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Chelsea Resort Proprietors Sue Town for $100M Around Delays

Ira Drukier with the Hotel Chelsea (Getty, Patrick McMullan/Getty)

Ira Drukier with the Resort Chelsea (Getty, Patrick McMullan/Getty)

The Chelsea Hotel was after a bohemian utopia, dwelling to the likes of Leonard Cohen and Patti Smith, and inspiring countless other artists.

But in the past decade, the historic residence has turn into additional of a dystopia, both equally for its house owners and a tiny but vocal team of longtime tenants. Residents have sued owners earlier and present, alleging harassment by using construction. And designs to renovate the resort, which have been in the works considering that at least 2012, ended up briefly halted in 2018 right after the metropolis issued a prevent-work purchase.

Now, the existing proprietors — hoteliers Ira Drukier, Richard Born and Sean MacPherson, who also individual the Jane Hotel and the Bowery Hotel — have filed a lawsuit versus the metropolis, the Section of Structures and the Division of Housing Preservation and Progress, alleging that the delays cost them at least $100 million.

The criticism alleges the town relied intensely on tenants’ grievances, which it states had been “hyperbolic, exceedingly exaggerated, deceptive, or outright untrue,” to cease building at the property. It further alleges that HPD “arbitrarily and capriciously” compelled a improve to the city’s formal information without having foundation. This resulted in two yrs of delays and hefty fees to the developers, in accordance to the go well with.

“Not only did the metropolis wrongfully quit development below legitimate permits many years into the hotel’s redevelopment, but it hid how and why it did so,” mentioned Jennifer Recine, an legal professional at Kasowitz Benson Torres, who is representing the advancement team.

Neither the city’s Legislation Division or HPD responded to a ask for to remark.

The lawsuit also alleges that prior to a hearing in entrance of the city’s Business of Administrative Trials and Hearings, the tenants’ lawyers demanded $25 million from the resort proprietors in exchange for withholding testimony. The tenants then allegedly bumped up their demand to $47 million nearer to the hearing, in accordance to the criticism.

The tenants’ lawyer refuted that allegation. “Our negotiations have been private discussions among attorneys, and we dispute the precision of that statement,” explained legal professional Leon Behar.

The lawsuit is the latest twist in the hotel’s very long, at instances agonizing history.

In 2016, Drukier, Born and MacPherson acquired the resort for $250 million with the target of bringing new lifetime to the dilapidated house. The former ownership team, led by Joseph Chetrit and Ed Scheetz, experienced presently obtained building permits in 2012, and the new entrepreneurs needed to complete carrying out that operate, together with renovating the foyer and finishing inside perform on new rooms.

Individuals plans strike a roadblock two several years later, when HPD allegedly changed the hotel’s occupancy designation to “single-room occupancy numerous dwelling,‘’ the place some models experienced a shared component these types of as a kitchen or lavatory. Less than that classification, the developers could not carry on with planned until they attained a certification of no harassment, a document that said that the landlords have been not harassing tenants. The developers used for one particular in early 2019, and HPD started an investigation before long thereafter.

Tensions experienced now arrived at a boiling point among the builders and a team of tenants who experienced earlier been allowed to stay at the resort on a lengthy-expression foundation beneath rent-stabilized leases. Some of these tenants complained to the city about the construction, proclaiming it made their residing conditions even worse. The remainder of the 50 or so tenants supported the developer’s system, according to the lawsuit.

In August 2019, HPD explained there was trigger to consider that harassment occurred at the lodge. A thirty day period later on, HPD submitted a petition versus Drukier, the certificate’s applicant, and the scenario was moved to the city’s internal legislation court. In the lawsuit, the plaintiffs call the OATH hearing, which took area concerning previous March and November, “a brutal uphill battle.”

Soon prior to the demo was established to resume in January 2021, the possession group located a document exhibiting that the hotel had been classified as a luxurious resort in 1997. This exempted the resort from the SROMD designation. HPD withdrew its situation in January, claiming that it had no file of the luxury exemption.

Two days later on, DOB rescinded its prevent get the job done get. Construction has due to the fact resumed, and the homeowners lately informed the New York Times they aim to open up the hotel by the close of the 12 months.