A “nonsense issue”: Extell Diamond District hotel mired in 18 inch dispute

UPDATED AUG. 18, 11:16 AM: An old guard Diamond District landlord is pulling out every stop to slow Gary Barnett’s planned hotel in the jewelry mecca. His latest move is almost too bizarre to believe.

Barnett’s Extell Development plans a 534-key hotel at 32 West 48th Street which, if completed, would open up the insular community of diamond shops on 47th Street to Rockefeller Center. But the process has dragged out in court for more than three years as the Elo Organization, which owns the building next to Extell’s site, has refused the developer’s attempts to install safety precautions on its building.

The cause for the holdup: An 18-inch strip of land both parties claim to own.

Elo built its case around an obscure law known as adverse possession, which allows for a person to acquire title to land somebody else owns. In its lawsuit, Elo claims that the building Extell demolished to create its project site didn’t reach all the way to the lot line with Elo’s building. Instead, it ended 18 inches short, leaving a small gap between the two buildings.

A diagram of Extell’s Diamon District assemblage

While the gap technically sits on Extell’s lot, Elo claims it has held “exclusive occupancy” of the strip and — crucially, for Barnett’s sky-high ambitions — its air rights. Elo says that for years its building’s antennae, air conditioning units and ventilation hung over this contentious strip.

“Adverse possession is an ancient doctrine that goes back to English real estate law,” said Jeffrey Braun, an attorney for Kramer Levin specializing in land use disputes. It makes more sense in rural or suburban settings, Braun explained, where precise lot lines may not be clearly surveyed and marked.

“This guy says, ‘Because my air conditioning units have stuck out over the property line, and it’s open and it’s notorious and you never really gave me permission to do it, I now own the air that my units occupy,’” Braun said. “These are the kinds of nonsense issues that get litigated in an adverse possession situation.”

Extell has prevailed in court thus far. In 2019, a judge ordered Elo to let Extell into its building to install some protections while it demolished the building next door. But that order only lasted eight months, and doesn’t extend to the protections for construction.

A spokesperson for Extell said the project is moving forward.

“New York has strong regulations in place to enable development to proceed and protect against obstructionist landlords that are trying to impede progress for their own financial gain. We are not going to continue to be bullied by such landlords looking to do so,” the spokesperson said in a statement after this story was published.

Another judge struck down some of Elo’s claims to adverse possession, such as its allegation based on an early twentieth century survey that its building’s foundation extended nine inches into Extell’s lot. Still, parts of the claim remain active before the court as both parties seek to consolidate their suits against one another under the supervision of one judge.

The Department of Buildings doesn’t actually require developers to get access agreements to earn work permits and start construction. That said, site safety plans still need to comply with the building code, which prescribes protections like netting and roof guards for neighboring buildings. If a construction plan includes these required protections, but the site doesn’t have them because a neighbor won’t allow access to the building, the city can shut the project down.

Read more

New York

Rotem Rosen faces holdout on Billionaires' Row

New York

A diamond is forever. Is the Diamond District?

Elo and Extell did not respond to requests for comment by press time.

The SLCE Architects-designed tower would be Extell’s second major project in the district, after the International Gem Tower, and a major step toward the firm’s goal of polishing up the well-worn neighborhood. Elo owns at least five properties in the Diamond District, including 15 West 47th Street, which it purchased for $115 million from the Chetrit family just before the pandemic.

Even if Extell wins in court, it can’t win back the time it has had to spend litigating the case.

“If you have to go to court to achieve what you want to achieve,” Braun said, “you’re already in trouble.”

This story has been updated with a comment from a spokesperson for Extell.