On Sept. 9, 2021, the New York State Court of Appeals denied a motion for leave to appeal an Appellate Division ruling that had upheld approval by the Department of Buildings (DOB) and the Board of Standards and Appeals (BSA) of the permit for construction of a 54-story residential building at 200 Amsterdam Ave. in Manhattan being developed by SJP Residential Properties and Mitsui Fudosan.
The case involved the interpretation of the New York City Zoning Resolution’s definition of “zoning lot,” the unit of land used to determine the zoning compliance of all proposed construction work in the city. At issue was whether the definition required a newly formed zoning lot to consist only of whole tax lots or permitted it to include one or more partial tax lots. Since its adoption in 1977, the definition had been consistently interpreted by the DOB to allow a zoning lot to include partial tax lots. The DOB applied this long-standing interpretation to the 200 Amsterdam Ave. zoning lot when it approved the building permit for the 200 Amsterdam Ave. project in 2017. The permit approval was challenged in an administrative appeal to the BSA on the grounds that the project’s partial tax lot condition did not satisfy the text’s requirement that a zoning lot “either [be] unsubdivided or consist[] of two or more lots of record.” The BSA, after considering both the language of the zoning text and the DOB’s consistent history of interpretation, concluded that the DOB’s interpretation was correct and upheld the building permit.
Petitioners appealed, and the New York Supreme Court, in Committee for Environmentally Sound Development v. Amsterdam Ave. Redevelopment Associates LLC, Index No. 157273/2019 (Sup. Ct., Feb. 23, 2020), overturned the BSA and invalidated the permit. It held that the BSA’s interpretation of the “zoning lot” definition was contrary to the plain language of the Zoning Resolution, that the BSA’s and the developer’s reliance on the DOB’s historic interpretation was unreasonable because the DOB had announced its intention to change its interpretation, that the developer had no right to rely on an invalid permit, and that the building must be partially demolished because an invalid permit conferred no right to develop.
The Appellate Division, in Committee for Environmentally Sound Development v. Amsterdam Ave. Redevelopment Associates LLC, 2021 NY Slip Op. 01228 (1st Dep’t Mar. 2, 2021), reversed, holding that the relevant provision of the Zoning Resolution is ambiguous, that the BSA has special expertise to interpret the Zoning Resolution and that it had rationally interpreted the zoning lot definition. Thus, the Supreme Court should have deferred to the BSA and not conducted a de novo review. The court also held that the controversy had been rendered moot, since the building had been substantially completed and petitioners had failed to exercise proper diligence in seeking injunctive relief against construction.
Kramer Levin represented SJP and Mitsui through the initial permitting process at the DOB and through the two appeals to the BSA. The firm also served as of counsel on the litigation in both the Supreme Court and the Appellate Division. The Kramer Levin team representing SJP included Land Use partners Paul D. Selver and James P. Power, and counsel Jeffrey L. Braun. Real Estate partner Andrew Charles advised Mitsui on financing and transactional issues.
As counsel to the developer through the DOB and BSA approval processes, we believe that the Appellate Division, in reversing the Supreme Court, properly relied on the well-established proposition that courts are to defer to expert agencies in their interpretation of ambiguous statutory language. The refusal by the Court of Appeals to entertain an appeal from the Appellate Division terminates the litigation and eliminates any risk that the litigation would result in revocation of the building permit or denial of certificates of occupancy for the project.