Former Chang property operates as underground hotel despite owner’s protestations

Reporter Adam Pincus spends night at hotel, confirming nightly stays at West 41st Street property

TRD New York /
Mar.March 24, 2010 06:26 PM

A Hell’s Kitchen apartment hotel that developer Sam Chang sold earlier this month to Israeli investors is available for single-night stays despite claims by its owner that it would not rent units for less than 30 days at a time.  

While the current interpretation of the law on overnight stays in apartment buildings is unclear, experts said in general the particular zoning for this building is not for overnight hotel use and could be construed as illegal.  

This reporter spent last night in Metro Apartments, the 13-story building at 440 West 41st Street located between Ninth and 10th avenues, paying just under $200 for a clean, well-furnished room on the fourth floor, which included cable television and wireless Internet access, with no room service available (see the reporter’s hotel booking receipt for the one-night stay below). 

Last week, co-owner Ben Suky, a managing member of Livorno Properties, told The Real Deal that he did not rent the units for less than 30 days, and planned to convert the apartment building into an extended-stay hotel.  

In a telephone interview from Israel today, he said they have not changed their policy. 

Although the regulations outlining illegal hotel uses are vague in apartment buildings with a J-2 residential occupancy group, such as this one, experts said that leasing for more than 30 days is generally legal, but leasing for less than 30 days may be illegal if less than half the building’s units are used by permanent tenants. 

Chang, CEO of the McSam Hotel Group, sold the 96-unit building March 5 for $17.5 million, after he took ownership of it last year from the real estate investment trust Hersha Hospitality Group in a complicated transaction involving two other properties. 

Yesterday morning, this reporter made a reservation using his own name, arrived at the hotel at about 8:30 p.m., and checked in with a doorman. The room was approximately 300 square feet, and included a kitchenette with cookware. Behind the bed was a black and white silkscreen on canvas of a photo of Audrey Hepburn from “Breakfast at Tiffany’s.”

The new owner of the property, US Suite, is a partnership of Israeli firm Aura Investments, Livorno Properties and U-Trend.

The mayor’s Office of Special Enforcement investigated the building in January, when under Chang’s ownership, in response to allegations that it was being used as an illegal hotel, but did not issue any violations, mayoral spokesperson Jason Post said. 

“Because an inspection conducted in January did not result in violations being issued, it does not therefore mean that the same address will still be free of illegal activity two months later,” Post said in an e-mail today.  

He added that a single stay for one night did not indicate it was necessarily illegal. “Our enforcement efforts have been hampered by ambiguities in the law, which we are trying to fix through legislation introduced in Albany in February,” Post said. Credit Card Page

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