NYC May Have Million-Dollar Breach of Contract Claim Against Marriott
Posted on Jan 01, 2016
According to the Chief Financial Officer for New York City, an audit recently uncovered an alleged “sweetheart deal” between the city and the Marriott Marquis hotel. The deal could cost the city up to $345 million. The hotel is located in Times Square.
According to the findings of the audit, the details of the deal are as follows:
- The Marriott first signed a lease with the city in 1982.
- In 1998, Marriott enter renegotiations of its lease with the city.
- The lease term was shortened by 40 years.
- The rent was reduced.
- The hotel received the option to buy the property for $20 million in 2017, when the lease expires.
As a result, Marriott will have the option to purchase the property in Times Square for approximately $173 million less than the real estate is worth today. In addition, New York City is allegedly losing nearly $172 million in lost rent as a result of the reduction in the renegotiated lease.
New York City’s Comptroller John Liu explains that the deal was reached during the term of former New York City Mayor Rudy Guiliani. He points the finger at the New York City Economic Development Corp. (EDC) for allowing the city to enter into such a “lopsided” deal. He further asserts that the EDC breached its fiduciary obligation to taxpayers by entering into a lease that was not in their best interest.
In addition, Liu accuses the Marriott of violating the terms of the lease agreement. He states that the hotel has not kept all of its financial records for the past six years, as well as failing to pay rent in the amount of $3.6 million. As a result, Liu is urging current Mayor Michael Bloomberg and his administration to use the alleged breach of contract to renegotiate the lease, making the terms more favorable to the city.
To learn more about bringing a breach of contract or other business litigation matter, contact a New York breach of contract attorney today at (888) 497-3410.