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Land Use, Housing & Zoning
58--60 West 39th Street, application to the Board of Standards and Appeals by H Hotel LLC renew building permits lawfully issued before December 20, 2018
At the regularly scheduled monthly Community Board Five meeting on Thursday, November 12, 2020, the following resolution passed with a vote of 46 in favor; 0 opposed; 1 abstaining:
WHEREAS, H Hotel LLC, the owner of the Subject Property at 58-60 West 39th Street (the “Applicant”) is requesting the Board of Standards and Appeals (the “BSA”) to renew building permits (the “Existing Permit”), pursuant to the common law of the State of New York, and pursuant to Zoning Resolution (“ZR”) Section 11-331, for a 31-story hotel (the “Hotel”) at 58-60 West 39th Street in a M1-6 zoning district; and
WHEREAS, The Subject Property is located in an M1-6 zoning district, except for a three-foot-wide area along its western lot line (i.e., the portion of the Subject Property located within 150 feet of Sixth Avenue), which is located in a C5-3 zoning district and also in the Special Midtown District (“MiD”); and
WHEREAS, The Existing Permits were issued prior to a December 20, 2018 amendment to the Zoning Resolution, which provided that a hotel in a M-1 zoning district would no longer be permitted as-of-right, but only if a special permit is approved by the City Planning Commission and the City Council, and, accordingly, the Existing Permits expired; and
WHEREAS, A permit for excavation and foundation work was issued by the Department of Buildings (the “DOB”) in July, 2018; and
WHEREAS, A New Building permit (the “NB Permit”) was issued by the DOB for the Development on November 30, 2018 for a transient hotel with 40,977 square feet of zoning floor area, 86 rooms and a restaurant and beverage venues; and
WHEREAS, The Developer intends to construct a larger version of the Development by acquiring 19,189.25 square feet of excess floor area from the parcel located to the west of the Subject Property, at 64 West 39th Street (Block 840, Lot 6) (the “Adjacent Parcel”); The Adjacent Parcel is located in a C5-3 (MiD) zoning district and the larger Development is envisioned as a 34-story transient hotel with approximately 173 rooms and approximately 62,062.5 square feet of zoning floor area that will cantilever over the Adjacent Parcel by approximately 25 feet; and
WHEREAS, Pursuant to Section 11-331 of the ZR and pursuant to the common law of the State of New York, Applicant is requesting the BSA approve a renewal of the Existing Permits; and
WHEREAS, According to Section 11-331 of the ZR, if, before the effective date of an applicable amendment of this Resolution, a building permit has been lawfully issued, to a person with a possessory interest in a zoning lot, authorizing a major development, such construction, if lawful in other respects, may be continued provided that the foundations for at least one building had been completed prior to such effective date; and
WHEREAS, According to Section 11-331 of the ZR, in the event that such required foundations have been commenced but not completed before such effective date, the building permit shall automatically lapse on the effective date and the right to continue construction shall terminate; and
WHEREAS, According to Section 11-331 of the ZR, an application to renew the building permit may be made to the Board of Standards and Appeals not more than 30 days after the lapse of such building permit and the BSA may renew the building permit and authorize an extension of time limited to one term of not more than six months to permit the completion of the required foundations, provided that the Board finds that, on the date the building permit lapsed, excavation had been completed and substantial progress made on foundations; and
WHEREAS, The BSA application was filed by the applicant on July 24, 2020, 582 days (1 year, 7 months and 4 days) after the amendment became effective, well past the permitted 30 day application window; and
WHEREAS, The Applicant stated that demolition and excavation were complete as of December 20, 2018 and 70% of foundations were complete, provided affidavits from engineer and concrete logs but provided no physical evidence of such statement (photographs, etc.); and
WHEREAS, The Applicant stated that as of the amendment adoption, they had spent $11.7 million or approximately 16% of the $70,113,670.66 total cost of the Development, broken down to $6.6 million on hard cost (demolition and excavation necessary of any use, including conforming uses) and $5.1 million on soft cost; and
WHEREAS, Demolition and excavation associated costs can serve both a hotel use and a conforming use and therefore are not rendered useless by the new amendment; and
WHEREAS, The foundations are generic enough that they can serve the initial 31 story hotel development as well as the more complex 34 story, multi-cantilevered project the developer ultimately intends to build, suggesting that the foundations can easily be adapted to serve a conforming use, and therefore are not rendered useless by the new amendment; and
WHEREAS, The Applicant commissioned an appraisal report for a multi-tenant commercial office development (conforming use), that states:
AS VACANT
The property is zoned for various commercial uses and is of sufficient size to accommodate various types of development. The immediate area includes various commercial land uses. Considering the surrounding land uses, location attributes, legal restrictions and other factors, it is our opinion that a commercial oriented use (i.e. hotel, office and/or retail) would be reasonable and appropriate. Therefore, it is our opinion that the highest and best use would be for commercial-related use, time and circumstances warranting.
AS IMPROVED
We assume the hypothetical office development is the subject’s highest and best use as-improved for the purpose of this appraisal and in accordance with the Scope of Work”; and
WHEREAS, The hotel development would have an As-Complete Value of $43,600,000 and an office development alternative would have an As-Complete Value of $21,800,000, and while the hotel valuation is higher, an office alternative has a significant value; and
WHEREAS, In order to gain the vested right, the landowner’s actions relying on a valid permit must be so substantial that the municipal action results in serious loss rendering the improvements essentially valueless, Cine SK8, Inc. v. Town of Henrietta, 507 F.3d 778, 784 (2d Cir. 2007) (internal quotation marks omitted); and
WHEREAS, The applicant did not establish that the hotel-specific spending associated with the development was substantial enough to result in serious loss; and
WHEREAS, The amendment to the ZR promulgated on December 20, 2018, states that Hotels in M1 Districts may directly or indirectly detract from opportunities for other kinds of development, by occupying vacant or underdeveloped sites that could have been available to other uses better equipped to fulfill neighborhood development objectives and needs, or by accelerating neighborhood change with the expansion of tourism-oriented uses; and
WHEREAS, There are already four large hotels on this block, at 245 W 38 St., 63 W 38 St., 69 W 39 St., and 26 W 39 St. (aka 19 W 38 St), and the last also applied for a BSA permit (196-58-BZ; Cal 2019-175-A) to complete the construction of a 299 room hotel after the amendment entered in effect; and
WHEREAS, The design, height, bulk, massing of the Hotel is not harmonious with neighboring architecture, would disrupt the streetscape; and
WHEREAS, The proposed plans show a large number of mechanical floors, with excessively high floor to floor heights, suggesting that the development is using a practice known as “mechanical void” to artificially increase the height of the building while not using additional FAR, a practice that has been banned in other parts of Manhattan; and
WHEREAS, Hotel use in M1 districts conflicts with CB5 district priorities as it competes with class B and class C office space; and
WHEREAS, The applicant has not demonstrated severe financial hardship or a vested interest in a hotel development and the appraisal commissioned by the applicant and produced by CBRE concludes that a conforming use (commercial) would be a high-performing use; and
WHEREAS, The transient hotel market has been gravely impacted by CoVID-19 pandemic and may not be a sustainable use, especially in an area that is already a oversaturated with hotels; and
WHEREAS, The Zoning Text Amendment passed by the City Planning Commission and the City Council in 2018 aims to address this exact type of hotel development that aims only to maximize profit with no regards for the urban environment, the streetscape context, or the needs of the district; and
WHEREAS, The applicant purchased the land in 2016, but filed permits only in summer 2018, shortly after the Department of City Planning had filed their proposal to amend the zoning resolution to no longer permit as-of-right hotels in M1 districts, to “beat the clock”, and applicant was likely aware that a hotel use may no longer be as-of-right; and
WHEREAS, Hotel use is permitted by special permit and the applicant can file a special permit with the Department of City Planning, as provided under the new zoning; and
WHEREAS, The applicant filed the present BSA application on July 14, 2020, 582 days after the amendment entered into effect and while being filed pursuant to common law, it is against the spirit of ZR section 11-331 that allows 30 days to file recourse with BSA;
WHEREAS, The applicant does not have a vested interest because they did not spend a substantial amount on a hotel specific development, a conforming use would be a high-value development and a special permit can be issued for hotel use; Therefore be it
RESOLVED, Community Board Five recommends denial of 58-60 West 39th LLC’s request to the BSA for a Renewed Permit, for the hotel located at 58-60 West 39th Street.