The demand set construction back for more than two years, delays the developer said cost as much as $30 million, and left tenants living in a work site frozen in time.
A stop-work order was issued, and an investigation found evidence of tenant harassment, prompting a hearing that dragged on until the end of December. That is when the developers unexpectedly revealed a document they had found in city archives that exempted the hotel from needing the certification at all.
Days later, the department dropped the case.
Tenants like Ms. Martin who supported the investigation were stunned. “An agency that is supposed to protect us from harassment dropped the case right at the end of the trial,” she said. “This could happen to anybody in the city if it happened to us.”
The tenants association (which is in favor of the renovation) was angry that work had stopped in the first place, blaming the city and their vocal neighbors for pursuing what they saw as a frivolous case. “It was a disgrace,” said Zoe Pappas, 68, the president of the tenants association, which represents 30 residents living in 20 apartments.
The developers see the abrupt end of the case as evidence that this was all just a delay tactic. “What was the point?” said Mr. Drukier, an owner of BD Hotels, which bought the Chelsea in 2016 for $250 million. “We were trying to finish a building that had already been under construction for quite a few years.”
The housing department did find evidence of harassment, but it declined to disclose any more information. “While this particular legal challenge has been withdrawn, the city has a broad range of tools to protect New Yorkers from harassment,” Anthony Proia, a department spokesman, said in a statement.
Now that the workers are back, so, too, are the complaints from the tenants who supported the harassment case. Water has been running only cold again. Sometimes, it runs brown too. Susan and Jonathan Berg, who live on the 10th floor, have been disturbed by incessant noise from ventilation fans on the roof. And construction dust keeps blowing into Ms. Martin’s apartment. “It’s a different level of awfulness,” she said.