Claim of spot zoning and taking at Seaport rebuffed

Down-zoning in South Street Seaport upheld. Peck Slip Assoc. LLC, the owner of a surface parking lot at 250 Water Street, sued the City seeking to invalidate City Council’s down-zoning of the South Street Seaport area on a claim that the rezoning made 250 Water Street impossible to develop.

In April 2003, the City Council approved a South Street Seaport down-zoning, reducing the permitted height and mass of all future development in a l O-block area of Lower Manhattan bounded by Dover, Pearl, Fulton and South Streets. (See map on back.) The rezoned area corresponded to the boundaries of the 1 977 Landmarks designation of the South Street Seaport Historic District, and culminated almost 40 years of City, State and community land use decisions on South Street Seaport.

Prior to the rezoning, Peck Slip submitted several development proposals to Landmarks for 250 Water Street with all but one, a 199 1 office development, being denied. Peck Slip never developed the 199 1 – approved building. When Manhattan Community Board 1 proposed the down-zoning, Peck Slip publicly stated that its property would be undevelopable, a contention that triggered an economic study by the Economic Development Corporation. The study found that a 250 Water Street development, restricted to the proposed lower size and mass (a 6.02 FAR) would have a 20% rate of return, potentially increasing to 35% with use of Liberty Bonds.

Following the down-zoning’s approval, Peck Slip sought a declaratory judgment in state court, seeking to void the rezoning. It argued that the down-zoning constituted unlawful spot zoning or, alternatively, a taking.

Justice Michael Stallman denied Peck Slip’s claims, finding that the rezoning was lawful and the takings challenge was premature since Peck Slip had not sought or been denied approval of a code compliant development under the new zoning.

Peck Slip Assoc. LLC v. City Council, N.Y.L.J., Oct. 13, 2004 at IB, (N.Y.Cty.Sup.Ct.) (Stallman, J.).

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.