Volume 20 Issue 15 | August 24 -30, 2007
Soho Alliance tries to trump the Donald
By Lincoln Anderson
Donald Trump’s Soho condo-hotel project has already risen four stories, but neighborhood opponents are determined to keep it from ever reaching its full planned height of 42 stories.
The Soho Alliance community group recently retained Stuart Klein the Department of Buildings’ former top lawyer in their fight against the tower at 246 Spring St. on Soho’s western edge. Although Trump’s name is on the project, the principal developers are the Bayrock Group and Tamir Sapir.
In addition to being Buildings’ general counsel from 1978 to 1979, Klein was also the department’s inspector general from 1979 to 1984.
Klein contends that because the Trump condo-hotel units were first pitched in advertisements as an investment opportunity and because their owners’ use of them will be limited by a restrictive declaration with D.O.B., the condo plan must be reviewed by the federal Securities and Exchange Commission.
He also contends that D.O.B., by approving the Trump project, contradicted a precedent it set when it opposed a similar project in the Meat Market three years ago.
In short, Klein said, “What’s happening here is the Department of Buildings is conspiring to violate the Zoning Resolution.”
Klein has put D.O.B. on notice that the Trump condo-hotel’s building permit should be revoked. If D.O.B. refuses to revoke the building permit, Klein will then write a letter to the Board of Standards, asking them to revoke it. If the B.S.A. refuses, Klein will then file an Article 78 lawsuit against the B.S.A. in State Supreme Court to pull the permit.
Starting off the somewhat-lengthy, but required, process, on July 24, Klein wrote Mona Seghal, D.O.B.’s current general counsel. In his letter, Klein picks apart the Trump restrictive declaration, finding what he calls many “very disturbing” aspects of the agreement.
At the heart of the issue is Hudson Square’s manufacturing zoning, which doesn’t allow residential use. What zoning does allow at the Spring St. site is a transient hotel, where guests typically only stay overnight. But because of suspicions that the Trump condo-hotel owners would use their units as primary residences, D.O.B. and the developers negotiated a restrictive declaration.
The agreement’s restrictions state that no owner may occupy a unit for a continuous period of more than 29 days in any 36-day period or for a total of no more than 120 days per year. Failure to abide by the declaration’s terms would result in possible D.O.B. audits and financial penalties, the latter which Klein blasted as “insubstantial given the cost and expense of the units.” That D.O.B. would get a substantial cut of these fines means the glitzy building could become a “cash cow” for D.O.B., Klein said, calling it “obscene.”
In his letter to Seghal, Klein emphasized that, in violation of D.O.B. rules, the Trump restrictive declaration lacks critical required language, specifically: “failure to comply with the terms of this restrictive declaration or easement agreement may result in the revocation of a building permit or certificate of occupancy.”
Meat of the issue
Klein cites as precedent the case of a planned 32-story Jean Nouvel-designed tower at 848 Washington St. in the Meat Market that saw the department waffle before finally rejecting a building permit for it in 2004. Forty-nine percent of that building’s units would have been for long-term residential occupancy, with the other 51 percent for use as a transient hotel. In 2003, the project was granted approval by then-Deputy Commissioner Ron Livian. But, a year later, his successor as Buildings deputy commissioner, Fatma Amer, put her foot down, saying that Livian’s approval “creates objectionable results by undermining the integrity of the…prohibition on residential occupancies in the zoning district in which the building is located. … [T]herefore, in order to develop a transient hotel in a manufacturing district, units may not be subject to lease, sale or other arrangement under which they would not be available for transient occupancy.”
Thus, Klein wrote in his letter to Seghal last month, “By approving the Trump Soho project, D.O.B. has violated both the Zoning Resolution and its own precedent. … It is unconscionable that D.O.B. would take such disparate positions regarding two similarly situated projects. D.O.B.’s approval of the Trump project appears not only to directly violate the Zoning Resolution, but, as stated by Ms. Amer, ‘undermines its integrity.’ ”
In addition, Klein notes in his July 24 letter to Seghal, “the Securities and Exchange Commission has closely observed condominium-hotel offerings in recent years,” and that the S.E.C. even issued a guideline to developers on when a condo-hotel plan constitutes a security.
“Under these guidelines,” Klein wrote Seghal, “a key factor in assessing whether a condominium-hotel offering is a security is whether there are significant restrictions on the purchaser’s use of the condominium unit.”
Klein said the restrictive declaration on the Trump condo-hotel certainly amounts to “significant restrictions,” since it limits the occupants from living there for two-thirds of the year.
Also, S.E.C. guidelines prohibit condominium-hotel offerings that advertise potential profit, Klein added. The Trump Soho Web site warns buyers that the units are not an investment opportunity. However, that proviso was added specifically because Trump Soho’s Web site was caught earlier pitching the units as an investment opportunity.
‘Revoke all approvals’
Klein concluded his July 24 letter to D.O.B.’s Seghal by stating, “[T]he only proper cause of action is the revocation of all approvals until the restrictive declaration is revised; and that the developer submit the declaration and supporting documentation to the S.E.C. for review and comment.”
A month later, Klein still hasn’t heard back from Buildings. Speaking on Monday, he said he’d called the S.E.C. a week earlier but hadn’t heard back.
On Monday, The Villager called the S.E.C. and talked to John Heine, a spokesperson. Heine said the Trump condo-hotel represented “a private issue” and that the commission would not comment to the press about it. Shortly after The Villager spoke to Heine, Klein reported Heine had called him and that they were playing “phone tag.”
On Tuesday, Kate Lindquist, a Buildings spokesperson, said, “The department is still reviewing the letter sent to the general counsel’s office.”
Julius Schwarz, executive director of the Bayrock Group, has been the main spokesperson for the Bayrock/Sapir development group. Schwarz could not be reached for comment by press time, with a receptionist saying, all three times The Villager phoned, that Schwarz was “in a conference call.”
Sean Sweeney, the Soho Alliance’s director, said, ideally, they would like to go right away to State Supreme Court and file an Article 78 lawsuit to stop the Trump project, but that they have to follow the process of first writing D.O.B. and then, if needed, the B.S.A. to revoke the permit. Sweeney said they know the process means construction workers will keep adding more floors in the meantime.
Sweeney called the Trump condo-hotel “an end-run around the zoning laws. Most developers would have to apply for a zoning variance or special permit,” he noted. “Trump and his partners wouldn’t have been able to get the variance, and they know that.”
If the Spring and Varick Sts. site were rezoned residentially, the city would never let Trump build as high as 42 stories, Sweeney stated confidently.
Sweeney said it’s also clear the condo-hotel, because of its restrictive declaration, needs review by the S.E.C.
“The restrictive declaration has so many loopholes that you could drive a truck through it,” he said, “but nevertheless it’s a restrictive declaration.”
He predicts D.O.B. won’t revoke the permit but that the B.S.A. very well may. If that doesn’t happen, though, they’re raising funds to go to court.
“People literally have volunteered to give us money,” Sweeney said. “Trump has money. Bayrock has money. We have money. … Trump thought that Hudson Square or that part of Soho was a quiet little neighborhood. But he’s not going to come in and steamroll Soho. This is not Troy, this is Soho. And he put his Trojan horse in the wrong neighborhood.”
Sweeney added that their battle isn’t just about Soho but has broader implications for manufacturing-zoned neighborhoods across the city.
Starting last year, the Greenwich Village Society for Historic Preservation led protests against the Trump Soho condo-hotel. However, since G.V.S.H.P. doesn’t file lawsuits, it’s deferring to the Soho Alliance on the current effort. Yet, G.V.S.H.P. was “intimately involved” in the letter Klein sent to D.O.B. and will remain “intimately involved,” assured Andrew Berman, the society’s director.
“We’re working very closely with the people who have filed this letter with D.O.B.,” he said. “We’re still very strongly opposed to the development and very much in the fight.
“This letter is the necessary next step before a legal challenge can be filed,” Berman said. “Should a challenge be filed, community groups and residents will have to dig deep into their own pockets to take the city to court, since the city will be defending the Trump project, which would be a pretty sad state of affairs average residents having to spend their hard-earned money to try to force the city to enforce the law and treat billionaire developers by the same rules as everyone else.”
G.V.S.H.P. does sometimes support lawsuits, such as when they backed East Village neighbors’ challenge last year to the air-rights transfer for New York University’s 26-story dorm project on E. 12th St.
“We may support this one, if it comes to that,” Berman said. “At this point, it’s a letter.”
Zoning changes needed
The G.V.S.H.P. director also noted that the city had promised to consider changing Hudson Square’s zoning to prevent similar Trump-sized developments and to close the supposed loophole allowing alleged condo-hotels in manufacturing zones.
“In spite of our protests, so far we have seen no such movement from either the City Planning Commission or the City Council,” he said.
In that same vein, Klein added why it’s critical to stop the Trump project now.
“I want to make this into a hot-potato issue because look at the precedent it’s setting,” Klein said. “Zoning changes move glacially. Neighborhoods will change before zoning is addressed.”
Klein said he feels D.O.B. is currently functioning in a state of “benign neglect” under the Bloomberg administration. He said whatever one thought of former Mayor Giuliani, he was a micromanager who kept on top of things.
“The Buildings Department actually ran a lot better under Giuliani,” Klein said. “I can tell you they stopped functioning about four years ago. They should weld the doors shut.”