CB3 Land Use Committee Says “Enough is Enough” at Stalled Orchard Street Site

139-141 Orchard St. has been an eyesore and a menace to neighboring businesses for more than eight years.

139-141 Orchard St. has been an eyesore and a menace to neighboring businesses for more than eight years.
139-141 Orchard St. has been an eyesore and a menace to neighboring businesses for more than eight years.

Members of Community Board 3’s land use committee have run out of patience with the developers of an Orchard Street hotel project that’s been stalled for eight years.

Last night, attorneys representing the financially troubled owner and his lender asked the panel to support a four-year extension to complete the 16-story building, located between Delancey and Rivington streets. The lender has filed an application with the NYC Board of Standards and Appeals (BSA) and hoped for CB3’s support.

Ben Zhavian of the DAB Group and his creditor, Maverick Real Estate Partners, were locked in a legal battle for several years. Then Zhavian’s company filed for Chapter 11 bankruptcy. This past February, another firm (Arcade Capital) agreed to purchase the property, finally completing the stalled hotel. But as we reported last month, the deal fell through and now the bankruptcy court judge has ordered the parties to put the building back on the market. There’s a problem, though. The project, which does not conform with current zoning, only had until August 20 to finish construction. So for a third time since 2011, they’re asking for more time.

Howard Goldman, the owner’s attorney, said he has asked the city for a four-year extension at 139-141 Orchard St. so the new developer does not need to come back to the community board and the BSA every year until the project is completed. The zoning ordinance only permits two 2-year extensions (which have already been granted in this case) followed by one-year extensions. But Goldman has filed the application under a provision known as “common law vesting.”

CB3 member Lisa Kaplan was unimpressed with the latest plea. “Why should we be open-minded about this when it’s been going on for eight years?” Noting that the project “squeaked in” before the city down-zoned 111 blocks of the Lower east Side in 2008, she asked, “Why should we be confident that this project will be an asset to the community?” Kaplan pointed out that any deal made with Zhavian or with the creditor wouldn’t count for much because the bankruptcy court is now calling the shots.

Tim Laughlin, executive director of the LES Business Improvement District, expressed another concern. The abandoned site, he said, has been menacing residents and businesses for several years. As we reported earlier this week, longtime Orchard Street men’s store, Ben Freedman, has been imperiled by the languishing site. Located right next door, the shop’s signage is completely obscured by scaffolding. “Any agreement should include provisions to secure the scaffolding and remove trash from the area,” said Laughlin.

Robert Dakis, the creditor’s attorney, was also on hand at last night’s meeting. “We share this board’s frustration,” he said, noting that the judge made the unusual decision to put the lender, rather than the property owner, in charge of handling the sale of assets. Dakis said the creditor is owed about $31 million, meaning that no offer will be accepted for less than that amount. “We’re now trying to facilitate a realistic process,” he argued.

CB3 member Linda Jones pointed out that the BSA will likely approve at least a one-year extension. Rather than an outright rejection by Community Board 3, she suggested asking the city to impose restrictions on the owner, requiring him to properly care for the construction site. Kaplan, however, emphasized that maintaining a safe work site is city law. “The Department of Buildings is supposed to enforce the law but they don’t,” she asserted.  CB3 members Enrique Cruz and Damaris Reyes argued that the time had come to make a strong statement against an irresponsible owner.

The committee unanimously approved a resolution opposing a four-year extension, calling the owner a bad neighbor and asserting that there is “no community benefit” to supporting the latest application.

If the BSA rejects an extension, the owner would be required to remove 8 stories from the skeleton of a building. But the city is very unlikely to order a dismantling of the existing structure.