The old Fleetwood garage in Mount Vernon looms over Broad Street West, but in a fight that pits developer against developer the question is whether the massive deteriorating parking garage is actually “real property.”
Two Fleetwood landlords sued the city and two developers in state Supreme Court in White Plains on Dec. 28, claiming that the Mount Vernon City Council improperly transferred the garage and air rights.
Alexander Development Group and the Bluestone Organization have budgeted $85 million for 42 Broad, the address of Fleetwood garage and the name of their proposed 249-apartment, 16-floor building. They plan to demolish a building next to the garage that formerly housed a Metro Fresh market and a Duane Reade pharmacy, for the apartments. The project is three blocks from a Metro-North Railroad station and across from the Cross County Parkway.
While merchants want to keep access to the most desirable and convenient parking spaces, the developers need the garage for future tenants. They plan to put in 15,000 square feet of retail space and add 169 parking spaces, bringing the total to 580 spaces. That”™s enough, according to the company, to accommodate its residents, shoppers and people who work nearby.
The battle pits New York City developers against New York City developers.
Alexander Development, based in Manhattan, has built apartments in Harlem and Brooklyn. Mark Alexander, the company president, also co-developed the Horizon at Fleetwood, an apartment building a few blocks away from the Fleetwood garage. Bluestone, based in Queens, is a third-generation family firm that has built more than 5,000 housing units.
Joseph Simone”™s Gramatan Realty leases property near the parking garage to a bank, florist, bakery, drug store, restaurants and medical offices. His Simone Development Cos., based in the Bronx, has built office, industrial, and medical center projects, such as Hutchinson Metro Center and Purchase Professional Park. Ralph Della Cava of CD Fleetwood Associates leases property near the garage to a bank, funeral home, pizzeria, frozen yogurt shop, and restaurant. He is a partner in R.A. Cohen & Associates, a Midtown Manhattan real estate investor and property manager.
Mount Vernon has operated the garage for 37 years under an unusual arrangement. It does not own the land.
Instead, it leased air rights in 1974 and built the garage in 1979. The city owned the physical improvements to the structure, according to its lease. Then in 2007 the lease was changed to limit the city”™s interest to parking spaces for another 37 to 57 years.
Fleetwood Garage is sorely in need of renovations. At most, 38 percent of the parking spaces are used during peak hours, leaving at least 267 vacant spaces at any given time, according to a court filing by the city. The city loses about $144,000 a year operating the facility.
Alexander Development bought the property for $3.2 million from Fleetwood Park Development LLC in 2014. It negotiated with the city for 18 months, agreeing in December to pay $3.25 million over the life of the deal and to spend about $3 million repairing the garage. The City Council agreed to terminate its air rights.
The crux of the case is procedural. The city charter requires that the sale or lease of city real estate must be approved by the City Council by a four-fifths supermajority vote. Lawmakers voted twice, as required by the charter, approving the deal with Alexander Development by a 3-2 vote in September and a 3-1 vote in October.
“In our view, they tried an end-around,” said attorney Jonathan D. Kraut, a partner with Harfenist Kraut & Perlstein LLP in Purchase, who represents the landlords. “They didn”™t have the votes to make happen what they wanted to happen.”
The city responded that Alexander Development owns the air rights, according to a court filing, and the city merely leased temporary air rights and parking spaces. The deal was a termination of rights, not a sale or lease of real estate, so the council could approve the deal by a simple majority vote.
“They”™re saying that the city of Mount Vernon doesn”™t know how to pass legislation and doesn”™t understand their own charter,” Mark Alexander said in a telephone interview. “They”™re trying to have a second go-around on the same issue.”
He was referring to a lawsuit that was filed last year in the same court. In that case, Della Cava”™s C.D. Fleetwood Associates and several residents and merchants objected to a special permit that allows Alexander Development to build the apartments. They claimed that the project would hurt businesses by increasing noise and traffic and taking away parking.
Acting Justice of the Supreme Court Susan Cacace ruled last summer that the petitioners lacked legal standing to sue and had failed to demonstrate how the project would harm them specifically.
Alexander Development spent two and a half years planning the project and getting city approvals. It has invested $9.1 million on the project, according to an affidavit by Mark Alexander, had lined up an investor who would put in $27 million and was about to close on a $55 million construction loan.
The new lawsuit was filed at the eleventh hour, the day before a groundbreaking ceremony and just as the company was poised to begin construction. The lawsuit has nothing to do with the garage or City Council procedures, Alexander said, “and everything to do with causing the project to fail.”
Simone and Della Cava presumably understand how critical it is to secure timely financing, he said. If the lawsuit is not dismissed quickly, “it is extremely unlikely that the construction loan will ever close or that the equity investor will ever provide any money.”
Alexander Development would lose the $9.1 million it has invested and an estimated $40 million in profits, he said.
“My clients are developers,” said Kraut, the attorney who represents the landlords. “They support further development in Fleetwood and they support this project as a concept.” But they want better access to parking.
Alexander said he could close on financing in April, if his side wins, and begin demolition immediately. The first apartments could become available in about 18 months and the rest in 21 months.
