Preserving Former Mitchell Lama Complex for Low and Moderate Income Tenants

Branch v. Riverside Park Community LLC, Index No. 402560/08 (Sup. Ct. N.Y. Co.)

Nature of Claims: This class action alleges that tenants in a 1,190 unit former Mitchell Lama complex are third-party beneficiaries of a ground lease requiring that the building be maintained for persons of low and moderate income, and that the ground lease was unlawfully modified without our clients’ consent. The action also alleges that the amendment should have been accompanied by an environmental impact review.

Background: The project is subject to a ground lease between the New York City Educational Construction Fund (ECF) and Riverside Park. Before it was amended, the ground lease provided that the premises “shall be used for . . . persons or families of low or moderate income only.” Without notice to the tenants, and after settling litigation with some tenants in which it was represented that the ground lease would not be amended, ECF and Riverside Park amended the lease to delete this term. The owner and ECF deleted that provision without notice to the tenants, who had relied on prior representations by the owner in court that the ground lease would not be amended. We allege the tenants are third-party beneficiaries of the ground lease.

Current status: On July 13, 2009, Justice Yates held that the tenants in this 1,190 unit former Mitchell Lama complex are incidental, and not intended, third-party beneficiaries the ground lease. Rejecting our claim that the current tenants were third-party beneficiaries of the original ground lease, on which they had relied to their detriment in settling the prior litigation, the court reasoned: “The public purpose, the noble goal of attempting to increase availability of lower and middle income housing, is not to be confused with a private right vested in certain tenants who happen to enjoy the advantages of that public purpose.” The court rejected our argument that in settling the prior litigation, the developer promised that the ground lease would not be amended. (The developer had represented during the prior litigation that the lease “is not being amended.”) The court found nothing in the record to support an inference that “the developer explicitly promised to maintain the restrictive covenant for any period of time when the prior litigation was resolved.” (In other words, in saying the lease “is not being amended,” the developer meant only that it is not being amended at that moment.) The court also held that our Article 78 petition was untimely and rejected our SEQRA claim. A notice of appeal has been filed.

No. Persons Affected: 1,190 families reside in this project.