Proposed condo projects pit neighbor against neighbor as court fights loom

As everyone knows, disputes between neighbors can be brutal. But when tens of millions of dollars in development are at stake, the fight becomes next-level.

That’s what is happening in Huntington right now, as neighboring property owners scrap over their plans to build rival condominium projects.

Earlier this month, the town board approved a plan pitched by Oheka Castle owner Gary Melius to build a 95-unit condo building on a portion of the castle’s 22-acre property.

The approval came over the vehement objections of attorneys for Oheka’s neighbor the Cold Spring Country Club, which is in contract with a developer to sell 13 acres of its 168-acre property for a separate 175-unit condo project, to be built just a chip shot away from the Oheka condo building.

As with any neighbor dust up, this one has a lot of history. Melius had previously offered to buy the club’s 13 acres and add it to about 5 acres of Oheka property so developers could build 190 condos on the combined site.

In fact, the Town of Huntington had approved the 190-unit plan in 2012, but the project, which was first to be developed by Gale International and then later by another development firm, FBE Limited, never materialized.

On the latter plan, Melius claims Manhattan-based FBE, which is now in contract to buy the club’s 13-acre development site, eventually cut him out of the project.

“I spent 10 months with FBE to buy my deal,” Melius told LIBN. “I gave them nine changes to the contract, and I said that’s enough of that. Then they went over to the club and bought their land because they knew I couldn’t do it without their land.”

In response, Melius took FBE and the club to court in 2021 for breach of contract, and though some of the claims in the lawsuit were dismissed, the case remains pending. Meanwhile, Melius sought and received town approval for his own plan to develop a four-story, 95-unit condo building on a portion of Oheka’s property, however, the approval was conditional on the condo development being able to use East Gate Drive and a connecting spur that’s owned by the club, which club officials say they won’t allow.

The road spur that connects with East Gate Drive was actually purchased by the club in 2009, in preparation for the previously contemplated sale of its 13-acre development site to Melius. And attorneys for the club plan to soon file an Article-78 lawsuit challenging the town’s approval of the Oheka project.

“One of the major issues is obviously access to this proposed development over the club’s property, to which Oheka has no legal right,” said attorney Howard Avrutine of Merrick-based law firm Avrutine & Associates, who represents the club. “That is something we believe the town should have made sure was addressed upfront before it rendered any decision.”

Both Melius and his attorney Michael McCarthy argue that the club doesn’t need to grant access to East Gate Drive and the connecting spur because it has been historically used by people coming to Oheka.

“East Gate Drive has been open and used by the general public from the time that Otto Kahn first built the castle, that’s the story on Oheka’s side,” McCarthy said.

But Avrutine counters that Oheka’s use of the road is limited.

“Under a theory of prescriptive easement, you have the rights that you acquired based upon the historic usage. You don’t have rights to do anything you want,” Avrutine said. “Since historically, there’s never been a 95-unit condominium development there, how could it be possible to argue that Oheka has the right of access to it based on historical usage? You can’t. That’s really the centerpiece of the reason why they simply cannot use it.”

In addition, attorney Anthony Guardino of Uniondale-based Farrell Fritz, who represents developer FBE, said in granting Oheka approval for the condo project, the town ignored the expressed restriction in the Historic Overlay District zoning it used to justify the project’s requested density.

“It’s an overlay district and the regulations specifically say you must apply the height, area and bulk requirements of the underlying zone,” Guardino says. “On the 5 acres, it allows one unit per acre and on the remainder, that has a density of two units per acre. The math never adds up to 95.”

On the club property, FBE has proposed to develop a two-building condo complex on about 13 acres of mostly wooded area just west of East Gate Drive and north of Colonial Drive, across from the Cold Spring clubhouse. The 175-unit condo project, which would be developed under the town’s Residential Open Space Cluster zoning, will have an on-site wastewater pump station that would be connected to the nearby Nassau County sewer system. The Oheka project will be building its own sewage treatment plant to serve its condos.

When it comes down to it, both Melius and the club have similar goals, which is to generate revenue to ensure the future success of the castle and the country club. Doug Solow, Cold Spring’s president, says the money from the sale of its development site will allow for much-needed capital improvements for the 260-member club that was incorporated in 1949.

“We’re in this for the long-term preservation of our club, for our membership, for the community, and we have absolutely no ill will at all towards Gary or the castle,” Solow said. “Because it’s in our best interest as well as the community’s to have the castle succeed because our golf course is constructed around it.”

Huntington Supervisor Ed Smyth called the town’s approval of the Oheka project “a lifeline” to the historic property. There will be an upfront $2 million payment put into a fund that will go towards maintenance of the castle in addition to 15 percent of each condo owner’s annual dues.

For Melius, the condo project could help Oheka climb out of its deep financial hole. The property is once again facing foreclosure, after a summary judgment ruling for Oheka’s lender last month by Judge Elizabeth H. Emerson in Suffolk County Supreme Court.

More than a decade ago, Melius defaulted on a $28 million commercial mortgage-backed securities loan, the debt of which has since ballooned to about $40 million with interest and advances, according to attorney David Rosenberg of Garden City-based Rosenberg Fortuna & Laitman, who is the court-appointed referee in the case. In the coming weeks, Rosenberg will schedule a hearing to determine the amount actually due to the lender U.S. Bank National Association, which will pave the way for the court to issue a judgment of foreclosure and direct a sale of the Oheka property.

However, the original lender may not be the entity that ultimately takes over the property. After a sale of the Oheka note found no takers last October, the loan is once again up for sale next week, and this time, it becomes a little more attractive because of the property’s valuable condo project approval. Melius says he will bid on the note in an attempt to buy it at a discount, but if that doesn’t work, he still doesn’t plan on surrendering Oheka to foreclosure anytime soon.

“I held them up for seven years. Now they got a victory in court, but I’ve made a motion to re-argue so that’s going to take a while,” Melius said. “Then, my next move is, I will go through Chapter 11, and they’ll take three or four more years to get it, if they ever got it.”

Originally built for financier Otto Kahn in 1921, the 126-room Oheka is listed on the National Register of Historic Places. The Cold Spring golf course and the property surrounding it that was used to develop about 300 single-family homes and the Otto Keil nursery behind the country club were all part of the original Kahn estate.

Once used as a retirement home for the town’s municipal employees and later as the home of the Eastern Military Academy, the castle was abandoned and crumbling when Melius took ownership in 1984. Over the years, Melius claims he has spent $46 million on renovations and improvements to the Oheka property.

In addition to ongoing financial woes, Melius survived an attempt on his life in Feb. 2014, when he was shot in the face by a still-unknown assailant. Now 78, the ever-feisty castle owner says he feels terrific, despite this latest development tug-of-war.

“I got over getting shot in the f—ing head,” he said. “You think these guys are going to bother me?”

Melius touted the support of the community and the town board in gaining approval for his project and predicted the neighboring proposed development would face an uphill battle.

“You think they have a chance when the whole community is against them? Never,” Melius said, “especially with the political power I have.”

Meanwhile, observers wondered if a comment by Supervisor Smyth following the vote to approve the Oheka plan might signal prejudice against the club’s pending proposal.

“I would congratulate Cold Spring Country Club for now having the most valuable piece of unbuildable land on Long Island and the lawyers will understand that,” Smyth said.

Oheka attorney McCarthy said that the best situation would be for the two parties to get together and build the original project.

“But there’s a lot of sniping going on and a lot of lawyering going on and it doesn’t help the community and it doesn’t help anybody except these warring factions,” he said. “The country club has a very nice piece of property, they’ve got very good lawyers, I’m sure that they can create a very successful development project.”

While the club’s condo proposal preserves the golf course, club officials say its existing zoning could also allow the development of nearly 300 single-family homes if the entire golf course was sold. But Solow said that’s not being contemplated at this time.

Instead, Solow says the club would like to see everybody succeed.

“If everybody is successful, everybody is happy,” he said.

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