New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021



SOS TO CITY: Our Garage Floors are Sinking. CITY TO CO-OPS: Get Lost

In New York City, as in Samuel Coleridge’s “Rime of the Ancient Mariner,” there’s water, water everywhere. When it’s in the conventional places – canals, creeks, rivers, reservoirs, harbors, and the seashore – water is generally regarded as an asset and a blessing. But there are also invisible waters beneath the city that can turn into a liability and a potentially costly curse.

Two co-ops in Queens are learning the hard way just what a nuisance underground water can be: the source of millions of dollars in damages, plus insurance claims, potential lawsuits, and the worst kind of headaches.

The two co-ops’ education began back in 2006, shortly after ground was broken for Rego Park Center, a massive $550 million development on seven acres where the Long Island Expressway crosses over Junction Boulevard. Originally the developer, Vornado Realty Trust, had hoped to build the city’s first Wal-Mart on the site, but fierce opposition from labor and environmental groups, local politicians, and small businesses led the developer to drop the controversial retailer. Revised plans included a Home Depot, Kohl’s, and Century 21, as well as a 1,400-space parking garage and a pair of residential towers.

The project had the hearty blessing of the powers that be. Mayor Michael Bloomberg praised it with this mouthful: “Rego Park Center is a wonderful example of what can be accomplished when government, the real estate industry, and local communities partner together in designing projects that grow New York City’s economy while also enriching local neighborhoods and serving the needs of residents in the community.”

City Councilwoman Helen Sears of Queens predicted, a bit more succinctly, that the project would become “an economic catalyst for the community.” And Frank Gulluscio, district manager of Community Board 6, added, “The bottom line is it’s a good thing for the neighborhood.”

That’s what the residents in the two nearby co-ops thought. The only trouble was the project called for construction crews to dig a 25-foot-deep hole in the ground. Cue the earth movers and the pile drivers.

“When they started work there was a lot of shaking,” says Diane Barton of Metro Management Development, resident manager of the Park Plaza co-op, a pair of high-rise towers located across the street from the construction site. “Things were falling off walls. I was scared. But there was no damage, which amazed us.”

The co-op’s good luck didn’t last. There’s an aquifer just 10 feet below the ground at the construction site, and once the excavation reached the water table, the builder, Bovis Lend Lease, had to divert the ground water into the city’s sewer system before digging could resume. In engineering circles, this around-the-clock pumping process is known as “dewatering.”

On May 2, 2007, Vornado sent a notice to Park Plaza that the water pumped from underground might have a foul odor, but it was not toxic. Area residents have described the water’s smell as “sulfurous” and akin to “rotten eggs.” Unpleasant, to be sure, but bearable. Then the other shoe dropped.

“By the end of May our garage floor started doing strange things – buckling, cracking,” says Barton “We noticed especially that the floor areas around the support pillars were sinking. Now it looks like we have speed bumps all over our garage.”

Barton notified the co-op’s architect, Howard Zimmerman, and the city’s Department of Buildings (DOB). “Residents were fearful,” she says. “We had to assure them that the building was not going to collapse.”

A preliminary investigation indicated that the buildings were in no danger of collapsing, but the architect recommended that the co-op get a more detailed opinion. So the board hired Mueser Rutledge Consulting Engineers to take soil samples and measure ground water, in an effort to document that the dewatering at the construction site had caused the garage floor to buckle and sink.

Then, on June 14, an elderly resident of the co-op tripped and fell on the uneven garage floor. Only then did the developer and builder send representatives to examine the garage, according to Barton. They told her that the irregular pavement was the result of “normal settling” – in buildings that had stood for almost 50 years without any settling, normal or otherwise.

“They wouldn’t even acknowledge that they were causing the problem, which was very upsetting to us,” says Barton.


Going Down

In December 2007, the problem spread two blocks east to Park City Estates, a co-op with five 17-story buildings and more than 1,000 apartments. General Manager Charles Zsebedics, of Century Management Services, was getting ready to leave on a European vacation when he saw that something was amiss.

“As I was coming from the garage into the building, I noticed the floor of the garage was sinking,” says Zsebedics (pronounced Ze-BED-ix). “I thought, ‘That’s a problem.’ ”

Theorizing that underground water pipes must have burst, the co-op’s staff dug up the asphalt around the spot where the garage floor had sunk. There were no burst pipes.

When he returned from his vacation on January 7 of this year, Zsebedics’s first thought was about the Rego Park Center construction site and the problems at Park Plaza. “I immediately put two and two together and thought this has to be caused by the dewatering,” he says.

The problem, as it turns out, is not confined to the two co-ops’ basement garages. A walk through the neighborhood reveals that streets have sunk, many sidewalks are sunken and/or cracked, and several buildings have separated from their surrounding sidewalks.

But as the two co-ops were about to learn, putting two and two together – that is, making a reasonable deduction based on plainly visible empirical evidence – is not nearly enough when it comes to fighting a big developer, its insurance company, and a high-profile project that has the hearty blessing of the powers that be.

“Everyone was saying to us, ‘You’ve got to prove your case,’ ” says Barton. And that’s precisely what the two beleaguered co-ops set out to do.

The co-ops decided to band together. Mueser Rutledge, Park Plaza’s engineering firm, drilled four wells in the Park City Estates garage to gather additional soil and groundwater evidence and monitor changes in the water level. The growing body of data began to look promising.

“From publicly available information, we estimated that the water level was originally about 10 feet below the ground surface,” says Jong Choi, a geotechnical engineer with Mueser Rutledge. “Based on our research, we found that the groundwater level was substantially depressed by their pumping activities – to about 35 feet (below ground level) under Park Plaza and about 29 feet under Park City Estates. We believe the water level was brought down by dewatering.”

Such changes in the groundwater level tend to have predictable consequences.

“When the groundwater level is drawn down that much,” Choi continues, “the settling is something you could expect. When groundwater level drops, soil loses its buoyancy. We call that ‘consolidation.’ That’s what’s causing the garage floors and sidewalks and streets to crack and settle.”

Choi estimates it could be weeks or several months before the water table stabilizes. Only then will he be able to produce a final report for his clients. Zsebedics and Barton, meanwhile, were busy bringing the problem to the attention of politicians and city agencies. Zsebedics also sought a stop work order from the Department of Buildings, an effort that proved fruitless.

Meetings were convened in March with representatives from the city’s DOB and Department of Environmental Protection, as well as engineers for the co-ops, the builder, and the developer. Then, on April 2, a DOB forensic engineer, a DOB plumbing supervisor, both co-ops’ property managers and engineers, and Steven Figueiredo, a DOB liaison, performed a walk-through inspection of both garages.

On the day of that walk-through, Zsebedics sent a notice to all shareholders and tenants at Park City Estates. He wrote: “We need to continue to put pressure on both city agencies so that they understand the seriousness of the hazards that are being caused to our property and others by the dewatering.” The board urged all residents to call the city’s 311 line to complain about hazardous conditions in the parking garage and on neighboring sidewalks and roadways. More than 50 people called in complaints. The powers that be were not amused.

The next day, several DOB inspectors descended on Park City Estates. Late in the day, Zsebedics got a call from Steven Figueiredo, the liaison at DOB. “He told me he was pretty much annoyed,” Zsebedics says. “He felt he had done everything he could to satisfy the boards and the residents. I think he felt betrayed that we had our shareholders call 311.”

An assistant commissioner from DOB also called, admonishing Zsebedics to “call off the dogs.” On April 3, Zsebedics complied, urging residents to stop their call-in campaign.

In a May 1 letter to Congressman Anthony Weiner, Figueiredo summed up the results of the two March meetings and the walk-through inspection: “Since both engineering groups concluded that the buildings and garages at Park Plaza and Park City Estates are structurally safe, DOB’s safety concerns have been satisfied. It was [DOB’s] recommendation that both parties privately continue dialogue on resolving the issues at hand.”

In other words, the two co-ops’ buildings were not in danger of falling down, so the condition of the garage floors and surrounding sidewalks and streets was not DOB’s problem.

Then the story took a cruel twist. Park City Estates, according to one contractor’s estimate, was already facing $9 million worth of repairs stemming from the dewatering. The city Department of Transportation proceeded to slap the co-op with a violation, claiming that more than 6,000 square feet of its surrounding sidewalks were broken and presented hazards. The co-op was given 45 days to make the repairs, at a cost of roughly $50,000.

It was Catch-22, Queens-style.


Cracking Up

Both co-ops were forced to take stopgap measures to deal with the damage to their parking garages. At Park Plaza, the two most severe cracks in the pavement were patched, including the one where the resident tripped and fell. In the Park City Estates garages, cracks, dips, and other hazards have been highlighted with Day-Glo paint. “Watch Your Step” signs abound.

On June 9, Zsebedics fired off a seven-page letter to Maura McCarthy, Queens commissioner of the Department of Transportation, with copies to a dozen other city officials, politicians, and engineers. The letter requested a meeting to discuss the sinking problem.

Zsebedics never heard from McCarthy. He finally got through to a liaison named Peter Goslett. “He said he didn’t know if DOT would respond,” Zsebedics says. “He was unwilling to say any more.” (As of October, a DOT spokesman was unable to get McCarthy to comment for this article.)

With the exception of Congressman Anthony Weiner and Steven Figueiredo at the Department of Buildings, elected officials and city staffers have largely been a disappointment to the board and residents of Park City Estates. “The city government has failed us at every level,” Zsebedics says.

After more than a year, the around-the-clock pumping finally stopped in late July. It had to be resumed briefly on September 3. Choi, the engineer, took readings on September 6, six days before the dewatering was completed and the equipment was removed from the site. That nine-day resumption of dewatering gave him a vivid snapshot of how the water table was affected by the pumping.

Such information could become invaluable as the co-ops seek to recoup money for damages to their properties. More good news came in September, when the federal government announced that it was bailing out the developer’s insurance company, financially troubled American International Group (AIG).

Aware that the burden of proof in such cases lies with the plaintiff, Bruce Cholst, a partner at Rosen & Livingston and the attorney for Park City Estates, had already notified AIG that the co-op might wind up filing a claim. Such early warning is crucial, especially when dealing with a potentially large claim, according to Cholst, who adds that the co-op hopes to settle the case without filing a lawsuit.

“The moral here is that you have to put (the developer’s) insurance company on notice that there’s going to be a possible claim,” he says, “and you can’t take it for granted that things are going to fall into place. Insurance companies love to claim they weren’t given notice of all the facts before a claim ripened. It’s also essential for boards to involve all the professionals – lawyers, property managers, engineers, insurers.”

In this case, he says, the shareholders at Park City Estates were in good hands.

“Harry Mayer is one of the most active board presidents I’ve ever seen,” says Cholst of the co-op’s leader. “He’s like a ball of fire. He’s a real detail-oriented person. Between him and Charles Zsebedics, the co-op has been blessed with great stamina, and stamina is what’s required because we’ve hit a wall of resistance.”

Perhaps a working definition of “stamina” is the six-inch tall stack of paperwork on Zsebedics’s desk – copies of all the e-mails, letters, memos, and reports he has sent and received since he noticed that first dip in the garage floor last December. It’s safe to say that this issue has become all-consuming with him.

“Charles has been unbelievable at cutting through the bureaucracy and fast-tracking this,” says Denice Motta, an insurance adjuster at Power Adjustment Group, who was called in by both co-ops. “He got on the phone with every politician and every person he could reach out to.”

“We had to learn as we went along,” Zsebedics notes. “Every time we hit a wall, we had to find a new door. Here, unlike in a conventional emergency, you have to do your own investigative work, banging on doors at city agencies and politicians until someone will listen. It’s been very frustrating. I think it’s appalling that there’s a huge construction site that’s going to benefit the city and we’re being caused to suffer. Then, we bring evidence of our crumbling infrastructure and it’s been ignored. It’s the greatest frustration you can have.”

Barton agrees. “The most frustrating thing is that there’s no accountability,” she says. “The boards have come together because we have a common cause. We gathered a lot of data. We presented our information, yet people don’t see any connection (between dewatering and cracked, sunken pavements). As if it could be anything else.”

This story may yet have a happy ending for both co-ops. That ending won’t become clear until the engineer produces his final report and the developer’s insurer decides whether to settle or fight. Until then, residents are advised to watch their step.

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