Court Sustains Illegal-Hotel Law

A New York State appellate court said no to an Upper West Side SRO hotel that claimed it was exempt from the 2010 Illegal Hotel Law because it had been renting short-stay rooms before the law went into effect. The New York County Supreme Court Appellate Division on March 17 ruled that Imperial Court, a single-room-occupancy hotel at 307 West 79th St., was breaking the law by renting out rooms for less than 30 days. 

Under the Multiple Dwelling and Illegal Hotel laws, residential units cannot be rented for less than 30 days unless another permanent resident is present, which means that while subletting is legal, regular and commercial short-term rentals are not. Imperial Court’s management, Assemblymember Richard Gottfried’s office said in a statement, “has operated more than two-thirds of the building as an illegal hotel, complete with maid service, mini-bars, and a notice warning guests that staying past checkout time would cause them to be charged for an extra day.” It had been renting out apartments to tourists since 2007, Assemblymember Linda Rosenthal said. 

The total number of illegal hotels in New York City is unknown, but it has increased greatly since the emergence of Airbnb. The Inside Airbnb Web site, using data released by the company last December, estimates that 58 percent of the over 27,000 Airbnb listings were illegal whole-home rentals—apartments that are supposed to be residential housing, but where the permanent resident was absent.

Airbnb argues that “home sharing” helps struggling New Yorkers pay rent. Opponents say that illegal hotels hurt working-class New Yorkers by removing apartments from the market and giving landlords an incentive to kick tenants so they can charge higher short-term rates. As of last Nov. 17, Gawker noted, Airbnb had almost 20,000 entire-home rentals listed. The 2014 Housing and Vacancy Survey estimated the city had only 75,000 vacant apartments.

Airbnb refuses to compensate hosts for potential legal fees or evictions, and is instead lobbying to have the Illegal Hotel Law repealed. 

Bennett Baumer, a community organizer at Housing Conservation Coordinators on the West Side, argues that Airbnb actually encourages the large-scale illegal hotel operations that it is supposedly cracking down on. The large-scale operators, he says, “are the people who do this professionally, and they most likely provide a better product to Airbnb, a better supply, then the occasional person who lives in their apartment and does this every once in a while.” 

For most of 2015, Inside Airbnb said, about 19 percent of Airbnb’s whole-home rentals were offered by people who had more than one listing—a sign of a commercial operation. It purged more than 1,000 entire-home listings in November, just before it released the data, to bring that share down to 10 percent. Since then, however, the share of entire-home rentals coming from multiple listings has risen to 13 percent.

Whatever Airbnb contributes to New York’s tourism sector, Baumer points out, is much less than the over $26 million lost from skirted hotel taxes, as well as the taxes and union jobs lost from a limping hotel industry. 

Still, he says, the Imperial Court ruling at least indicates that Christian Klossner, the new executive director of the Mayor’s Office of Special Enforcement, at least has the political will—and sufficient funding—to “aggressively go after” illegal hotels, especially large-scale operators.