The Seward Park Co-op has rejected an offer from developers of the former Bialystoker Nursing Home site to purchase air rights for $53.7 million.
Residents of the large Lower East Side complex voted on Tuesday. Results, released, today, show that 690 shareholders (apartment owners) voted in favor of the air rights sale, with 507 voting against. There were 30 abstentions. While the referendum won approval by a majority of residents voting this week, it did not reach the two-thirds threshold required for passage.
The developers, Ascend Group and Optimum Asset Management, wanted to acquire 162,000 square feet in unused development rights from the neighboring co-op. They planned to build 33 and 22 story towers on either side of the historic Bialystoker Nursing Home building at 228 East Broadway. The project would have included 210 luxury condos spread over 226,000 square feet. The development team vowed to build even if the co-op rejected the offer. They say the “as-of-right” project will include 140 apartments. New 17 and 20 story towers would cover about 78,000 square feet.
The co-op board spent months negotiating an agreement with the developers, and unanimously endorsed the sale. They argued that it was a “once-in-a-lifetime” opportunity to improve the cooperative’s financial situation. The aging buildings, constructed in 1960, face at least $12 million in mandatory maintenance projects. The proceeds also would have been used to pay down the co-op’s debt and to replenish emergency reserves.
There were vigorous campaigns from the developers, residents in favor of the sale and opponents of the deal. Some of the apartment owners whose views would be blocked by the new project raised their voices the loudest. Others argued that the general quality of life of the co-op would be harmed by the oversized buildings. After years of living in a construction zone (due to the huge Essex Crossing project), it became apparent that many residents are feeling development fatigue. The developers were not oblivious to the opposition. They sweetened their offer with $ 5 million for a four month “maintenance holiday.” Days before the vote, they came through with another $1 million for lobby renovations at Seward Park.
In a memo sent to residents last month, the board of directors stated, “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 has made it clear that maintenance increases and new assessments were inevitable if the offer was rejected. The complex, formerly a limited equity middle income co-op, has a large number of fixed-income seniors.
In a statement today, the board of directors said, “Although the majority of voters favored selling air rights, the supermajority threshold required by our bylaws was not reached. The Board had prepared for both possible referendum outcomes and will move forward with refinancing our mortgage.”
In addition to the referendum, the co-op elected new board members Tuesday. The victorious candidates were Doron Stember (currently president), as well as incumbents Aaron Fineman and Erica Cullmann. Sidney Goudie, a new board member, was also elected. All of the winning candidates strongly supported the referendum, while two other candidates defeated this week opposed the air rights sale.
The Seward Park Co-op has more than a million square feet of undeveloped air rights. It could still build on its own property, but this was the only opportunity to sell development rights to an adjacent property owner.
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.
UPDATE 3:26 p.m. Wayne Heicklen, one of the developers, responded to the vote today saying, “Obviously we’re very disappointed. We thought that the shareholders would appreciate the fact that they are basically selling us something they otherwise can’t use or sell to anybody else and that this was kind of a onetime opportunity to be paid 54 million dollars.”
A spokesperson for the development team said they plan to move forward with the “as-of-right” plan for two smaller towers.
And then there’s this. An online petition went live today, purportedly from residents who favored the air rights sale. The petition, with no identifiable author reads, in part:
…in large part due to some very wealthy and selfish shareholders, we will now expect to see a maintenance assessment, a carrying charge increase and no new lobbies for a very long time. WE DO NOT ACCEPT THAT THE MINORITY CAN CAUSE SUCH HARDSHIP FOR THE MAJORITY! We reject that. On the basis of the fact that 57% of us demand that the sale go through. We are NOW demanding that the sale go through or that the shareholders are offered another chance to pass this referendum. The majority spoke and the minority here must not be able to cause further financial and quality of life damage to the rest of us.