Developers Say Boards Are Using Access Agreements as “Ransom”
Aug. 9, 2017 — Spike in lawsuits as developers push back against high fees for building access.
In a landmark court ruling last year, co-op and condo boards won the right to demand license fees, plus attorney and architect fees, when granting access to their buildings to developers at neighboring properties. That legal ruling has introduced a new edge to access agreement negotiations, Crains reports, with building owners demanding higher payments and developers responding by taking them to court at a increasing rate.
“There are [building owners] that use this as an opportunity to hold developers up for a ransom payment,” says Jared Epstein, vice president and principal of Aurora Capital Associates, which is constructing a mixed-use project in the Meatpacking District. “We have experienced this previously, and, instead of being extorted, we use the court system to secure the right to protect our neighbors’ properties.”
According to attorney Dani Schwartz, a partner at Wachtel Missry, the number of lawsuits has risen dramatically, likely buoyed by both the 2016 appellate court ruling and the relentless burst of construction. “Over the last several years, it’s become challenging to even keep track of all the decisions,” Schwartz says.
But attorney Robert Braverman, a partner at Braverman Greenspun who represents numerous co-op and condo boards, says his clients are not acting unreasonably. “The owners of adjoining properties don’t want to be inconvenienced by construction and don’t want the attendant debris and noise,” Braverman says. “It is true that the landscape has changed a bit in terms of payments, but I wouldn’t say that anyone is being taken to the cleaners.”
The developer David Amirian might beg to differ. When he was making plans to build a pair of luxury condo buildings on East 13th Street in Manhattan, Amirian budgeted around $75,000 to compensate neighbors for the inconvenience of construction, including installing safety devices on their properties. He ended up spending $500,000.
“They went berserk and started asking for fees, lost rent and insurance,” Amirian says. “All neighbors see are dollar signs when they hear the word development.”
Which makes you wonder: what do developers see when they hear the word development?