9th & 10th St. L.L.C. v Board of Stds. & Appeals of City of N.Y.

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[*1] 9th & 10th St. L.L.C. v Board of Stds. & Appeals of City of N.Y. 2006 NY Slip Op 51392(U) [12 Misc 3d 1183(A)] Decided on July 18, 2006 Supreme Court, New York County Stallman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through August 1, 2006; it will not be published in the printed Official Reports.

Decided on July 18, 2006
Supreme Court, New York County

9th & 10th Street L.L.C., Petitioner,


Board of Standards and Appeals of the City of New York, Respondent.



For Petitioner:

Anderson Kill & Olick, P.C.

1251 Avenue of the Americas

Of Counsel: Jeffrey E. Glen, Esq.

Steven Cooper, Esq.

Gail M. Eckstein, Esq.

New York, New York 10020

(212) 278-1000

For Respondent:

Michael A. Cardozo, Esq.

Corporation Counsel of the City of New York

100 Church Street, Room 5-157

Virginia Waters, of Counsel

New York, New York 10007

(212) 788-0822

Michael D. Stallman, J.

This Article 78 proceeding seeks to annul a decision of respondent Board of Standards and Appeals, which affirmed the denial by the City's Department of Buildings of petitioner 9th & 10th Street L.L.C.'s application for building permits for a 19 story residence within a R7-2 zoning district at 605 East 9th Street in Manhattan. At issue is whether the Department of Buildings acted arbitrarily or capriciously when it determined that petitioner did not adequately demonstrate that the proposed residence will be used as a "college or school student dormitory," as set forth in the City's Zoning Resolution.


Petitioner purchased the property from the City of New York at auction; title passed to petitioner on July 21, 1999. A restriction in the deed limits the use of the property to " Community Facility Use' as such use is defined in the New York Zoning Resolution as existing on [the] date of the auction." R18.[FN1] Currently, a five-story building (formerly a public school) sits on the parcel.

The parcel is located in a R7-2 zoning district, which is a medium-density apartment house district. Pursuant to the Zoning Resolution, the relevant permitted uses in this district include uses listed in Use Group 2 (UG2), which include all residential development which is not single-family detached development, and Use Group 3 (UG3), which consists of "community facilities." See generally Zoning Resolution §§ 22-12, 22-13. [*2]

The Zoning Resolution lists the following as "community facilities": (1) college or universities; (2) college or school student dormitories and fraternity or sorority houses; (3) domiciliary care facilities for adults; (4) libraries, museums or non-commercial art galleries, (5) monasteries, convents or novitiates; (6) non-profit hospital staff dwellings; and (7) nursing homes and health-related facilities.

All of the specified "community facilities" are institutional-type uses viewed as necessary or beneficial to the larger community.

The distinction between UG2 and UG3 requires, among other things, different permissible floor area ratios (FAR), which determines how much can be built upon the zoning lot,[FN2] and different parking requirements. In the R7-2 zoning district, the maximum FAR for a UG2 residence is 3.44, and the building must accommodate off-street parking for half of its units. By contrast, the maximum FAR for a UG3 "community facility" is 6.5, which permits a bigger building to be built on the zoning lot, and the "community facility" need not provide off-street parking.

In October 2004, petitioner applied for a building permit from the New York City Department of Buildings (DOB) to construct a 19 story "college or school student dormitory" on the parcel. Petitioner claims that it intends to rent units to students from a number of different schools and colleges. Individual dwelling units include one or more bedrooms, a living room, a bathroom, and a kitchen.

On November 29, 2004, DOB stated six objections to petitioner's application. Only Objection No. 4 is at issue in this action: DOB was not persuaded that petitioner substantiated the proposed building's use as a UG3 "college or school student dormitory." See R20. DOB viewed proposed Floors 3-19 as having a layout for residential apartments, not student housing.

By a letter dated March 1, 2005 to DOB, petitioner stated that the building will be used solely for students because of the deed restriction, and that the design of the apartments was consistent with student dormitory use. Petitioner contended that DOB had no right to require petitioner to prove that the use stated in the application will occur. R23.

In a letter dated March 21, 2005 to petitioner, DOB Borough Commissioner Osorio responded: "As you know, the Department [of Buildings] requires an institutional nexus in order for construction to be classified as a dormitory. This is necessary to distinguish a "student dormitory" which is a community facility use and entitled to extra floor area, from other types of housing that are classified as Use Group 2, including buildings that house students, and that are not eligible for additional bulk."

R11. Osorio addressed petitioner's arguments and directed petitioner to provide DOB with a "deed or lease from a school," stating that, "without a deed or lease with an educational institution, the Department is not satisfied that a dormitory use is being established." R12. On this basis, DOB [*3]Borough Commissioner Osorio denied reconsideration of Objection No.4.

Meanwhile, on March 3, 2005, DOB proposed Rule 51-01, which provided, among other things, that no permit shall be issued to create a student dormitory without documents submitted to DOB establishing, generally speaking, a nexus with an educational institution, and a restrictive declaration that the facility shall only be used as a student dormitory, as classified under Use Group 3 of the Zoning Resolution. According to its Statement of Basis and Purpose, Proposed Rule 51-01 was "intended to codify the Department's current practice of requiring a "dormitory to have an institutional nexus to a school(s)." See R27.

Petitioner wrote to DOB on March 24 and March 28, 2005 to comment on Proposed Rule 51-01 and to supplement its March 1, 2005 letter. Petitioner contended that Proposed Rule 51-01, which requires a nexus with an educational institution, is illegal and beyond DOB's power. In any event, petitioner argued that it could meet the documentation requirements Section (c) (1) of Proposed Rule 51-01. Petitioner states that it intends to enter into a ten-year lease of the proposed dormitory with University House Corp. (UHC), a non-profit entity chartered for the benefit of participating educational institutions. According to its certificate of incorporation, UHC's initial board of directors will consist of a lawyer and an accountant, who each has no apparent connection with an educational institution, and a third individual represented as being a Director of Housing and Residential Life from Pace University. R66-67.

By a letter dated March 29, 2005, Borough Commissioner Osorio responded that, under Proposed Rule 51-01, a 10-year lease with a nonprofit entity "chartered for the benefit of participating educational institutions" could place the proposed building under UG3. R43. She stated, however, that DOB intended that the board members of the non-profit entity would have to "consist of each of the participating educational institutions." Ibid.

Petitioner then offered to submit a draft of its 10-year lease with UHC, and offered to amend UHC's bylaws to require a board of directors consisting solely of members appointed by participating educational institutions, which would be provided to DOB as a supplement to the pending application for a work permit. R45-46. Borough Commissioner Osorio rejected the proposal as speculative, because the proposal provided no assurance that one or more educational institutions will operate a dormitory at the premises.

On April 20, 2005, petitioner filed an administrative appeal with the Board of Standards and Appeals (BSA). Meanwhile, on May 16, 2005, Proposed Rule 51-01 was published in the City Record, and became effective on June 20, 2005.

The BSA held a public hearing on petitioner's application on August 16, 2005. On October 18, 2005, BSA issued a resolution denying the appeal.

On November 17, 2005, petitioner commenced this Article 78 proceeding. Petitioner essentially contends that it is entitled to a building permit as-of-right, because the proposed building would constitute a "community facility" under Use Group 3, as set forth in the use regulations of the Zoning Resolution, which is an as-of-right use for the R7-2 zoning district.

BSA contends that a building housing students is not per se a community facility. Rather, BSA insists upon an institutional nexus between the housing for students and a college or other school to distinguish between a UG3 dormitory from a UG2 residence for students. According to BSA, petitioner failed to establish this institutional nexus.

Proposed Rule 51-01, codified at 1 RCNY 51-01, is not at issue in this petition. BSA claims [*4]that the Proposed Rule was not applied to petitioner's application. Rather, BSA asserts that DOB engaged in a review process and applied standard DOB practices, and that the Proposed Rule simply codified pre-existing practice of requiring an institutional nexus.


"[T]he BSA is comprised of experts in land use and planning, and . . . its interpretation of the Zoning Resolution is entitled to deference. So long as its interpretation is neither irrational, unreasonable nor inconsistent with the governing statute,' it will be upheld." Matter of New York Botanical Garden v Board of Stds. and Appeals of City of NY, 91 NY2d 413, 418 (1998). "Courts may set aside a zoning board determination only where the record reveals that the board acted illegally or arbitrarily, or abused its discretion, or that it merely succumbed to generalized community pressure." Matter of Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d 608, 613 (2004).

According to petitioner, the requirement of an "institutional nexus" in the work permit application is "unprecedented," in that no other project has ever been required to meet this standard. Petitioner's Mem. at 1.

Whether an agency decision is considered "unprecedented" does not establish that the agency has acted arbitrarily or capriciously. An agency may engage in " ad hoc decision making based on individual facts and circumstances.'" Matter of DeJesus v Roberts, 296 AD2d 307, 310 (1st Dept 2002), quoting Matter of Alca Indus. v Delaney, 92 NY2d 775, 778 (1999). Ad hoc decision making may lead to "unprecedented" decisions if the facts and circumstances are unique. A decision which is "unprecedented" might warrant further inquiry as to whether petitioner was arbitrarily singled out. However, the codification of the "institutional nexus" requirement belies such an assertion. The issue is not whether DOB's requirements are unprecedented, but rather whether the requirements are arbitrary and capricious.

DOB inquired as to whether the proposed building was affiliated with an educational institution instead of looking to the building's potential occupants. BSA agreed with DOB's interpretation, reasoning that "if there was no requirement of institutional control, any private party could build UG2 residences and market them to students from any school, negating the presumed beneficial effect for a specific community-based education and thus for the community as a whole, and resulting in an unjustified financial windfall (in terms of developable floor area) for the private developer." R5.

It cannot be said that this approach is arbitrary and capricious as a matter of law. The Zoning Resolution lists "college or school student dormitory" among the as-of-right uses in Use Group 3, but it does not define those terms. See Zoning Resolution § 22-13 A. Because the layouts and floor plans of school dormitories may resemble those of residential apartments and rental units envisioned as student housing, it is reasonable for DOB to articulate criteria to differentiate UG2 residences that simply target a student rental market from UG3 college or school student dormitories.

The Zoning Resolution does not simply use the term "dormitory" or "student housing." Rather, it specifies that it be a "college or school student" dormitory. Because a student, by definition, attends a college or school, the phrase "college or school" would be redundant if it were intended to modify "student." Rather, the phrase "college or school" therefore speaks in terms of [*5]use by an educational institution, as opposed to a use generally for housing for students. See Matter of Baskin v Zoning Board of Appeals, 40 NY2d 942 (1976), rev on dissent below, 48 AD2d 667, 668 (2d Dept 1975)("neither the design of [a] house nor the nature of its occupancy . . . controls. The combination of the design of the house and the nature of the occupancy is the twofold test").[FN3] Indeed, other types of community facilities specified in the Zoning Resolution refer to institutions, such as fraternity or sorority student houses, monasteries, and non-profit hospital staff dwellings. See Zoning Resolution § 22-13.

Petitioner's reliance on Matter of Di Milia v Bennett (149 AD2d 592 [2d Dept 1989]) is misdirected. In Di Milia, DOB denied a permit for a single-family house which could, theoretically, be used later as a non-conforming two-family home. The court held that the proposed structure met the criteria for a single-family home at the time when the permit was required, and that was enough to require the issuance of a permit as-of-right. The Di Milia Court held that "[t]he standard to be applied herein is the actual use of the building in question, not its possible future use." Id. at 593.

Unlike Di Milia, DOB's objection to petitioner's application is not based on whether the proposed building could later be used in a non-conforming manner. The issue is whether petitioner has met the criteria for a college or school student dormitory use in the first instance. As respondents indicate, without a showing of the institutional nexus presupposed by the wording of the definition of "community facility," there would be no practical way to distinguish between a UG3 "community facility" and a UG2 residence. DOB did not deny petitioner's application based on possible future use, but rather on the inadequacy of petitioner's of intended use.

Nevertheless, petitioner asserts that DOB has no right to ask for proof of the building's proposed use as a condition of granting a work permit. Petitioner argues that, because DOB is an enforcement agency, it may cancel the building's Certificate of Occupancy only if petitioner later fails to comply with its UG3 use. The Court disagrees. As BSA indicates, the NYC Building Code vests DOB with the authority to examine all applications for permits for compliance with the building code and applicable laws and regulations. NY City Building Code [Administrative Code of the City of NY] § 27-191. Thus, the law does not require the agency to grant a permit for a nonconforming use (i.e., a use not a "community facility"), and then wait until the owner constructs a building to the larger scale and bulk permitted only for a conforming use, and then effectuates a plan to use the building for a use not consonant with the permit.

It was not arbitrary and capricious for DOB to insist upon documentary proof that the building would be used a college or school student dormitory, as opposed to accepting the use restriction in the deed and petitioner's stated purpose. As discussed above, the Zoning Resolution permits college and school dormitories to exceed FAR and bulk requirements that would normally apply to residences. Once erected, the building cannot be unbuilt (without great expense), and its impact on the neighborhood cannot be undone. Students residing in the building may be forced to relocate at an inopportune time if the building's certificate of occupancy is later revoked. A proposed as-of-right use in this case therefore does not give petitioner a right to dispense with DOB verification of the building's compliance with applicable zoning regulations. [*6]

Neither does the deed with the City of New York require the City to grant petitioner a permit to build the 19 story structure currently envisioned. Although the deed requires petitioner to build a "community facility," and provides that a failure to do so would, in theory, allow the City to close the premises, the deed cannot be viewed as a blank check permitting petitioner to build whatever it chooses under the rubric of "community facility." The deed is not a substitute for the permit process, and petitioner, like every other applicant, has the burden of proving entitlement to the permit. The availability of other remedies for the City in the event of petitioner's breach, such as revoking the building's certificate of occupancy, does not diminish DOB's responsibility to vet the permit application.

Petitioner's proffer of a non-profit entity, consisting of a board of directors that is not entirely affiliated with an educational institution, does not establish an institutional nexus. Petitioner has failed to establish that the proposed housing will be operated by an entity whose sole interests reflect the required institutional nexus. Furthermore, DOB's insistence on a long term lease to establish an institutional nexus was not irrational. No educational institution owns the parcel, and DOB rationally concluded that a leasehold interest with an educational institution or non-profit entity composed of educational institutions could satisfy the requirement of an "institutional nexus." The Zoning Resolution permits a community facility greater bulk and height because of the articulated assumption that the facility and the institution provide concomitant benefit to the community at large. This trade-off would be not be fair to the community if the proposed lease were short term.


Petitioner argues that "[a]n agency determining a proposed land use, must issue a permit if the application meets all of the requirements of the code or resolution. The agency has no power to add conditions, for that is legislating and is beyond the agency's authority [emphasis in original]." Petitioner's Mem. at 20. Petitioner argues that DOB is only an enforcement agency, and cannot "compel an institutional nexus' as a condition of being able to build what can only be used as a college or school student dormitory" without usurping the legislative function. Id. at 21.

This argument is unpersuasive. An agency may adopt a regulation that goes beyond the text of the enabling legislation so as to "fill in the interstices in the legislative product." Matter of General Elec. Capital Corp. v New York State Div. of Tax Appeals, Tax Appeals Trib., 2 NY3d 249, 254 (2004). As mentioned above, the Zoning Resolution does not define "college or school student dormitory." Zoning Resolution § 71-00 provides that DOB shall "administer and enforce" the Zoning Resolution, "except as specifically provided in the New York City Charter and in this Resolution." Thus, DOB had the authority to adopt criteria that reflected its reasonable interpretation of the meaning of "college or school student dormitory" as having an institutional nexus.

Petitioner's position assumes that DOB added criteria to petitioner's application in an illegal manner, in order to deny petitioner's application. There is no evidence that DOB acted arbitrarily, irrationally or capriciously, or solely to deny petitioner's application. Neither does it appear that DOB exceeded its authority as an enforcement agency by adding conditions to the Zoning Resolution. As previously discussed, DOB did not add any new criteria for evaluation of petitioner's application, and did not apply Proposed Rule 51-01, which had not yet been enacted. Instead, DOB relied on existing administrative requirements for an institutional nexus already presupposed by the Zoning Resolution. This is not legislation; rather, it is permissible interpretation by the [*7]administrative agency having the responsibility and expertise to assure that permit applicants are entitled to build what they propose. DOB's insistence that petitioner fulfill the existing requirements of the Zoning Resolution was legal, rational and within its jurisdiction.


Petitioner argues that the respondents are judicially and otherwise estopped from refusing to grant petitioner a permit. The doctrine of judicial estoppel "precludes a party who assumes a certain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed [internal quotation marks and citation omitted]." Gale P. Elston, P.C. v Dubois, 18 AD3d 301, 303 (1st Dept 2005); see also Warnecke v Warnecke, 12 AD3d 502 (2d Dept 2004).

The petition refers to state and federal actions by certain community groups to prevent the sale of the property to petitioner. El Bohio Pub. Dev. Corp. v Diamond, Sup Ct, NY County, Index No. 105380/1997, affd ; El Bohio Pub. Dev. Corp. v Giuliani, 99 Civ 3533 (MBM) (SD NY 1999). In the course of that litigation, Lori Fierstein, Deputy Commissioner of the Division of Real Estate Services in the New York City Department of Citywide Administrative Services, signed an affidavit discussing the sale of the property to petitioner. R501. The purpose of the affidavit appears to have been to convince the judge that a sale of the property to petitioner would fulfill the obligations required by the deed, especially the requirement that a "Community Facility" would be built on the property. In her affidavit, Fierstein represented, among other things, that petitioner had "credibly and rationally explained that he could not specify an exact use [of the property] until he was able to further inspect the property and formulate plans with prospective partners or contractors," but that she "found this to be a reasonable position and thus concluded that [petitioner] properly established the requisite good faith intent to comply with the community use restriction. Therefore, there is no basis for plaintiff's suggestion that my determination that the closing can proceed was without rational basis." R517.

Petitioner considers this, and other statements in the prior record, to be proof that the City adopted a position in the present litigation that conflicts with its position in the earlier litigation. However, the City's belief, prior to the sale and prior to petitioner's specific proposal for the site, that petitioner intended in good faith to fulfill its duty to build a "community facility" is not inconsistent with the City's position here. Rather, the City's view, after vetting petitioner's plans, including petitioner's failure to provide the required documentation as to a proper UG3 use, is that petitioner did not live up to the City's expectations. Thus, it cannot be said that the City took conflicting or contradictory positions in the two litigations. In the absence of a conflicting position, there can be no estoppel of any kind.


Finally, petitioner asserts that DOB bowed to community pressure, and thereby acted in an arbitrary and capricious manner. No principle of law forbids a public agency from considering input from community residents or organizations. Rather, the hearing and submission process seeks to give members of the community an opportunity to examine development proposals and the way the various City agencies consider them. Even proposed "as-of-right" projects, when exposed to public scrutiny, may turn out to be not legitimately "as-of-right." Public participation helps open a window on a decision-making process that can affect the future course of a community's development. Here, despite the stridency of some persons objecting to the project, examination of the hearings and the [*8]documentary submissions shows a range of opinion which the DOB could consider in meeting its obligation under the law. Petitioner's argument lacks merit.


Petitioner has not met its burden of proving that respondent acted arbitrarily or capriciously or contrary to law. Rather, DOB had a rational basis for refusing to grant a premises permit to build a dormitory without adequate proof of an institutional nexus between the proposed dormitory and a known school (or schools), or a nonprofit entity representing such school(s). BSA's decision to uphold DOB's denial of petitioner's application for permits was not arbitrary and capricious, and had a rational basis. Accordingly, it is

ADJUDGED that the petition is denied, and the proceeding is dismissed.

This constitutes the decision and judgment of the Court. Copies to both sides.

Dated: July 18, 2006

New York, New YorkENTER:




Footnote 1:The Record of Proceedings before the Board of Standards and Appeals, Volumes I-IV, pages 1-1710 are cited by page number prefaced by a "R." Petitioner also submit two volumes of exhibits, but agrees that respondent's record is more complete.

Footnote 2:The higher the FAR, the greater the density is allowed on the zoning lot. For example, if a 5,000 square foot lot has a FAR of 10, then 50,000 square feet of usable floor area can be constructed on the lot (10 x 5,000 square feet). If the same lot had a maximum FAR of 5, then only 25,000 square feet of usable floor area could be constructed on the lot.

Footnote 3: In Baskin, DOB granted a variance to a one-family home, allowing the homeowner to install a second kitchen, on a finding that the house met the criteria for a one-family residence despite the possibility that it could later be converted into an illegal two-family home.

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