Posted Nov 19, 2022, 5:49 AM
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https://therealdeal.com/2022/11/18/j...idges-project/
JDS hits snag after ruling on Two Bridges project
Court rejects appeal to merge lots without ground tenant’s approval
Nov. 18, 2022
By Pat Ralph
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Michael Stern’s massive apartment project in Two Bridges has hit a roadblock, leaving next steps for the proposed 80-story, 500,000-square-foot tower unclear.
Stern’s JDS Development Group lost an appeal last week to move forward with merging zoning lots without the consent of an LLC that holds the long-term ground lease on the site at 247 Cherry Street, court records show.
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A ruling from the New York Supreme Court said Little Cherry LLC, which has more than 20 years remaining on its ground lease, had not waived its right to consent to future enlargements of the combined zoning lot when it approved the merger of two other lots in a 2008 agreement.
The agreement approving the merger of Lots 15 and 76 noted that one of the lots may be expanded, but did not give permission to a future zoning lot merger.
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JDS recently sought to expand its project onto an adjacent parcel, Lot 70, but Little Cherry sued, claiming that it had not granted permission. An appellate court ruled in favor of Little Cherry in 2019, saying the lessee was a party of interest and could have a say in how the land was used.
At the time, the LLC had 25 years left on its ground lease at 247 Cherry Street, where JDS had planned to construct as many as 660 units above the one-story building and neighboring senior residence on the site. The court also ordered that Little Cherry’s status as a party of interest could not be relitigated.
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The New York Supreme Court also ruled in favor of Little Cherry and New York Community Bank in April 2021, saying JDS could not proceed with its project without consent to the zoning lot merger. The court implemented an injunction to prevent the project from moving forward without such approval, which the plaintiffs had yet to grant.
JDS appealed last year, claiming that the injunction crippled the project by banning all development or construction on Lot 76 and the adjoining property.
But in the decision last week, the court called JDS’ claim “unavailing” because it can proceed with its development without requiring a zoning lot merger or affecting Little Cherry’s property rights, the court said.
It wasn’t immediately clear what the ruling means for JDS’ project. Neither Stern nor attorneys representing his firm responded when reached for comment.
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Attorneys representing Little Cherry provided a statement that only a real estate lawyer could love, but it did agree with JDS that the injunction blocked the project.
“The legal issues are significant,” the statement said, “because the trial court and now the appellate court distinguished the rights of a ground leasee from the rights of a typical building space tenant, addressed the impact of a prior waiver of the right to object and addressed the scope of an injunction which stopped the proposed development.”
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