Hotel owners are profiting off of the homeless crisis

NY Daily News

Owners of dozens of recently-built homeless hotels are saving millions of dollars on city taxes through an obscure rebate program that allowed them to hold on to $12.5 million in the 2018-2019 tax cycle.

Of the owners benefiting from the tax break — known as the Industrial and Commercial Abatement Program — the biggest winners include Sam Chang, Harshad Patel and Riverbrook Equities, according to a New York Hotel Trades Council analysis obtained and vetted by the Daily News.

Chang, for example, has built 49 hotels since 2006.

Of those, 14 have housed the homeless. Five have received ICAP rebates and saved approximately $2.3 million on their 2018-2019 tax bills, city records show.

Chang, who still retains ownership in one of the hotels, the Holiday Inn JFK, saved $791,323 in taxes for that property during the last tax cycle.

In all, 44 homeless hotels appear to have received both the ICAP rebate and homeless subsidies within the past four years, city records show. There are a total of 151 hotels that get ICAP rebates. From 2015 to 2019, homeless hotels that got the rebates saved more than $30 million.

All the while, owners like Chang and other operators who get the tax rebates are getting paid by the city to house the homeless. That money is routed to the hotels through homeless service “management companies,” which get the money directly from the city.

A spokeswoman for Chang’s McSam Hotel Group said the company has done nothing wrong.

“McSam Hotel Group complies with New York City laws, rules and regulations in building hotels. We never build hotels with the intent of housing homeless persons," spokeswoman Lisa Linden said. 

"McSam Hotel Group makes no decisions regarding whether homeless persons are housed in hotels. The management companies make those decisions.”

Harshad Patel said the rebate fulfills its mission of creating jobs and that critics are ignoring the big picture.

“It’s the only reason we are building,” he said. "We have a lot of expenses.”

The city projects it will spend $2.1 billion overall on tackling the homelessness crisis in 2020. In 2018, $384 million went from city coffers to housing homeless people in hotels. Less clear is how much of the city’s homeless budget is going specifically to hotels that already receive the ICAP rebate.

Whatever the cost, affordable housing advocates believe it’s a waste of taxpayer money.

“What the city needs to do is build housing to house the homeless,” said Cea Weaver, Housing Justice for All’s campaign coordinator. “It’s a better use of our resources. It’s better than paying hotel owners twice.”

Blissville shelter changes hands; another "hotel" on the horizon

From The Real Deal:

Brooklyn investor Shulem Herman has gone to Queens for his latest purchase.

Herman has purchased a homeless shelter in Long Island City from Lam Group for $36.5 million, according to property records. He took out a roughly $23.2 million mortgage for the purchase from Sterling National Bank.

The 154-room building used to be a Fairfield Inn hotel and is located at 52-34 Van Dam Street.

Who knew owning a homeless shelter could be so lucrative? Actually, that's been apparent for years, so we'll end sarcasm right here.



From The Real Deal:

Another day, another Long Island City hotel from Sam Chang.

The developer filed permits with the city’s Department of Buildings on Monday for a 14-story hotel with 282 rooms. The project at 52-02 Van Dam Street would span about 82,000 square feet and replace a pair of industrial buildings.

This is the latest of many hotels Chang’s McSam Hotel Group is planning for the neighborhood. The company is also building a 324-key hotel nearby at 38-39 9th Street and a 142-key hotel at 38-04 11th Street.

Wow, it's certain that tourists will flock to a hotel that is hard to get to and sits amidst 3 homeless shelters. Unless there is some kind of hidden plan here. Hmm, what could McSam be up to? End sarcasm again.

You know, this neighborhood had so much potential. Instead the city is turning it into a slum. Well, this guy thinks it's great for some reason but everyone else sees the forest through the trees.

129-ft tall hotel proposed for LIC

From The Real Deal:

Sam Chang is proposing a 324-key hotel at 38-39 9th Street, just a block away from another Long Island City property the hotelier acquired last year.

Chang’s McSam Hotel Group filed permits for a 13-story hotel spanning 111,627 square feet at the site, according to documents filed with the city’s Department of Buildings on Monday.

If approved, the structure would be 129 feet tall.

Worker dies after concrete slab falls on him

From AMNY:

A 27-year-old construction worker was crushed to death Tuesday when a concrete slab fell on him while working on West 37th Street, police said.

The worker, who was not immediately identified, was excavating the site, between 8th and 9th avenues, at about 1:30 p.m., police said. The slab was part of the adjacent building's foundation wall and was not being moved at the time.

The man, from Jersey City, died at the scene, police said. A second worker narrowly escaped the falling debris and was found in the basement area with minor injuries, said FDNY Deputy Chief Joseph Carlsen.

The workers were excavating the soil around the foundation wall, which is standard practice, when the collapse occurred, said Department of Buildings Commissioner Rick Chandler. The building next door was evacuated as well.

The building is under construction to become an 18-story hotel, according to the DOB. The proposal was filed with the DOB in January.

The building is owned by Sam Chang and the McSam Hotel Group, which also owns several hotels in the area.

Post calls for Liu's resignation

From the NY Post:

Some 13 employees at Chang’s McSam Hotel Group and his Comfort Inn in Flushing dropped $800 each into Liu’s coffers. Over at W&L Construction, which has worked on properties Chang developed, 19 more employees gave Liu $800 each, for a total haul of more than $15,000.

If Liu returns those donations, he’s essentially admitting that he knows Sam Chang & Co. were the real source of that funny money.

But if he keeps the Chang checks, he’s holding on to donations that seem mighty likely to be illegal.

Either way, it looks like Liu is in a fix.

Fact is, this man has no business playing any role in city government — least of all as comptroller, where he’s trusted to oversee the city’s $65 billion budget and billions more in pension investments.

Which is why he needs to drop the act and resign immediately.

Things are only going to get uglier for John Liu from here on. He should spare the city the taint of his presence and get himself gone. Now.

Sounds an awful lot like commentary posted here over the weekend...

Sam's got Johnny's back

From the NY Post:

Many of the low-paid maids, truck drivers and janitors who donated to embattled Comptroller John Liu’s campaign coffers are connected to businessman Sam Chang, the budget hotel king of New York, records show.

Liu, a mayoral hopeful, received at least $29,600 from donors who owe some or all of their income to Chang, according to 2013 campaign data from the city Campaign Finance Board.

The donations from Chang, his employees and business associates, come as investigators from the US Attorney’s Office are swarming around Liu’s campaign records looking for fund-raising violations and possible illegal overseas contributions.

Chang, who has run as many as 37 midrange and budget hotels in the city, had no comment, according to a secretary at his Great Neck office. He personally gave Liu $800 on July 1.

Six other employees of Chang’s company, McSam Hotel Group, also donated $800 on July 9, records show, and another had donated in June.

Also, on July 9, six employees of Chang’s Comfort Inn Flushing each gave $800.

Mall at Caldor site delayed

From the Queens Chronicle:

Flushing shoppers will have to wait a little longer for the opening of the New World Mall at the old Caldor site in Flushing. Plans now call for it to open in October, a month later than expected.

The 165,000-square-foot building, at the corner of Roosevelt Avenue and Main Street, has been closed since Caldor went out of business 11 years ago. It previously was the location of Alexander’s and prior to that, S. Klein department store.

One of the developers is Sam Chang of McSam Hotels, LLC. on Long Island. According to a spokeswoman, Helen Suen, the three-level store will be converted into shops for nationally known retailers such as the Gap and Cohen’s Optical on the first level, a supermarket on the second floor and an Asian food court on the third.

The developers are in negotiations with other potential retailers they will not yet name. But Suen said the food court will include several eateries featuring Korean, Chinese and Japanese cuisine. The original plan had called for just one restaurant.

The location includes 350 underground parking spots and there will be valets used when the mall opens. Although Flushing officials are happy the vacant store will be used again, they are concerned about how the new mall will affect traffic in an already congested area.

Gene Kelty, chairman of Community Board 7, noted that corner of Main and Roosevelt is particularly busy and that the Department of Transportation is beginning a six-month traffic redirection pilot program in the area beginning in mid-July.

So that's what's going on at the former Caldor site!

From the Queens Tribune:

The store formerly known as Caldor will end its 11-year dormancy when a new development opens in September.

High-end hotel magnate Sam Chang has begun work on a new use for the community eyesore, investing $15 million to create a "major super store." It will feature retail on its first floor, a supermarket on the second and a major Chinese restaurant on the third.

"We definitely want to do it as upscale as possible, with all the money we're spending there," Chang said.

The developer promised no small vendors would be on the retail floor of the building. He was quick to assert, "It's not the Flushing Mall."

The Long Island-based developer leased the space for 15 years from Vornado Realty Trust, with an option to renew for another 15.

A series of building permits have been granted since mid-December that allow renovation of the property.

Chang said he has no plans to expand or deviate from the original use of the site, which is zoned C4-3 which limits use to retail commercial development.

The developer also hopes to include about 350 spots-worth of valet parking at the site.

Just to refresh your memories, the NY Times had this to say about Chang a few months ago:

Investors, real estate brokers and hotel chains love Mr. Chang. Community groups, some elected officials and the hotel and construction unions, not so much. Critics contend he has built his empire barely within city codes and are vowing to stop his freewheeling, nonunion operations in manufacturing districts like the garment center of Manhattan.

Well that's Manhattan. This is Flushing. Bring him on!

Shady hotel developer livin' large

From the NY Times:

Sam Chang, the hotel king of New York, surveyed a portion of his domain from West 39th Street, a gritty block south of the Port Authority, from where he can see not one, not two, but a half-dozen of his hotel sites on a single block. “They ought to name this block for me,” he said.

Investors, real estate brokers and hotel chains love Mr. Chang. Community groups, some elected officials and the hotel and construction unions, not so much. Critics contend he has built his empire barely within city codes and are vowing to stop his freewheeling, nonunion operations in manufacturing districts like the garment center of Manhattan.

“Sam is a guy where, if you sign a deal with him, it better be signed in blood,” said Steve McInnis, political director of the New York City District Council of Carpenters. “He’s definitely on our watch list.”

A year ago, Mr. Chang, a high school dropout turned mogul, predicted he would retire in 2010. But in a concession to hard times, he said he had pushed his retirement date to 2013 and dumped his bodyguard, though not his Rolex or his 2.5-carat diamond ring.

Mr. Chang throws an annual New Year’s Eve party in Flushing for 200 real estate, construction and financing executives. He is, by his estimation, a “good drinker” who prefers Johnny Walker Blue, a rare Scotch that sells for $220 a bottle.

Mr. Chang’s hotels have been popular with budget travelers, but not with New York City community boards or the construction and hotel workers’ unions. Since December 2006, his construction company, Tritel, has accumulated 207 serious building violations, 47 of which are still unresolved. Community Board 7 in the Bronx often found him unresponsive when work on a hotel near Fordham University weakened the foundation of an adjoining home, flooding the basement.