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"Historic Preservation" Can Mean Big Problems for Property Owners

In New York, local governments may impose significant restrictions on the use of private land. For example, since 1965, New York City has authorized local officials to designate certain buildings as “historic landmarks,” which limits the ability of owners to redevelop or alter their own properties. The law is supposed to still allow owners the ability to earn a “reasonable return” on their properties without compromising historic preservation. But the city and property owners often disagree on the proper balance between these objectives.

Stahl York Avenue Co., LLC v. City of New York

Here is an ongoing case illustrating this conflict. The First Avenue Estate is a 15-building housing complex constructed during the early 20th century. Two of the buildings were designed by an architect named Philip Ohm and completed in 1915. Stahl York Avenue acquired the entire First Avenue Estate in 1977 with the intention of redeveloping what it considered “architecturally insignificant” tenement buildings.

In 1990, the New York City Board of Estimate, the body then charged with designating historic landmarks, designated 13 of the 15 Estate buildings—all but the two Ohm-designed tenements—as historic landmarks. This means Stahl could redevelop the two Ohm buildings without restriction.

But in 2004, after Stahl announced plans to do just that, the New York City Landmarks Preservation Commission, which assumed control of the historic designation process following the Board of Estimate's abolition, decided the Ohm buildings were architecturally significant enough to merit protection. Stahl challenged the decision in court and lost.

Stahl subsequently submitted a “hardship application,” which is a special exemption to the historic landmark designation. Stahl argued it could not rent the Ohm buildings without committing to millions in renovation costs, and it “could not earn a reasonable return” on the property without demolishing the buildings and building anew on the property. After nearly four years of hearings and review, the Landmarks Preservation Commission denied Stahl's hardship application in May 2014.

Stahl then filed lawsuits in both state and federal court seeking to overturn the Commission's decision. The state lawsuit remains pending. On May 21, U.S. District Judge Edgardo Ramos dismissed the federal lawsuit, which accused the City of violating Stahl's constitutional right to “due process.” In short, Judge Ramos said Stahl did not have any constitutionally protected right to a favorable decision from the Commission, either with respect to the historic landmark designation or the hardship application. New York law grants the Commission fairly wide discretion on these subjects, and recognizing a federal constitutional claim here would be “diametrically opposed” to the city's legitimate interest in balancing the need for historic preservation against the rights of property owners.

Getting Help With the Regulatory Burden

As this case demonstrates, it can be difficult for property owners to assert their rights, either before local officials or in court. It can take years, even decades, to address regulatory concerns. That is why if you are involved in any sort of legal or regulatory dispute it is important to work with an experienced New York real estate attorney. Contact our office today if you need to speak with someone.

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