Seward Park Co-op Rejects $54 Million Air Rights Sale

LOWER EAST SIDE, NY — Residents of the Seward Park Cooperative rejected a $54 million air rights sale that would have cleared the way for a pair of condo towers in the Lower East Side, the cooperative's general manager confirmed.

The deal would have sold excess development rights of the four-building complex, with more than 1,700 units, to the Ascend Group, a developer planning two nearby towers. On Thursday, just over 1,200 shareholders voted on the sale with 690 — or 56 percent — in favor of the sale and 30 abstentions, but fell shorts of the two-third majority required by the co-op's rules.

"Although a majority voted in favor of selling air rights, the supermajority threshold required by our bylaws was not reached," the board said in a statement.

The vote throws a wrench into developer Ascend Group's plans, which purchased the landmarked Bialystoker Nursing Home on East Broadway between Clinton and Montgomery streets in 2016 for nearly $50 million, property records show.

The former nursing home abuts the co-op's 15-acre parcel and is the only properly eligible to receive the co-op's unused development rights. Ascend had planed to purchase 162,000 square feet of air rights from the complex to beef up its two condo towers. Now the developer will have to stick to the 115,000 square feet of new residential space that is allowed as of right.

"We were obviously disappointed. We were very surprised," said Wayne Heicklen, a partner at Pryor Cashman who represented Ascend as it worked to acquire the co-op's air rights. "We thought we made a compelling offer. This would have been $54 million dollars for an asset they wouldn’t be able to monetize in any other way, and in my mind there was no downside."

The co-op board was in favor of the sale, which it said would have raised nearly $40 million after taxes to pay for pressing capital needs including 25 new elevators, building repairs and would have halted the board from raising maintenance fees for shareholders. The developer also would have used $5 million to pay the entire complex's maintenance bills for four months, Heicklen noted.

"I understand people were concerned about the community and gentrification and changes coming to the neighborhood, but those changes are already there," said Heicklen. "But we’re going to go back and take a look at our plans for the as of right and focus on building a beautiful building."

Photo courtesy of Seward Park Cooperative