China's property sector woes could spell trouble for prestige mega-projects in London, New York, Sydney and other top cities as the developers behind them scramble for cash.
While China Evergrande Group's struggles have dominated the crisis, the risk to multi-trillion dollar global property markets stems from some of its rivals that have spent the last decade competing to build ever taller and grander skyscrapers.
Shanghai-based Greenland Holdings, which breaches as many of China's debt "red lines" as Evergrande, has just built Sydney's https://www.greenlandaustralia.com.au/en/greenland-centre tallest residential tower, has plans to do the same in London https://spirelondon.com and has billions of dollars worth of projects in Brooklyn, Los Angeles, Paris and Toronto.
The developer says it remains committed to its flagship builds including its long-delayed, 235 metre-high Spire London tower, but it put part of another major London site on the market earlier in the year and other firms are hoisting for sale signs too.
Evergrande and Kaisa Group, which was the first Chinese property firm to default back in 2015, are both trying to sell Hong Kong buildings to drum up desperately-needed cash., while Oceanwide Holdings has just had what was supposed to be San Francisco's tallest tower seized by disgruntled creditors.
"I suspect, as with anything, if you're running into liquidity issues you start to look to sell your investment properties," said Omotunde Lawal, head of emerging-markets corporate debt at asset manager Barings, which holds some Chinese property firms' bonds.
As many Chinese firms overpaid for prime overseas sites in the scramble to secure them, the question is who will buy them, Lawal added. "Probably they are unlikely to get cost, so I think it depends on just how desperate they get."
SIZABLE ASSET SALES
Guangzhou R&F Properties is another major firm in focus after it required an emergency cash injection this month. It has two giant unfinished developments in London, including one with a dozen skyscrapers next to the Thames https://www.thamescity.com, as well as numerous builds in Australia, Canada and the United States.
An R&F spokesperson in London said it remained "fully committed" to all its British projects.
But with nearly $8 billion of debt to repay in the next 12 months, only $2 billion of freely available cash and sales down nearly 30% year-on-year last month, major credit rating agencies say it will need to cash in some chips.
"R&F's capacity to handle its near-term debt maturities will hinge on the execution of sizable asset sales," S&P said, predicting that buildings, hotels and various stakes in projects could all be sold. Fitch meanwhile estimates R&F has 836 billion yuan ($130 billion) of assets that could potentially be sold.
R&F, Greenland, Evergrande and Kaisa have all declined to comment further on their finances. Oceanwide said last week it was "actively discussing" the situation with its San Francisco project with the creditors involved.
SPENDING SPREE
Chinese developers went on a major international spending spree between 2013 and 2018, but the splurge has slowed abruptly since as Beijing has moved to curb firms' excessive debts.
After pouring more than 28 billion pounds into London projects in 2018, they have spent 1.5 billion pounds in the first half of 2021, the lowest amount since 2012, data from Real Capital Analytics shows.
Figures from estate agents Knight Frank paint a similar picture in Australia, New York and other top north American cities, where Greenland, R&F and others big firms including Country Garden, Poly Property and China Vanke also spent tens of billions of dollars a year.
Stephanie Hyde, UK chief executive of real estate firm Jones Lang LaSalle, which markets for R&F in London and another firm called Xinyuan which has just narrowly avoided default, told Reuters she wasn't aware of any Chinese firms looking to sell-up due to strains back in China.
If they did decide to sell though, they were likely to find buyers relatively quickly she added, due to the flood of international investment money current circling global property markets like London where prices are now at a record high.
Chris Gore, a central London principal at real estate firm Avison Young, said he wasn't aware of any sudden selling plans either, but that the pressure would grow on Chinese firms if the crisis at home continued.
"If they needed to sell and could sell for a profit, then I think they would just sell," Gore said. "There wouldn't be a problem if a few wanted to sell, but if they all suddenly wanted to exit at the same time, they couldn't."
America’s crisis at the border is now a crisis in New York public schools.
The Biden Administration is flooding New York City and Long Island communities with thousands of unaccompanied immigrant minors captured crossing the Mexico-US border, often arriving here, as The Post recently reported, via clandestine flights in the middle of the night.
Data from the US Department of Health of Human Services confirms that the New York area is a hotspot for shipping children rounded up illegally crossing the border without guardians.
Four counties alone, Suffolk, Queens, Nassau and Brooklyn, took in nearly 5,000 unaccompanied children in just 11 months, from Oct. 1, 2020 to Aug. 31, 2021, according to HHS.
With public education in the area costing about $28,000 per child, per year, that’s a $139 million hit on New York taxpayers to educate children arriving unexpectedly just in those four counties.
The arrival of these children, mostly teenage boys, in local schools is creating a classroom crisis that is strapping educational resources, costing taxpayers millions in un-budgeted dollars, and aiding gang-recruiting efforts, argue parents, teachers and immigration experts.
“We’re at maxed capacity for kids with special needs, but they’ll keep sending them,” lamented one high school teacher in Queens, among the communities hardest hit by the illegal-immigrant student dump.
Fifteen counties nationwide have received more than 1,000 unaccompanied children caught at the border over the past year, reported HHS. The top five counties on the list are all in Texas, California and south Florida.
But four of those 15 counties are right here in New York: Suffolk (1,528), Queens (1,314), Nassau (1,064) and Brooklyn (1,046). The Bronx nearly made the list, with 461 unaccompanied students. New York is the only state in America with four counties receiving more than 1,000 unaccompanied minors, despite its 1,700-mile distance from the southern border.
Data suggests that around 2,000 young migrants have arrived at Westchester County Airport just since August 8.REUTERS
The 1,528 children released into Suffolk County is sixth most of any county in the nation. The HHS list includes only those counties that received 50 or more minors. Manhattan and Staten Island were not on the list.
These numbers are on top of the legal and illegal immigrant children arriving, or who already live here, with parents or a guardian. An estimated 504,000 undocumented immigrants live in New York City, according to a 2020 report by the city’s Department of Education.
The surge in migrant crossings during the Biden Administration has included a reported 125,000 unaccompanied minors.
The resulting influx of unaccompanied children into local schools becomes “a giant unfunded mandate and enormously unfair to the communities that are forced to accommodate these kids,” said Jessica Vaughan, the director of policy for the Center for Immigration Studies. “It causes enormous challenges for the schools, a disruption in the quality of education for all and sometimes even a crime problem that wasn’t there before.”
One Brooklyn teacher said his ninth-grade English language arts class this year has 13 children from Ecuador alone, noting that educators are not privy to a child’s legal status.
“I think it’s good for New York City because our enrollment numbers are going down. The school lost students during the pandemic,” the teacher said. “This kind of evens out the enrollment.”
But unaccompanied immigrant children often surprise administrators, teachers, students and parents when they show up suddenly at local schools, many with special education needs, minimal school time at home, and unable to speak English. Some of these children, from indigenous Central American cultures, don’t speak Spanish either, notes Vaughan.
(From left) Justin Llivicura, Jefferson Villalobos, Michael Lopez Banega, and Jorge Tigre have all been MS-13 victims.
“Most parents are not even aware this is going on,” said Sam Pirozzolo, former president of the Community Education Council on Staten Island, while those aware of potential problems are afraid to raise politically incorrect concerns amid an angry cancel culture that forbids dissent.
“Parents are under assault, period,” he said. “They’re already called domestic terrorists for standing up for their children. It’s difficult enough worrying about your own children, your own families and your local neighborhood politics but then have to worry about another issue. Parents are under siege as it is.”
Flight-tracking data suggests that around 2,000 underage migrants have arrived at Westchester County Airport on 21 flights just since Aug. 8. Most were bused to locations in New York City and Long Island, The Post discovered.
“The city is not notified by the federal government of arrivals,” City Hall officials told The Post. “But we do monitor trends in the publicly released data, and engage with local service providers, particularly legal services providers, to understand and troubleshoot any barriers to accessing city services.”
A majority of the unaccompanied minors, 68 percent, are teenage boys from Central American nations,HHS reports, mostly Guatemala, Honduras and El Salvador, raising concerns the program may serve as a pipeline for gang activity.
MS-13, a gang rooted in Central America and a magnet for teenage boys, has infiltrated local high schools in recent years, with deadly results. The gang violence included a brutal quadruple homicide, three of the victims teenagers, in Central Islip, L.I., in 2017.
MS-13 “has deliberately taken advantage” of America’s unaccompanied minors policy to “grow their ranks in the United States,” said Vaughan. “New York happens to be one of those areas where MS-13 clique leaders have been told to take advantage of our open border.”
Struggling schools and communities, those that can least afford to handle an influx of needy new students, end up bearing the brunt of the problem.
“They (unaccompanied minors) are not going to Eleanor Roosevelt High School, I’ll tell you that,” the Queens teacher told The Post, referencing a top-ranked school with rigorous admission standards.
“They’re never placed in screened schools. It’s essentially just a cycle of dumping kids in schools that are unscreened … regardless of the geographic district or zone. All you’re doing is creating more of a divide in a system that’s already divided.”
The language barrier alone strains city resources. The Brooklyn teacher told The Post his high school has seen a recent influx of teens from El Salvador, and that he’s happy to accept them after enrollment fell during the pandemic. But now his school is short on English as a New Language (ENL) teachers after two were ousted for being unvaccinated.
A teacher in Brooklyn said that his high school has seen a recent influx of teens from El SalvadorHelayne Seidman
The city runs five ELL (English Language Learner) transfer schools for older teen immigrants, but four of them are in Manhattan, which makes it difficult for kids to commute from immigrant hotspots Queens and Brooklyn. And there are not enough seats for all the newcomers, so they have to be placed in local schools which may not have the staff or resources to meet their needs, said Rita Rodriguez-Engberg, director of the Immigrant Students’ Rights Project for Advocates for Children of New York.
“The biggest challenge is that the DOE doesn’t have enough local schools which are supportive for these students,” she said. “There are not enough school placement options, both for older and younger (students).”
Concerns about failing education, strained school resources and children falling prey to gangs come on top of the crushing financial burden new students place on taxpayers.
The DOE refused to answer questions about funding to educate unaccompanied immigrant minors.
“The federal government has come in and said ‘we’re going to social-engineer your schools and there’s nothing you can do about it,’” said Andrea Vecchio, a founding member of the East Islip Taxpayers PAC, which began battling the arrival of unaccompanied minors during the Obama Administration.
Smaller communities, such as those on Long Island, struggle harder to meet the challenge of educating foreign students who show up at the door one day.
East Islip’s small school system of just 3,350 students had as many as 50 unaccompanied minors as recently as 2019, before the pandemic sent kids home. The current number is unknown, but “probably higher” said former school board member Phil Montouri. Just 33 new students equals about $1 million in added annual costs – a big number for small communities.
Rodriguez-Engberg, whose group helps enroll the newcomers in city schools, said gang concerns are overblown.
“All the students we serve are very eager to be in school and waiting for the enrollment to happen so they can get their lives together,” she said.
The city opens its arms to all students, despite any outside concerns.
“New York City has and will always be a welcoming city of immigrants and we are proud to serve every young person in New York City – regardless of immigration status,” Department of Education spokesperson Katie O’Hanlon told The Post.
“By law, every child in our city has a right to a public school education and we do not ask about immigration status. Education is a human right.”
Students in New York City have that right to a free public education up until age 21, which means that a 20-year-old man being groomed for MS-13 might be sitting in class next to a teenage girl, warns Vaughan.
Demand for single-family rental homes is off the charts and shows no signs of abating anytime soon, and that is pushing rents sky-high. This has allowed the largest owner of houses in the US to raise rents.
According to Bloomberg, Invitation Homes Inc., which owns approximately 80,000 homes across the country, increased rents by 11% in the third quarter. They raised rents by 8% on renewals and 18% on new leases. Geographically, much of the new increases were found in the Southwest, where rents increased 30% in Las Vegas and 29% in Phoenix.
"It's a little bit crazy," CEO Dallas Tanner told analysts during a Thursday call. "There just isn't enough quality housing available right now."
In a separate report, CoreLogic wrote this week, on a national basis, rents rose 9.3% in August from the same period last year. Data showed that all top metro areas tracked by the real estate research firm recorded positive rent growth. The highest growth areas were Miami at 21%, Phoenix at 19%, and Las Vegas at 15%.
"Converging economic trends are driving a surge in single-family rent prices, and consumer confidence has driven an uptick in demand for both renters and buyers," Molly Boesel, an economist at CoreLogic, said who was quoted by CNBC.
"The ongoing preference toward more living space — and slim for-sale inventory — is forcing would-be buyers back into renting, putting significant strain on the single-family rental market," Boesel said.
However, Lawrence Yun, the National Association of Realtors' chief economist, believes that surging rents could lead to more homebuyers to avoid rising inflation.
Because if you can't afford to rent, you can afford a million-dollar starter-home?
Needless to say, rising home prices and rents is more bad news for whatever is left of the middle class. Most Americans will soon be priced out of owning a home and stuck in a renting society where more and more of their incomes are used for shelter expenses, unable to save for a downpayment.
Roughly $10 billion of a $46 billion pool of federal rental aid has made it to renters, landlords and utility companies after another $2.8 billion was disbursed by state and local governments in September, the Treasury Department announced Monday.
Treasury said that funds from the Emergency Rental Assistance (ERA) program reached more than 510,000 households last month and more than 2 million since the initiative began this year.
The department had distributed the entirety of the $46 billion to eligible state and local entities in May to help struggling renters avoid eviction upon the expiration of federal and state moratoria.
The urgency to expedite the rental aid distribution process ramped up in August when the Supreme Court struck down the Centers for Disease Control and Prevention’s (CDC) eviction moratorium, which was imposed in September 2020.
But despite months of pressure from Treasury and attempts to loosen red tape, nearly 75 percent of the rental assistance funds have yet to reach the intended recipients.
Even so, the mass wave of evictions that many policymakers feared has not materialized thanks in part to state and local eviction bans, court backlogs and eviction diversion strategies, according to data from Princeton University's Eviction Lab.
“That said, every unnecessary eviction is one too many, which is why Treasury continues to do everything it can to make sure assistance is reaching people who need it most – including by working to ensure that those facing eviction have an opportunity to apply and are protected during the application process,” the department said Monday.
Construction employment will remain at its lowest point since 2014 for the duration of 2021, with spending expected to drop by $1.5 billion over the next three years, a report from the New York Building Congress predicts.
The report published Thursday, which forecasts trends in the construction and building industry over the next three years, claims construction spending will amount to $174.1 billion by 2023, a $1.5 billion decrease compared with the period from 2017 to 2019. As New York City struggles to get back on its feet, such recovery metrics will remain slow-changing.
After non-essential construction shut down for nearly three months in 2020, the number of new buildings dramatically declined. In 2019, total floor space built peaked at 103.3 million gross square feet, but now, even as the industry creeps toward recovery, the Building Congress estimates that this year will remain significantly behind pre-pandemic levels at 74.2 million gross square feet.
The report’s forecast for floor space built over the next two years is even worse, with growth expected to drop to 67 million gross square feet in 2022 and 61.3 million by 2023.
While this drop-off isn’t entirely abnormal — the report posits that annually built gross square feet still falls in the same range as from 2015 to 2020 — these numbers reflect the widespread impact of the pandemic on all aspects of the industry, many of which face similarly abysmal projections.
The report broke spending predictions into multiple categories. Over the next three years, overall spending is projected to amount to $174.1 billion, which, adjusted for inflation, shows a more dismal $38.2 billion drop-off compared with spending between 2017 and 2019.
Meanwhile, government spending in construction, while up from 2020, is set to steadily decline by 2023. According to the report, this year could amass $23.1 billion, whereas 2023 is slated for $21.1 billion. If adjusting for inflation, current public investments are receding lower than Great Recession levels, displaying an imminent need for government aid, officials said.
“No matter what you throw at New York City, we are able to withstand it and come back stronger,” Cheryl McKissack Daniel, chair of the New York Building Foundation and president and CEO of McKissack & McKissack, said in a statement. “This should underscore why we need more investment in our infrastructure, as it is one of the best ways to improve our society.”
The report’s projections don’t account for the federal infrastructure bill currently debated in the U.S.House of Representatives. If that bill, allocating $1.2 trillion in infrastructure, were to come to fruition, it would cause a boom in economic activity — to a predicted tune of $19 billion.
Without taking that bill into consideration, however, the report says that this year will see a 21 percent improvement in residential construction spending compared with last year. By 2023, such spending could amount to $36.6 billion. While a step in the right direction, this forecast remains 33 percent lower than spending between 2017 and 2019.
Non-residential construction spending is slated to fluctuate, starting at $23.7 billion this year before dropping to $22.2 billion in 2022 — only to rise again to $25 billion the following year.
Yet although these statistics look bleak, the Building Congress remains optimistic about the future, predicting a construction resurgence within the next few years.
“Despite the economic impact that COVID-19 has had on New York City since the start of the pandemic, the building industry proves its strength time and time again, as spending and job creation continue on an upward trend from 2020,” Carlo Scissura, president and CEO of theBuilding Congress,said in a statement. “With a long road to economic recovery ahead, the ever-present threats of climate change and infrastructure that’s crumbling, we need meaningful, immediate support from Washington.”
As New York City begins to bounce back, the building industry could invest $60.6 billion into construction, per the report. The pandemic battered industries throughout the city, so the revitalization of construction, however erratic, has the potential to alleviate some of the economic aftermath; the report predicts that this year will add 135,000 construction jobs to the economy, 140,222 potentially in 2022 and 157,100 in 2023.
Global supply chain disruptions have sent industrial tenants into a leasing frenzy, pushing warehouse vacancy to unprecedented lows.
Prologis’ portfolio was 98 percent leased and just under 97 percent occupied at the end of the third quarter, the San Francisco-based warehouse REIT reported Friday. Moreover, its development pipeline was already 70 percent pre-leased — the firm’s highest pre-lease rate ever.
“Space in our markets is effectively sold out,” CFO Tom Olinger said on the firm’s quarterly earnings call.
Excluding special items, adjusted funds from operations hit $795 million for the quarter, or $1.04 per share, up from $689 million in the same period a year ago.
Rents, meanwhile, were up 7.1 percent compared to the second quarter. Prologis expects rents to grow a record 19 percent this year in the U.S. and 17 percent globally.
Industrial real estate is alone among the major commercial sectors in that its fundamentals actually strengthened over the course of the pandemic, as consumers made more and more purchases online. Ecommerce was driving historic demand for warehouse space even before the pandemic began, and lockdowns sent the trend into overdrive.
The broader U.S. industrial market mirrored Prologis’ performance in the third quarter, with vacancy falling to an all-time low of 4.1 percent and average rents reaching an all-time high of $7.18 per square foot.
Industrial demand right now is “crazy,” Prologis chairman and CEO Hamid Moghadam said on the call.
“Just based on the number of people competing for the same good spaces, and all the inbound calls we get from all our good customers wanting to gain an advantage over another good customer, people are almost in a panic mode when it comes to committing to real estate,” Moghadam said.
In sum, Prologis inked 56 million square feet of leases during the quarter — well above historical figures.
Ecommerce companies were responsible for roughly one-quarter of the firm’s new leases during the third quarter, and spaces of more 100,000 square feet are “effectively fully leased,” Olinger said.
Prologis forecast a record 375 million square feet of net absorption in 2021, against 285 million square feet of new deliveries.
A convergence of the bottom-up softening of certain parts of the office market, the white-hot demand for Class-A industrial space that is close to consumers and the lack of available space for that use has caused industrial developers to, at least temporarily, get into the office business.
Developers like Goodman, Rexford Industrial Realty and Black Creek Group are looking for and acquiring office space that is zoned industrial, even if it has tenants in it, with plans to replace those offices with new industrial space once leases are up.
Rexford spent roughly $105.3M on the Behr paint company headquarters in Santa Ana last month, the Orange County Business Journal reported, and $70M on the Volt Campus in the city of Orange in late August — both office properties with tenants with years left on their leases — with plans to turn both into industrial space.
“We had never really focused on doing office conversions before this pandemic,” Rexford Industrial Realty Executive Vice President of Investments and Acquisitions Patrick Schlehuber told Bisnow.
In the past, industrial properties were getting purchased for office developments, because office was the higher-revenue use, Schlehuber said. That isn't always the case now.
Over the past decade, the demand for industrial space has been intense, especially spaces close to consumers that can fill in the so-called last mile of the e-commerce equation. But the coronavirus pandemic poured gasoline on the fire of industrial demand, RCLCO Managing Director of Strategic Consulting Eric Willett said. Over the past two years, interest in any available parcel and weighing its potential for industrial usage has definitely increased, Willett said.
“The fact that the end user or the supplier of goods to the customer is wanting and needing to be closer to the population is leading groups like ourselves to look at these types of opportunities in a different way,” said Lang Cottrell, Southwest regional director for Goodman North America.
CRE professionals said that although this isn’t necessarily a new concept, these deals have become increasingly popular as the availability of land in these infill areas becomes ever scarcer, as the prices for industrial land rise, and as the strong demand for industrial space intersects with the weakening demand for certain kinds of office space.
In Orange County, where a number of these deals have taken place, CBRE found the Q3 vacancy rate for industrial was 1.3% — a record low. Another record was set by the 2.3M SF of projects under construction “as developers respond to record low vacancy paired with insatiable demand from occupiers,” the report’s authors wrote.
In the South Bay area of LA County, where these deals are also playing out and where developers are looking for prospective spaces in Carson, Gardena and Torrance, the overall Q3 vacancy rate was 0.6%, CBRE reported. In LA overall, industrial and logistics capital markets are experiencing record activity, thanks to e-commerce growth, CBRE said.
Office, especially outside of the highly amenitized low-rise campuses of the Westside and premier areas and trophy spaces, has not been experiencing the same boom. In Torrance, CBRE’s Q3 count found office vacancy at 14% but industrial vacancy at 0.3%
Cushman & Wakefield Capital Markets Group Vice Chair Jeff Cole said the market for low-rise commodity office buildings, like the ones that are favored in office-to-industrial transactions, has struggled significantly.
“The rates have gone down, vacancy has gone up and the alternative for that office owner is to try to re-lease the building in a very soft market or try to sell the building,” Cole said.
The pricing on those two choices is so much lower than what owners can expect if they sold to an industrial developer, so when the option arises, office owners bite.
“They invariably decide that it is a good alternative strategy for them to sell to an industrial developer,” Cole said.
There are some commonalities in what developers look for. Industrial zoning makes a property attractive, eliminating the hurdle of having to rezone the site, which can push out the timeline for industrial transformation.
South Bay areas that have lots of industrial space with offices mixed in or similar areas in North Orange County or South Orange County, where Lake Forest is, are ripe for these kinds of office-to-industrial transitions because the underlying properties are often zoned for industrial, Cole said.
A joint venture between Western Realco and RREEF Property Trust snapped up four neighboring office buildings totaling about 222K SF in South Orange County’s Lake Forest in April. The JV plans to turn them into 240K SF of new Class-A industrial space once the office tenants have moved on. That same month, an adjacent roughly 145K SF office building in that same park sold to Black Creek Group for $34.9M, public records show.
Buyers with office-to-industrial plays in mind don't see tenants in the building as a hurdle. Though developers are definitely looking at how long they are slated to stay in the building, several of these deals included office buildings with long-term leases in place.
Goodman purchased the Cypress Technology Center with a 330K SF industrial building on the site, but the remaining third of the site is occupied by a 150K SF office building. Both buildings have leases in play for six to 12 months, which provides Goodman some cash flow while it figures out how best to use the space, Cottrell said.
Location in an industrial area is ideal because then the new industrial use fits in. Infill sites are attractive because they are close to people, but those people don’t always want to be close to a last-mile-type site. Several of the industry professionals who spoke to Bisnow mentioned the importance of being sensitive to the community throughout the planning phases of these projects, as community pushback against them can complicate city approvals.
Cottrell said that at the Cypress site, it is exploring whether it could adaptively reuse the property, which would help get it online faster and with less environmental impact. But it is also evaluating a possible redevelopment of the site with a three-building campus of Class-A industrial space.
While there are clearly a fair amount of these types of properties in infill areas where these deals make financial sense, it isn't a trend that will be cropping up in every neighborhood. Though these deals aren't confined to Orange County by any means, the economics that make office-to-industrial attractive don’t work everywhere. In Culver City, West LA and other markets where tech, media and entertainment tenants are still attracted to office space, these types of deals don’t pencil.
“These aren’t happening in Playa Vista or Santa Monica,” Cole said.
A group of Big Apple residents has filed suit against the city to try to prevent outdoor street dining expanded during the pandemic from becoming permanent — arguing the al fresco set-ups are quality-of-life flops.
“Prior to its application to make the temporary open restaurants program permanent, [the city Department of Transportation] received thousands of complaints from residents related to noise, vermin, garbage accumulation, crowded sidewalks impeding residents access — all quality-of-life issues consisting a significant impact upon the environment,” says the Manhattan Supreme Court lawsuit filed Monday.
“Despite plain evidence of those adverse effects, the DOT still issued a negative declaration, foreclosing the need for more intense study of both the projected effects, alternatives and mitigation measures,” the filing claims.
At issue is a June 18 finding by the DOT saying that if the expanded outdoor dining went into effect permanently, it would not have a negative environmental effect on residents, court papers say.
The lawsuit claims the outdoor dining structures have led to many negative consequences for NYC neighborhoods.Gregory P. Mango
This finding allows the city to bypass a normal public review process to fully assess the impacts that the measure would have and also allows the city to get around rezoning laws, the documents claim.
The DOT recommendation now goes to the City Council, which will decide whether to accept it and make the outdoor areas permanent, Mayor Bill de Blasio wants.
The lawsuit comes as the DOT said the agency and city Department of Sanitation have removed 24 of the street establishments since July 2020.
Of the 24 removals, eight were because of non-compliance, and the rest were found to be abandoned or already destroyed, the DOT said. Violations had included blocking a fire hydrant, blocking a bus stop and blocking a bus lane.
Mayor de Blasio announced last year the outdoor dining program could be a permanent fixture in NYC.Robert Miller
As for the lawsuit, it was filed by 23 residents from Manhattan and Brooklyn and is asking a judge to overturn the DOT’s recommendation to let the existing temporary set-ups become permanent.
The suit lays out case studies of each of the residents’ personal alleged bad experiences with the city’s Open Restaurants program.
One plaintiff, Kathryn Arntzen, who have been living with her husband on leafy Cornelia Street in Greenwich Village in Manhattan for 32 years, said she doesn’t even recognize their street anymore.
She said their block now has seven restaurants which have outdoor seating under sheds.
Arntzen claims in the court papers that music and televisions are blasted from the set-ups and dining guests can be heard chattering loudly.
A Department of Transportation study from earlier in 2021 said that there would not be negative environmental effects from the structures.James Keivom
Further, garbage is always piled up outside the eateries and the “rat population has grown immensely,” she says in the documents.
Now, Arntzen “feels as if she is walking through a restaurant” when she is out and about in her neighborhood, making “social distancing nigh impossible,” the suit claims.
The plaintiffs’ lawyer, Michael Sussman, told The Post, “The city owes it to the citizens to follow the law.
“It’s really quite simple. You have to comply with very basic rules in implementing major changes to public policy, and that just hasn’t been done here,’’ he said.
Sussman added that if the proposal passes, it would “gut” hundreds of zoning provisions.
Kathryn Arntzen claims in the suit that the outdoor dining fixtures have led to an increase in rats.Gregory P. Mango
“These acts require the study of environmental things — noise, sanitation, parking and quality of life,” Sussman said. “These are all the factors that are supposed to be analyzed carefully before you implement these changes.
“They said they found no significant impact, which is impossible.”
A spokesman with the city Law Department said, “The city’s environmental review was thorough, complete and found no adverse impact.
“This is the first step in crafting a permanent program, and New Yorkers will continue to have opportunities to share their thoughts on how Open Restaurant structures should be designed.”
