Development

Deed Restrictions Imposed By City Have Expired

Matter of Alfred Condominium v. City of New York

NYLJ 9/14/10, Supreme Ct.,

N.Y. Cty.

(Gische, J.)

In neighbor's article 78 proceeding challenging the city's approvals of Fordham University's plan to build new buildings on its Lincoln Center campus, the city and Fordham sought judgment on the papers submitted. The court summarily denied neighbor's petition and dismissed the proceeding, holding that the city's approvals were not arbitrary, and that any deed restrictions imposed on Fordham when it initially acquired the property have expired.

Fordham initially acquired the two superblocks that make up its Lincoln Center campus pursuant to a 1957 land disposition agreement (LDA) that was itself a component of the city's Lincoln Square Urban Renewal Plan (LSURP). The LDA required Fordham to complete the proposed project within five years, and provided that a covenant to devote the land for the uses specified in the LSURP would run with the land for 40 years from the date of completion of the project. The LSURP limited the height of buildings to 20 stories, and imposed bulk and density requirements. By 1966, Fordham had completed only one of the buildings contemplated by the LDA. Fordham and the City then executed a modification to the LDA, and provided that the covenant would expire on Jan. 27, 2006. Not until 1990, however, did Fordham receive a “Certificate of Completion” from the city certifying that Fordham had completed the project. On June 30, 2009, the City Council approved a new development plan proposed by Fordham that would include buildings as high as 52 stories, and that would violate the covenant in the LDA in other respects. A neighboring condominium challenged the city's approval of the plan, contending both that the city's approval of the plan failed to comply with SEQRA, and that the approval was inconsistent with the LDA, because the covenants were still in effect.

In dismissing the petition, the court noted that the final environmental impact statement demonstrated adequate consideration of alternatives, and included analysis of the various issues affecting the community. With respect to the neighbor's argument that the covenants were still in effect, the court relied on the 1966 amendment to the LDA, which established a 2006 termination date for the covenants. The court held that the statute of limitations had expired on any challenge to the 1966 agreement.

COMMENT

A neighbor does not have the right to enforce covenants created in the context of a municipal zoning approval unless he is the third-party beneficiary of the agreement creating those covenants. An individual is a third-party beneficiary only when the two principal parties entering into the contract did so with the intention, either express or implied, of directly and primarily benefitting that individual. In Mendel v. Henry Phipps Plaza W., 6 N.Y.3d 783, tenants in a Mitchell-Lama development sued to enforce a covenant requiring the developer to “devote the housing site to the uses specified in the Urban Renewal Plan,” namely to provide low- and moderate-income housing.The tenants were unable to demonstrate that the land disposition agreement creating the covenant was intended for their benefit, and thus lacked standing to enforce it.

The intention of the principal parties to benefit the public in general, is not enough to deem a member of the public a third-party beneficiary. Branch v. Riverside Park Community LLC, 24 Misc.3d 1226(A). In Branch, another case dealing with the deregulation of Mitchell-Lama housing, the court specifically found that the public purpose of providing affordable housing did not give a third party the private right to enforce any covenants of the lease.

When an individual is found to be a third-party beneficiary to a contract, the principal parties may modify that contract without the beneficiary's consent if they reserved that right in the contract itself. In Puro v. Puro, 89 Misc.2d 856, 859, the signatories of an agreement specifically reserved the right to amend the agreement. Because of this, they were able to alter the terms of the contract to the point of extinguishing all rights of the third party. On the other hand, if an individual is not found to be a third-part beneficiary to a contract, the principal parties may modify the contract regardless of whether or not they reserved that right. In Alfred Condominium, the developers were able to modify their agreement with the city to the detriment of the interests of the condominium owners because those individuals were not deemed third-party beneficiaries.

Deed Restrictions Imposed By City Have Expired

Matter of Alfred Condominium v. City of New York

NYLJ 9/14/10, Supreme Ct.,

N.Y. Cty.

(Gische, J.)

In neighbor's article 78 proceeding challenging the city's approvals of Fordham University's plan to build new buildings on its Lincoln Center campus, the city and Fordham sought judgment on the papers submitted. The court summarily denied neighbor's petition and dismissed the proceeding, holding that the city's approvals were not arbitrary, and that any deed restrictions imposed on Fordham when it initially acquired the property have expired.

Fordham initially acquired the two superblocks that make up its Lincoln Center campus pursuant to a 1957 land disposition agreement (LDA) that was itself a component of the city's Lincoln Square Urban Renewal Plan (LSURP). The LDA required Fordham to complete the proposed project within five years, and provided that a covenant to devote the land for the uses specified in the LSURP would run with the land for 40 years from the date of completion of the project. The LSURP limited the height of buildings to 20 stories, and imposed bulk and density requirements. By 1966, Fordham had completed only one of the buildings contemplated by the LDA. Fordham and the City then executed a modification to the LDA, and provided that the covenant would expire on Jan. 27, 2006. Not until 1990, however, did Fordham receive a “Certificate of Completion” from the city certifying that Fordham had completed the project. On June 30, 2009, the City Council approved a new development plan proposed by Fordham that would include buildings as high as 52 stories, and that would violate the covenant in the LDA in other respects. A neighboring condominium challenged the city's approval of the plan, contending both that the city's approval of the plan failed to comply with SEQRA, and that the approval was inconsistent with the LDA, because the covenants were still in effect.

In dismissing the petition, the court noted that the final environmental impact statement demonstrated adequate consideration of alternatives, and included analysis of the various issues affecting the community. With respect to the neighbor's argument that the covenants were still in effect, the court relied on the 1966 amendment to the LDA, which established a 2006 termination date for the covenants. The court held that the statute of limitations had expired on any challenge to the 1966 agreement.

COMMENT

A neighbor does not have the right to enforce covenants created in the context of a municipal zoning approval unless he is the third-party beneficiary of the agreement creating those covenants. An individual is a third-party beneficiary only when the two principal parties entering into the contract did so with the intention, either express or implied, of directly and primarily benefitting that individual. In Mendel v. Henry Phipps Plaza W., 6 N.Y.3d 783, tenants in a Mitchell-Lama development sued to enforce a covenant requiring the developer to “devote the housing site to the uses specified in the Urban Renewal Plan,” namely to provide low- and moderate-income housing.The tenants were unable to demonstrate that the land disposition agreement creating the covenant was intended for their benefit, and thus lacked standing to enforce it.

The intention of the principal parties to benefit the public in general, is not enough to deem a member of the public a third-party beneficiary. Branch v. Riverside Park Community LLC, 24 Misc.3d 1226(A). In Branch, another case dealing with the deregulation of Mitchell-Lama housing, the court specifically found that the public purpose of providing affordable housing did not give a third party the private right to enforce any covenants of the lease.

When an individual is found to be a third-party beneficiary to a contract, the principal parties may modify that contract without the beneficiary's consent if they reserved that right in the contract itself. In Puro v. Puro, 89 Misc.2d 856, 859, the signatories of an agreement specifically reserved the right to amend the agreement. Because of this, they were able to alter the terms of the contract to the point of extinguishing all rights of the third party. On the other hand, if an individual is not found to be a third-part beneficiary to a contract, the principal parties may modify the contract regardless of whether or not they reserved that right. In Alfred Condominium, the developers were able to modify their agreement with the city to the detriment of the interests of the condominium owners because those individuals were not deemed third-party beneficiaries.