The Real Deal New York

Pan Am Equities files suit over $45K illegal hotel fine

Firm claims city agencies abused discetion when they targeted it over tenants' alleged misdeeds

December 14, 2015 04:20PM
By Ariel Stulberg

Rick Chandler and 132 West 45th Street

From left: DOB Commissioner Rick Chandler and 132 West 45th Street in Midtown

The Manocherian family’s Pan Am Equities sued two city agencies, accusing them of “abuse of discretion” for the fines they placed on the development firm after its 132 West 45th Street tenants were caught maintaining an illegal hotel.

The Environmental Control Board fined the firm earlier this year to the tune of $45,000, $1,000 per day, for violations of the city’s short-term rental laws, according to the complaint.

The company, which lost an appeal on the matter earlier this year, filed suit Monday in New York State Supreme Court, asserting the agency, along with the Department of Buildings, of unfairly singling it out for severe penalties.

Pan Am claims, according to the suit, “had no knowledge whatsoever that the apartments were being used as short term rentals,” and only learned of it when they received three violations from the ECB.

The firm asserted that there were inly two tenants in violation, that both only operated their illegal rentals for 17 days and that both were immediately evicted.

“The rule was never intended to be a blunt instrument used against good faith property owners who are not complicity in these short terms rentals,” wrote Pan Am’s lawyers in the complaint.

The company is looking to overturn the appeal decision.

Pan Am bought the 13-story, 72,000-square-foot Midtown building in 1977. It contains 94 rental units.

More recently, in June, it received a $150 million refinancing on its 570,000-square-foot building at 145 67th Street, known as Tower 67, from the Prudential Insurance Company of America. Last year, the company sold six Upper East Side rental buildings for $48 million to S.W. Management.

The city’s Law Department said in a statement that the “claims will be reviewed.”

Representatives of the Environment Control Board couldn’t be reached.