Zoning on Lightstone’s Moxy Hotel in Williamsburg ruled improper

David Lichtenstein’s Lightstone Group was riding high in early March after it opened the Moxy Hotel in Williamsburg, which boasts a Tel Aviv inspired restaurant and a rooftop bar with views of the Brooklyn Bridge.

But a week after the grand opening celebration of the 216-room hotel at 353-361 Bedford Avenue, the major national developer received some bad news: a judge ruled its zoning is improper.

A New York City Department of Buildings spokesperson said it is reviewing the matter, but it’s possible the city could revoke its building permits. 

The Lightstone affiliate is appealing and filed a motion to reargue its case. It claims the lawsuit is essentially a money grab by a neighboring property owner. But Lightstone also warns that if a certificate of occupancy is not issued, its hotel’s future is in jeopardy.

Lightstone declined to comment through a spokesperson.

The issue stems from a long-standing dispute with the owners of the four-story property next door. The property’s representative, Jack Gold, alleges Lightstone excluded the neighboring lot in its 2019 filing with the Department of Buildings in order to obtain additional square footage needed for zoning. 

When the neighboring property owner at 141 South Fifth LLC discovered that its lot was excluded, Lightstone amended its filings and added three new tax lots. Yet, it never obtained the required consent from 141 South Fifth to add said lots. 

The property owner filed two challenges with the Department of Buildings and then moved forward with its lawsuit in 2021.

The allegations also claim that the Lightstone affiliate trespassed onto its neighbor’s property, installed plywood over the windows of their building and constructed a bridge scaffolding in the rear section of the lot. 

The Lightstone subsidiary “is attempting to use its outsized economic strength and influence to bully and hoodwink its neighboring smaller property owners,” said Dov Medinets of Gutman Weiss, the attorney representing the property owner who filed the suit. 

Lightstone, for its part, argued its neighbors consented to add in the additional lots in 2017. The developer’s lawyers argue their client has made a number of commitments to complete the project by October and if it cannot obtain a certificate of occupancy from the Department of Buildings it will incur substantial costs and be unable to refinance its existing loans. Further, the firm risks missing a deadline to Barlab NYC, which holds the food and beverage contract on the hotel.

Lightstone paid $30.4 million for the development site in July 2019. In August 2021, it secured a $77 million construction loan from G4 Capital.