Finally, Days Numbered for Illegal Hotels?

Categories: Landlords

HotelToshi.jpg
When the Jensen Family checked into one of Robert "Toshi" Chan's "suites" at the Zen Garden House, they weren't paying Marriott prices. The window screens in the bedroom were torn and the bathroom walls were full of mold, one of which had a gaping hole. They found hair in the shower stall. It wasn't what they expected, but for $100 a night, Hotel Toshi is a cost-effective substitute for many like the Jensen Family who find the allure of affordability attractive.

But Hotel Toshi, perhaps the most well-known (and most hated) of short-term lodging companies in the city, may soon have to re-structure its business.

A new law signed in July that will take effect next year, sponsored by State Senator Liz Krueger and supported by Mayor Michael Bloomberg, prohibits hotels and hostels operating in residential buildings. The new bill also limits New Yorkers who regularly advertise 30-days-or-less sublets via websites like Airbnb.com and Craigslist.org.

"Say your grandmother wanted to sublet her apartment for three weeks while she went on vacation; technically, according to the bill, that would be illegal," says Krueger. However, she notes, "It's a complaint driven system." She says that while the bill allows for heavier enforcement among more established illegal hotels, it is unlikely that your grandmother would be arrested for subletting her apartment while sightseeing in Paris.

For years, the city has been grappling with the issue of illegal hotels, which spring up when landlords kick out longtime renters for the more lucrative trade of renting for only days or weeks at a time.

According to Brandon Kielbasa, a housing specialist at Cooper Square Committee, the trend has only worsened. "Landlords benefit from creating turnover in buildings with rent stabilized units, so it's a win-win for them," he says. "Make a bunch of money on these illegal hotel units and chase out the long-term tenants to boot so they can make even more money all at the expense of the community."

"Right now," Krueger tells the Voice, "the city of New York doesn't have enough tools to go after the guys who are doing this." But, she notes, when the bill goes into effect in May 2011 the city will be far better equipped to tackle the issue. In a statement, Bloomberg said the bill "helped clear up ambiguities in the law that have hindered [the city's] ability to take enforcement actions against illegal hotels."

"The majority of the illegal hotels that I have seen have been two to three units here or there in buildings rented as suites by the landlord," says Kielbasa. "They are often not the majority of the units in the building, and with that, the [Office of Special Enforcement] has been limited in their capacity to enforce. The new bill will allow the OSE to more effectively address these instances in buildings where there are just a couple units.

But then there are those like Chan who believe short-term hotels and hostels provide an inexpensive alternative to high-priced hotels. The new bill poses to take that alternative away from New Yorkers and tourists who can't bear $238 a night -- the average room rate for a New York City hotel in 2009.

For Chan, proprietor of Hotel Toshi and burgeoning real-estate kingpin who has snatched up property in Williamsburg, SoHo, the Lower East Side, Midtown and Gramercy, this new legislation presents numerous hurdles. "We're very careful about our expansion right now," he says. Hotel Toshi is currently spread across 19 buildings and totals nearly 60 apartments, all of which are residentially zoned and illegal according to the new bill. Chan says he hopes to have 25 percent of Hotel Toshi commercially zoned by the 2011 deadline.

The Voice asked Krueger how she thought the new bill might affect tourism, particularly for tourists who have been marred by the recession. Krueger responded bluntly: "That's a real issue, but New York City and State have a priority to assure New Yorkers affordable housing first."

Kielbasa agreed, noting, "These landlords are removing affordable housing from communities that are starved for it."

At least, in the end, it wasn't all bad for the Jensen Family. There was a silver lining to their stay at Hotel Toshi: Thor Jensen, via a review on CitySearch.com, listed: "Pro: Did not actually die."


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