Fight Over Billionaires' Row Shelter Heats Up With Giuliani Aide

(Bloomberg) -- In their battle against Mayor Bill de Blasio’s plan to put a costly homeless shelter near Manhattan’s Billionaires’ Row, neighborhood residents have summoned help from an earlier administration.

The West 58th Street Coalition, a group of residents and business owners opposed to the city’s proposal to convert a tired Midtown hotel into a men’s shelter, is exploring legal action and has hired lawyer Randy Mastro, a former deputy mayor under Rudolph Giuliani. The group aims to raise at least $300,000 to mount a possible court challenge based on New York State’s Article 78, which allows citizens to appeal an action taken by a government agency.

Fight Over Billionaires' Row Shelter Heats Up With Giuliani Aide

“Who better to know when government screws up than a former deputy mayor who also litigates?” Mastro, now a partner at Gibson, Dunn & Crutcher LLP, said in an interview. “To locate the facility at this venue is just out of whack, it’s inexplicable.”

The coalition complains that the city would be paying a premium to shelter the homeless near one of Manhattan’s priciest real estate corridors, where a penthouse sold for a record $100.5 million and more condo towers aimed at the globetrotting elite are under construction. The residents opposing the proposal lived in the area well before the billionaires’ boom, and argue the shelter poses security concerns in a neighborhood where they run small businesses, push strollers and go out for evening walks.

A nine-year contract with Westhab Inc. would convert the now-closed Park Savoy Hotel into temporary housing for about 140 men at a cost of $63 million, or roughly $50,000 annually per person, the coalition estimates. That’s about 38 percent more than the $36,300 the city spent on average to shelter a homeless person for the year in 2017, according to the Mayor’s Management Report.

‘Squandering Money’

“We’re taxpayers, we vote and we should have a say if the city is squandering money for this location that can be better spent for these men,” said Suzanne Silverstein, president of the West 58th Street Coalition, who’s lived in the area since 2005. “If they have that kind of money, why aren’t they doing something that offers a long-term solution?”

Fight Over Billionaires' Row Shelter Heats Up With Giuliani Aide

The contract was the subject of a sometimes emotional public hearing last month that filled every seat of a lower Manhattan meeting space. As of the end of last week, it hadn’t yet been approved, according to Silverstein.

De Blasio’s Turning the Tide homeless plan aims to open shelters in neighborhoods that don’t have them, and the West 58th Street site -- between Sixth and Seventh avenues -- would be the only one within almost a mile, according to Isaac McGinn, spokesman for the New York City Department of Homeless Services.

“Every neighborhood across New York City has a part to play in addressing this citywide challenge,” McGinn said in an email. He added that the facility would have at least two security guards and 56 surveillance cameras. Shelter residents would need to obey a 10 p.m. curfew.

The Department of Homeless Services doesn’t itself select sites for potential shelters, but rather reviews proposals for locations submitted by shelter providers. In the Park Savoy case, Westchester County-based Westhab is seeking to open its first site in Manhattan by renting out the hotel. The city has halted work on the gutting of the property indefinitely because the owner didn’t secure the required permits, the Department of Buildings website shows.

Lucrative Deal

Owners of the Park Savoy, a no-frills hotel that’s gotten middling reviews on travel websites, would receive $2.6 million in annual rent payments from the city for the duration of the shelter contract. That’s not a bad deal for a hotel landlord in Manhattan, where revenue per available room fell 0.5 percent in 2017, according to lodging-data firm STR Inc.

“It definitely takes the volatility out of your math,” by eliminating the costs of marketing or selling discounted rooms through online travel sites, said Jan Freitag, senior vice president at STR. “You’re getting paid for a non-discounted room, and you don’t have distribution costs if you do a direct deal with the city.”

Paul Pappas, identified in building records as the managing member of the entity that owns the Park Savoy, didn’t return a call or email seeking comment.

Mastro, the coalition’s lawyer, said the group is exploring all legal avenues to challenge what it views as a poor use of public funds.

“That the city decides to spend $50,000 per person -- far more than has ever been spent before -- when its resources are constrained, and then tell the public that it’s basically a fait accompli, that’s not only intolerable,” Mastro said, “that’s illegal.”

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