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City Council Hikes Fines for Illegal Hotels

By Emily Frost | September 12, 2012 8:05pm

CITY HALL — New Yorkers who open illegal hotels in residential buildings could soon face a much steeper fine.

The City Council passed a bill Wednesday that would increase the penalty for running an illegal hotel from about $800 to up to $25,000 for repeat offenders.

The current fines are seen as "the cost of doing business" and are not high enough to deter apartment and building owners from renting rooms illegally to tourists, said Councilwoman Gale Brewer, one of the bill's chief sponsors.

The proposed fines, which would be doled out by the Department of Buildings, would range from $1,000 to $25,000.

New York State first outlawed the conversion of residential rooms into transient hotels in 2010, and since the ban went into effect in May 2011, the city has received more than 1,000 calls about the issue, City Council Speaker Christine Quinn said.

"And that's just the tip of the iceberg," she said.

Illegal hotels are particularly common on the Upper West Side, Brewer said, because of the ubiquity of single-room occupancy units catering to low-income residents. Landlords saw that it was far more lucrative to rent to tourists than to operate a rent-controlled apartment, so they started pushing tenants out to make room for transients, Brewer and Quinn said. 

Quinn added that she isn't just worried about the loss of affordable housing — illegal hotels also pose a safety hazard.

"They don't meet basic fire and safety regulations, placing tourists in danger," Quinn said.

John Fitzpatrick, chairman of the Hotel Association of New York, praised the legislation, saying the illegal hotels cut into legitimate hotel business and evade taxes. 

The increased fines, which will go into effect 60 days after Mayor Michael Bloomberg signs them into law, wouldn't just hit larger operations like the former Candy Hostel on West 94th Street — they would also affect those who try to rent their own apartment temporarily through popular sites such as airbnb.com, which connects travelers with apartment owners and renters.

Under state law, it is illegal to turn an apartment into a hotel, even if it's just for a short time, Quinn said. 

"The reality is an awful lot of the owners of the units they advertise on airbnb are on permanent vacation," she said.

In Stuyvesant Town alone, there are 40 units listen on airbnb, Quinn said. 

Though the bill devotes no additional resources to the Department of Buildings for enforcement, Quinn said the fines will "penalize actors in a very real way." 

The bill passed the Council 38 to 5, with Brooklyn Councilmen Lewis Fidler and David Greenfield, Queens Councilman Dan Halloran and Staten Island Councilmen Vincent Ignizio and James Oddo in opposition.