Harshad Patel and his company New Ram Realty, which owns and operates the Holiday Inn Express at 59-40 55th Road, are being sued for violating their lease agreement with property owner KCM Realty.
In a complaint document filed with New York State Supreme Court, representatives for KCM claim that under the terms of their lease, New Ram is only allowed to use the property for “the erection, operation and maintenance of a hotel,” retail stores on the ground floor and parking.
When Patel approached the property owner with the proposal to convert the hotel into a homeless shelter, KCM immediately advised New Ram that the change would violate the agreement, according to court documents.
“The proposed conversion would constitute an event of default under the lease,” KCM’s representatives said. “KCM would not consent to the proposed sublease.”
KCM, which is located at 362 Kingsland Avenue in Greenpoint, first leased the land to New Ram on March 5, 2004. The lease term was 45 years.
According to the lease, New Ram is prohibited from converting the hotel into apartments or other residential uses without KCM’s written consent.
On August 25, weeks after the city first revealed its plan to the Maspeth community, Patel brought the proposal to the property owner. According to the documents, the agreement was to sublease 110 rooms for an initial term of five years. New Ram, in return, would receive at least $2.4 million a year in rent.
After KCM rejected New Ram’s proposed sublease, Patel requested a meeting with the property owner. In a September 7th meeting, KCM made clear it didn’t want the hotel converted into a homeless shelter.
Following the refusal, Patel told the media and community representatives that he had abandoned the homeless shelter plan.
But within weeks of making those statements, the document said, New Ram “struck a deal with the city to rent a substantial part of the hotel to DHS,” which circumvented the lease restrictions. On October 10, 30 homeless men were moved into the hotel.
KCM representatives also said metal detectors were installed in the lobby and that the Department of Homeless Services (DHS) was providing on-site services and security. They said that move was an attempt to “do an end-run” around the lease restrictions.
The lawsuit now seeks an injunction to stop the flow of homeless people from moving in and to keep the facility solely as a hotel.
“The potential profit to New Ram must have been too great to turn down because in blatant disregard of the terms of its lease and in contradiction to its representatives to the community, New Ram has begun the conversion of the hotel into a homeless shelter,” KCM’s reps said.
READ THE LAWSUIT: