Thursday, April 1, 2021

Legal Eagle Arthur Schwartz, Attorney Skilled In Opposing Privatization, Says He’ll Stop Mayor de Blasio’s Even Worse Scheme To Leverage“Covid Emergency Streeteries* Declaration” Into More Real Estate Development

Double height streetery - Fifth Avenue in Park Slope- last spring it was single height.

(* Also spelled 'streateries')

Mayor Bill de Blasio, (“Build de Blasio” as he is affectionately known by some in the real estate development community) has an even worse plan with respect to his use of “Covid emergency” declarations for a privatizing takeover of public space to enhance private real estate ownership in New York.  It’s an even worse plan and attorney Arthur Schwartz of Advocates for Justice says that he’s going to fight and defeat it.  Mayor de Blasio's plan is that he wants to turn property owners’ street occupation rights into even more development rights than previously imagined.

Schwartz noted how he had already sued when the City Council unilaterally decreed the Open Restaurants Program permanent and he confidently predicted that he would not let this new, expanded and even worse version of that “Covid emergency” based declaration get one wit further.   Respecting Schwartz’s earlier legal action see: The Village Sun (Real News For The Community)- Locals to sue city over ‘illegal’ Open Restaurants program, by Lincoln Anderson, March 9, 2021

Schwartz previously attacked the de Blasio and the City Council for using the “Covid emergency” as an excuse to make `Open Restaurants Program’ permanent by passing a law (Intro 2127-A), November 15th of last year, that gave the mayor’s Department of Transportation and whatever any other agency the mayor designated unfettered power to create a permanent program to give the streets away for ‘restaurants.’  In the lawsuit Schwartz brought pro bono (representing an ad hoc coalition of community groups under the umbrella name “New Yorkers for Safe Open Streets” a.k.a. S.O.S.) Schwarz pointed out that this extensive delegation of power to the mayor and his agencies  amounted to “unconstitutional” changes to the city’s zoning laws bypassing community input and  “totally ignoring” the City Charter’s Uniform Land Use Review Procedure (ULURP), a process that specifically requires zoning change review by community boards, the borough presidents, the City Planning Commission and the City Council.

Schwartz said that the permanent long-term giveaway of streets to neighboring properties was a privatizing handout to landlords, and that:    

basically, property owners would be able to charge higher rents due to the permanent availability of the parking lane for use for additional seating.
In other words, with higher rents being charged, there would be no benefit to restaurants or restaurant owners.

Ultimately, the community activist attorney* said, the Open Restaurants program post-COVID would not benefit restaurants, only landlord property owners who would be able to charge higher rents due to the permanent availability of the parking lane for use for additional seating.  “You can’t be doing this without any parameters at all,” says Schwartz adding to his objections, “there isn’t even the slightest framework to hem in the mayor and his agencies from doing absolutely anything they want or can imagine.”

(* NOTE: Arthur Schwartz is the same community activist attorney who successfully represented WBAI free speech radio, "Radio for the 99.5%," the only truly listener supported public radio station in New York City, in fending off a potentially privatizing attack on the station that involved the surreptitious and illegal shutdown of the station in October 2019.)                       
The Village Sun article includes this overview analysis by Schwartz, “speaking to The Village Sun,” he said:

what is currently being seen with the Open Restaurants diktat is part of a wider problem of community disenfranchisement perpetrated by City Hall.

“To me,” he said, “it’s part of an approach taken by the city that is also reflected in the recent proposal by [Council Speaker] Corey Johnson to create a ‘zoning czar’ that would shorten the ULURP process, where decision making on land use is getting more and more centralized and less involving the affected communities. This is imposing the will of the mayor on communities without their having a say.”

Those of us who have been watching the effect of Covid on city real estate are worried that this will also compound consolidating ownership: Are we are going to be seeing greater consolidation of property ownership in a city where a limited number of real estate families already dominate excessively given the squeeze of high property high taxes from a stressed city in need of income while store fronts are vacant as Mom and Pops close because of the virus?  Mom and Pops, unlike the big box stores, don’t have a parallel web-sales presence to help carry them through.  Big real estate owners also seem to have an affinity for big-box chain stores where they can replicate deals over swaths of property. . . All this in a city where City Hall has been handing out huge acreage swath to single owners, like the Atlantic Yards (now “Pacific Park”) project, Hudson Yards, Willets Point, the Columbia takeover of West Harlem, etc. often with the aid of eminent domain abuse seizures of property from smaller owners. And now public streets and sidewalks will be consolidated in that ownership.

Mayor de Blasio has defended making the `Open Restaurants Program’  permanent saying that assuring that permanence will induce the construction of sturdier outdoor enclosures to accommodate restaurant patrons.  He notes that many of the streeteries initially built last spring were ramshackle affairs, thrown up often so improvisationally that they constitute unsettling eyesores to the community.  "Knowing that you can keep, rather than quickly scrap what you build, will generate investment in far lovelier enclosures as people think in terms of a future and build with that in mind," said de Blasio.  

Irving Place is one of the streets where sturdy streeteries are expected to be greatly expanded under the new de Blasio permanence program.

Mayor de Blasio’s new edition of the `Open Restaurants Program’ is supposed to be initially be launched mostly by new regulations issued by the mayor. Ideas for it started to get generated when Evan Moore a Department of Transportation Deputy Director was conferring and trading expertise and thoughts with Max Tolstoy of the Department of Buildings.  With the streeteries built last year becoming more permanent and with the continuing need for such legal “outdoor” spaces to accommodate patrons given the prospective bans on indoor restaurant space, a number of the streeteries were informing the city that they were going with the expedient of building second stories to their “outdoor” space.

Moore and Tolstoy quickly realized there were implications to be considered.   For instance: `Should staircases meet any prescribed code standards?’  This led to trying to think through possibilities through on a more integrated basis.  `Should second stories only be permitted for those who had built sturdier structures making use of the outdoors, for instance, those with locking doors, and operable glass windows?’ Then it was realized that with outdoor staircases possible, maybe even lifts and sidewalk elevators being used, especially if wheel chair access is to be nondiscriminatorily provided, why not consider putting some of the new outdoor space structures on the roofs of shorter buildings?

Irving Place is a good small street to see in microcosm many solid doors and sturdy operable windows on streeteries.

Thinking multidimensionally this way, and thinking of building upwards in general, Moore and Tolstoy realized they had a tool to work with that they hadn’t been thinking about, known to those who understand the zoning code and regulations as "FAR," for Floor to Area Ratio.  The FAR concept, already in the code and thus already available, prescribes that how much and how tall you can build in terms of total square footage will be determined as a multiple of the dimensions of the real estate you own absent any structures.  Thus, formally recognizing the right to permanently occupy what was parking lane space as the addition to the owned property that it actually is, means that all building owners with such space attached have additional FAR with which to build higher and more real estate.

Mr. De Blasio, immediately blessed this concept with the caveat that any new space built with the additional FAR coming available would have to be deemed “outdoor” space for a period of time, a period of time that would also have to have some conceptual relation to the period of time that people think that Covid, at least as a crisis, is expected to be around.  Furthermore, the space would also have to be deemed restaurant space throughout that period.  De Blasio further specified that, somewhat along the lines of some of the legal concepts of `adverse possession’ or `possession is nine-tenths of the law,’ the Moore Tolstoy Open Restaurants Program should henceforth start requiring that parking lane street acquisitions and everything built under the program should be built with a certain level of sturdiness and meet certain minimums of protected enclosure in order to be considered certifiably consummated.

On 19th Street and Park Avenue, one of the city's streeteries is now rebuilding in a sturdier fashion planning to take advantage of de Blasio program loans for structures of greater permanence.

“But you can’t just expect that people will be able to do all this building under the program with insufficient resources to do so,” said de Blasio.  That is why eligible owners applying to City Hall for approval will be able to take out loans from the city, “Sturdier Construction Underwriting Motivation” loans.  Modeling the program on the federal Covid program Paycheck Protection Program (PPP) loans, these loans will likewise be forgiven if the structures built are sturdy enough to stand for one year.  The loans will be funded by tax-exempt bonds issued by Goldman Sachs.  The City’s former deputy mayor for housing under de Blasio, Alicia Glen will get a finder's fee for the bond transaction.  Although Glen is not now with Goldman, she came to work for de Blasio as Deputy Mayor for Housing from her previous position with Goldman where she led Goldman Sachs’s Urban Investment Group.  Glen said that it required a lot of thinking, `to whom the loans should go,' but that Goldman was advising that loans should, for logical reasons, go to the property owners, not the restaurant operators.  She said this was the advice the city was going to go with.

Most of the streeteries on Fifth Avenue in Park Slope, the neighborhood from which de Blasio originally hails, are expected to go to two story editions

Because most of the loans are expected to be forgiven rather than repaid, the source of funds for bond repayment will have to come form another source.  Goldman has decided the bonds will be tax-increment bonds.  Instead of any repayment funds having to come from the real property owners acquiring new properties and building rights under the program, the bonds will be paid off by higher taxes (tax-increments) that the rest of each neighborhood’s properties will pay. This is justified, says Glen, by the additional value and overall uplift the new building and dining spots will add to the neighborhoods.  To encourage their acquisitions, the street property acquiring owners will be exempt from real estate taxes for five years.

Arthur Schwartz says he will fight the new Moore Tolstoy Open Restaurants Program for all the same exact reasons he brought his lawsuit against de Blasio’s initial Intro 2127-A version of the program prior to these new expansive interpretations, and he emphasizes that this version has all those same faults, flaws and unconstitutionalities, while at the same time "being ten times worse" . .  Schwartz says he is absolutely confident he will prevail. . .

. . . Nevertheless, mayor de Blasio is set to boldly announce, in a press conference today, the Moore Tolstoy Open Restaurants Program along with Goldman's imminent issuance of its tax-increment bonds for  the“Sturdier Construction Underwriting Motivation” ("SCUM") program loans.  That should make a lot of restaurant landlords happy, this first day of April, April 1st.

Another streeterie in Park Slope that just went to two stories in March.

And one more