House divided: Plaza residents, hotel battle over union labor

UPDATED Aug. 28, 2020, 2:45 pm: An internal dispute over union labor at the Plaza has gone public.

In a lawsuit filed last week, One Central Park South’s residential board, which represents the Plaza condominiums, alleged that the hotel has stalled and obstructed a nonunion contractor from initiating repairs to a 15th-floor balcony.

The board has asked a court to permit the use of nonunion labor, claiming the repairs constitute a public safety emergency.

Read more

New York

The Plaza's many lives: How moguls, labor fights and a changing city shaped an icon

New York

The Plaza shuts down and lays off 251

New York

Hotel Trades Council president steps down, taps successor

In emails reviewed by The Real Deal, the Plaza’s condo manager, First Service Residential, claims the board approved of using nonunion labor, although the messages do not specify which of the three boards governing the Plaza did so.

On two occasions, however, hotel representatives — Katara Hospitality, which operates the Plaza hotel, and real estate firm JLL, which consults for the hotel board — told First Service by email that they disagreed with the decision to use a nonunion contractor for the balcony.

According to the building’s by-laws, facade alterations must be approved by the condominium board, which is composed equally of residential and hotel board members, plus a tie-breaking vote known as the accessory designee.

First Service senior vice president Tom Padilla, in a message to an attorney, wrote that Katara “has decided not to allow us to proceed and has held the project back.”

“Now they want to go union,” the message concludes.

The residential board seeks a restraining order against the hotel and condominium boards to allow First Service to contract nonunion Skyline Restoration to begin the repairs.

In a prior exchange with Padilla, a Katara representative voiced concern that Skyline’s cost estimate had risen more than 20 percent from 2019 to this year, requesting that a project manager be brought on board to approve the cost increase.

Skyline disputes it raised prices. A company representative told TRD that, per a request from First Service, its bid has not changed since 2018 and that it was ready to subcontract union labor to probe the balcony.

“I’m going to lose money on the deal, and that’s okay,” the representative said.

Plaza residences command hefty sums. One four-bedroom unit was listed in February for $45 million.

Attorneys for the residential board declined to comment on the lawsuit. Attorneys for the hotel board and the accessory designee did not reply to requests for comment.

The city issued the Plaza a summons in 2018 for failing to maintain the building’s exterior facade, saying that loose bricks and cracks in the masonry had been found in multiple locations. The board claims it has tried since 2016 to secure a contractor for the work.

Architectural firm HLZA, which helps the Plaza comply with facade safety rules, said further delays would force it declare the building unsafe, telling First Service in an email that restarting the bidding process with union firms would require months of planning, and ultimately cost 30 to 40 percent more over the life of the project.

“We asked specifically at the onset of this project, in writing, if union labor would be required for the probe work and we were told no,” HLZA said in an email to First Service. The firm recommends an “open shop” solution in which union members are gradually added to the project and nonunion workers “phased out.”

The disagreement recalls a famous labor battle at the Plaza, when hotel workers union head Peter Ward mounted a public relations war against developer El Ad, who purchased the building in 2004, and whose partitioning of condos away from the hotel resulted in union job losses.

Still, Ward, who retired this summer as president of the Hotel Trades Council, walked away from the fight with substantial concessions, sending a message to condo developers wanting to turn hotels into private residences: don’t cut unions out.

Contact Orion Jones at orion.jones@therealdeal.com

This story has been updated to include a response from Skyline Restoration.