Cracking Down on Illegal Hotels: City Sues Landlord for Converting Hundreds of Affordable Housing Units

June 29, 2017

NEW YORK - The Mayor's Office of Special Enforcement (OSE) today announced that it filed a lawsuit in New York State Supreme Court against Hank Freid, CEO and Founder of the hospitality company Impulsive Group. The suit alleges that Mr. Fried converted nearly 250 affordable residential housing units, in five Upper West Side buildings, into illegal hotel units. Mr. Freid used online booking sites to advertise and rent the units to short-term guests in violation of a slew of city and state regulations.

"This landlord illegally took hundreds of affordable units off the market. Today, we filed a suit to get him to stop his unlawful activities." said Christian Klossner, Executive Director of the Mayor's Office of Special Enforcement. "This action should stand as a warning:  We will use every tool at our disposal to preserve and protect our housing stock, to protect our homes and neighborhoods, and keep residents and visitors safe."  

The Office of Special Enforcement, tasked with enforcing against illegal hotels and other short-term transient use, has issued over 200 building and fire code violations and 90 summonses for illegal advertising, with potential penalties up to $1,019,340 at Mr. Freid's properties since December 2011. The lawsuit filed against Hank Freid, known as a nuisance abatement case, is an enforcement tool OSE is increasingly employing against chronic offenders when they refuse to cease the illegal use. A hearing seeking a preliminary injunction against Mr. Freid's illegal use of the buildings will occur September 12th.

"New York City is in the middle of a long-term affordable housing crisis. This landlord is just one egregious example of a problem that has spread throughout the city and continues to make that crisis worse - housing meant for regular New Yorkers being converted into illegal hotels," said Senator Liz Krueger. "I thank OSE for their work in bringing these 250 affordable units back onto the market, and for their continuing efforts to crack down on illegal hotels and protect public safety."

"I am impressed with the commitment the Mayor's Office has shown in cracking down on unscrupulous illegal hotel operators like the Impulsive Group. When landlords convert what is meant to be affordable long-term housing into housing for short-term guests, they contribute to the increasingly serious housing crisis in the City of New York and circumvent the proper rules and regulations for the operation of a hotel. Not only are such hotels illegal, they are also unsafe as their unlicensed status allows operators to cut corners in vital areas of safety and worker protections. This suit sends a clear message that nobody in New York City is above the law," said Senator Marisol Alcantara.
Assembly Member Richard N. Gottfried of Manhattan, Assembly sponsor of the 2010 State law on illegal hotels, said, "Effective enforcement by Mayor de Blasio's Office of Special Enforcement is a strong deterrent to people seeking to profiteer off residential apartments by illegally renting them out as hotel rooms, at the expense of law-abiding neighbors. With this action, OSE is sending a clear message: illegal hotel operators deprive New Yorkers of desperately needed affordable housing, make life a nightmare for neighbors, and endanger public safety and they will face severe consequences for doing so."

"A word of advice to those New York City landlords running an illegal hotel scam: OSE will track you down and root you out," said Assemblymember Linda B. Rosenthal (D/WF- Manhattan). "With the continued loss of affordable housing in New York City, we need a zero tolerance policy toward this type of landlord behavior."

"Housing is housing," said Manhattan Borough President Gale A. Brewer. "When scofflaws turn residential apartments into illegal hotel rooms, it puts tourists and residents alike at risk, and it makes our housing crisis worse. I thank the Office of Special Enforcement for pursuing this case, and for their continued efforts to protect our housing stock and keep illegal profiteers from worsening the housing crisis."

"I strongly support the efforts of the Mayor's Office of Special Enforcement to crack down on illegal hotels and preserve the Upper West Side's housing stock. By renting out residential units as hotel rooms, Mr. Fried took away hundreds of homes meant for the people of our district. Illegal hotels also create a safety issue for other building residents and provide landlords with an incentive to harass tenants. In the midst of New York City's current housing crisis, Mr. Fried's unscrupulous behavior made a bad situation worse," said Council Member Helen Rosenthal (Manhattan, District 6).