Rector Square buyers allege condo used for dorms, hotel stays
February 20, 2009 01:00PM By David Jones
 |
Nearly a year after gaining regulatory approval, Rector Square developer Yair Levy failed to disclose the building's financial records to buyers at the troubled condominium, offered vacant apartments for extended-stay hotel guests and sold at least 10 apartments for use as college dorm rooms, according to attorneys and complaints filed with state Attorney General Andrew Cuomo.
Anglo Irish Bank filed suit in New York State Supreme Court earlier this month to foreclose on the 304-unit building after Levy defaulted on a $165 million loan to the lender, on payments to the Battery Park City Authority and failed to meet construction deadlines.
Marc Held, a Brooklyn attorney representing about 50 Rector Square buyers, said his clients were kept in the dark for weeks about the building's deteriorating condition, even though construction stopped and the sales office was shut down in mid-December.
"The unit owners were not provided [with] any information about what was going on either by the sponsor, the management company or the Battery Park City Authority," Held said.
As The Real Deal first reported, Anglo Irish Bank alleges that Levy owes more than $117 million in principal, plus interest, on the mortgage.
According to the complaints filed with Cuomo's office, at least five unsold apartments were used as extended-stay hotel rooms by Marriott ExecuStay, a Marriott International unit that offers hotel rooms of up to 30 days in business cities around the world.
Using the condo for extended stay hotel nights may be in violation of local zoning laws, however such a deal appears to clearly violate Levy's condominium plan, which bans owners from renting out their own apartments.
Jason Post, a spokesman for the mayor's Office of Special Enforcement, which handles illegal hotel usage, said if the building had 421a or J51 tax abatements, then offering hotel space would be a clear violation of zoning laws. He referred the matter to the Department of Housing Preservation and Development.
A Marriott spokesman said the company was looking into the matter, however the Marriot Web site clearly lists Rector Square as one of its ExecuStay hotel sites.
Buyers also allege that Levy sold several apartments to the University of Rome, which uses the apartments as dormitory rooms for students. New York City Department of Finance records obtained by The Real Deal show that at least 10 apartments were sold to La Sapienza University di Roma in October 2008 for $3.1 to $3.3 million.
The complaints also allege that Levy told the buyers that 40 percent of the units were pre-sold, however the lawsuit by Anglo Irish shows that only 72 of the buildings 304 units have been sold.
Cuomo, whose office previously intervened when Levy tried to evict affordable housing tenants at Rector Square, did not return phone calls for comment. Levy not return calls either.
Levy, whose company YL Real Estate Developers has been hit with $3.15 million in mechanic's liens from 20 subcontractors or suppliers in the past three months at condo conversion Park Columbus, did not return calls either.
Cooper Square Realty president David Kuperberg, whose company manages Rector Square, 20 Pine and other downtown properties, said he could not comment on Rector Square.
Battery Park City Authority officials said they have been in touch with tenants and buyers at Rector Square, who are facing the potential loss of heat and other utilities, since Levy failed to pay thousands of dollars in PILOT payments to the Authority since mid-2008.
"We're very concerned about what's going on at 225 Rector," said Leticia Remauro, spokeswoman for the Battery Park City Authority.
Assembly Speaker Sheldon Silver's office is scheduled to hold a meeting this afternoon with Rector Square buyers, tenants, Anglo Irish Bank, officials from Attorney General Andrew Cuomo's office, Battery Park officials and other local politicians. Buyers at the building are also considering an offer to join the lawsuit as plaintiffs against Levy.
The Real Deal reserves the right to delete any comment it finds to be rude, obscene, racist, sexist, bigoted, irrelevant or repetitive, as well as inappropriate comments about anyone's personal appearance or advertisements. The Real Deal does not endorse any comments posted on its Web site nor does it verify the veracity of comments or the identity of posters.
Comments
Anonymous
Jason Post of the Mayor's Office of Special Enforcement is passing the buck- again! For over two years, the OSE has refused to enforce occupancy, zoning and tax abatement regulations in buildings that are being operated as illegal hotels at the same time the owners are receiving 421a and J-51 abatements. See the Illegal Hotel Working Group's report titled "Room by Room" issued in June of 2008. As of that date, over 200 building owners were blatantly defying zoning, occupancy and tax abatement regulations. The OSE, DHCR, HPD and Dept. of Finance all claim they can do nothing to end illegal hoteling.
Comment #1 Posted By: Anonymous 02/20/09
Anonymous
That whole area of Battery Park looks like a college campus.
Comment #2 Posted By: Anonymous 02/20/09
Anonymous
Bloomberg doesnt want to clamp down on developers breking the law. They are his rich frends . so the City dumps it to HPD which doesnt have jurisdiction over illegal hotels . Rotten Bloomberg . Piece of garbage. He also gutted the dept buildings in their enforcement efforts .
Comment #3 Posted By: Anonymous 02/20/09
BRING BACK BUSH
This is America so get with the rules of the game! Instead of hiring an attorney to protect your rights, you should have just bought them! Your condo not only needs to collect monthly maintenance fee's, but start collecting for those campaign contributions. Find out how much the other guy is paying and round up by 20 percent. What? You thought that hundreds of thousand to millions of dollars change hands because "he stands for family values"?? Stop draining or taxes with your litigation that is designed to go nowhere, and learn how to "pass the buck". It's how our founding fathers did it. It's how it was done last year! Do you really want to bring down this country with your righteous code of ethics? Open your eyes! Do a little reading! And look below... (The Real Deal: December 2006) Industry leaders gave generously to campaign Cuomo's campaign contribution records show a who's who of the big names in New York real estate, including developers, brokers and real estate mortgage companies.
Comment #4 Posted By: BRING BACK BUSH 02/20/09
Anonymous
Yeah, real inteligent Bush Man! Most condos are middle class and aint got millions to throw around.
Comment #5 Posted By: Anonymous 02/20/09
BRING BACK BUSH
Again... Lets call this "class 101". Ever wonder why only the poor can afford to raise a family in Manhattan? I'm sure you've had this conversation before... "Wow, married with 2 kids and you live in the Village? I make a descent living but I could never afford more than 400 square feet. Answer: "I've got a three bedroom and it's... (come on, you know the word)..."stabilized". How did he do it? They are an organization! Contact all the condominiums in the city. Call yourselves "The Coalition for Family Values". Make a few donations to an abused wives foundation and look into adequate campaign contribution potentials. Now sit back and watch the headlines change from "CONDO CRISIS" to "Manhattan Condominiums Receive Tax Break!" Now, turn off the sitcom, put down the potato chips and pretend "this is the real world!!"
Comment #6 Posted By: BRING BACK BUSH 02/20/09
Anonymous
Bloomberg's ex-campaign staffer, Kathleen Cudahy, is the chief lobbyist for the illegal hotel industry. Is it any surprise that illegal hoteliers openly defy zoning, occupancy and tax abatement laws without fear of enforcement? It must be nice to have friends at city hall. It's inevitable that there will be injury or death resulting from fire in an illegal hotel. These are residential buildings without the security, fire systems or dual egress required in legitimate hotels. When people are hurt or killed, count on our elected officials to feign shock that illegal hotels have been operating in residential buildings.
Comment #7 Posted By: Anonymous 02/21/09
BRING BACK BUSH did have one point - campaign contributions. Given YL's track record and gross mismanagement of every property he's got, it is curious that the AG has been largely unresponsive on this entire issue - seemingly with all of YL's properties. I just dont know that YL donated enough, at least on public record, to get this kind of preferential treatment. According to public records, he only gave $4500 to Cuomo's AG campaign. Is that really enough to buy the blessings of a state agency? 'Cause, you know, if $4500 is all it takes, I could consider pitching in for next time.... unless there is more off the records that I am not seeing.
Comment #8 Posted By: 02/21/09
It was actually an "In-Kind Contribution." So it could have been anything.
Comment #9 Posted By: 02/21/09
Anonymous
Yes, but did you see how much Swig contributed? (kill the spaces) http: // www. elections.state.ny.us:8080/plsql_browser/CONTRIBUTORB_COUNTY?NAME_IN=swig&position_IN=ANYWHERE&date_from=&date_to=&CATEGORY_IN=ALL&OFFICE_IN=ALL&county_IN=ALL&AMOUNT_from=&AMOUNT_to=&ZIP1=&ZIP2=&ORDERBY_IN=N
Comment #10 Posted By: Anonymous 02/21/09
Anonymous
Who the hell wants to live down there anyways? It's so desolate and since the collapse of Wall Street it's pretty erie down there during the work week as well.... Why doesn't NYU buy it, so the students can hold their pathetic protests there along the Hudson.
Comment #11 Posted By: Anonymous 02/24/09