Vicious Vacancies: City Council Raises Fines On Illegal Hoteliers

The operators of illegal hotels may have trouble sleeping tonight—and it won’t necessarily be because of the rowdy tourists filing

An illegal hotel that was busted on the UWS. (The Mayor’s Office, via Dnainfo)

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.

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AirBnb (ABNB)-ers beware!

“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.

At a press conference before the vote Speaker Christine Quinn said that she had seen “residents being pushed out of their homes” by landlords eager to make more money, including whole buildings emptied of their tenants. The fine increase is aimed at preserving single room occupancies and residential hotels—many of which are rent-controlled—and other affordable housing units that are often especially vulnerable to conversions to transient hotels.

After all, why break the law to collect market-rate rents when you can break it and collect market-rate hotel rates? It’s $2,000 a month or $300 a night. You do the math.

Safety was another major concern cited by Ms. Brewer, who pointed out that the stringent safety codes mandated in legal hotels are not present in most illegal conversions, endangering tourists and long-term residents alike. And then there is the annoyance and the general inconvenience of living next door to drunken tourists tripping into their bunk beds after hours. Ms. Quinn spoke of one long-term tenant who came home one night to tourists screaming at him about the sub-standard service in the so-called hotel.

The fine increase, which passed 38 to 5 at a full council vote this afternoon, comes on the heels of a relatively new state law that prohibits class-A residential units from being rented for less than 30 days, with few exceptions (owner-occupied townhouses may rent up to two rooms provided everyone has access to the common areas).

The city has enforced the law aggressively since it took effect on May 1, 2011, fining some 1,900 illegal hotel operators in 2011, more than twice the number fined in 2010. Higher fines, even if they do not deter illegal hoteliers, should at least help defer the enforcement costs incurred by the Mayor’s Office on Special Enforcement.

And while the hotel industry supports the bill (tourism is booming and illegal hotels siphon off their business), not all city residents have been equally thrilled. Bed and breakfast proprietors, for example, were dismayed to discover that they were considered illegal hotels in the eyes of the state law (the group is now lobbying for changes to the law allowing them to offer short-term rentals). And as for those with AirBnB accounts, the law and the higher fines—while tailor-made for another class of scofflaws—do apply, even if the Mayor’s office is probably not inclined to waste its resources busting such individuals.

“If you rent your apartment out once a year, do I think it’s likely that the DOB is going to come after you? No. I don’t,” said Ms. Quinn, in response to a reporter’s question. She paused for a beat before adding with a smile: “But it is illegal activity.”

Vicious Vacancies: City Council Raises Fines On Illegal Hoteliers