New York Appellate Court Allows Top Floors of Upper West Side Condo Building to Remain

The New York City development community was alarmed by a trial court decision in February of last year that would have required removal of the top floors of a 55-story condominium building under construction at 200 Amsterdam Avenue on the Upper West Side of Manhattan. On appeal, the Appellate Division, First Department, issued a decision in early March reversing the trial court, which means that, absent any further appeal, the building can be completed and the condominium units offered for sale.

The case, In the Matter of Committee for Environmentally Sound Development v. Amsterdam Avenue Redevelopment Associates LLC, 2021 NY Slip Op. 01228 (“Amsterdam Avenue”), serves as a high-profile, high-stakes reminder of the importance of two well-settled principles of New York zoning law:

• Administrative agencies like planning and zoning boards, which are charged with administering technical regulations with which they have substantial experience and technical expertise, are entitled to substantial deference and cannot disregard past precedent without good reason, such as differences in facts or changed circumstances;
• A party seeking to overturn a permit or approval must avail itself of all opportunities to seek a stay that halts construction or risk having its case dismissed as moot, and a developer seeking to defeat an appeal can do so by taking the risk of diligently proceeding with construction while the appeal is pending.

Amsterdam Avenue initially was eerily reminiscent of a 1988 case decided by New York’s highest court, the Court of Appeals, which required the developer of a 31-story Upper East Side apartment building to remove the top 12 floors, which had been built based on a building permit issued in error to allow more stories than the zoning permitted. That case, In the Matter of Parkview Associates v. City of New York, 71 N.Y.2d 274 (1988), remains a potent reminder that a developer cannot rely on a permit that purports to authorize improvements that the zoning regulations do not allow.

The issues in Amsterdam Avenue were different, and so was the ultimate result. The procedural history is fairly complex and need not be detailed here. In short, the principal and highly technical issue was whether a zoning lot could encompass partial tax lots rather than entire tax lots under the New York City Zoning Resolution. The issue was one that had come up before, on both the zoning lot at issue as well as surrounding properties, all of which include partial tax lots. The developer ultimately cited some 34 instances in which approved zoning lots contain partial tax lots.

Language dating to the 1961 Zoning Resolution specified that a zoning lot need not coincide with a tax lot, and a guidance document known as the Minkin Memo, issued in 1978 by the then Commissioner of the Department of Buildings (DOB), confirmed this. Thus, the DOB issued a permit, which was appealed by the Committee for Environmentally Sound Development, an organization which, according to its website, “has been advocating for environmentally sound development in New York City for nearly 30 years,” and the Municipal Art Society (collectively, “Petitioners”) to the Board of Standards and Appeals (BSA). It ultimately denied the appeal and upheld the issuance of the permit.

While the BSA appeal was pending, Petitioners commenced an action in Supreme Court (the trial-level court), seeking a declaratory judgment that the zoning lot was improperly formed and a temporary restraining order and preliminary injunction to stop construction, which had by then commenced. The parties entered into a stipulation to hold the request for injunctive relief in abeyance for a period of time, during which the developer agreed that it would not assert that ongoing construction and related expenditures render the case moot.

Petitioners amended their Supreme Court action to challenge the BSA’s determination, resulting in a remand and a denial of the injunctive relief sought to halt construction. Meanwhile, construction continued, Petitioners again unsuccessfully moved to halt construction, and the BSA again upheld the building permit.

Petitioners again appealed the BSA determination. Among other things, they sought to have construction halted and to have the portions of the building removed that exceed the allowable bulk of 17-20 floors. By now, nearly two years had passed since the building permit was issued, the superstructure was up to 53 floors, and the curtainwall was installed through the 32nd floor.

The Supreme Court, in the decision that alarmed the development community last year, found that the DOB should not have relied on the Minkin Memo (because the DOB had found that interpretation to be incorrect and planned to supersede it with a new guidance document that had already been drafted) and faulted the BSA for not giving retroactive effect to the DOB’s new interpretation. The Supreme Court also found that the plain language of the Zoning Resolution does not permit the inclusion of partial tax lots in zoning lots. It therefore directed the DOB to revoke the building permit and ordered removal of the floors exceeding the bulk allowance.

The developer appealed, supported by several amicus curiae involved in New York City real estate and building construction. The Appellate Division, First Department, reversed, finding that the Supreme Court failed to accord appropriate deference to the BSA’s interpretation of the Zoning Resolution. As the administrative agency charged with its interpretation, the BSA possesses technical knowledge of the Zoning Resolution, its operation in practice, and the practical implications of how it is interpreted. The Appellate Division also found that it was reasonable to rely on the Minkin Memo and the precedent established by the fact that other buildings on the same block included partial tax lots yet were nevertheless issued certificates of occupancy. Additionally, the appellate court noted that the final version of the new superseding guidance document specified that it would not apply retroactively (it is unclear whether that was known to the BSA at the time it made its decision). The appellate court also noted the substantial hardship that would result from requiring removal of multiple floors of the building, particularly where a retroactive application would deviate from the precedent established by the DOB’s longstanding interpretation.

Finally, the appellate court ruled that the proceeding was moot due to the substantial completion of the building and the failure of Petitioners “to exercise continued due diligence to halt the project by not seeking injunctive relief at every stage of this protracted litigation.” The abeyance agreement concerning Petitioner’s request for injunctive relief was extended several times, but ultimately Petitioners did not pursue an appeal of the Supreme Court’s implicit denial of that relief by ruling that “[a]ny requested relief not expressly addressed by the Court has nonetheless been considered and is hereby denied.” This, apparently, was fatal.

While Amsterdam Avenue neither establishes any new points of law nor alters existing law, it is a key reminder of the need to take advantage of all available remedies and opportunities to stay or halt construction or otherwise risk a determination of mootness, as well as of the equitable factors the courts will look to when evaluating whether to require such extreme relief.