Subway Saga

Watch the closing doors: the new East Side extension could mean train
trouble, property loss, and construction woes for co-ops and condos in its path.

How would it feel? You live in a luxury condominium/cooperative on Manhattan’s tony Upper East Side. The building has great views, a 50-car underground garage in the basement, even a plaza. Now the city, in the form of the Metropolitan Transportation Agency (MTA) tells you, “We’re going to give you a new view: of hundreds of commuters pouring in and out of a new train station across the street from you. And to do this, we’re going to condemn part of your building and maybe take your plaza away as part of the project.”

You could get mad. You could try to fight City Hall. Or you could negotiate.

It’s not a hypothetical question. The situation could happen to you – and variations of it have already occurred to a collection of co-ops, condos, and rentals on the East Side. So if you’re among the 23 buildings that the city has targeted while constructing its new Second Avenue subway line, you should pay attention. Otherwise, you could lose more than your peace of mind.

A Hole in the Ground

First, a brief history of what the song “New York, New York” dubbed “a hole in the ground.” New York’s subway system – the largest in the world – was originally run by three separate concerns: the privately owned Interborough Rapid Transit Company (IRT) and the Brooklyn-Manhattan Transit Company (BMT) and the city-owned Independent line (IND).

The IRT started running in 1904. Its route followed today’s 1-2-3 trains on the West Side and the 4-5-6 trains on the East Side. The BMT lines include the R, N, and J. The Independent Subway, running along Eighth Avenue, was formed by the city in the 1920s as a system to compete with the IRT and the BMT. In 1940, the bankrupt IRT and BMT were bought by the city, and several connections were built between the IND and BMT.

There were originally two additional elevated lines on the East Side, running along Second and Third Avenues that were demolished in the 1940s and ’50s. Currently, the one rapid transit option on the Upper East Side is the four-track IRT Lexington Avenue Line, the most crowded in the country. Its average of 1.3 million daily riders is more than double the daily traffic load of the entire Washington, D.C., Metro system, and exceeds the combined daily ridership of the rail transit systems of San Francisco and Boston.

Talk of building a new Second Avenue line dates back to 1949, but after many false starts, plans were begun in earnest in 2007. In November of that year, Mary Peters, the United States secretary of transportation, announced that the would receive $1.3 billion in federal funding for the project’s first phase, to be doled out over a seven-year period.

The Second Avenue subway project will include a two-track line along Second Avenue from 125th Street to the Financial District in Lower Manhattan. It will also have a connection from Second Avenue through the 63rd Street tunnel to existing tracks for service to West Midtown and Brooklyn. Stations will make use of a combination of escalators, stairs, and in compliance with the Americans with Disabilities Act, elevator connections from street-level to station mezzanine and from mezzanine to platforms.

According to the MTA, the new line “will reduce overcrowding and delays on the Lexington Avenue line, improving travel for both city and suburban commuters, and provide better access to mass transit for residents of the far East Side of Manhattan.”

Under the current plan, the project is to be built in four phases. Phase One includes tunnels from 105th Street and Second Avenue to 63rd Street and Third Avenue, with new stations along Second Avenue at 96th, 86th, and 72nd Streets and new entrances to the existing Lexington Avenue/63rd Street Station at 63rd Street and Third Avenue. The first contract involves the construction of new tunnels between 92nd and 63rd Streets, the excavation of the launch box for the tunnel boring machine at just south of 92nd to 95th Streets, and access shafts at 69th and 72nd Streets. In February, the MTA reported that the budget for the first phase exceeds the initial, four-year-old estimates by a substantial amount. The new budget is set at $4.43 billion. The target completion date is also being pushed back to 2015.

There are only four residential occupancies along Second Avenue and one large commercial occupancy being taken over. There are 24 easement takings – i.e., taking slivers of properties – primarily for entranceways, emergency entranceways, and station venting.

My Way or the Subway

If you want to find out if your building falls in the path of the subway, you can check out the MTA’s website and/or contact the MTA. Chances are if you are an affected building, you have been contacted. According to Roco Krsulic, the MTA’s director of real estate, here’s how the process works: the city decides what property – or portion of a property – is needed. The owner is then informed. A public hearing is subsequently held at which questions and protests can be filed. The findings are published, and any issues raised at the hearing are addressed. This report is presented to the MTA board, and there is a 30-day review process. After that, the MTA negotiates with the property owner.

“Our activities are guided by federal rules and regs. It’s not that we arbitrarily offer them figures because we like to lowball them,” Krsulic notes. “We have an independent appraiser value the taking. And we are obligated, pursuant to the federal rules and regs, to offer the highest appraised value.” For stores, the agency offers relocation benefits.

Neil Brody, 18-year-veteran president of the board of the co-op at 250 East 87th Street (a 31-story, 225-unit property that extends across to 86th Street), didn’t wait to be contacted. As soon as he heard about the MTA’s plans and saw a map of the route about four years ago, he took action. Besides reading all he could on the proposed work, he attended community board meetings on the issue and saw that the board hired a lawyer specializing in this area (technically, an easement and zoning attorney).

“We weren’t going to be able to stop this project, so the thinking was let’s understand it as much as we can and see how we could work together to accommodate what we knew was coming with the least problems for our building. And that was our philosophy from the beginning in dealing with the MTA,” notes Brody, an attorney who handles construction litigation and has spent many hours every week on this project.

The board hired Richard Bass, a senior real estate analyst at the law firm of Herrick, Feinstein. The MTA wanted to take part of the building’s basement space for a shaft to provide emergency egress and ventilation. “There’s a lot to talk about it,” Bass notes. “Their work will affect the heating plant; they’re cutting slabs, and there’s a lot of mechanical equipment. It’s a substantial construction project. The building wants to handle the construction. Right now, we’re in negotiations as to how to handle that and how the MTA funds it. Some of the retail space is also being affected; it’s reconfiguring three retail spaces.”

In addition, the board hired an architect and a mechanical engineer to offer advice. “We wanted to stay as much ahead of the curve as we could,” explains Brody, “so that we knew we could intelligently speak with them and try to protect us as much as we could and see where they were going in terms of adversely affecting the property.”

Attention, Passengers

Some affected buildings took similar routes. The Royale Condominium on 63rd and 64th Streets on Third Avenue, for instance, will have to deal with four new sidewalk entrances on the four corners of 63rd Street and Third Avenue. The 202-unit condo, completed in 1984, will lose its public plaza temporarily (it will be used as a construction site staging area) and the western border of the plaza will be destroyed for a ventilation shaft.

“We will soon be entering into negotiations on compensation and building schedules. We haven’t gotten that far yet,” says Kevin Mitchell, an account executive at Douglas Elliman, the managing agent. “The Royale is considering hiring an attorney to negotiate a fair settlement. The board considered protesting, but didn’t, on the advice of several attorneys who said we had very little hope of stopping the project.”

Others would rather fight City Hall. For instance, the Knickerbocker condominium at 308 East 72nd Street, faced with a new subway entrance that would add to the congestion on Second Avenue, is joining forces with other buildings in the area with the intention of suing the city.

“I first heard about the subway entrance a month ago, and I called the MTA,” recalls Burton Wallack, principal in Burton Wallack Management, the agent for the building. “None of the notices said they were going to change the location of the subway from the corner to the middle of the block.” The co-op group created a fund and hired lawyers and are making plans to sue.

“We’re grouping together with a number of buildings on 72nd Street to look into the MTA moving the entrance to the middle of the block, without any notification or environmental impact studies,” says Michael Laub, the Knickerbocker board president for the past six years. “A number of people feel it will lower property values because of the increased number of people; and there are unsafe conditions – it’s in the middle of the street and will cause a tremendous jaywalking situation. Parking will be taken away. It doesn’t make sense.” The group challenged the project at a recent public hearing and is awaiting a ruling.

Some properties report being frustrated with the MTA. “They don’t tell us much. They only tell us what they want to tell us,” says James Letsen, account executive at Charles H. Greenthal, who manages the 204-unit 233 East 69th Street off Second Avenue.

“What I understand is there’s going to be a ventilation shaft on 69th and Second. We’ve asked for diagrams, pictures. Is the smokestack going to be above our building line? Is it going to be attached to our building? We got no feedback, no cooperation, just lip. They will not give you specifics. Most of the time, they say they don’t know and they’ll get back to us.”

The board has tried to get a number of local owners together to fight it but has been unsuccessful.

Emergency Brake?

In the end, what should a board do? Sue? Roll over? Or something in between? East 87th Street’s Brody, who has spent four years reviewing the project, offers advice and raises his concerns: “My advice is to always be ahead of the curve, to anticipate, to inquire, to hire professionals, to engage, to meet with officials involved. There is always a great fear that the [MTA] should be financed properly and that it doeasn’t run out of funds in the middle of the project. One of the concerns is whether the full funding would be there. In Barcelona, there is a famous church called The Unfinished Church. At one meeting, I asked them to assure us that our building would not end up looking like that.”

Bass says a board should understand what the impact is, and talk to the MTA one on one. “The MTA has done extensive outreach and is willing and open to meeting with individual property owners, and property owners should take advantage of that. We promote a one-to-one dialogue – that way if there’s a real problem, there can be a collective solution. We facilitate the communication between the MTA and our client. The most important thing is to be well-informed and engaged in the process.”

And be sure to step lively.