Monday, September 17, 2007

A blighted gas station? Or an increasingly valuable piece of property?

The number of gas stations in the five boroughs is "steadily disappearing," as developers find the sites much more lucrative for housing and retail, the New York Times reported in a July 4 article headlined Shops and Condos Crowding Out Gas Stations.

The phenomenon raises questions about why exactly a gas station (right) at Dean Street and Flatbush Avenue in the Atlantic Yards footprint should be considered underutilized and thus blighted, according to the Empire State Development Corporation (ESDC). The ESDC's Atlantic Yards blight study also makes the dubious claim that mild sidewalk cracks and graffiti on a now-demolished adjoining building also constitute evidence of blight. (See Tracy Collins' map for location of gas station.)

Developer Forest City Ratner owns the property, paying $5.42 million for it, according to a document unearthed by Assemblyman Jim Brennan's lawsuit. (Property Shark says $5.2 million and that the transaction occurred on 3/1/06.)

The designation of blight might justify the invocation of eminent domain to terminate the lease of longstanding gas station operator John Tsao and speed construction of the project, which at this spot would rise a tower some four times the height of the eight-story apartment building behind the station.

Then again, it's not at all clear that eminent domain would be necessary; according to a 1/1/06 article in the Brooklyn Paper, Tsao once got a buyout offer from the developer, even though he has no rights over the property he rents. I recently contacted Tsao, who would not comment for this article.

Something is likely afoot. Adjacent empty properties have been steadily demolished in recent months; the gas station property would stand to be next on the list, further isolating the two extant apartment buildings on Pacific Street behind the station, both of which have tenants in lawsuits challenging in the project.

Stations disappearing


The disappearance of gas stations is part of a trend. From September 2003 to February of this year, the city lost about 9 percent of its gas stations, according to the Times; Brooklyn was a close second to Manhattan in the rate of change, going from 529 gas stations to 468, an 11.5 percent dip. Some of the losses may be the result of consolidations, but others are the result of development.

As the Times reports:
These sites are attractive because they are frequently situated on busy corners and are large, typically covering 12,000 to 30,000 square feet. Zoning often allows for expansion, too.

(Photo of now-demolished buildings on Flatbush Avenue by Adrian Kinloch.)

A former BP Amoco station at 236-250 Atlantic Avenue at Adams Street (the exit from the Brooklyn Bridge) in Brooklyn might have brought $1 million to $2 million as a gas station but instead sold for $13 million, according to the broker quoted in the Times. (Property Shark says $9.75 million.) The $13 million figure works out to about $456 per square foot. By contrast, Forest City Ratner paid $5.42 million for the Flatbush Avenue lot covering 18,574 square feet. That's $292 per square foot.

Forest City may face additional costs at the site. On the other hand, the developer gains a zoning override--essentially,, a private rezoning--from the Empire State Development Corporation (ESDC) that vastly increases allowable development rights.

Indeed, while the Blight Study conducted for the ESDC concludes that the lot can accommodate up to 74,296 square feet of development, Building 2, planned for the site (and a larger footprint beyond), would rise 322 feet and involve more than 380,000 square feet.

Underutilization

As the article suggests, designations of blight are hardly needed to overcome the "underutilization" of a gas station; the free market seems to be taking care of that issue.

Then again, there's also a need for such low-rise structures. At the 5/3/07 court hearing in the challenge to the Atlantic Yards environmental review, plaintiffs' attorney Jeff Baker called the state’s criterion of underutilization “a fairly unique concept,” noting it lacked any analysis of how the property is being used.
(At right, looking along Flatbush Avenue toward Grand Army Plaza)

The gas station lot, he said, is considered “dramatically underutilized,” but now is occupied by “a highly successful gas station.” There’s nothing in the law, he said, “that says all buildings must be built to the maximum size possible.” The ESDC’s method, he argued, “is, per se, arbitrary and capricious.”

ESDC blight report

In its Blight Study, the ESDC offered this assessment of Block 1127, Lot 1:

(All emphases added)
Unsanitary and Unsafe Conditions
The structures located on lot 1 itself appear to be in fair condition. However, the façade on the building east of lot 1 (lot 56), which faces the gas station and parking area, is in poor condition. As shown in Photograph B, the façade has been plastered over and is painted with graffiti. The plaster has crumbled in areas, exposing the underlying brick. In addition, as shown in Photographs C and D, portions of the lot’s asphalt surface are pot holed (Photograph C shows a drainage grate near the lot’s entrance that has sunk below grade) and areas of the sidewalk surrounding the lot are cracked and uneven.

Underutilization

As indicated above, lot 1 is in an R7A zoning district, with a C2-4 overlay and an FAR of 4.0. Although the 18,574 sf lot can accommodate up to 74,296 zsf of built space under current zoning, it hosts a one-story 1,913 gsf building, utilizing less than 3 percent of the lot’s development potential.

Environmental Concerns
The Phase I ESA identified known subsurface contamination on lot 1. The site is undergoing remediation within the jurisdiction of the New York State Department of Environmental Conservation Spills Program....


The DDDB response

Develop Don't Destroy Brooklyn's (DDDB) blight response counters that the ESDC overstated indications of deterioration and attributed a blighting influence to a separate property:
John Tsao has operated this first-class gas station and car repair shop for 31 years. His is a clean, attractive business, open 24/7, with a small convenience store out front. Prospect Heights residents with cars depend on John Tsao for the smooth functioning of their automotive lives. Should the FCR plan be realized, Prospect Heights will not have a single gas station or auto repair shop left...

The main Lot 1 blight complaint raised in FCR’s report deals with the lot next door – the demolished 461 Dean Street, a.k.a. Lot 56 (Blight Study Photograph 1127-B-1): “the façade has been plastered over and is painted with graffiti. The plaster has crumbled in areas, exposing the underlying brick.” Why does the Blight Study even mention this? FCR demolished 461 Dean St., Spring 2006: the alleged ‘blight’ vanished. Graffiti mentioned here and elsewhere in the Blight Study is of such a small amount as not to be noticeably different than any other neighborhood, particularly in the surrounding 1/2-mile radius. Again, most of the heavy graffiti in the study area is on MTA owned property and has been negligently left alone.

FCR
[sic; actually it's the ESDC] mentions that “portions of the lot’s asphalt surface are pot holed.” (Blight Study p. C-70 & 73) These so-called potholes are in fact asphalt patches applied to holes drilled by Roux Associates in the course of making soil sample borings for AKRF when FCR was purchasing the property. It is not evident as asserted in Photo 1127-1-D that the entry drainage grate has sunk below grade. Likewise, the concrete sidewalk has cracks so very modest and so easily fixed, they do not merit “blight characteristic” status.

New York City, again, has been lax about enforcing NYC sidewalk maintenance laws. This scrupulously well-maintained Mobil station, is needed by motorists on heavily trafficked Flatbush Avenue and residents whose cars are out of tune and out of gas.

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