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It seems an unlikely spot to sell luxury condominiums, as current owners of the Imlay Street building are trying to do. That is unless, of course, your marketing theory is that the working part of the waterfront will soon be history, leaving just the water and the splendid open views of Lower Manhattan, New York Harbor, and nearby Governors Island. In that case, the $7.2 million that a group of investors paid for 160 Imlay in November 2000, when it was strictly limited to industrial use, becomes more windfall than mere investment.
Until a judge issued a restraining order last week in response to a lawsuit brought by local businesses seeking to block the project, it looked like real estate entrepreneurs Bruce Federman, Zachary Fruchthandler, and Bruce Batkin were well on their way to achieving their goal. In a controversial vote by the city's Board of Standards and Appeals late last year, the investors won a precious variance for the property, allowing them to escape the zoning restrictions and turn the property into 144 condos.
Crews got right to work punching holes for big windows in the concrete and gutting an interior originally built to hold heavy equipment and freight hauled from the docks. The transformation of 160 Imlay Street, where the original owners had proudly chiseled "New York Dock Co." in the rooftop bulkhead, has become a symbol for the bigger changes that lie in wait for the neighborhood.
The lawsuit against the project is only the latest and most public aspect of a bitter debate that has played out over the past year concerning the fate of the Red Hook Marine Terminal, which sprawls along 80 acres controlled by the Port Authority of New York and New Jersey. Port Authority officials, along with top city economic-development officials, have quietly expressed a preference to have cruise ships docking at the piers, as opposed to freighters and barges, and condos and residential development where warehouses and sheds now stand.
Pushing back on the other side has been the local community board, which voted overwhelmingly against the zoning variance for the Imlay Street conversion. The community board also passed resolutions supporting the current waterfront tenant, a company called American Stevedoring, which employs some 500 workers who handle lumber, cocoa, and general cargo. Also supporting the idea of a working waterfront have been Councilmember David Yassky and Congressman Jerry Nadler, who helped push the reluctant Port Authority to grant a three-year lease extension to American Stevedoring. That deal is supposed to be finally inked this week. After that extension, however, all bets are off.
The Imlay Street investors were clearly encouraged by their prospects. The same group later purchased an identical building next door at 62 Imlay Street, even though it falls under the same industrial-zoning restrictions. The investors have told builders in Brooklyn they plan to carry out the same conversion there.
"What they are trying to do is a de facto rezoning of the waterfront, and they are trying to do it building by building," said Michael Hiller, the attorney who won last week's restraining order on behalf of the Red Hook/Gowanus Chamber of Commerce. "They are coming up with these bogus variances, and eventually, as the BSA itself acknowledges, it will result in the end of manufacturing in Red Hook and result in an influx of residential conversions."
The BSA seems to have clearly understood how much was at stake at 160 Imlay Street. The board held two hearings on the matter and visited the site in person. During the hearings, one member, Peter Caliendo, called the property "the most critically important in Red Hook. This is a domino building. If it falls, the sister building [the identical mammoth property next door] will also go residential."
Although the members of the BSA are appointed by the mayor, it is supposed to reach its decisions independently while considering an array of factors including hardship, uniqueness, and how a zoning change would affect the surrounding neighborhood. But in the midst of the hearing process, the Imlay Street investors upped the ante, hiring George Arzt, a savvy and well-connected lobbyist, to represent them at City Hall. Lobbying-disclosure records filed by Arzt show that he met with Daniel Doctoroff, the city's deputy mayor for economic development, as well as top officials of the city's Economic Development Corporation. In late 2003, just as the BSA was finally preparing to vote on the matter, Arzt and developer Bruce Batkin went to see Doctoroff about the matter.
"We just wanted to explain the project," Arzt said last week. "You always go to everyone you can see." Doctoroff's response, he said, "was noncommittal." A city spokesperson said that Doctoroff also met with a project opponent.
A corporation that includes several of the Imlay Street investors, called Industry City Associates, also made a contribution of more than $100,000 to Doctoroff's favorite charity, NYC2012, the group once headed by the deputy mayor that is pressing to bring the Olympic Games to New York.
Around the same time, the BSA finally made up its mind. Despite its previously voiced reservations, the board voted 3-1 on December 23 in favor of granting a waiver for the project. In its decision, the majority said they were persuaded that the owners could not find industrial tenants for the project, and had no other option but to turn it into residential units.
As written, the board's decision was a virtual death knell for similar industrially zoned properties of more than two floors: "The majority of the building's square footage is massed on the upper floors," the panel stated, "rendering it less desirable to modern manufacturing concerns that require ground-level space for immediate truck access."
The lone holdout was then BSA chairman James Chin, a Giuliani-administration appointee, who had been told by the Bloomberg administration while the board was still considering the matter that he would be replaced as chairman. A few days after the vote, Chin was replaced.
The board's vote surprised some people who had taken a close look at the proceedings. "My sense from talking to senior professional staff at the BSA was that the variance wasn't going to be approved. They thought it would be denied," said a Brooklyn legislator.
Among the arguments raised in the debate before the board was whether or not the owners had made an adequate effort to market the property to industrial tenants. Attorneys for the owners insisted they had triedand come up empty. But Adam Friedman, director of a group called the New York Industrial Retention Network, said that his organization had proposed tenants and still has a list of 60 companies in search of affordable space.
"The impact of the conversion could be significant," said Friedman. "It has the container port in front, and it is surrounded by other industrial and manufacturing users. By introducing residents onto the block it sets the stage for a conflict over traffic problems and everything else that can arise when there are different types of uses. It changes the market and that fuels real estate speculation."
Some longtime residents are hoping Imlay Street will have exactly that impact. John McGettrick, who moved with his family to a 19th-century rowhouse on nearby Coffey Street in the 1980s, said that those trying to hold on to the area's industrial zoning are blocking revitalization and trapping the neighborhood in an obsolescent past. "No matter how this deal was done," he said, referring to the conversion, "it is going to be good for the neighborhood. This is an area that lost more than half its population. As a result, we've been beset by garbage dumps and every other usage no one else in the city wants."
A brief hearing on the lawsuit was held last Friday by Brooklyn judge Yvonne Lewis. Despite objections from lawyers for the property owners that their project was already well under way and that it had fairly obtained its variance, the judge agreed to continue her stop-work order. Another hearing on the matter is due to be held this week.