Case Study 13

SoBro Seeks to Buy Contaminated Land in Mott Haven

Background:

For the past six years, SoBRO has sought to acquire a vacant corner lot on 138th Street, a busy commercial thoroughfare in the South Bronx. SoBRO believes the property would be an ideal location for affordable housing and street-level retail shops. Yet the property is upside down, a real estate term for land that costs more to return to productive use than its market value. A gas station had operated at the site for years. Its underground tanks had leaked and caused a major gasoline spill discovered in the 1990s.The state spent $1.4 million responding to the spill and placed a lien on the site for its costs. The site also has a $2.9 million city tax lien because the landowner stopped paying property taxes twenty years ago.

Startegy:

Undeterred, SoBro engaged an attorney, an expert in the field of brownfield remediation and redevelopment, to advise it on how to acquire the property. SoBRO found the attorney through the New York City Brownfield Partnership, a non-profit organization focused on providing community benefits in connection with the redevelopment of vacant, contaminated land. For community developers and others unfamiliar with the intricacies of land development in New York City, the Partnership’s Pro Bono program makes available attorneys, environmental consultants and other professionals to non-profit developers, community groups and others for an initial consultation at no cost.

Conclusion:

About the same time SoBRO engaged the attorney, it learned how to contact the site owner and expressed its interest in purchasing the property. However, the attorney counseled SoBRO not to buy the vacant corner lot because of the cost of satisfying the state and city liens and the additional environmental clean-up that redevelopment would require. Instead, the attorney recommended that SoBRO work to reduce the City and State liens before taking title. SoBRO and the attorney contacted City and State officials to discuss compromising the liens. At the same time, it continued discussions with the property owner. To date, however, the liens have not been reduced and the owner has disappeared.

The attorney provided SoBRO with 10 hours of legal services at no cost. Instead of paying the lawyer for his time, the parties agreed that if the site moved forward later, and SoBRO was involved in the site’s redevelopment, the attorney would be hired to represent SoBRO in the site’s acquisition and development.

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