Plugging the hole on Illegal Hotels

Editorial

Last week, we were happy to report a breakthrough in the battle by city officials and tenant advocates to stop landlords from turning their buildings into illegal hotels, with the city’s first-ever injunction against one such owner.

The nature of the problem, which has been festering for years, is clear: With Manhattan’s still-surging real estate market, the money to be made renting residential-building apartments to tourists is too enticing to turn down, luring not only individual landlords but major capital firms and corporations into the fray. With Manhattan apartment vacancy rates of less than 1 percent and an 85 percent occupancy rate for the city’s 75,000 hotel rooms, nightly rentals—even at “bargain” rates of $100–$150—can be far more profitable for building owners than even market-rate apartments, let alone rent-stabilized units. Consequently, an increasing number of rent-regulated buildings throughout the city are being targeted by corporations and real estate investment firms for conversion to transient hotels, albeit illegally.

Nearly 100 such buildings are on a list compiled by advocacy groups, where tenants report increased crime, luggage and excess noise in their hallways, dilapidated buildings that are not up to hotel code, and worst of all, landlords trying to harass them into leaving. While rent-stabilized buildings and SROs are most vulnerable, market-rate tenants are not immune: As we write this, a caller to our office reports that tenants in a market-rate building on Bank Street have been told their leases will not be renewed because the owner will be renting to tourists.

Building owners who flout the city’s 46-year-old zoning laws—while advertising openly on Websites such as Travelocity and Expedia—get away with such flagrant violations because of a muddied patchwork of weak laws that let owners off with minimal fines, which amount to a cost of doing business—or a slap on the wrist.

Last year, a coalition of advocates and legislators created the Illegal Hotels Working Group to address the problem, bringing together the city’s Department of Housing Preservation and Development, Department of Buildings and the Mayor’s Office of Special Enforcement (OSE) to develop a strategy and bolster enforcement. In January, City Councilmember Gale Brewer, State Senator Liz Krueger and State Assemblyman Richard Gottfried promised new legislation with teeth, which would substantially increase D.O.B. fines, tighten the legal definition of “residential” and empower the city to do its own enforcement. Brewer then introduced a bill to the City Council in March, which got little support. Gottfried is circulating a draft of a bill in Albany. And the Working Group is still waiting for Mayor Bloomberg to take the lead in demanding bold new legislation that fixes ambiguities in the law that harm the city’s residential housing stock, while developing new models for extended-day housing.

The stock of affordable housing in Manhattan is dwindling, and illegal hotels are only adding to the crisis. Only strong legal and enforcement mechanisms working hand-in-hand will begin to solve the problem. While we applaud the mayor’s recent strengthening of the OSE, the need for new legislation is abundantly clear. We urge the City Council and the mayor to act soon. As Manhattan Borough President Scott Stringer said last week: “We can’t be slow to act in housing matters—it’s too important.”