[NYguy]

http://online.wsj.com/article/SB1000...googlenews_wsj

Developers in Power Struggle
Lawsuit Shows Extent of Vornado-Extell Fight Over a Central Park South Site





By Elliot Brown
August 26, 2012

A battle between two powerful New York developers over one of the city's most valuable development sites is getting litigious. For months, landlord Vornado Realty Trust had been trying to strike a deal to remove rival Extell Development Co. from 220 Central Park South, a former apartment building in which Extell controls a basement parking garage on a lease that runs until 2018. Since 2005, Vornado has wanted to raze the building and put a condo tower in its place, but it is being held up by Extell, which also owns a neighboring development site and has resisted Vornado's offers to buy it out of its lease.

Last week, a lawsuit filed by the parking garage company controlled by Extell showed that the conflict has taken a new turn: Vornado has told Extell it is in default on its lease, a precursor to an eviction. Extell, in turn, believes Vornado's claims are frivolous and it is seeking to block any possible eviction. Vornado's move rests on an action made by the Department of Buildings in May, when it fined the property owners $200 because the parking garage wasn't being used "primarily for residents," as is required by its certificate of occupancy. According to the lawsuit, Vornado then told Extell that it had violated the terms of the lease, triggering a default.

Extell, one of the city's most active developers, alleged in its lawsuit that the violation issue raised by Vornado "is nothing less than a sham." Vornado has bought out all the residential tenants in the building overhead, creating a situation where there were no residents who could possibly use the parking spaces, Extell said. In its lawsuit, Extell asks the court to order Vornado to "re-occupy the building with tenants" in order to uphold its own obligations under the lease. "They take away our clients, they empty out the building, and then say, 'You're in violation because you have an empty building,'" Gary Barnett, Extell's president, said when reached by phone Friday, expressing confidence he would prevail. "We have a valid lease for the next six years, and we don't think that any court in New York City is going to allow a landlord to throw us out and treat us unfairly."

David Greenbaum, the Vornado executive in charge of the project, told analysts on a conference call earlier this month that the residential development site is "probably the best in Manhattan, with unobstructed views of the park." "We've got enormous financial aspirations for this development," Mr. Greenbaum said, acknowledging the fight with Mr. Barnett. "We feel very good about where we are in the process with demolition having commenced."

This is getting nasty. It can only be resolved with a battle for the skyline!...........