Tag Archives: Wolf Haldenstein Adler Freeman & Herz

Showdown at the Dakota

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"The Dakota May 2005" by Makemake at the German language Wikipedia. Licensed under CC BY-SA 3.0 via Wikimedia Commons - https://commons.wikimedia.org/wiki/File:The_Dakota_May_2005.jpg#/media/File:The_Dakota_May_2005.jpg

Jeremy Cohen, a partner with Wolf Haldenstein Adler Freeman & Herz, and I discussed a lawsuit brought by a New York City co-op owner who says he’s been unable to move into his apartment at the famed Dakota coop for 16 years.

We spoke with June Grasso on Bloomberg Radio’s “Bloomberg Law” show. The podcast of the show is here and the complaint in the case is here. A Bloomberg news story summarizes the allegations:

Robert Siegel, chief executive officer of Metropole Realty Advisors Inc., said in his lawsuit that he paid $2.23 million in 1999 for an apartment at the Dakota and has never spent a night there because the board refused to approve his renovation plans and took part of his unit as storage space for the building. He’s seeking $55 million in damages and a court order allowing him to make the renovations.

“These bad-faith acts foreclosed the possibility of Mr. Siegel constructing bedrooms there and thus ensured that the apartment could not be used by Mr. Siegel and his family,” according to the June 29 complaint, filed in New York State Supreme Court.

Before buying the street-level duplex at the building on 72nd Street and Central Park West — once home to celebrities such as John Lennon and Lauren Bacall — Siegel got permission from the co-op board to convert the lower level into four bedrooms with air conditioning for his children, according to the lawsuit. Once the sale was complete, the board said it would only approve Siegel’s plans if he agreed to buy additional shares of Dakota co-operative stock for $1.8 million, which would about double his monthly maintenance charges, according to the complaint.

After Siegel refused to make the additional payments, the board voted to reclassify half of Siegel’s apartment as “non-habitable storage space,” according to the lawsuit. The board also barred him from adding air conditioning or ventilation to the lower level, thereby making it unsuitable for bedrooms, according to the complaint.

Reiss on the Poor Door

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Law360 quoted me in ‘Poor Door’ A Symptom Of Tough Balancing Act In Housing (behind a paywall). It opens,

Extell Development Co.’s so-called “poor door” — a separate entrance for affordable housing tenants at a development on Riverside Drive — made headlines last week after receiving official approval, but experts say the controversy clouds the reality of balancing private and public housing interests in a city like New York.

The building and its “poor door” first caught the world’s attention last year, when the developer released renderings for the project that showed separate doors for condominium buyers and affordable rental tenants.

It wasn’t the first setup of its kind, particularly not in New York City, but with news of growing inequality around the country and especially in large urban areas, many criticized the separate door as classist and suggested that affordable housing tenants were being treated as “second-class citizens.”

The controversy erupted again last week when the Department of Housing Preservation and Development confirmed that it had approved Extell’s application for the department’s inclusionary housing program, which gives the developer access to certain incentives in exchange for adding to the city’s affordable housing inventory.

Many have argued that the trade-off may not be worth it: If developers that qualify for such programs end up relegating lower-income tenants to a separate entrance, are those tenants benefiting fully from the city’s efforts to house them?

“One reason that the ‘poor door’ issue touches a nerve is that real estate and class are so closely linked in New York City,” said David Reiss, a professor at Brooklyn Law School who focuses on real estate finance and community development. “Affordable housing units are seen as a great equalizer. The notion that someone living in an affordable housing unit must be constantly reminded of their status is repugnant to many.”

This has led to headlines around the world proclaiming Extell’s design and the city’s approval a “disgrace.” But experts say the question of what to do about such practices is not that simple.

Inclusionary housing has been a major tenet of Mayor Bill de Blasio’s plan to add or maintain 200,000 affordable housing units over the next decade. In a city with such high land prices and rents, it has become clear that developers need some kind of incentive to include affordable housing in their projects, and the mayor and city council have made a series of adjustments and concessions to get such housing into projects like the new Domino Sugar Factory development and under-construction buildings at Hudson Yards.

But just how affordable and market-rate housing should be built together in these developments has not been as closely considered, and experts say the “poor door” controversy may just be the first of many unanticipated issues in need of creative solutions.

To get around the issue of affordable units having different entrances or looking different and having different amenities from market-rate units, some have suggested making the units indistinguishable, but Reiss warns that this might cause additional problems.

“For instance, given a particular amount of funding for affordable housing, is it better to build fewer units of affordable housing that are indistinguishable from market-rate units in a Manhattan building, or is it better to build more units of affordable housing in an outer-borough — and therefore cheaper — building?” he said. “There is no right answer to that question. Each reflects a policy preference. But it is most important to realize that a trade-off between cost and number of units exists.”