The Real Deal New York

Solow has 1,000-year lease from city

August 12, 2008 04:44PM
By Adam Pincus

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Although developer Sheldon Solow spent years assembling the parcels on the Consolidated Edison site on the East River for his $4 billion mixed-use project, he still does not own all the land.

And it could take him another 853 years before he does.

In a legal oddity that city officials said may be unique in Manhattan, a small portion of the site is owned by the city through a 1,000-year lease drafted back in 1861. Solow controls the property through a long-term lease from the city, however, and officials said he has what amounts to full ownership.

Solow agreed to acquire the entire nine acre site, along First Avenue, between 35th and 41st streets, from Con Edison in 2000 for $630 million. He has plans to build seven towers with 6.1 million square feet of commercial and residential space.

The approximately 25-foot-by-100-foot parcel is perpendicular to and on the east side of First Avenue, 25 feet south of where an extension of 39th Street will run part way through the development site.

Solow’s massive project was approved by the Department of City Planning and passed by the city council in March after a bruising public process, which forced a number of concessions from the developer.

A two-story commercial building will be constructed directly above the leased parcel, while a 56-story residential building is planned to rise about 100 feet south of it, architectural renderings of the site show.

Steve Stein Cushman, the City Law Department contracts and estate chief, said any lease term for 100 years or more provides most of the rights of full ownership, known as fee simple.

Asked why the city did not sell the parcel to Solow, Cushman said the developer had not asked.

“No one has ever raised the issue of selling the property,” he wrote in an email.

In an interview, Cushman added that in order to sell the property, the city would have to review it under the Uniform Land Use Review Procedure and put it up for public auction.

A spokesman for Solow’s development company did not respond to requests for comment.

Real estate attorney Stephen Nahley, a commercial real estate partner at the law firm Moses and Singer who was not involved with the project, said he had never heard of a 1,000-year lease.

He said a sale by the city could start a bidding war, a headache no developer would want.

“Solow could still be outbid at the auction,” he wrote in an email. “It would seem to be overkill for a [small] piece of property.”

The lease on the parcel was sold by Con Ed to Solow’s group in 2005, according to city records.

The original lease was between the “Mayor, Aldermen and Commonality of the City of New York” and William Austin, dated November 11, 1861 and recorded May 28, 1863. The lease changed hands several times before being turned over to Con Ed’s predecessor, the Edison Electric Illuminating Company, on March 3, 1898.

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