Almost every Lower East Side construction site stalled during the 2009 economic downturn has been restarted. But not so at 139-141 Orchard St. Documents posted on Community Board 3’s website today show that the project, a 16-story hotel development, is seemingly no closer to completion than it was a year or two ago.
Back in February, the Daily News reported that Arcade Capital had agreed to buy the unfinished hotel at a bankruptcy court-ordered auction for $33 million. At the time, we noted that the clock was ticking. The prospective new owner only had until August 20 to restart construction to meet a deadline set by the NYC Board of Standards and Appeals (BSA). The building does not conform with zoning rules put in place across the Lower East Side in 2008, so special permission was required.
Now a new application has been submitted to the city for a four year extension under a legal provision known as “common law vesting.” An attorney for the creditor (Orchard Hotel LLC) wrote to BSA Chair Margery Perlmutter, saying that the deal from Arcade Capital has been withdrawn. The lawyer, Howard Goldman, said a U.S. Bankruptcy Court judge has ordered Orchard Hotel LLC to complete the BSA application as quickly as possible before putting the property up for auction once again. The owner of the property, D.A.B. Group, filed for Chapter 11 bankruptcy.
If they must comply with current zoning, Goldman noted, 8 stories would need to be removed from the building. This is the third time the property owner has gone to the city for an extension. The site, located between Delancey and Rivington streets, has been a serious problem for businesses on the block. Scaffolding and plywood completely obscure Ben Freedman, a men’s store located next door. Recently the owner, Avi Saks, said the stalled site has had a devastating impact on his shop, a LES fixture since 1927.
On Wednesday, September 9, CB3’s land use committee will be asked to support the BSA application.
