The developer behind a hotel-to-apartment conversion in Columbus Circle narrowly avoided foreclosure in April but now faces a lawsuit from its lender, who alleges construction mismanagement.
Los Angeles-based Parkview Financial claims that the cofounders of CSC, Alberto and Salomon Smeke Saba, failed to address issues with the city that would allow work to move forward. CSC said it has already begun fixing the issues with the relevant city agency, the New York City Department of Housing Preservation and Development.
On Tuesday, CSC presented at a community board meeting to seek approval for the work, a key part of curing the problem with the city, according to their lawyer, Robert Salame of Vedder Price.
“This was the very first Community Board meeting CSC could have presented at since revised plans were approved by relevant agencies,” Salame said via email. “CSC could not have moved any quicker.”
Parkview lent $207 million for the purchase and redevelopment of the Hudson Hotel at 353 West 57th Street in May 2022. (The hotel was 356 West 58th Street; the new project has the West 57th Street address.) Construction began soon after. However, a little more than a year later, problems arose.
The hotel was built as the American Women’s Association clubhouse, a residence for young women. At issue now were renters in the hotel’s 39 single-room occupancy units. Because the hotel is in a special zoning district, HPD surveys tenants before the Department of Buildings can issue an alterations permit, to certify that they’re not being harassed, Parkview says.
In this case, tenants were unhappy. They complained of poor pest control and exposed wiring. HPD in turn started the process to deny the needed certification. About February 2023, the Department of Buildings issued a partial stop-work order on the property, Parkview claims.
CSC decided to pursue a cure with the department. But the developer failed to meet the maturity date on the loan of November 2024, Parkview alleges. Parkview initiated a foreclosure sale scheduled for April 10.
To put off foreclosure, the two parties signed a new agreement. As part of that, CSC agreed to submit the documents to the city to correct the HPD issue, while Parkview agreed to incentive payments.
But the Smekes never submitted those documents, Parkview says. Now, the lender is suing to force CSC to submit the documents, as well as for attorney’s fees and costs.
“Unfortunately, after repeated delays and continued lack of progress by the defendants, as alleged in the lawsuit, we felt we had no other option than to ask that the court require the defendants to perform,” a spokesperson for Parkview said via email. “We hope this lawsuit will help get the project and the construction timeline back on track and headed toward the goal of providing completed rental units to the public.”
CSC has countered that there was no mismanagement and that Parkview failed to pay the obligations it agreed to during the negotiations to avert foreclosure, a CSC spokesperson said.
“For many months, CSC has consistently sought one thing: clarity that Parkview could and would fund its obligations,” Salame said in a statement.
Last March, an affiliate of developer Baruch Singer sued Parkview for breaching obligations regarding a 10-story Midwood project. And this past July, Parkview drew another lawsuit, this time with an entity tied to Acier Holdings, accusing the REIT of failing to fund a Newark, New Jersey project. Those lawsuits are no longer active, and work on the Newark project has restarted.
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