Receiver given go-ahead to re-launch construction
July 07, 2014 06:00PM
By David Jones
From left: Maverick Real Estate principals David Aviram and Ted Martell, 139 Orchard Street and Simon Miller
A Manhattan Supreme Court judge expanded the authority of a court-appointed receiver to allow the fiduciary to re-launch construction at the long-stalled Allen Street Hotel project, The Real Deal has learned.
Simon Miller, an attorney and receiver at the 139 Orchard Street site, confirmed that limited construction is expected to resume at the site after he meets with officials from the Department of Buildings.
“The court had given me authority to proceed with construction as I deem necessary in order to maintain the building permits,“ Miller told The Real Deal. “The building permits require proceeding with some kind of construction.”
Miller gained court approval late last month after learning that the DOB had discontinued the New York City stalled sites program but grandfathered sites that were already in the plan. The stalled sites scheme, created to monitor stalled construction projects in the wake of the 2008 Lehman Brothers collapse, was designed to maintain the structural integrity of stalled real estate projects so that they could be completed once additional financing became available.
The DOB will be sending inspectors to the Allen Street Hotel site in the next few days.
As The Real Deal previously reported, Maverick Real Estate Partners acquired a $5.5 million loan from Brooklyn Federal Savings Bank in 2011, which became available after DAB Group allegedly defaulted on the note.
The stalled 98-room hotel project was put on the market for $39 million, or $398,000 per room. After years of litigation, a Manhattan Supreme Court judge ruled that the developer was misled by lenders DAB Group — this after a five-judge panel had found no merit to that claim. The case was then sent back to a lower court for a full trial, where it sits now.
Under the new order, Miller has been authorized to retain the firm of Ricter+Ratner as the general contractor and to retain all the required subcontractors to get the project back up to speed.
“The receiver is going to be working with the Department of Buildings to take all the steps necessary to preserve the entitlements and building permits so that when the foreclosure is complete the existing structure and planned hotel can be completed,” said attorney Y. David Scharf, representing Maverick.
It is still not clear whether the DOB officials will request full construction to be resumed or whether construction will be limited to maintain the status of the permits.
William Wallace, the attorney for DAB Group, was not immediately available for comment.