Park51, Con Edison go to court

BY ALINE REYNOLDS  |  First, it was the Park51 opponents; now, it’s the landlord that’s giving the developer of the proposed Islamic Community Center in Lower Manhattan headaches.

SoHo Properties’ Chief Executive Officer Sharif El-Gamal, the developer behind Park51, has become entangled in a heated fight with Con Edison, the owner of 51 Park Place.

On Mon., Oct. 3, El-Gamal took the utilities company to State Supreme Court, asking the judge for injunctive relief from an imminent termination of his lease. The lawsuit follows a Sept. 14 default notice, in which Con Edison ordered the SoHo Properties to make rent payments amounting to $1.7 million — based on the most recent appraisal of the property this summer that was three years in the making.

As a result, El-Gamal’s right to purchase the property is also in jeopardy.

Due to the pending litigation, the judge has temporarily forbid Con Edison from carrying forth the lease termination — which involves evicting the tenant — until the case’s first hearing, which is set for Thurs., Nov. 17.

According to Con Edison, the real estate developer owners a “significant” amount of rent retroactive to August 2008, based on a newly formed lease rate of $47,437.50 per month (up from the original rate of $2, 750 per month).

The lease calls for the tenant to immediately fork over the $1.7 million in arrears.

The utilities company denied speculations by El-Gamal that Con Edison is “bowing to political pressure” with the termination notice, as stated in the law suit.

“We have been among the many parties that have defended the tenant’s right to buy the property,” said Allan Drury, a spokesperson for Con Edison. “In seeking to terminate the lease over the unpaid rent, we are fulfilling our fiduciary obligation to our ratepayers and shareholders.”

El-Gamal and his team decided to take Con Edison to court principally because he deems newly determined property value to be an “erroneous revision of the formula provided in the lease,” according to the court papers.

Con Edison’s default notice is “fatally defective,” the law suit continues, because it “prematurely” threatens to end the tenant’s lease and demands “wildly inflated amounts in rental arrears, far in excess of what may be legitimately and accurately due.”

Under the current lease, the developer claims to owe $881,519 — about 50 percent of Con Edison’s assessment of the rent arrears.

In the suit, El-Gamal promises to pay off the duly owed arrears in a series of installments by next February, rather than in one lump sum — but only the amount that is approved by the court. And, “In the event the court determines that a legitimate default under the breach exists, plaintiff is ready, willing and able to cure such default,” the papers say.

A longer-term injunction, the documents state, would “afford the opportunity for the court to determine the issues relating to the invalidity of the underlying rent re-set arbitration… and the wrongfulness of Con Edison’s default notice.”

El-Gamal also bemoans Con Edison’s delay in the appraisal — most recently postponed from earlier this year until August — which caused more arrears to accrue and allegedly affected the developer’s plans for realizing Park51.

“The development is so complicated, due in no small part to the intense and often hostile objections from some in the media and general public… that any delays create consequences in all aspects of the development and the fundraising for it,” said El-Gamal in the law suit.

Con Edison has yet to file a response to the case but has released a statement saying, “Con Edison remains hopeful that it can reach an agreement with the tenant that is in the best interests of all parties.”

Assuming El-Gamal is able to resolve the lease conflict, the developer says he fully intends to build the Islamic Community Center and mosque at the site.

“We are committed to establishing an Islamic Community Center known as ‘Park51’ and a mosque known as ‘PrayerSpace’ at 49-51 Park Place,” said El-Gamal.

By press time, El-Gamal neither confirmed nor denied reports in an Oct. 19 article published in the “Wall Street Journal” that said the developer is exploring condominiums, a hotel and an office tower in the adjacent property, 45-47 Park Place.

El-Gamal also wouldn’t verify the W.S.J. article’s mention of a “significant departure” from the developer’s original vision of Park51; nor would he comment on whether or not the community center would be a “relatively small portion” of the overall project.

When asked if the developer was considering dissolving Park51 the nonprofit due to fundraising hurdles, El-Gamal categorically replied, “Absolutely not.”

With respect to incorporating Downtown residents and workers — particularly Community Board 1 — in its future decisions concerning the project, El-Gamal said, “Our doors are always open, and we have and continue to encourage the Downtown community to take ownership of this project.”