The Real Deal New York

CIM Group, AG settle on illegal hotel operation

Developer will pay $4.4M for Murray Hill building that was receiving 421a benefits

February 26, 2016 05:20PM

Richard Ressler 47 East 34th Street

From left: Richard Ressler and 47 East 34th Street in Murray Hill

A year after shuttering the illegal hotel operating at 47 East 34th Street, the New York state Attorney General’s office and CIM Group reached a settlement.

The 36-story, 106,000-square-foot Murray Hill tower was supposed to be a condominium and was receiving 421a tax breaks. In exchange for affordable apartments, a building owner pays no property tax under the program. Hotels are not eligible for the abatement.

CIM Group bought the 110-unit building for $54 million in October 2011 in a foreclosure auction. CIM then leased the property for two years to BridgeStreet, a temporary housing provider, in March 2012, receiving $4.9 million.

Attorney General Eric Schneiderman investigated the building in the summer of 2014, the New York Observer reported. The building was being operated as a hotel, charging $239 a night for a studio. CIM agreed to pay $4.4 million — the value of the tax breaks — to a city fund geared toward affordable housing. It will also pay $275,000 for the cost of the state’s investigation.

“I am pleased that this company has agreed to do the right thing by paying the city back taxes and offering more than 100 rent-stabilized leases to New Yorkers,” Schneiderman said in a statement. “My office will continue to crack down on illegal development that exacerbates the city’s severe affordable housing shortage.”

The hotel was closed in March last year and turned into rent-regulated apartments. CIM terminated its lease with BridgeStreet in December 2014, which was effective March last year.

CIM is suing BridgeStreet for $5 million. [NYO]Dusica Sue Malesevic

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