NY’s Top Court Rejects Challenge to Howard Hughes’ 250 Water Street Development

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Howard Hughes Corporation’s plan for a 27-story residential development at 250 Water Street in Manhattan likely cleared its final legal hurdle after the state’s highest court rejected a challenge by a local group opposed to the project.

The New York State Court of Appeals on Tuesday shot down a motion from local groups calling to reject the decision by the Landmarks Preservation Commission (LPC) to allow the 400-unit apartment building to be built on a parking lot in the South Street Seaport historic district.

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The ruling, along with the state’s recently passed extension to the 421a development tax exemption, means its full steam ahead for the project that broke ground in 2022, Howard Hughes Corporation officials said.

“For too long, the lot at 250 Water Street has been an underutilized part of the Seaport,” Howard Hughes CEO David O’Reilly said in a statement. “Today’s decision marks a major win for Lower Manhattan and the city, and paves the way for Seaport Entertainment Group to begin construction on a vibrant, mixed-use project that will be a significant contribution to the neighborhood.” (Seaport Entertainment Group is a Howard Hughes subsidiary.)

The Seaport Coalition said in a statement the decision “will badly serve as precedent for future historic district preservationist battled in the City of Yes,” and that the numerous meetings the LPC had with Howard Hughes before the proposal was voted on “undermines the impartiality of the LPC.”

“We found ourselves defending the very agency that should be defending us,” the statement said. “This new normal enables developers to engage in backroom dealing with City Hall while the courts look the other way.”

The site at 250 Water has been used as a parking lot since 1977, and since the 1980s developers have unsuccessfully tried to build housing on it. Howard Hughes won approval for its plans in 2021, but the Seaport Coalition later sued claiming the project went against the 1977 landmark district designation in the area that restricted any new buildings from exceeding the scale and height of the existing structures, and that LPC was wrong in approving the project.

In 2023, Judge Arthur Engoron sided with the Seaport Coalition and invalidated the certificate of appropriateness issued by the LPC for the site. 

The appellate division of the New York State Supreme Court overturned Engoron’s decision in June, and the Seaport Coalition quickly filed an appeal against that move. Tuesday’s ruling by the Court of Appeals lets the appellate division’s decision stand.

The Skidmore, Owings & Merrill-designed project calls for a mix of market-rate and affordable apartments on top of a five-story base that will have commercial, retail and community space, according to Howard Hughes.

Howard Hughes started excavation work on the site in August and expects the building to be finished in 2023, New York Yimby reported.

Update: This story has been updated to include a statement from the Seaport Coalition.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.