A $26 million investment resulted in $115 million ADDITIONAL costs

On April 29 the Landmarks Preservation Commission (“LPC”) voted to designate the Park Avenue historic district as New York’s 111 historic district.  The district contains approximately 64 buildings and extends from 79th St. to 91st St.  The impetus behind this nomination was Extel’s acquisition of the rectory, parish house and development rights from Park Avenue Christian Church located on the southwest corner of 85th street and Park avenue. Christ Church was built in 1909 and further altered and enlarged the 1960s.

1010-Park-Avenue-1920s_NYPL

A picture of the church as seen in the 1950’s.

Extel paid $24.7 million for this +\- 40,000 SF development. Included in this price, Extel will build the Seller an $8.75mm church annex and contribute up to $2mm for a preschool. Extel is currently building a luxury condominium project.

1010 Park Avenue LPC Submission revised design 2015-01-05.indd

Building rendering as approved by Landmarks Preservation Commission

So back to Landmarks Preservation Commission. In reviewing this proposed building the commissioned a study of the surrounding area and determined that Christ church has “no style” which in landmarks parlance means that it can be demolished with only a staff level permit!  This Cleared the way for Extel to design a building next to a historic structure and not be subject to much regulation or over site.

1010 Park Avenue LPC Supplemental Presentation 2014-12-02.indd

Section of Proposed building

I want to be perfectly clear that I don’t judge or criticize Extel for obtaining the necessary approvals for the construction of this building; on the contrary, I think NYC is a vibrant city and should evolve and adapt to the needs of it residents and businesses to continue making this the best city in the world. The last think I want for NYC is for it to become a permanent museum like Paris, where nothing can be altered, where the rooftop view from Centre Pompidou only shows a handful of cranes – and could be the cause of their 10.6% unemployment rate and social upheaval it is currently facing.

 

So the LPC whipped everyone into a tizzy and managed to get enough people to pass the 111 historic district of Park Avenue. Wonderful!  How does that affect the current residences? But what are the consequences of this? Did anyone other than hard-core preservationists asked for or support this designation?

Extel’s $25mm deal created a “preservation tax” on all Park Avenue Historic residents. Whereas before a simple work permit was necessary to do any exterior work including façade maintenance and window work, residents now have to hire professionals to navigate the very extensive and expensive LPC application process and public hearings before they able to do any work.

An analysis of an unnamed building located in the District shows that a 2011 budget for façade work prior to the landmark designation came in at approximately $580,000. The budget for the work now mandated by LPC has increased to over $1.3 million.  The same can be said about a window replacement job where the costs have risen from a budgeted $550,000 to a new budget of $1.65 million in the same period.

Most buildings in the district tend to be of similar sizes with lots of approximately 100 feet by 100 feet with 20 apartments per building. So if one infers that all 64 designated buildings would encounter the same price increases, the landmark “preservation tax” works out to $1.82mm per building for a total of $116.5 million for the newly created district!  That’s $91,000 per average resident many of which are elderly people!   And there are no tax breaks or offsets available at all.  This is very onerous.

Other consequences include a slowdown in sales of apartments needing window replacement because most of the times, the LPC requires a building-wide renovation instead of doing it one apartment at a time.  This delay is caused by cascading factors such as Board Approval to do the work, Board approval for improvement financing, LPC approval, putting together a Bid Package to go out to contractors,  scaffolding design and permits, and much more, all of which could delay the process between 18-36 months.

There are times that the LPC “consultants” require renovation or replacement of bricks and ornamental pieces to be an exact replica of the old ones, something that is virtually impossible to achieve without reaching out to a very small pool of vendors that have monopoly pricing power and can set any price because they have the LPC requiring the work.  Using an analogy to the recent Epi-Pen pricing increase, people suffering from allergies HAVE TO buy the Epi-pens at ANY price from the ONE vendor with monopolic pricing power or else they die!   In Park Avenue’s case the bricks or decorative elements from the facade or an old window sash could fall and injure – or worse still kill someone.

Maintaining buildings is good but if a Government Entity imposes onerous requirements that result in a substantial cost increase, then they should accompany it by some incentive or tax reduction to alleviate the impact.

 

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