Seward Park Co-op Votes June 12 on $52.7 Million Offer For Air Rights
There’s finally a referendum date at the Seward Park Cooperative for the potential sale of air rights to a team developing the former Bialystoker Nursing Home site on East Broadway.
In a letter from the board of directors sent today, residents of the large Lower East Side complex were told that the vote will take place June 12. The developers from the Ascend Group and the Optimum Group have now agreed to pay $52.7 million for 162,000 square feet of development rights. That’s up from $48.6 million in an earlier version of the agreement.
If the referendum is approved by at least two-thirds of those participating, the development team plans a 210-unit luxury condo complex on three lots at 222-234 East Broadway. The existing building, a city landmark, would be renovated. Meanwhile, the developers have said they plan towers on either side of the vacant structure. On the eastern parcel, there would be a 33-story building with a 12-foot cantilever over a ramp leading to Seward Park’s underground parking garage. On the western parcel, the former site of Dora Cohen Memorial Park, there would be a 22-story tower. Taken together, the new buildings would encompass 226,000 square feet.
Until now, the board has refrained from stating a position on the air rights proposal. But according to today’s letter, all 11 directors have now endorsed the deal, calling it, “in the best interest of the coop overall.”
“The proposed transaction is a once-in-a-lifetime opportunity not only to secure affordability for all of Seward Park’s shareholders,” they asserted, “but also to dramatically improve the financial and physical status of the coop. In the absence of revenue from an air rights sale, we would be faced with a combination of increased debt, maintenance fees, and/or assessment fees that may result in untenable costs of living for some shareholders.”
The board outlined how the proceeds would be used (the co-op expects to have $39 million on hand after taxes). $12 million would go for required maintenance projects in the sprawling complex on Grand Street. These projects include the reconstruction of 32 “structurally unsound” terraces and the replacement of all 25 elevators. Another $22 million would be devoted to reducing the co-op’s debt and replenishing reserve and emergency funds. The board is also planning to waive maintenance fees for four months if the referendum is approved. Once the debt is paid down, the co-op expects each household would save an average of $1,800 annually.
Since the proposed air rights transaction became public in late 2016, there have been many shareholder meetings and a robust debate among residents about the development deal. Rising property taxes, reduced flip tax revenues and the costs of maintaining buildings that are nearly 60 years old have created significant financial pressures.
The formerly limited equity co-op’s more than 1,700 apartments became market rate in 1997. Two-bedroom apartments routinely sell for more than $1 million today. But about 40% of the residents at Seward Park are original cooperators, many on fixed incomes. The board is presenting the air rights sale as a rare opportunity to protect them.
“The Board firmly believes that taking actions to preserve value and affordability for all shareholders,” the letter stated, “and maintaining the multigenerational and diverse nature of the coop are fundamental responsibilities of the Board and consistent with the founding principles of cooperative living.”
Winning approval, however, will not be easy. Residents in some buildings would lose their views, as well as light and air. There are also concerns about adding more apartments in the neighborhood on top of the residential units and retail coming to Essex Crossing and other projects. Traffic congestion on the streets surrounding the Seward Co-op has already grown noticeably worse. Under current open space rules, owners of the new complex would not have access to the co-op’s expansive outdoor spaces. But, as the board noted, it can’t guarantee those “longstanding” rules won’t be changed in the future.
The developers say they will build on the Bialystoker site even if the air rights sale is rejected. They floated an “as-of-right” plan that includes a 17-story tower on the eastern lot and a 20-story tower to the west of the existing building. But the co-op’s real estate experts believe it’s more likely they would put up a single, narrow 30-story tower to the east of the Bialystoker building. In a memo sent to residents last year, the development team stated, “At any moment and without the consent of the Coop, Ascend/Optimum can adopt its as-of-right plan or design a completely new one that conforms to its existing development rights.” The developers could build about 78,000 square feet on the two lots as-of-right.
Seward Park has 1.3 million square feet in unused development rights. But the board has said the current proposal is the only opportunity to transfer air rights to another property owner. In order to use its remaining development rights, Seward Park would be required to build on its own property.
The developers initially offered $20 million for Seward Park’s air rights. In March of 2017, the board voted to call a referendum, but no date was set. During the past year, the co-op’s lawyers have been negotiating the final deal that has now been presented to residents.
Editor’s note: The publishers of The Lo-Down are residents of the Seward Park Cooperative. It is our policy to disclose any potential conflicts that arise in our reporting.