The Redevelopment of the Brighton Beach Baths

The Brighton Beach Baths were founded in the mid-19th century and quickly became a popular destination for local residents and vacationers. Suffering from a shrinking membership caused by competition from developments outside of the city, the Brooklyn neighborhood and its once bustling boardwalk were neglected for decades.

In 1955, however, Brooklyn developer Alexander Muss acquired 21 acres facing the Brighton Beach boardwalk, including the Brighton Beach Baths. Eventually renamed the Brighton Beach Bath and Racquet Club, Alexander Muss & Sons continued to operate the club, adding steam rooms, hot showers, a miniature golf course and tennis courts.

In the late 1980s, Muss’s son, Stephen, announced plans to replace the Racquet Club with a six-building housing development called Brighton by the Sea. The project was stalled for years by a lengthy land-use review process and opposition from local officials and members of the community. In 1998, frustrated with the complications, Alexander Muss & Sons sold the property title to Muss Development, a separate branch of the Muss family business.

Muss Development revised the plan, expanding the scope of the project to include 16 buildings. With an expected 2014 completion date, more than 50 percent of the units have already been sold. In addition to its popularity with tenants, the development has been lauded for its positive effects on the Brighton Beach neighborhood, raising property values and creating jobs.

Leonard Grunstein worked with the Muss family on the redevelopment of the Brighton Beach Baths property. Combining sometimes-esoteric forms of common ownership, Mr. Grunstein drafted a plan that permitted the phased condominium development structure of the property.

The Muss family, which has been building in New York City since 1906 and has developed more than 15 million square feet of real estate, was responsible for high-profile projects such as Forest Hills Tower in Queens and the Marriott Hotel in Downtown Brooklyn.

Tax Incentive Fuels Three Hanover Square Renovation

Hanover Square Park, located in Lower Manhattan’s Financial District, is a mixed-use plaza bordered by Pearl Street to the east and William Street on its southern side. Historically, the square was at the heart of New York’s commodity market and housed the New York Cotton Exchange until the mid 1970s.

Three Hanover Square is a 23-story building located on the southwestern side of the plaza and was the first major residential conversion in the neighborhood. Valued at more than $3 million in 1976, it stood empty for three years after the Cotton Exchange vacated it. The conversion, completed in the late 1970s, was made possible by the application of a tax incentive similar to a J-51 structure that was embodied in the ground lease drafted by Leonard Grunstein, an assistant corporation counsel for the the City of New York at the time.

The J-51 program, administered by the City’s Department of Housing Preservation and Development, provides property tax exemptions and abatements for the rehabilitation or conversion of buildings for residential purposes. Prompting a wave of interest in the neighborhood, more than 7,000 apartments have since been added to the Financial District’s once-limited housing stock. However, in 1976, there were concerns by developers and financing sources about the unpredictability of the J-51 program and its application. To solve the problem, a UDC subsidiary that was tax exempt took title to the property. Concurrently, a financeable ground lease structure was put in place that incorporated the then existing J-51 tax benefits program as part of an in lieu of tax provision in the lease.

Today, 3 Hanover Square attracts tenants with its classicist, turn-of-the-century façade, spacious apartment units and convenient location. With developments like Battery Park City to the west – a project Mr. Grunstein helped realize a few years later – and South Street Seaport just a few blocks east, Lower Manhattan has become “a global model for mixed-use neighborhood success.

Leonard Grunstein Helps Negotiate Parkchester Redevelopment

The Bronx’s sprawling Parkchester community, once thought of as a “planning phenomenon” during its development in the late 1930s and 40s, served as an early model for Manhattan’s Stuyvesant Town, Peter Cooper Village and Riverton Houses.

The Metropolitan Life Insurance Co. initially proposed the 171-building “city-within-a-city” during the 1939 New York World’s Fair, which was later completed in 1942 despite building restrictions during World War II. The development, which takes its name from the nearby Park Versailles and Westchester Heights neighborhoods, was the largest “privately built planned community” upon its completion and quickly became a haven for returning veterans and their families.

The Helmsley Organization purchased Parkchester in 1968 and subsequently converted it into separate condominiums during the 70s and 80s. However, the development later fell into a state of neglect and disrepair, desperately in need of millions of dollars worth of rehabilitation.

Lacking the necessary funds for a major revitalization effort, the condominiums turned to the Community Preservation Corp. (CPC) to help finance redevelopment of the complex. This rehabilitation project cost more than $250 million and included large-scale projects such as the installation of more than 65,000 new windows, the electrical re-wiring of all 12,271 units, and the redevelopment of commercial spaces.

Working with the CPC and developers Morton Olshan and Jeremiah O’Connor, Leonard Grunstein negotiated the acquisition and created the unique financing device that enabled redevelopment.

As a result, Parkchester is once again a thriving neighborhood appealing to moderate- and middle income families, drawing residents with its wide, tree-lined walkways, green spaces, and playgrounds. Once largely Eastern European and Irish Catholic, the complex’s affordable prices have attracted middle- and working-class ethnic minorities from the West Indies, Latin America, and East and South Asia.

From Crime To CO-OP | Tudor City

Built in the late 1920’s by Manhattan real estate developer Fred F. French, Tudor City became one of the first residential skyscraper complexes in the world. Nestled in the east side between First and Second Avenues, it is bordered by 40th Street to the south and 43rd Street to the north.

At the turn of the century — before French’s development — the neighborhood was dominated by tenements and slums and was plagued by one of the highest crime rates in the city. With Tudor City, French sought to transform a haven for gang and criminal activity into a “residential enclave” that would attract the middle-class tenants who had been fleeing the city for the safety and comfort of the suburbs and outer boroughs.

Completed in 1932, this “city within a city” – as French often referred to it – is now home to over 5,000 New Yorkers and includes a number of residential apartment buildings, a hotel, businesses, three parks and a children’s playground.

2 Tudor City Place is a 15-story tower within the complex that was converted to a co-op in 1985 when Tudor City changed ownership. In 2000, Leonard Grunstein was involved in the re negotiation of the building’s ground lease, an agreement in which the tenant is permitted to develop property for a specified time. According to Barbara Corcoran, who was quoted in a 1998 New York Times article, an advantage to purchasing units in such properties is “that the owners typically keep them in excellent physical and fiscal condition…”

Marina Turned Dockominium | Grunstein Drafts Plan

Formerly a privately owned marina, the Anchorage Yacht Club in Lindenhurst, Long Island, was converted to a “dockominium” in 1985 – the first of its kind in New York state.

Functioning much like its land-based counterpart, a dockominium (also known as an “aquaminium”) allows owners to buy individual boat slips within a marina. Similar to traditional condominium structures, owners share common areas that are maintained by a condominium association and are overseen by a management company. Individual owners, in turn, pay common charges as well as property taxes individually assessed against their unit.

At the Anchorage, which has 460 deeded boat slips, owners share facilities that include a swimming pool, tennis courts, playgrounds, bathroom and showers, docks, and walkways. There are also separate commercial condominium units including office and commercial spaces, repair and boat storage.

Traditionally in the business of renting or leasing available slips, marinas began converting to alternative forms of ownership in the 1980s and ’90s, especially in high-demand areas such as Florida, North Carolina and California. Ownership of a unit in a dockominium provides a number of advantages, most importantly the ability to sell or rent the space when desired. Additionally, dockominiums allow individuals to apply for mortgages and tax deductions, as they would for ownership of an apartment in a condominium.

The dockominium conversion process is complicated, as marina owners must hold the rights not just to the water but to the land beneath the surface as well, which is often owned by the state. As a result, this condominium was premised on ownership of the land adjacent to the canals where the boat slips are located. In effect, each unit is the sliver of land to which the boat slip was attached. As a partner at Herrick, Feinstein, LLP, Leonard Grunstein was formulated the condominium structure, drafted the Condominium Plan and organized the closing that allowed for the conversion of the marina and the subsequent creation of the Anchorage.