Portman’s New York Marriott Marquis

Planning for the New York Marriott Marquis was first announced in 1972 when Mayor John Lindsay approached John C. Portman, a prominent architect and real estate developer based out of Atlanta, to design a major hotel in Times Square. The project, which was part of a larger campaign to redevelop the crime-ridden neighborhood, was co-developed by Portman and Marriott International 10 years later.

After three years of construction, the $350 million Marquis officially opened its doors in October 1985 with a grand opening celebration in the hotel’s distinctive atrium. With 1,946 guest rooms and suites, the hotel was the first major project of the Times Square redevelopment and is often credited as the starting point of the neighborhood’s commercial renaissance.

Located on Broadway between 45^th and 46^th streets, the hotel sits on the former site of five historic theaters – the Helen Hayes, the Morosco, the Astor, the Bijou and the Gaiety. As a result, part of the project’s approval required the inclusion of a new theater on the property, the Marquis Theater. In addition to the 1,500-seat theater, the hotel boasts a ballroom and 80,000 additional square feet of meeting, banquet and exhibition space.

The 49-story tower is best known for its atrium lobby, which rises 45 stories to the city’s only revolving restaurant. The design, first popularized by Portman in 1967 with the Atlanta Hyatt Regency, represented the future of commercial architecture. With subsequent projects like the Marriott Marquis hotel in Atlanta, the Westin Bonaventure in downtown Los Angeles and the Embarcadero Center in San Francisco, Portman made a name for himself as an innovative architect, reinventing hotel design with his trademark atria, high-tech glass elevators and revolving rooftop lounges.

Although it struggled with a 78 percent occupancy in its first full year of operation, the Marriott Marquis still stands today as one of the largest and busiest hotels in New York City and continues to attract guests to one of the world’s most iconic travel destinations.

As counsel to the Mayor’s Mid-Town Office of Development, Leonard Grunstein worked on the Urban Development Action Grant (UDAG) application that permitted the development of the hotel in the early 1980s.

Letter to the Editor: De Blasio And Affordable Housing

In a letter to the editor of Gotham Gazette article, “De Blasio Pins Affordable Housing Hopes On Mandatory Inclusionary”, Leonard Grunstein advises Mayor-elect Bill de Blasio, that mandating the construction of middle-income housing only to city-owned land, could be an alternative.

He notes the article correctly highlights the challenges of requiring affordable housing. The highlights include: a possible domino effect that would create less affordable housing, due to slowing of new development of market-rate housing; tenants facing extra construction costs so that owners can make up for loss incurred by the affordable units; and lastly building to accommodate more people puts more strain on public service, who would need to plan for more schools and better infrastructure.

The policy would require developers to have a percentage of their building’s units as permanent affordable apartments. Developers who participated, would receive increased building heights and tax breaks.  Currently there is similar version that is optional.  Many developers have chosen to opt out of this policy; does this foreshadow what is to come if the policy became mandatory?

In his alternative solution, Grunstein suggests:

“One alternative de Blasio should consider is to mandate the construction of middle-income housing only in the development of city-owned land.  The city successfully took this tact with Seward Park, a strip of city-owned land on the Lower East Side, by obligating RFP respondents to make at least half of the housing units there affordable. Refining the requirements to be more capital market friendly may have enabled an even greater amount of middle-income units.”

If de Blasio followed through, it would strengthen New York’s middle class.  It would create a need to work together with the real estate industry.

Read Leonard Grunstein’s full letter here.

The Albany Hilton Hotel Redevelopment

The concept of redeveloping what was known as the Ten Eyck Hotel site was launched in 1972 and was hailed as a collaboration between the public and private sectors in an effort to revitalize a stagnant business district. It was championed by public officials such as Mayor Erastus Corning and Gov. Nelson Rockefeller, and was part of a larger urban renewal plan that sought not only to develop Albany’s downtown but also provide jobs for local working class residents.

When completed in 1980, the Albany Hilton became the city’s only major hotel in the neighborhood. The $18 million, 400-room hotel completed the redevelopment of Ten Eyck Plaza, a $45 million project that included a bank, a parking garage, an office tower, a commercial arcade and a public park. The project was spearheaded by Rockefeller, who wanted to provide guests with acceptable accommodations, and Corning, who pushed for the demolition of the Ten Eyck Hotel and convinced the governor to include office and retail space as part of the complex. It was financed in part by a federal Urban Development Action Grant to the City of Albany, which was then loaned to the developers of the Hotel as a second mortgage. Built on property owned by a subsidiary of the State’s Urban Development Corp, the project benefited from an agreed-upon schedule of tax abatements and exemptions.

Subsequently known as the Omni Albany when Servico declared bankruptcy in 1990, the hotel was turned into the Crowne Plaza Albany nine years later as part of a $10 million renovation project by Lodgian Inc., an Atlanta-based company that specializes in upgrades and renovations.

Today, the hotel is known as the Hilton Albany, changing its name once again after the completion of a $14 million renovation earlier this year. Improvements to the 34-year old building included newly decorated rooms, wireless Internet, updated in-room entertainment systems and a new lobby restaurant, lounge and check-in.

As a new associate at Herrick, Feinstein in 1978, Leonard Grunstein represented the developers of the project, a partnership between a public hotel company and private development firm. Within this role, he negotiated the financeable ground lease with the UDC, helped craft and negotiate the leasehold financing structure for the first mortgage and the UDAG second mortgage, and dealt with the many problems that had to be solved associated with a project of this scale. This included such arcane matters as navigating the City’s and State’s laws in order to obtain a liquor license at the Hotel. Grunstein also helped obtain and negotiate the terms of the Urban Development Action Grant, which enabled the project’s fruition.

Leonard Grunstein Drafts CCRC Offering Plan

CCRCs, or Continuing Care Retirement Communities, are long-term care providers that offer elderly residents a combination of housing, individualized health care and a sense of community. Although the life-care industry was traditionally nonprofit, for-profit CCRCs became more prevalent in the 1980s as large service and hospitality companies such as the Marriott Corp. became increasingly involved.

In 1998, Harbor Ridge Associates announced plans for a senior housing development in Port Washington, Long Island, based on the successful model of Marriott’s Edgehill Community in Connecticut. The proposed development was to be called Harbor Ridge Estates – a private, gated community of 675 units reserved exclusively for households with one or more members older than 55. A major component of the development would also be a 400-unit continuing care facility to be operated by Marriott Senior Living Services, a division of Marriott International Inc. that has since been sold to Sunrise Assisted Living Inc.

Plans for the CCRC project included a variety of layouts – from one-bedroom apartments to larger two-bedroom units – and amenities such as a restaurant, health club with an indoor heated pool and greenhouse. In-house services would also include a salon and barbershop, postal service, banking and scheduled transportation.

Despite interest in the project, the Harbor Ridge development never came to pass for a variety of reasons, including a complicated financial structure and disagreements between the various entities involved.

As a partner at Troutman, Sanders, Leonard Grunstein led the team that drafted the offering plan and obtained approvals and acceptances from numerous government agencies, including the Superintendent of Insurance, the Department of Health and the Attorney General. Additionally, he helped structure the self-insured life-care contract — an arrangement that provides residents, who pay maintenance charges to cover the cost of operations, complete health care coverage for the duration of their tenancy.

Today, Amsterdam at Harborside, another life-care community, occupies the site of the planned Harbor Ridge project. The development, for which construction began in 2007, contains 226 independent-living apartments, 56 skilled-nursing units and 18 units for patients suffering from Alzheimer’s.

Leonard Grunstein Works to Enable Sale of Hotel Pennsylvania

The Hotel Pennsylvania, located across the street from Pennsylvania Station and Madison Square Garden, opened in 1919. An immediate sensation, the Pennsylvania’s 2,200 rooms made it the “largest tavern in the world,” offering guests luxuries such as the “servidor” – a small compartment built into bedroom doors for deliveries; ice water in every room; and a number of private and public cafes, dining rooms and ballrooms.

The 27-story tower was designed by McKim, Mead and White as a complement to the original Pennsylvania Station, which stood across 7^th Avenue until 1963. The firm – established in 1879 by Charles Follen McKim, William Rutherford Mead and Stanford White – was essential in popularizing the Beaux-Arts aesthetic in New York, making its mark throughout the city with buildings such as Columbia University’s Low Library, the Brooklyn Museum and the Manhattan Municipal Building.

Statler Hotels, which had managed the Hotel Pennsylvania since its construction, acquired the property in 1948 and changed its name to The Hotel Statler. Over the years, as ownership changed, the hotel was renamed three more times, finally returning as the original Hotel Pennsylvania in 1992 when Penta Hotels, the owner at the time, filed for bankruptcy.

Six years later, Vornado Realty acquired the property in a $160 million joint venture with Planet Hollywood and Ong Beng Seng, a Singaporean hotel development and investment firm. Within two years, Vornado had purchased the remaining 60 percent stake from both partners, valuing the hotel at $210 million.

Over the years, as Vornado negotiated plans for redevelopment, the Hotel Pennsylvania fell into a state of disrepair. Following strong opposition from the community and local preservationists, the company abandoned plans to demolish the building and replace it with an office tower, choosing instead to renovate the existing structure and invest to make the hotel profitable again.

As a partner at Herrick, Feinstein, Leonard Grunstein helped create the unique financing and tax structures that enabled the sale of the Hotel, as noted above.