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Wall Street Journal / Biz - Money

New York City Council Halts Midtown Tower Construction

Work on an 800-foot-tall tower in East Midtown that has been under construction for six months was halted last week following a vote by the New York City Council to limit skyscrapers in the area,.
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Josh Barbanel

Work on an 800-foot-tall tower in East Midtown that has been under construction for six months was halted last week following a vote by the New York City Council to limit skyscrapers in the area, in a win for a grass-roots group that sought to block the project.

Within minutes of the council vote Thursday, the city’s Department of Buildings posted a “stop work” order on a plywood fence at the construction site, on East 58th Street near Sutton Place. Workers put down their tools and left.

Construction of the tower, known as Sutton 58, was stopped by a group led by residents of a 450-foot-tall co-op known as the Sovereign, which is across the street from the site.

The East River 50s Alliance, which worked with local elected officials and spent about $1 million on lawyers and consultants, drafted a proposed zoning change last year that would limit the construction of tall towers on side streets to protect the area from oversize development.

The council’s move was unusual because it overruled a provision adopted by the City Planning Commission just two weeks earlier that would have allowed Sutton 58 to be built.

Jonathan Kalikow, president of Gamma Real Estate, which is building the tower, said the council’s action would immediately lead to the layoff of more than 100 workers. He said he would file an administrative objection to the shutdown with the city’s Board of Standards and Appeals, but the process could take six months or more.

Mr. Kalikow put much of the blame for the shutdown on the local councilman, Ben Kallos, a Democrat. Mr. Kallos signed the application for the zoning change, along with the East River 50s Alliance, and pressed officials to expedite it.

Mr. Kallos’s support was crucial in the council as other members followed his lead on the issue, a courtesy usually extended on local land-use issues.

“I take full credit for it,” Mr. Kallos said, after hearing of Mr. Kalikow’s complaints. He said the developer is welcome to pursue his rights under the law, but that eventually he might find there already are too many super-tall buildings “intended for billionaires.”

The city rules allow a building to continue construction after a zoning change only if the foundation was complete. Sutton 58’s foundation work was 95% finished, and would have been done in about 10 days, Mr. Kalikow said.

A rendering of the entrance to Sutton 58. Jonathan Kalikow, president of the tower’s developer, said he would file an objection to the council’s decision to the city’s Board of Standards and Appeals.Photo: Thomas Juul-Hansen

He now has the right to ask the Board of Standards and Appeals to reinstate the project because “substantial progress” had been made on the foundation.

Beyond the immediate impact on the site, real-estate executives were concerned that the rezoning could have a chilling effect on other developers. John Banks, president on the Real Estate Board of New York, an industry group, said developers make “financial commitments of hundreds of millions of dollars” based on their right to build under existing zoning rules.

Opponents of the Sutton 58 tower claimed victory.

“This action represents the fulfillment of a yearslong effort,” said East River 50s President Alan Kersh, who lives across the street from Sutton 58. “For us this was never about just one building; it was a districtwide effort to prevent mega-towers.”

On Friday, a few workers at the site were sweeping up around long rows of steel bars awaiting installation, but construction was otherwise at a standstill.

Write to Josh Barbanel at josh.barbanel@wsj.com

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