City shuts down illegal hotel operation as part of $1.1M settlement

An illegal hotel operator on the Upper West Side is on the hook for $1.1 million in penalties, as part of a settlement with the Adams administration to shut down a short-term rental operation.

City Hall officials also helped a nonprofit organization acquire the West 97th Street building, which will become housing for low-income and formerly homeless New Yorkers, according to the mayor’s office.

Details: The $1.1 million settlement with landlord Hank Freid and his company includes penalties for sustained illegal activity, and for 333 violations issued by inspectors from the Mayor’s Office of Special Enforcement for safety violations, illegal occupancy and illegally advertising for short-term rentals.

The deal comes following a decade-long legal fight against Freid, who has amassed nearly $2 million in total penalties and had two other illegal hotels shuttered, according to City Hall. He did not immediately respond to a request for comment.

The building in the latest settlement — 258 West 97th Street — was purchased for $11 million from Freid by the nonprofit Fortune Society that helps formerly incarcerated New Yorkers reenter society. Fortune is working with the city’s housing and social services departments to turn the building into 82 income-restricted affordable apartments. Of these units, 58 will be for the formerly homeless, nine will be filled through the city’s general affordable housing lottery and 15 will be for existing tenants.

“Today, we are not only shutting down an illegal hotel operator but also creating 80 new affordable homes for New Yorkers struggling to get by,” Mayor Eric Adams said in a prepared statement. “The old approaches to the affordable housing crisis are no longer enough — which is why my administration is pursuing bold, innovative strategies like this one to create housing New Yorkers can actually afford.”

Key context: The city has been cracking down on the use of short-term rental platforms like Airbnb by landlords who have turned apartment buildings into de facto hotels, taking housing units off the market in the process. State law currently prohibits rentals for fewer than 30 days, when the host is not present, in most apartment buildings.

The Hotel Trades Council, the politically powerful hotel workers union that is close to Adams, has been a major backer of efforts to heighten regulations on short-term rentals as they cut into the hotel industry. The union backed a measure approved by the City Council in 2018 that sought to require the company to make monthly disclosures of certain host information to the city, but the law stalled amid a court challenge.

The de Blasio administration reached a settlement with Airbnb in 2020 that called for the Council to introduce a new, less expansive law that would require quarterly reporting on a more targeted group of listings. The Council passed another measure last December to require people renting out their apartments for fewer than 30 days to register with the Office of Special Enforcement, an effort to weed out hosts listing units illegally.