Town Asks Who Agreed to What, When
Michael Walrath, an Internet entrepreneur, seems to have a Midas touch. He sold his start-up digital advertising company, Right Media, to Yahoo for $850 million in 2007. In 2011, he invested in a rundown bar on Fort Pond in Montauk, which became the popular Surf Lodge. Whether that golden touch can give him a third floor on his Montauk house will be determined over the next few weeks by the East Hampton Town Zoning Board of Appeals.
The Z.B.A. held a public hearing on March 22 on a request from Mr. Walrath and his wife, Michelle Walrath, to legalize the third floor of the house, which is at 188 West Lake Drive. They bought the property shortly after completing the sale to Yahoo in 2007.
The lakefront property, which is almost five acres, once housed the Anchorage, a bar and motel with 10 units. It was converted to a private residence in 1999, according to Lisa D’Andrea, a planner for the town who prepared a memo for the board. It contains either two or three lots, which also became an issue.
According to documents on file with the Building Department, the Walraths’ dream house began to take shape in late 2008 and early 2009, when they were granted permits to build a pool, decking, a cabana, and put in an array of solar panels. In 2011, the architectural review board gave them permission to raise the height of the roof. Then, in 2012, a building permit was issued for interior demolition and reconstruction.
Mr. Walrath, who spoke by phone on Tuesday, said once the sheetrock came off, major structural problems became apparent. “When we started to demolish the archway, the house began, essentially, to fall in on itself.” The decision was made to build a new house “in kind and in place” in July of that year, Mr. Walrath said. He added that the contractor, John Scollan, had received a verbal okay from the building inspector at the time to proceed with demolition.
Nevertheless, the Building Department — which had not issued a a permit for the structure’s demolition — issued a stop-work order when consruction commenced. Mr. Scollan met with a building inspector, Mr. Walrath said, who eventually signed off on demolition and a survey that included a third floor. “Everything was being done by the book, by the right protocol,” he said. He added that the house always had a third level. But, when the Walraths tried to get a certificate of occupancy in 2014, the Building Department found the third floor illegal. Mr. Walrath then agreed to remove the stairs accessing the top floor, and, in 2015, a certificate of occupancy was issued for a two-story structure.
Joel Halsey of Lighthouse Land Planning, Mr. Walrath’s representative during the public hearing, said several times that errors had been made in the process. His comments did not sit well with Roy Dalene, a board member who is the founder of Telemark, a construction company.
“The construction of this third floor is so blatant. I don’t understand. Did he think that he could do this?” Mr. Dalene asked, referring to Mr. Scollan.
“It is my understanding that the contractor is under the assumption that he could do this,” Mr. Halsey said. Mr. Dalene jumped in. “Is this contractor still operating? He has no idea of the code. This is blatant,” he repeated.
“Things happened in this town before the new building inspector took over,” David Lys, a zoning board member, said.
On the phone, Mr. Walrath said rapid turnover in building inspectors had been a major hindrance. “There has been no consistency or continuity,” he said. “I have had five different inspectors come to the house over the past four years.” Each new inspector would have to learn the project’s history. “It’s like trying to play a basketball game where they change the rules every five minutes.”
Mr. Lys asked about something else — a bluestone driveway that had been removed, then rebuilt. “Once that had been removed, it should have been quartz,” he said. Eventually, the bluestone was taken up and replaced with the required quartz. “It is still not naiveté,” Mr. Dalene said.
When it came time to put in a new septic system, almost all of the huge concrete rings were placed underground on the middle lot, away from the house, and, Mr. Walrath said, away from Lake Montauk. “My kids swim in that lake,” he said. “I swim in that lake.” The health of Lake Montauk is of paramount importance, Mr. Walrath said. “There are no chemicals used on the property. No nitrogen.”
If the middle lot is actually a separate lot, using it for an accessory structure is legal under the town’s so-called Jerry Seinfeld law, enacted in 2005, according to Elizabeth Baldwin, the attorney who advises the Z.B.A. Mr. Seinfeld had created a baseball field on a lot adjacent to his Further Lane, Amagansett, house. Before the law was changed, no accessory structure could be built without a dwelling on a property. The town changed the law, with officials saying it was counter to the goal of decreasing housing density.
As to whether the land referred to as the middle lot actually was a separate entity, Mr. Halsey said Mr. Walrath could, if he so desired, split it away from the lakefront lot and develop it, potentially with a house up to 10,000 square feet. Instead, Mr. Halsey offered to consider the lot attached to the lakefront lot, or “sterilized,” as he put it. The land would never be developed and a scenic easement placed on it.
“Can I just tell you the picture I have in my mind of what happened here?” Mr. Dalene asked. “The picture I am getting is that this was the plan from the get-go. Now you are coming to us and offering up merging lot two but it seems there have been many violations.”
Cate Rogers, a member of the board, said that despite the fact that the land is in a harbor protection district, it had been almost totally cleared. But Mr. Halsey argued that the two lots closest to West Lake Drive were a meadow.
“There is nothing to say that will stay a meadow,” another member, Lee White, said.
At the end of the hearing, the board agreed to keep the record open. John Whelan, chairman, said he wanted the entire Building Department history of the property, including documents stored in the basement, researched. “We’ll get to the bottom of this when we get to the archives.”