The Real Deal New York

Stahl Organization sues city over landmark rentals

Firm looks to overturn 2006 ruling on two Lenox Hill buildings
By Adam Pincus | September 25, 2014 06:30PM

The real estate investment firm the Stahl Organization is asking a federal court to overturn a landmarking designation from 2006, claiming a pair of century-old buildings in Lenox Hill should be open for demolition and redevelopment.

Stahl is hoping to overturn the seven-year-old decision from the Landmarks Preservation Commission designating the six-story walk-ups at 430 East 65th Street and 429 East 64th Street, facing York Avenue, as historic structures.

The real estate firm filed the complaint Monday in U.S District Court in Manhattan, after the city threw out its hardship application this year. That rejection followed an earlier loss to the city when Stahl sued in New York State Supreme Court, trying for the first time to overturn the landmarking.

The company is bringing the case to a federal court because, according to the suit, the city has deprived Stahl of its property rights without due process of law.

“In designating the buildings, the LPC succumbed to political pressure from influential residents and allied interest groups,” the complaint says. “The LPC’s denial of Stahl’s hardship application was also outrageously arbitrary and entirely irrational.”

In an apparent appeal to Mayor Bill de Blasio’s plan to build more affordable housing, the complaint says, “The LPC’s actions have blocked Stahl from pursuing exactly the kind of residential housing development this city needs.”

The firm is seeking an overturning of the landmarking designation, as well as unstated compensatory damages. The lawsuit claims the partially vacant rental buildings if redeveloped pursuant to Stahl’s plans would be worth about $200 million.

The LPC declined comment on the suit.

“While litigation is pending, we can only say that the claims raised in these lawsuits are being reviewed,” a spokesperson for the agency said.

A source close to Stahl said, “we regard the LPC ‎process as arbitrary, irrational, and unconstitutional.”

The suit is the latest chapter in a long-running dispute. Stahl says in the complaint that it purchased the pair of rental structures as part of a larger package of 15 buildings comprising the entire block between York and First avenues and 64th and 65th streets, in 1977. The company said the long-term plan was to redevelop the properties.

The city initially intended to grant landmark status to the whole block, which was built by the City and Suburban Homes Company between 1898 and 1915 and known as the First Avenue Estate. The buildings are considered historically significant because they were part of the “light-court” model that attempted to improve the living conditions for city dwellers.

But instead of including the entire block in 1990, the two buildings at 430 East 65th Street and 429 East 64th Street were removed from the designation, and the rest were made part of a city landmark.

In 2004, however, local residents heard Stahl was planning to demolish and build a high-rise on the site, and asked the LPC to add the two buildings as landmarks, which it did in 2006. Stahl filed suit in New York State Supreme Court in 2007 to block the designation, but lost. The judge at the time noted the City Council referred to the 1990 decision to remove the buildings as a “bad back-room deal.”

Stahl filed a hardship claim in 2011, but the LPC rejected that claim last May.