NEW YORK—The operation of illegal hotels in New York City is widespread. These are single room occupancy (SRO) buildings that are zoned as residential, thus prohibiting commercial activity. Illegal hotel operators ignore zoning regulation and make a high profit margin by evading commercial real estate taxes.
The 2010 Illegal Hotels Law made a clear distinction between legitimate and illegal hotel operations. For the past three years fines have targeted illegal hotel operators, however they are too small and operators showed little response.
City Council Speaker Christine Quinn proposed on Wednesday a dramatic increase in fines to dissuade illegal hotel operators.
After the bill was instituted three years ago offenders would be fined $800. The new legislation, Intro 404 will set fines at $1,000. Those who illegally convert multiple apartments or receive repeated illegal conversion violations can be fined up to $25,000.
“The City Council’s action today sends a strong message to these scofflaws: breaking the law is not a good business model,” said state Sen. Liz Krueger, the sponsor of the 2010 state law.
The city law was passed on Wednesday and is pending a signature by Mayor Michael Bloomberg
The hotels are often run with part of the building inhabited by long-term residents and the other typically used by tourists.
“The transients don’t care about us, they are there for a few days and then they are gone,” said Charles Seelig, 64, a long-term resident of an East Village apartment complex that is illegally used as a hotel. “I’ve had people open my door in the middle of the night when I’m sleeping. I’ve had people yell at me because they were upset with the service in the hotel.”
“We had [tourists in here] for seven years,” said Ann Cunningham, 77 of the Upper West Side. The residents in her building often faced unsettling problems like bed bugs, fires, drug users, prostitution, and inadequate security.
Council Member Gale A. Brewer outlined three main reasons why these illegal hotels are so problematic:
1. Illegal hotels displace working people who rely on SRO units for permanent housing, and owners often evict stabilized tenants and move tourists in to obtain higher revenue.
2. Tourists who are on vacation stay out late and create disturbances, making terrible neighbors for working people who share bathrooms and who have to get up early for work.
3. Illegal hotels also often involve illegal alterations that create a danger for residents and firefighters in case of emergency.
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