Air rights are not real estate, a Supreme Court justice has ruled, thus clearing an obstacle to construction of an $85 million apartment building in the Fleetwood section of Mount Vernon.
The dispute over the meaning of “real estate” pitted New York City developers against one another.
Alexander Development Group of Manhattan and the Bluestone Organization of Queens plan to build a 16-floor, 249-apartment tower at 42 Broad Street West. They want to demolish a building that housed a grocery store and pharmacy and renovate the adjacent, deteriorating, money-losing Fleetwood Garage.
The parking garage is at the center of the case. They city built it in 1979 and has operated it ever since. But Mount Vernon does not own the land. It leased the air rights.
Alexander Development bought the land two years ago for $3.2 million to provide parking for future apartment tenants.
Then the city agreed to terminate the air rights for $3.25 million. The deal allows continued public use of the garage, but local landlords and merchants were concerned that they would lose access to the best parking spaces.
CD Fleetwood Associates and Gramatan Realty, which lease spaces in the garage for tenants in nearby businesses, sued the city and developers on Dec. 28 to stop the project.
They argued that the city charter requires city council to approve the sale or lease of city real estate by a four-fifths supermajority vote. The deal terminating air rights was approved by a 3-2 vote in September and a 3-1 vote in October, both times falling one vote short of a supermajority.
Supreme Court Acting Justice Susan Cacace ruled on April 7 that air rights, under a “plain reading” of the city charter, do not meet the definition of real property. Furthermore, she said, there was no transfer of property or title, so there was no sale of real estate.
Cacace ruled that council had “lawfully adopted” the deal.
Mark Alexander, president of the development company, said he could close on financing in six to eight weeks, then begin demolition of the retail building and renovation of the garage, and finish the apartment tower in 18 to 24 months.
“There most certainly will be an appeal,” said Jonathan D. Kraut, the attorney who represents CD Fleetwood and Gramatan Realty.
He said it would be foolish for the developer to proceed and he would be shocked if any commercial lender would fund the project while an appeal is pending.
“He should be prepared to be shocked,” Alexander said.
