In 2002, Imlay Street Real Estate LLC submitted an application to the New York City Board of Standards and Appeals (BSA) seeking a variance to convert a 220,000-square-foot Red Hook industrial building into 145 luxury residential condominiums with ground floor retail stores. This particular property was located in an "M2-1 Manufacturing Zone" which prohibited residential use.
According to the New York City Zoning Resolution ("ZR"), a property owner may seek a variance if it can be shown that the property has unique physical characteristics which render it impractical to comply with existing zoning standards. Such hardship can be demonstrated by way of "dollars and cents proof" that there is an inability to recognize a reasonable return. To that end, Imlay submitted a cost/benefit analysis of one of the permitted uses.
Shortly after the BSA's approval of the variance, members of the Red Hook-Gowanus Chamber of Commerce filed an Article 78 petition with the Kings County Supreme Court seeking revocation of the grant.
After some two years of legal wrangling, on June 2, 2006, Justice Yvonne Lewis found the analysis of only a single permissible use to be "woefully inadequate" and BSA's reliance thereon "arbitrary and capricious." According to the Judge, Imlay needed to establish that other permissible uses such as retail stores, hotels or office buildings would not yield a "reasonable return." Since Imlay's documents were filled with conclusory assertions as to the viability of these other configurations, the court viewed Imlay's submissions to be insufficient as a matter of law, and remanded the matter to the BSA for additional economic evidence (in the form of an appropriate "dollars and cents" analysis).
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For a copy of the Kings County Supreme Court's decision in Matter of Red Hook/Gowanus Chamber of Commerce v. New York City Bd. of Stds. & Appeals, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_51064.htm
For additional information about the process of securing a zoning variance, outlined in ZR section 72-21, please click on the following link:
http://home2.nyc.gov/html/dcp/pdf/zone/art07c02.pdf