January 22, 2003
Battle Nears Over Rezoning Near Seaport

A long-running battle over a New York real estate family's desire to build a 43-story residential tower near the South Street Seaport despite 20 years of opposition by neighborhood residents and elected officials is about to pose a sharp challenge for the Bloomberg administration.

The project, known as 250 Water Street, is the Bloomberg administration's first experience with that classic New York battle: powerful real estate interests clashing with local politicians and residents, with the city expected to take sides and make decisions.

Community groups and elected officials have blocked at least seven previous attempts by the developers, the Milstein family, to build what opponents describe as an oversize building within the low-slung historic district that marks Manhattan's origins as a seafaring port.

But this time, the Milsteins' proposal for apartment towers has emerged only weeks after Mayor Michael R. Bloomberg outlined his vision for rebuilding Lower Manhattan by encouraging development, especially housing.

And the Milstein project has become particularly touchy for the Bloomberg administration. Daniel L. Doctoroff, the deputy mayor for economic development and rebuilding, did not return calls for comment, nor did the Landmarks Preservation Commission or the City Planning Department.

The Milsteins say their project is a test of the mayor's resolve to rebuild downtown, increase housing and encourage risk-taking developers. Residents and property owners are vowing to fight for a historic district that they say can be a valuable tourist attraction and an economic engine because it harks back to the days of Moby-Dick.

Both sides are girding for battle today at a public hearing at the Department of City Planning over a plan sponsored by Community Board 1 to "downzone" the South Street Seaport Historic District, a move that would prohibit tall buildings. Both sides fear that the Bloomberg administration will give in to their opponents. "This has the potential to be a very bloody battle," said one planning commissioner, who spoke on the condition of anonymity.

The Milsteins have enlisted the Real Estate Board of New York and hired a public relations specialist, George Arzt.

Their opponents are backed by the State Assembly speaker, Sheldon Silver, local politicians and the Municipal Art Society, as well as local landowners and the Alliance for Downtown New York, a business group.

The project site is a parking lot that covers the block bound by Beekman and Water Streets, between Beekman Street and Peck Slip.

"The development of 250 Water Street would serve as an important catalyst in the city's effort to rebuild and attract new economic investment to Lower Manhattan," said Howard Milstein, whose family bought the lot in 1979. "City planners have long recognized that a successful development of vacant sites such as 250 Water are vital to the revitalization of the financially struggling seaport area."

The Milsteins have scaled back what was a proposed 43-story office tower in 1984 to a residential building with two towers, one 24 stories tall and the other 13. The two towers, they say, break up what would have been a massive building and provide views to the East River. The project, on the western edge of the historic district, would help support the low-scale buildings there, they say.

Whatever City Planning does, the proposal needs the approval of the landmarks commission.

The project, the Milstein camp says, would be smaller in height than Southbridge Towers, the high-rise apartment complex across Pearl Street from their block. The developer is aware that many of the residents of Southbridge are political supporters of Mr. Silver and opponents of the Milsteins' plans.

Many of the important principals know each other well. Mr. Doctoroff was once a partner of Howard Milstein in their ill-fated ownership of the Islanders hockey team, though neither man expresses any affection for the other. And Jennifer J. Raab, a former chairwoman of the landmarks commission who failed to approve one of the Milstein proposals for Water Street, is a cousin of Carl Weisbrod, president of the Downtown Alliance.

Madelyn Wils, chairwoman of Community Board 1, said the towers would clash with the four- and five-story brick buildings from the 18th and 19th centuries that characterize the 12-block historic district.

She said the community board raised $80,000 to come up with a plan for rezoning the district, with the encouragement of the planning department under both the Giuliani and the Bloomberg adminstrations.

But the developer learned of the proposed rezoning last year as it was working on its eighth plan for the site, by Charles A. Platt, an architect and a former commissioner who had voted against a previous Milstein plan. Ms. Wils and others now fear that the Bloomberg administration will scuttle the zoning proposal.

"They can't say, `All bets are off,' " Ms. Wils said. "Promises have to be kept. You don't wipe out a historic district in the name of rebuilding downtown. The Milsteins have not played nicely for 20 years. But because of their greed we have not been able to settle this to everyone's satisfaction."

The Milstein camp, in turn, said that the community board's zoning plan would result in an ugly squat building covering the entire lot.

Frank J. Sciame, a property owner in the historic district who has developed apartments in two 18th-century buildings, supports downzoning.

"I am very much pro-development, especially downtown, but not above all else," he said. "Downtown needs housing, but it also needs quality-of-life elements that give it life."

But the Milstein camp suspects that the Bloomberg administration will approve the rezoning effort because it does not wish to tangle with Mr. Silver. Mr. Silver, a longtime opponent of the Milsteins' plans, dismisses the talk.

"This is simply something that should be done," he said about the community board's rezoning.

Copyright 2003 The New York Times Company