Monday, December 15, 2008

New York and Region

Blight to Some Is Home to Others; Concern Over Displacement by a New Times Building

Published: October 25, 2001

Blight is what state officials see on the block of Eighth Avenue between 40th and 41st Streets: a shabby blend of sex shops, prostitution, loitering and drug dealing that scarcely welcomes the world to the new Times Square.

They plan to acquire 10 properties on the block and turn the whole site over to The New York Times Company and Forest City Ratner Companies, which would build a 52-story tower, the lower half to be occupied by The Times, the upper half by other office tenants.

Blight is not all that would disappear from the block in the wake of this project, however. So would the fedoras, porkpies, homburgs and boaters at Arnold Hatters; the $600-a-yard French hand-beaded lace, delicate as hoarfrost, at B & J Fabrics; the studios where students learn audio engineering and multimedia production at the SAE Institute of Technology; and the dorm rooms at Sussex House, around the corner, where a few of them sleep at night.

As the 42nd Street revival moves from Times Square toward the Port Authority Bus Terminal, so does the now-familiar pattern of small landlords and entrepreneurs -- some vital, some marginal, some irreplaceable -- giving way to companies like Condé Nast, Reuters and Ernst & Young.

But even if well charted, the process is no less wrenching for those who stand to lose buildings and places of business, some of them after three generations.

The owners feel as if they have known the worst of both worlds. Their properties have been under the shadow of condemnation since 1981, when the block was identified as the potential site of a merchandise mart as part of the state-sponsored 42nd Street redevelopment project. That prospect depressed values, discouraged tenants and inhibited private development.

Now, they stand to lose their buildings just as 42nd Street has roared back to life, and blight -- the original rationale for condemnation -- has abated. They expect to receive far less in the condemnation settlement than they would if they were approached individually to make private deals.

''They never even came to ask if I wanted to sell,'' said Joseph Orbach, who has owned the 16-story building at 265 West 40th Street with his brothers, Markus and Sidney, since 1978. ''They're just taking it.'' There are some 30 tenants, including architects and engineers.

At a condemnation hearing on Sept. 24 and in later interviews, owners expressed anger that a large corporate neighbor, The Times, was getting the benefit of a fully assembled 80,000-square-foot development parcel at a price of $84.94 million, in addition to city incentives that may reach $29 million.

''It is obvious that The Times can get a much cheaper deal by hiding behind the condemnation process,'' said William F. Wallace, whose family has owned the land under 620 Eighth Avenue, at 40th Street, since the turn of the last century.

The six-story turquoise building that now stands on the Wallace property was designed in 1963 by Wechsler & Schimenti. After many lean years, Stratford C. Wallace said he and his brother put more than $3 million into the building and attracted two new tenants in the late 1990's: the Taylor Business Institute and the SAE Institute.

Udo Hoppenworth, the vice president of SAE, which enrolls about 200 students, said the school intended to stay in business. But much will depend on its ability to find comparable space. SAE will also face exceptional moving expenses for its large, sophisticated sound consoles.

Around the corner, the eight-story, 140-bed Sussex House dormitory at 260 West 41st Street is awaiting word on how much the state will offer for the property. ''If we can't pay our debt, there's a good chance that there won't be a Sussex House,'' said Thomas Alessandrello, the vice president for operations.

The dormitory now houses students from 21 schools. One, Jared Grant, a sophomore at the Fashion Institute of Technology, said of the neighborhood, ''It's a nice lively area.''

Those are not the words the government would use.

''Prostitution, drug use and loitering are still common,'' particularly around the sex stores on the north end of the block, according to an August 2001 memorandum by state officials. The buildings ''generally present a shabby front entrance'' to the revivified 42nd Street strip, the memorandum stated, and are ''developed to only a fraction of their theoretical capacity.''