In the past, he said, hotel operators have disregarded stipulations. On these commitments, he argued, the hotels have “zero credibility.”

CB3’s full board will vote on the resolutions later this month. Their endorsement is simply a recommendation. It’s one of many factors the BSA considers in evaluating applications for variances.