LES Co-op Turns Down $54M Air Rights Deal Developer Wanted to Build Two Neighboring Condo Towers

The vicinity of East Broadway on the Lower East Side, the site of two proposed condo buildings (David Chiu).

Plans for a development company to buy the air rights from a Lower East Side co-op so it can build two large condo towers were recently dealt a serious blow.

Crain's New York Business reported that the Seward Park Cooperative rejected a $54 million deal from developer Ascend Group, after the co-op board fell short in getting the required 2/3 majority votes from the shareholders necessary for the sale.

Ascend Group purchased the former Bialystoker Nursing Home at 228 East Broadway in 2016 for almost $50 million. The plan was to build two condo towers – one reaching 22 stories, and the other 33 stories -- on either side of the Bialystoker building, according to Curbed. The plan hinged on Ascend's being allowed to purchase 162,000 square feet of air rights.

With this setback, Ascend will instead proceed to construct two condo towers at a smaller scale of 17 and 20 stories each, reported The Real Deal.

The Seward Park Co-op board had favored the deal, since the money from the air rights sale would have paid for major renovations to the building, including new elevators and balcony repairs. The transaction would have also kept maintenance fees from going up for the building's residents.

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3 Comments

  • Can't the Board make an executive decision? Why did it need a 2/3 vote of the shareholders. How are your bylaws written?
  • I was told that the shareholder vote was required because Seward Park is a Mitchell-Lama development. But do coop boards generally have the right to sell the coop's assets without shareholder approval? For some older, low-lying buildings, their own air rights potentially are worth a huge amount. If the bylaws do not address the board's power to sell assets and/or air rights, does that mean the board can sell whatever it wants?
  • The coop passed a bylaw amendment in 2014 requiring a 2/3 majority of shareholders participating in a special meeting (not all shareholders, so long as quorum is reached) to vote in the affirmative for a transfer, sale or use of unused development rights to be approved. Slightly more than 56% voted in favor of this sale, but the super majority of 67% was not reached.