Testimony by New York State Senator Duane before the New York City Council Committee on Housing and Buildings Regarding Introduction 404 – Fines for Illegal Conversions of Permanent Residences to Hotels

December 13, 2011

My name is Thomas K. Duane and I represent New York State's 29th Senate District, which includes the Upper West Side, Clinton/Hell's Kitchen, Greenwich Village, and part of the East Side, including the East Village, Stuyvesant Town, Peter Cooper Village and Waterside Plaza. Thank you for the opportunity to present testimony before the New York City Council's Committee on Housing and Buildings today regarding Introduction 404, which relates to the fines for illegal conversions from permanent residences to hotels. I applaud Council Members Gale Brewer and Speaker Christine Quinn for this bill and ask the Committee to support this vital piece of legislation.

The problem of apartments in Class "A" residential buildings being converted into transient hotel units should not be understated. For close to a decade my district and many other parts of New York City have seen an explosion of such conversions. These "illegal hotels" create hazardous conditions for short-term visitors and permanent residents alike, and undercut the legitimate hotel industry that is such an important part of New York City's economy.

Illegal hotels are dangerous to those who stay in them because residential buildings are not bound by the same strict fire and building codes as are legitimate hotels. Illegal hotel rooms also tend to fall far below standards in terms of security, room quality and amenities. These conditions not only leave visitors vulnerable to harm, but also damage the city's reputation, and therefore harm tourism and the legitimate hotel industry.

Further, as you will no doubt hear from many tenants, advocates, and legislators today, illegal hotels are bad for New Yorkers. Their proliferation greatly exacerbates our already severe lack of affordable housing by taking literally thousands of residential units off the market. Moreover, tenants living in buildings with illegal hotels suffer from the lack of security and excessive noise that result from transient guests coming and going without regard for their neighbors. Tenants in these buildings also commonly face extreme harassment from landlords who have realized that their apartments would be worth much more as illegal hotel rooms than as homes for permanent tenants.

This widespread illegal practice needs to be attacked accordingly. In 2010, the New York State Legislature passed legislation that I co-sponsored that clarified that Class A multiple dwelling residential buildings may only be used as long-term residential housing. Then-Governor David Paterson signed this bill into law and it went into effect on May 1, 2011. Regrettably, despite the new law, illegal hotels continue to proliferate in my district and across the city.

While the Mayor's Office of Special Enforcement ("OSE"), which has the task of investigating and prosecuting operators of illegal hotels, works tirelessly to combat this scourge on New York City's affordable housing stock, the agency is overworked and underfunded. Currently, it only has enough staff for a single enforcement team to investigate illegal hotel complaints throughout the City. I am very grateful to OSE Director Kathleen McGee as well as her predecessor at the agency, Shari Hyman, for their exceptional dedication to this fight, but they have not been given the resources needed to succeed.

One crucial tool that would significantly aid enforcement efforts is increased and graduated penalties. We cannot put an end to the operation of illegal hotels in our City when the punitive measures facing landlords who are found guilty of this crime are pitiable. Under the current fine structure, a building's owner may be assessed a one-time fine of $800 regardless of how many illegal hotel units he or she operates. Considering that illegal hotel rooms may rent out for several hundred dollars a night, and there are often multiple rooms being used in this fashion, an $800 fine is a laughable punishment that a landlord could easily write off as a cost of doing business. By allowing fines to be issued for every unit used illegally, with compounding fines for repeat offenses, Introduction 404 would establish penalties that are sufficient to compel lawful conduct.

I thank the City Council's Committee on Housing and Buildings for allowing me to submit this testimony and urge you to pass Introduction 404.

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