Monday, September 17, 2007

As Tourists Find Rooms, Tenants Face Disruptions

The New York Times
September 17, 2007
By J. DAVID GOODMAN and JOSHUA BRUSTEIN
http://www.nytimes.com/2007/09/17/nyregion/17hotel.html

Michael Cutler, a 53-year-old transplant from Texas, has lived for more than five years in an overstuffed single-room apartment in the Imperial Court, an 11-story building on West 79th Street at West End Avenue.

Mr. Cutler makes do in a 168-square-foot space that is crammed to the ceiling with antique radios, used electronics and his paintings. But since 2004, he has noticed signs of change.

“This is part of the tourist hotel,” Mr. Cutler said as he stood in front of an apartment two doors down and fingered the black key-card slot and the brass-colored handle. “Handles for the tourists, knobs for the residents.”

Mr. Cutler came to New York to become an artist but now earns about $20,000 a year installing signs for Wall Street corporations. He is one of about 120 long-term residents of the Imperial Court — half of its population — who have watched as hallways, bathrooms, kitchens and bedrooms have been upgraded in an effort to transform the building into a hotel.

In undergoing such an extensive retrofitting, the Imperial Court is not alone. Landlords at a growing number of New York apartment buildings are finding it lucrative to replace long-term tenants with a transient clientele of tourists and other short-timers.

The Illegal Hotels Task Force, made up of local officials and tenant advocates, has received complaints from tenants of about 100 residential buildings citywide. The task force is drafting a report on the issue, to be released in the fall. Already, the city is moving to shut down several hotels, including the Imperial Court, that it says are operating illegally.

Under current city laws, a building intended for residential use must be used primarily as permanent residences, with a minimum lease term of one month. Some property owners have interpreted this to mean they can use the space as hotel rooms as long as the minimum stay is 30 days. And in buildings classified as single-room occupancies, like the Imperial Court, the law is even murkier, with many of those tenants paying by the week.

Councilwoman Gale A. Brewer, in whose district the Imperial Court is located, is among several council members who have introduced a bill to tighten restrictions on the conversions. And a spokesman for Mayor Michael R. Bloomberg said his office was working on legislation that would “fix ambiguities in the law.”

While the complaints are concentrated on the Upper West Side, which still has a large number of single-room-occupancy buildings, examples have been cited throughout Manhattan.

“They’ve been cropping up all over the place,” said John Raskin, an organizer with Housing Conservation Coordinators, a tenants’ association that works with public officials to draft tougher laws. “Anywhere a tourist would feel safe.”

With the number of tourists rising every year — an estimated 44 million last year, up from 42.6 million in 2005, according to the city — such conversions could become even more tempting. But the existing law surrounding conversions is murky, and few building owners have been punished for renting out short-term space in residential buildings.

“There’s not a clear law that says what an illegal hotel is,” said Yarrow Willman-Cole, a tenant organizer at the Goddard Riverside S.R.O. Law Project, which provides legal representation for single-room occupancy tenants.

And although Web sites like Hotels.com and Expedia.com advertise rooms in the Imperial Court and other residential buildings, the ventures operate largely below the radar. The Imperial Court, for example, has no printed brochures. For inquiries regarding rates, employees at the reception desk refer visitors to the building’s Web site, ImperialCourtHotel.com.

There, a visitor can get a room from $119 a night (bathroom shared with other guests and single-room occupancy tenants) to $389 per night for two double beds, private bathroom and kitchenette. Mr. Cutler, by comparison, pays about $225 a week for a room that includes a kitchen nook and bathroom.

The Department of Buildings says that the Imperial Court is violating the law by operating as a tourist hotel. The department, which issued two violations against it in 2006 for operating as a tourist hotel, argued its case in July at a hearing before the Environmental Control Board.

Martin J. Heistein, a lawyer for the owner, Michael Edelstein, does not dispute that the building is operating as a hotel, but says that single-room occupancy buildings are intended for such use.

“The bottom line is that the hotel doesn’t rent on a daily basis,” Mr. Heistein said after the hearing. “It’s been weekly since 1958.”

Assemblywoman Linda B. Rosenthal, who represents the Upper West Side, disputed that claim, saying in an interview that she rented a room for two nights in February.

When asked about Ms. Rosenthal’s stay, Mr. Heistein said this month that the Imperial Court had been a “primarily weekly” building.

The case has been adjourned until next month.

On Thursday, the city will ask a State Supreme Court justice to stop three buildings on West 94th and 95th Streets from operating as hotels. David M. Satnick, a lawyer for Fitos Neophytou, the on-site manager for all three sites, says that they are doing nothing new in renting rooms as a hotel and that they will continue to operate “as they have for decades.”

In some eyes, owners of such buildings are simply doing what is good business.

“I’m not sure why a lot of public officials are getting upset,” said Frank Ricci, a spokesman for the Rent Stabilization Association, which represents residential building owners. “I think the owners are just trying to make ends meet.”

Residents of such buildings often see the situation differently. They complain of noise late at night, the lack of maintenance and security in a building where strangers come and go at various hours, and constant construction that disrupts day-to-day life.

Charles Nassif, who, like Mr. Cutler, lives on the first floor of the Imperial Court, said his worst experience came one evening when he was taking a shower and a group of guests decided that his time was up. “I was in my bath towel,” he said, “and they were trying to push the door open.”

On a recent day outside the hotel, several foreign guests who were consulting a subway map were baffled by the idea that their hotel had permanent residents. But Ken Macdonald, a former New Yorker who was renting a room for $135 a night while in the city for a visit, knew all about the full-time residents. He used to be one.

From 1989 to 1994, Mr. Macdonald paid $170 a week to live in the Imperial Court. Though he still recognized some faces, many of his old neighbors were nowhere to be found.

“A lot of people lost their spots,” he said. Stubbing out his cigarette, he headed back inside to his room, key card in hand.


Gabriele Stabile for The New York Times

Michael Cutler is a long-term resident of the Imperial Court. That it is used as a hotel is evident in its key-card locks: “Handles for the tourists, knobs for the residents,” he said.


Gabriele Stabile for The New York Times

The Imperial Court, on the Upper West Side, is among a growing number of apartment buildings whose landlords are replacing long-term tenants with tourists and other short-timers.

Sunday, September 16, 2007

Throwing a Wrench Into Co-op Budgets

The New York Times
September 16, 2007
Your Home
By JAY ROMANO
http://www.nytimes.com/2007/09/16/realestate/16home.html

UNEXPECTED government efficiency could put shareholders in some New York City co-ops at risk of losing income-tax deductions for interest on mortgages and property taxes.

The problem results from the interplay between two otherwise unrelated issues.

The first is the "80-20" rule, a federal tax rule that requires residential co-ops to get at least 80 percent of their gross income from their tenant-shareholders and no more than 20 percent from other sources like commercial rents.

The other is the city's property tax abatement program.

Most co-ops recapture the abatement, which is paid in a lump sum directly to the building, by assessing all shareholders for about the same amount as their individual abatements each year.

"It's a way of refurbishing the coffers of the co-op without being too painful for the shareholders," said Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums.

(Condominium owners get their abatements directly, and because the 80-20 rule does not apply to condos, this is not an issue for them.)

Stuart M. Saft, chairman of the co-op and condo council, said that under the Internal Revenue Code, as long as at least 80 percent of a co-op's income is from its shareholders, the shareholders are treated like homeowners for tax purposes.

If income from them falls short of 80 percent, shareholders cannot legally deduct interest and property taxes for their apartments from their income taxes, Mr. Saft said.

An assessment to recapture the city tax abatement is considered income from shareholders, and some co-ops use the assessment to help them comply with the 80-20 rule. But this year, the city has speeded up the abatement process, throwing a monkey wrench into co-ops' delicate 80-20 financial balance.

Ms. Rothman said that each year, the city sends a letter to every co-op building specifying each shareholder's abatement. In past years, that letter was sent at the end of the year, and co-ops would impose the assessment at the beginning of the next year. But this year, the city sent out the abatement letters earlier than usual.

And therein lies the problem.

Mark B. Shernicoff, a Manhattan co-op accountant, said buildings that regularly impose assessments to recapture the abatement most likely did so at the beginning of 2007 for last year's abatement.

Since the letters for this year's abatement have already arrived, some co-ops may be tempted to impose an assessment to recapture this year's abatement now. And that might well be a mistake.

Mr. Shernicoff said that if the city does not send out next year's abatement letters as early as it did this year, thus enabling co-ops to recapture the 2008 abatements in 2008, co-ops that imposed two assessments for this year will not be able to impose another one for next year. That could put them on the wrong side of the 80-20 rule.

"My recommendation for co-ops that file on a calendar-year basis is to wait until next year to impose the assessment," Mr. Shernicoff said.

"And co-ops on other fiscal years should make sure to consult with their accountant to make sure they do the assessment in the right year."


Tom Bloom

Last apt. dweller's 'hotel' hell

New York Post
By ANGELA MONTEFINISE
http://www.nypost.com/seven/09162007/news/regionalnews/last_apt__dwellers_hotel_hell.htm

September 16, 2007 -- A fed-up family is taking on a hotel giant.

It's the Marinacs against the Marriott in a battle over the hotel chain's Chelsea location on West 24th Street - a location the family, as well as the city, believes is operating illegally out of a 19-story apartment building.

"This is an apartment," said Maryanne Marinac, 41, the last long-term tenant in the building, which has about 200 units.

"The certificate of occupancy says it's an apartment. It was never changed. And yet here's the Marriott, operating a hotel."

Marinac, who has lived in her one-bedroom apartment with her husband for six years, said the trouble began in 2003, when the Marriott struck a deal with the building's owner and began renting rooms for between $200 and $500 a night.

Although the Marriott calls its "Execustay" location a "corporate apartment provider," critics say it's an illegal hotel.

"The people living there are just visiting," said John Raskin of Housing Conservation Coordinators. "That's a hotel. Period."

The problem, according to officials, is a vague city law that legislators are working to change. Because the Marriott says it only offers a minimum of 30-day stays, it can claim it offers month-to-month apartment rentals, not hotel rooms.

Except the Marriott is actually allowing short-term stays, officials said.

The Mayor's Office of Special Enforcement seized a doorman's report, from Oct. 30, 2006, to Nov. 5, 2006, which featured "at least 21 instances of less than one-week stays," according to a June letter from the Department of Buildings to the Environmental Control Board.

The Post was also able to obtain a rate for less than a 30-day stay last week, and online reviews of the hotel reveal short-stay visitors.

Marriott spokesman Roger Conner didn't comment.