UES Landlord Is Stymying Next-Door Medical Center, Developer Says

UPPER EAST SIDE, NY — Another week, another Upper East Side construction project being stymied by a stubborn neighbor — this time, a medical center by Northwell Health struggling to get off the ground on Third Avenue, according to a new lawsuit.

In 2018, the nonprofit developer The University Financing Foundation (TUFF) acquired the six vacant buildings that formerly lined Third Avenue between East 76th and 77th streets. Once those buildings were demolished, TUFF planned to partner with Northwell — the state's largest health care provider — to construct a new medical center offering outpatient care, surgeries, cancer treatment and more.

Over three years later, the site has been mostly cleared, but construction has yet to begin — in large part because a next-door landlord is holding up the demolition of the last remaining building on the site, according to new court papers filed by Blue Sky Real Estate, another company working with Northwell and TUFF on the project.

Before demolishing the stubby, two-story building at 202 East 77th St., developers must first gain access to the adjacent five-story building at 204 East 77th St. in order to install vibration monitors, overhead protections and window protections; and remove a rear yard wall that separates the two properties. Since 2019, developers have been negotiating with the owners of 204 hoping to reach an agreement.

But those talks ultimately failed after the next-door landlords made "made a variety of unreasonable demands," according to developers, including the installation of unnecessary roof protections costing $300,000, and being reimbursed for lost rent "due to the possibility of a tenant’s sensitivity to 'noisy construction work,'" the suit alleges.

The court papers ask a judge to grant the developers access to 204 East 77th St. in order to start demolition, which will take about three months.

The landlords of 204 East 77th St. are listed in the suit under an LLC, "East Seventy-Seven Co.," but public records suggest the building is controlled by Merit Operating Corporation, a neighborhood landlord whose partners include Vincent Giffuni and Joann Wellner.

This lawsuit comes amid another legal battle centering on a proposed apartment tower on East 86th Street. In that case, the adjacent Congregation Kehilath Jeshurun synagogue is refusing to give developer Sergey Rybak access to its building because it fears the 20-story tower would endanger children at its day school — concerns that have been echoed by City Councilmember Julie Menin.

Elsewhere in the neighborhood, meanwhile, the developer Extell is at work building an awkwardly-shaped apartment tower on First Avenue after a holdout tenant refused to surrender his rent-stabilized apartment.

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