Allen Street Hotel Lambasted by CB3 in Bid for Extension to Complete Project

Posted on: September 10th, 2015 at 4:51 am by
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The Allen Street Hotel is a convoluted clusterfuck that’s more than eight years in the making. We’ve seen it all – everything from foreclosure and property sales to owner Ben Zhavian allegedly threatening the creditor’s lawyer with rape. It snuck onto the scene in the eleventh hour before the 2008 zoning took hold, and slyly ascended sixteen stories. Today, as it stands, the construction is nothing but a skeletal superstructure that contributes nothing to the block. Unless you consider urine, feces (human and animal), and an occasional mattress as boons to quality of life.

The site continues to devolve as the courts battle over its future.

But time is running out for the effective owner – the creditor which seized control from the D.A.B. Group through foreclosure – to complete the stalled out project. Since both parties are battling in Bankruptcy court, the judge is now calling the shots. The priority is to obtain an extension so that the property can be returned to the open market for potential suitors (the creditor hope to net at least $31 million). Apparently the imminent deal with Arcade Capital last spring totally tanked. Ergo, another extension from the NYC Board of Standards and Appeals is required to find a new developer and add meat to the bones, so to speak.

There had been two previous two-year extensions approved by both Community Board 3 and the BSA. As such, only one-year extensions can be approved from here on out. Yet, ownership is trying to invoke “common law vesting” to extend the term four years to avoid a return visit to the community every year. D.A.B. counsel Howard Goldman was tasked with coaxing the Land-use subcommittee of CB3 last night, and boy was there fight.

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Early rendering of the Allen Street Hotel

The CB3 panel, for its part, showed no compassion for the owner-lender entity and its plight to completion. An outspoken Enrique Cruz led the attack, reiterating ad nauseum the fact that this sneaky project has had no positive impact on the community and needs to be stopped; conversely Tim Laughlin of the Lower East Side BID noted that the arrested development adversely affects the well being of merchants and residents along both Allen and Orchard Streets and should be finished ASAP. But the staunch opposition won out. The overriding mantra of the evening was, “What’s in it for us” if such a sweetheart extension deal is awarded?

The board toyed with the idea of approving the four-year application to enable the addition of binding stipulations, but Cruz, buoyed by strong peer support, demanded to take a stand, and force these jokers to come back every year. The motion to deny carried unanimous approval.

Despite the outcome of the vote, though, D.A.B. still meets the threshold for a one-year extension, since both substantial construction and expenditures had been made as of the applicable date. So we can likely expect a BSA renewal.

We should also mention that, if an extension is not acquired, and the construction permits do expire, then ownership would be required to downsize the sixteen-story development to comply with the zoning it so egregiously cheated. Meaning, a reduction of overall building height by 58%.


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