By Alexander Dworkowitz
A legal battle over plans to turn downtown Flushing’s Caldor site into a mini-mall is preventing the development of the property, court records show.
The tenant of the Caldor property, the Vornado Realty Trust, filed suit against the landlord, the Lillian Goldman Marital Trust in September after the Goldman Trust would not approve plans to alter the building.
The case has been in court since, preventing any development of the 165,000-square-foot property at 136-20 Roosevelt Ave. The site has sat empty at the crossroads of the Flushing business district since Caldor shuttered its doors in 1999 and has been called an eyesore by community leaders.
The lawsuit comes as developers are pushing to revive downtown Flushing. In 2001, Old Navy opened in the empty Woolworth’s building next to the Caldor site. In November 2002, Boymelgreen Developers purchased the dilapidated RKO Keith’s Theater, which has been vacant for 17 years, with plans to transform the landmark into a mixture of commercial space and housing.
In May 2001, Vornado entered a contract to sell the remaining years on its lease, which expires on Jan 31, 2027, to Flushing developer John Chen and his company, Flushing Expo Inc., for $18.75 million.
Chen told Vornado he planned to subdivide the property in order to create a mini-mall known as the Flushing Expo.
Although the deal between Vornado and Chen had not closed, Chen’s company began working on the building last summer, according to Vornado’s lawsuit filed in civil court in Manhattan.
Chen’s group dismantled a passenger elevator, removed cement block as well as brick from two floors and installed aluminum framed mullions and fixed glass panes, according to the suit.
When the Goldman Trust found out about the changes, it hit Vornado with a notice of default in August 2002 in an attempt to end Vornado’s tenancy. In the notice, the Goldman trustees said Vornado had violated the lease by allowing structural changes to the property, accusing Vornado of allowing the building to deteriorate into a state of disrepair.
In response to the notice, Vornado filed suit against the Goldman Trust on Sept. 26, 2002. Judge Marilyn Shafer issued a preliminary injunction, preventing the Goldman Trust from terminating the lease before the case was settled.
After the suit was filed, Vornado submitted several development plans to the Goldman Trust, none of which were approved by the trustees.
“The proposals contemplate a common area to be used for pedestrian circulation (‘mall’) and the subdivision of this single-tenant facility into multiple units — changes which will alter the character of this building,” David Malitsky, an agent for the Goldman Trust, wrote to Vornado on March 25.
Representatives of Vornado, however, accused the Goldman Trust of trying to end the lease prematurely so as to negotiate a second, more profitable deal.
In an April court deposition, Joseph Macnow, executive vice president of Vornado, called the actions of the Goldman trustees “nothing more than legalized extortion.”
Macnow went on to write, “In actuality, the premises have no ‘character’ to speak of in light of the fact that the space, since it ceased operation as a Caldor store in the avid 1990s, is an empty shell with no finishes or aesthetic value. Tenant seeks to only improve the character by investing an estimated $8 to $10 million in alterations, modification, upgrades and repairs.”
Attorneys for both Vornado and the Goldman Trust did not return calls for comment.
Despite the legal battle, Chen was confident that Vornado eventually would be authorized to sell the lease, allowing him to develop the property.
“It’s just a matter of time,” he said.
Flushing community leaders have had a mixed reaction to Chen’s plans to subdivide the property.
Chuck Apelian, co-chairman of Community Board 7’s Land Use Committee, said he was not thrilled with the mall concept, but he was disappointed to learn of the lawsuit.
“It’s unfortunate for Flushing, obviously,” he said. “We’ve had other properties tied up in courts, i.e. the RKO Keith’s. We don’t want to see another one. It’s prime downtown real estate, but it’s beyond our control anyway.”
Reach reporter Alexander Dworkowitz by e-mail at Timesledger@aol.com or call 718-229-0300, Ext. 141.
