Toshi, the party promoter/actor/owner of Smart Apartments LLC (“Hotel Toshi”) has to cough up $1 million to the city of New York as part of his settlement to put a halt on his brand of illegal, short-term rentals in residential spaces, which had flourished in the age of Airbnb.
The city sued Smart Apartments in October as part of their crackdown of 50 buildings with units that had been converted into hostels to turn out a profit with out-of-town tourists (as opposed to long-term leasers) without prior approval.
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After notching a victory in the case of host Nigel Warren, locking down the legality of hosting while you’re still on the premises, Airbnb is dealing with another legal challenge from New York Attorney General Eric Schneiderman. He wants data on 15,000 local hosts, saying it’s necessary to determine unpaid hotel taxes and root out illegal hotel operators on the platform. The company is fighting the subpoena as, they say, too broad.
In the meantime, public policy head David Hantman convened a presser at General Assembly to tout how much the startup is contributing to the economy of New York City. Between the sternly upbeat tone and the stack of printed pamphlets, it felt like a visit from the Jehovah’s Witnesses.
Toshi just wants everyone to have a good time. That’s one of the first things the 38-year-old entrepreneur told The Observer as we sat on the bench outside his Flatiron Hotel. It was only 5:30 p.m., and inside the hotel’s groovy restaurant, brightly colored drinks were passed around as a woman in a sparkly white dress covered a Beyoncé song in a smoky, lounge-y growl.
Through the crowd, you could see into the Flatiron’s lobby, with its two-story cylindrical aquarium filled with exotic undersea creatures, including a remora, a type of suckerfish that resembles a shark and gets around by attaching itself to bigger fish.
The first floor is called Toshi’s Playground. “I just made these signs, look!” said Toshi (real name Robert Chan), pointing to an anime rendition of his dog, Ponzu. Ponzu is a Morkie, we were informed: half Maltese, half Yorkie.
Graphics of Toshi and Ponzu are everywhere: above a red velvet throne that greets customers when they walk in, and almost subliminally painted around the white-on-white minimalist penthouse where Toshi throws his parties.
Unfortunately for non-Ponzus, the Flatiron does not allow other dogs inside.
Ponzu’s ubiquity is more than just a cute gimmick. It’s part of a strategic rebranding of his master as a fun-loving nightlife figure, after Toshi’s last such effort backfired.
The operators of illegal hotels may have trouble sleeping tonight—and it won’t necessarily be because of the rowdy tourists filing in after midnight. The City Council voted this afternoon to raise fines on building owners who convert permanent residential units into illegal hotels from $800 to $2,500 per violation to $1,000 to $25,000 for repeat offenders.
“Many of these illegal hotels are taking housing away from New Yorkers who need it,” said Upper West Side Council member Gale Brewer, who introduced the bill because she did not believe that the $800 fine was enough of a deterrent for landlords who often make more than $100 a night on each illegal unit, particularly when they pack the rooms with bunk beds.
New Yorkers have apparently found a sure-fire way to fight back against ever-increasing rents–becoming part-time hoteliers.
The number of violations against residential landlords who house temporary occupants has more than doubled since last years, according to The Real Deal. The Real Deal links the leap in violations, 1,897 in 2011, to recent state legislation curbing illegal hotels.