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Garden dispute stalls development.

Housing advocates have always maintained that the quirky rent stabilization laws stand in the way of the construction of more city dwellings. It's almost impossible to get rent stabilized tenants to move, they say, even with recent changes to policies, and as for rent controlled tenants, well, more than one Midtown skyscraper is cantilevered over a crusty old tenement.

The latest high-rise residential project to be threatened is supposed to be constructed over what has become, for some, a sacred garden.

Rent stabilized tenants in an adjoining building are claiming their services will be reduced if what grows in the garden are bricks, rather than the current ivy, impeding their access. They are represented by Michael Gruen, of Gruen & Livingston.

And on the avenue side of the garden are eight "cottages," which were constructed on the second floor of retail stores, and open out into the tuner garden plot. The cottages now house tour rent controlled tenants, one rent stabilized tenant and two building employees.

The rental tenants, all over 70 years old. have hired attorney David Rozenholc, known for his work in organizing the Ansonia tenants to fight a co-op plan, and the saving of the City and Suburban buildings.

The property, known as Cottages and Garden, is located on Third Avenue. between 77th and 78th Street.

While the taxpayer retail opens at street level onto Third Avenue, the second-story cottages have glass block windows facing the Avenue to keep out the noise of the El train, which in 1921 was still rumbling by.

A portion of the tear second-story creates a terraced entryway to the one bedroom cottages, which are accessed through the locked garden gate at 78th Street or through the lobby of the adjoining doorman apartment building at 177 East 77th Street, currently owned by the same Estate.

The entire site, which is formally two parcels, is owned by the Estate of Arthur Diamond. Recently, the Cottages and Garden parcel was contracted to be sold to Aby Rosen, Michael Fuchs and Trevor Davis for a reported $15 million.

According to Steve Solomon, a spokesperson from Howard Rubenstein's office who represents the developers, the current "very creative design" will keep four of the Cottages on the southern end and maintain a light-filled courtyard garden.

But it also calls for the construction of a 32-story apartment building on the northern corner of the site that would "step-down" along 78th Street. Additionally, more garden area would be created on the roof of the remaining four Cottages. "They will have breathtaking gardens," insists Solomon. "It's an effort to provide as much greenery as possible to a site that was very green. The lushness will be maintained and the new courtyard will be visually available to all the neighbors."

The parcel on which the 77th Street apartment building is situated has about 19 feet behind the building to the north that also has been turned into a garden. There is a definite demarcation, however, between that garden and the other garden areas of the Cottage parcel, including the main, ivy-covered area with a small pathway that runs through to 78th Street. There, a double-locked gate protects the entire garden from the street and a small brick medical office that also would be demolished.

The garden is inhabited by two large beech trees and two other scraggly hardwood trees, all of which appear to have grown rangy as they starved for light. Ivy and hostas are the main plantings, both low-light loving plants. Most of the bushes are overgrown, and nothing appears to be carefully tended.

The residents say that wasn't true when the late-Arthur Diamond puttered in the garden, almost on a daily basis. But when he did so, he wore "two hats," says Gruen, as the head of the two corporations that owned the separate parcels.

And as owner, Gruen says, Diamond always told the tenants of both buildings they had the right to use the entire garden.

The theory is that if someone makes the representation that you have a particular right to use someone's property, and you rely on that and take an apartment because you've been told by the owner or someone speaking for the owner that you can use that garden, then you have that right," said Gruen. "Here, while technically there were two separate parcels and still are, by every appearance, it is one parcel and the two separate corporations are different by name only. Arthur Diamond, who was the most active owner, gave people these rights [as head of the two corporations], so once the tenant has the rights, under stabilization, they have fights to services."

Under general common law, Gruen claimed, a tenant has rights to appurtenances and reliance on it is sufficiently conventional that it has a name: easement by representation and estoppel.

Gruen says he is focusing on the service issues with regard to the use of the main garden "because it will have the greatest immediate impact." He said the long-term goal is to save the property, and Cottages and Garden.

But wait a minute: If a new owner takes over the adjoining property, doesn't that person have a right to use the property in any way they legally see fit? You betcha, says Jeffrey Turkel, an attorney with Rosenberg & Estis, who is not representing any of the parties in this action. Although the tenants may have some service complaints, Turkel says there are other rights, including the freedom of trespass.

Why should someone else's tenants have the right to traverse the property, versus the new owner's rights, where you don't have to allow strangers on the property, he asked?

While it is a rent stabilized apartment building, the use of both properties is not feasible under two ownerships, said Turkel.

"The elementary right of freedom of trespass has to win over a statutory tenant's right," he added.

Mark S. Rudd, a sole practitioner who represents owners and is also not involved in this case, agreed with Turkel.

"They can say whatever they want to say, but these parcels are owned by separate entities and are separate tax lots and the fact that they may share one or more principals has nothing to do with whether or not tenants can use the adjoining property," he explained. "While the fee holders might have rights against each other, the tenants can't advance a claim that the parcels can't be separately used."

And if much of the garden can only be looked at and not walked on because it is not grass but tangled ivy, wouldn't all the apartment tenants still be able to look at a similar amount of greenery if the developers are providing other plantings on the roof of the Cottages and in a new courtyard as a replacement?

The "required service" is service provided by the owner to the tenant as of a certain date. While the base date would not be an issue in this case, the question might become "Was it something provided by the owner to the tenants in consideration of their payment of rent or something provided by his largess?"

"My father was fond of saying no good turn goes unpunished," Rudd added of his late-father, owner Philip J. Rudd.

The law allows for some reductions in rents after a determination by the Division of Housing and Community Renewal (DHCR) that "required services" are not maintained for rent stabilized tenants. In the case of rent controlled tenants, the loss of "essential services" - which includes the undefined "living space" - could call for a reduction in the maximum bass rent calculation.

Nevertheless, Rudd says the tenants can't claim a reduction of services under rent stabilization rules because the adjoining lot-holder restricted the use.

"If hypothetically the apartment building is sold and that person puts up a fence, the fee holder might be able to put forth some kind of a claim against the garden predicated upon an easement, but the tenants couldn't," he said.

Case law already supports the construction of a skyscraper that blocks resident's views, or obstructs lot line windows that should not have been there in the first place.

Additionally, Rudd said the law provides a mechanism for compensation or relocation of existing tenants, both for rent controlled and stabilized tenants. The employees, he noted, would not have these fights because their living quarters are incidental to their employment.

Attorney Robert Goldstein, a partner with Borah Goldstein Altschuler & Schwartz, who represents the contract vendees on the Cottages and Garden, says the apartment building tenant's claim "is the natural extension of a concept run amok. It's not enough to have the apartment and the building, but they want to have the service, even if it's on an adjoining property."

Goldstein agrees that rent stabilization rulings haven't allowed adjoining property tenants to encumber the next property.

"A governmental action that would sanction that would be unconstitutional and in the nature of a taking, and raises serious questions," said Goldstein. "If you can raise that kind of argument, it puts into question what the courts have said is permissible in rent regulated environments."

Meanwhile, Rozenholc is livid that his clients have been served with "an illegal" notice of demolition. He says it has to come from the owner, and claims a contract vendee doesn't have standing under the DHCR regulations to send such a notice.

Goldstein says New York State allows contract vendees to act as the owners, and in fact, they were acting with permission and as the agent of the owner. Nevertheless, Goldstein insisted, isn't it better to give the tenants as much notice as possible that they may have to move?

Besides, the place to complain about ali of these questions is at DHCR and not in court, said Goldstein.

"They are tactically doing what they can to kill the transaction. You don't usually sue, but sit down and talk," he added. "Nothing is going to happen to threaten these people in any way. We expect to be in DHCR eventually and they'll have an opportunity at that time to say whatever they want."
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Article Details
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Title Annotation:New York City residential development
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 21, 1997
Previous Article:Owners win rent control suit in appeal vs. DHCR.
Next Article:Brooklyn's Renaissance Plaza typifies new construction trend.

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