A court has booted a city parking garage after finding it was raking in hundreds of thousands in parking fees and not paying its rent.
Justice David Cohen found that, despite its claim that business was decimated by the coronavirus pandemic, Icon Parking was illegally occupying the space beneath the luxury Excelsior Co-op on 57th Street despite the fact their lease had expired.
Icon was even charging 100 residents of The Excelsior $700 a month to park in what attorney Bradley Silverbush called a “borderline criminal” attempt to “continue to make money hand over fist without paying their expenses.”
Now the parking giant has been ordered to pay the co-op $1.5 million in back rent and it could see that number skyrocket as over a dozen other landlords chase similar claims.
“What they were doing smacks of fraud,” said attorney Bradley Silverbush, of Rosenberg & Estis, who represented the co-op board.
“This is a problem we are having with many garages throughout the city. Until somebody is strong enough to say this is wrong, to collect rent from their customers and not pay any rent to the co-op, until such time somebody recognizes how egregious that is, they will continue to do it as long as possible.”
One of the biggest garage operators in the city, Icon has been accused by 16 other landlords of doing the same thing to them, using the pandemic and the Governor’s eviction moratorium as a smokescreen to commit fraud.
Icon’s attorney, Carl Regelmann of Tannenbaum Helpern, claimed the parking business was way down after more people began working from home and mid-towners moved to their second homes when COVID struck in March.
At the same time, he said costs of enhanced cleaning and Covid-19 related prevention measures had increased. “Since the pandemic started, Select [Icon] has lost significant revenue in comparison to previous years.”
But the judge sided with the landlord, The Excelsior Co-op Board, finding that the garage was capitalizing on the COVID crisis to make money.
Even though their lease had expired, Icon remained in the lot and continued to charge up to $17,000 a day on the 328 parking spaces, without paying a penny rent.
The situation put the co-op board in its own precarious position when its funds began to dwindle and it was facing the possibility of defaulting on its own payments for the building’s ground lease.
The case comes as New York City landlords pile up millions in debt of their own after Governor Andrew Cuomo instituted a statewide eviction moratorium on residential and commercial tenants for non-payment of rent.
“Most landlords think their hands are tied and there is little to nothing they can do about it,” said Silverbush. “But this case shows that landlords do have the ability to seek relief when they are being victimized by an unscrupulous tenant.”
In the case of Icon Parking – a subsidiary of Select and Quik Park that’s owned by the private equity firm HPS Investment Partners – attorneys reckon the company owes city landlords around $7.5 million in back rent.
Among those who have filed suit against the company are Kamber Management, SL Green, Brookfield Properties, the Red Apple Group and ABS Partners Real Estate.
“There is no question that landlords do have the ability to seek relief from bad-actor tenants, assuming they have the appropriate language in their lease,” said Silverbush.
“It is important they have a lawyer who knows this area of the law well look at the lease, because this avenue won’t work for everyone. But, with a modern, sophisticated lease, the chances are they could win.”
“This case demonstrates that even at a time of enormous distress, when the court system has been hampered by COVID-19 and resulting case backlogs, decisive and creative legal representation can protect the rights of property owners,” Silverbush added.
A spokesman for the state’s Homes and Community Renewal division conceded that New York’s landlords are facing “extraordinary challenges meeting their financial obligations because of the pandemic.”
“To assist landlords during this unprecedented pandemic, the Governor launched the New York Forward Loan Fund, a new economic recovery loan program aimed at supporting New York State small businesses, nonprofits, and small landlords as they reopen after the COVID-19 outbreak and NYS ON PAUSE,” said the spokesman.
He said HCR has committed $10 million to provide rent relief payments to small landlords struggling to serve their tenants and maintain their buildings during the crisis.
Access to loans for small landlords is targeted to owners with residential buildings of 50 units or less, and will prioritize loans for landlords whose properties are in low and moderate-income census tracts or who serve low to moderate-income tenants.
To date $2.3 million has been awarded to support 61 businesses and residential landlords, this includes more than $1 million in rent relief payments to 28 small landlords.
In addition, the Emergency COVID Rent Relief program assists landlords and tenants by providing landlords direct payments on behalf of tenants who lost income due to the COVID-19 pandemic and struggle to pay their rent.
The Tenant Safe Harbor Act protects residential tenants from eviction if they’ve suffered financial hardship during the pandemic, but landlords retain the ability to collect monetary damages for owed rent where there funds are available.
The HCR spokesman added, “New York State, facing a $62 billion, four-year revenue loss due entirely to the pandemic, has been calling on the federal government to bolster our efforts and deliver funding to assist landlords and small businesses. Despite promises, they’ve done nothing. New Yorkers need the federal government to act responsibly and deliver the resources people need.”
For additional information on loans available to small landlords, visit the web site here.