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"Support businesses and organizations that support Chelsea Now" Thirty-day policy on hotel stays ignored by Marriott By Chris Lombardi As legislators, city officials and the corporate housing industry argue about what constitutes an “illegal hotel,” new evidence obtained by Chelsea Now indicates that one of the major players in the industry may not even be playing by its own rules. Documents obtained under the Freedom of Information Law (FOIL), 16 months after Marriott Execustay was first cited by the Department of Buildings for illegally operating a transient hotel at The Chelsea on West 24th Street, show that contrary to the company’s explicit policy mandating a 30-day minimum stay, guests have signed in and out for visits as short as three nights. They also show that this evidence was known by the city but never considered by judges who dismissed such charges against Execustay, believing instead an affidavit filed by Execustay staff that declared such practices had ended. This information, first obtained by the last residential tenants remaining at the Marriott Execustay Chelsea, sheds important light on the competing claims of building owners and permanent residents in the citywide battle over illegal hotels. It’s significance is also notable in the wake of recent City Council hearings, as the city grapples with adopting new legislation to combat the problem.
Marriott Execustay’s 30-day policy is common to New York’s corporate housing industry, whose companies lease all or portions of venerable residential buildings and rent them as 30-day transient lodgings, arguing that this practice falls within the boundaries of New York’s Byzantine zoning and rent laws. Their assertion is not based on the city’s tax rules, which requires 180 consecutive days of occupancy to establish a person as a “permanent resident,” or the New York State Multiple Dwelling Law, which defines a “Class A” multiple dwelling as a building “which is occupied, as a rule, for permanent residence purposes.” “The law is pretty clear,” said longtime housing attorney Stuart Klein, most recently known for opposing Donald Trump’s condo-hotel in progress on Spring Street. “You cannot offer residences as hotel rooms, or vice-versa.” The only place where the 30-day rule is even mentioned is in successive decisions by the Department of Buildings, in which month-to-month tenants were protected from eviction. This, according to advocates, has created a “loophole” through which Marriott and others could claim that as long as they rented apartments only for 30-day stays, those guests became “residents” even if each apartment turned over 12 times a year. “There are important reasons why we have different laws and zoning provisions for homes and transient hotels,” said Assemblymember Richard Gottfried, a founding member of the Illegal Hotels Working Group, an alliance of advocates and elected officials convened last summer. Gottfried and State Senator Liz Krueger are trying to close the loophole for good, by sponsoring legislation in Albany that would bar a corporation, like Marriott, from renting a residential unit or units. But their efforts are already up against strong lobbying from the Corporate Housing Providers Association (CHPA), a two-year-old organization with 21 members in New York. Some of the franchise members are national chains like Execustay, Bridgestreet and Furnished Quarters; others are more homegrown operators like Sirva Properties, Gamut Realty and Metrotech. All argue, before Albany and City Hall, the right to what they call the “30-day rule.” One tenant makes a stand From where Maryanne Marinac sits, in the Chelsea on West 24th Street, the 30-day rule is a “legal fiction,” and the term “corporate housing” is “a scam for these illegal transient hotel businesses,” she said, like the Execustay Chelsea, which appears in the 2007 brochure of the city’s tourist hotel agency NYC & Co. Operated as “Temporary Housing With a Familiar Name” by Marriott Execustay, the Chelsea is a 50-year-old Class A building. As previously reported in Chelsea Now, it had many residential tenants in 2001, when the Marinacs moved in and signed their lease with previous owner Townhouse Management. They only learned of Execustay’s involvement, said Marinac, when told that the latter company “managed” the building. Marinac and her family have stayed and fought long after the other residential tenants left, the latter taking buyouts or fleeing lawsuits filed by the owners. Their FOIL request was filed as they tried to learn why Marriott had been declared free of the 2006 “occupancy violation” at the Chelsea, despite the involvement of the Mayor’s Office of Special Enforcement (OSE), which is charged with enforcing current laws regarding illegal hotels. The story represented in the FOIL documents begins in May 2006, when DOB cited the West 24th Street building’s owners, Chelsea Commonwealth LLC, for “illegal transient use.” The citation yielded a single fine of $800. Soon after, as well as a housing court judge declared that Marriott Execustay was not entitled to the rent payments from the Marinacs and other residential tenants, because it was operating the building in violation of the building’s certificate of occupancy. The building soon came under the purview of the newborn OSE, directed by Shari Hyman. Demanded the hotel roster In general, OSE has accepted CHPA’s interpretation of the law on 30-day rentals, with a caveat. At a City Council hearing last week, Hyman emphasized that “we recognize the need for corporate housing and alternative stay locations and want to encourage this industry, just not in residential buildings in residential neighborhoods.” However, when tenants could provide evidence that the companies were renting those units to transients for far fewer than 30 days, OSE has commenced investigations. And in October 2006, OSE investigators walked into the Chelsea, according to hotel employees, and demanded that the doorman produce a current printout of the hotel roster. The shortest stay listed on the roster is three nights: Overall, the “Doorman Report” yielded 21 such listings. Others are listed as MANAGED with a corporate name attached: “MORGAN STANLEY-MANAGED” or “GOOGLE-MANAGED.” The latter, according to Marinac, can translate to quick turnover: “These are employees that stay here for one, two, three nights,” Marinac told Chelsea Now last Monday. But none of this evidence made it to a June 7, 2007, hearing at the Environmental Control Board (ECB), in which Marriot tried to appeal the May 2006 charges of transient use. According to OSE spokesman Jason Post, “concerns over ongoing investigations” prevented his office from promptly informing DOB’s Enforcement Division about the Doorman Report. By the time DOB did get the information, the hearing was right around the corner. When he got the reports, Michael Burns, DOB’s deputy director for enforcement, immediately told the attorney handling the cases to adjourn (not cancel) the cases before ECB. According to Marinac, Burns did so in an urgent Blackberry message that was apparently never received; letters in the FOIL show that Burns repeatedly implored ECB judge Leo Cole to hold an additional hearing, citing the new evidence. (Efforts to reach Burns for this story were instructed his subordinate and referred to Hyman’s office.). Cole refused. “The hearings went forward without my husband and I being present as witnesses, and without the additional evidence,” said Marinac last week. In November 2007, ECB judge Cole closed the case, finding “insufficient” grounds to consider the roster OSE had seized a year earlier. By then, the May 2006 violation had been declared remedied by DOB, based on a September 2007 “certificate of correction.” What the FOIL reveals is that certificate was filed not by the owner but a Marriott employee, drafted and notarized by Marriott’s attorney, David Pfeffer, of the real-estate law giant Arent Fox. Pfeffer, who has represented Marriott before the ECB, was also deputized to refuse requests by Marinac’s attorney and State Assemblymember Richard Gottfried for a copy of the lease between the building owner and Marriott Execustay. Declaring such information “confidential, “ Pfeffer repeatedly assured Gottfried that “Ms. Marinac continues to enjoy living in Apartment 4E, despite not having paid rent since 2005.” When Chelsea Now contacted Pfeffer for this article, he said that he couldn’t discuss “current litigation.” The attorney then secured the following official statement from Marriott: “The Marinacs’ charges are inaccurate and without merit. They moved into the Chelsea after Execustay had already leased the premises. They reside at the Chelsea pursuant to an agreement with Marriott Execustay. Resident satisfaction is of utmost importance to Execustay, and therefore we maintain an active dialogue with Ms. Marinac.” Asked to respond, Marinac scoffed, “Dialogue? Through lawyers,” adding that the couple’s legal costs far exceed the rent they have been withholding since the May 2006 decision. After successive “holdover proceedings” failed to have the Marinacs evicted, a state judge ruled last month that the couple is entitled to a full jury trial, which was scheduled for Dec. 13. Marriott immediately appealed the decision, putting the trial is on hold. If the hearing ever does take place, Marinac plans on not only presenting the FOIL evidence, accumulated photos and witness reports but also subpoenaing “some people who work in city agencies.” They have strong incentive to continue In last week’s letter to Gottfried, Pfeffer also added that Marriott was in “active dialogue”—not with Marinac, but with city officials. OSE’s Jason Post confirmed on Monday that Hyman’s office had met with Pfeffer, though he declined to comment when asked if OSE had confronted Marriott about the doorman reports. As for the Marinacs, Post said simply, “That case is closed,” referring to ECB judge Cole’s decision. Post also said “No comment” on whether OSE would use the evidence in another case, or even whether the investigation was ongoing. Meanwhile, the rosters at the Chelsea no longer note the departure dates of “guests.” Marriott Execustay’s Website warns that New York rentals are for 30 days, though an email request by Chelsea Now for a one-week reservation was met with a careful response: “Unfortunately, New York Law requires short-term guests to sign a lease of 30 days.” The response avoided the phrase “a stay for 30 days.” Sales Director Megan Bonaghura then reassured the potential guest that “one of our customer service representatives” would follow up and explain. To members of the Illegal Hotel Working Group, the new information highlights the need to intensify their efforts. “They’re clearly breaking the law in Marinac’s building,” John Raskin of Housing Conservation Coordinators said Monday. “And they have strong incentive to continue to do so, for as long as Marriott Execustay and CHPA can argue that it’s legal to do transient rentals in a residential building.” To Raskin, the case “demonstrates the need for a strong mayor’s bill,” meaning the bill long promised by OSE. To Gottfried, it’s more about protecting current law — the city’s carefully constructed matrix designed to ensure actual residential neighborhoods remain within city limits. The city’s desire to help a burgeoning “new industry,” Gottfried told Chelsea Now last week, should not supersede the law. “There are many things people do that make money,” said Gottfried. “Like drug dealing, and we still try to stop them.”
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