Targets of de Blasio’s first illegal hotel suit fight back

Kermanshahs say city unfairly targeted their two Manhattan buildings for legal action

TRD New York /
Oct.October 21, 2014 03:55 PM

The Manhattan landlords the de Blasio administration hit with its first lawsuit targeting buildings allegedly used as illegal hotels have fired back, claiming they were victims of “unequal enforcement” under the the law.

Brothers Hamid and Majid Kermanshah claim that a lawsuit filed Sept. 2 in New York State Supreme Court by the Mayor’s Office of Special Enforcement that accuses them and others of violations — including deceptive trade practices and providing illegal hotel accommodations — unfairly targeted them.

The city said there were illegal hotel uses in their properties at 59 Fifth Avenue, a four-story residential and retail building between 12th and 13th streets in the West Village, and at 5 West 31st Street, a 10-story commercial building in Midtown South.

In a response filed Friday, the brothers allege that the city is “engaging in unequal enforcement of the law with an illicit motive and based on an impermissible purpose, so as to discriminate between persons in similar circumstances.”

One government source disputed that, saying the city targeted individuals and landlords based on complaints, and this case was not one of selective enforcement.

“When we have a bad actor putting people’s safety at risk, we’re going to go after them,” First Deputy Mayor Tony Shorris, who oversees the Office of Special Enforcement, said in a statement to The Real Deal. “It takes a lot of 21st-century detective work to put these cases together, and we have better tools than ever before to do it.”

A representative for the Kermanshahs declined to comment.

The competing claims are part of a high-stakes battle between property owners or leaseholders who may be renting out apartments units illegally, and the city and state which want to enforce current law. The government must walk a balance, however, because some Internet sites such as Airbnb have proven not only lucrative for property owners, but also for the city. The sites often provide visitors with affordable staying options, and these visitors then spend cash that boosts the local economy.

In response to illegal hotel complaints, the city says it has increased the number of apartment inspections. Between January and August, it has carried out 617 inspections upon receiving complaints, up from 434 during the same period last under the Bloomberg administration.

This is the first case the new administration filed in an effort to crack down on illegal hotels, although it was not directly tied to Airbnb, a source in the de Blasio administration said.

While the city’s complaint does not name Airbnb, it does say that illegal hotel are impacting affordable housing. Housing advocates say the service removes units from use in areas that lack affordable housing.

The city’s complaint against the Kermanshah’s identifies a litany of violations, and cites rulings in the city’s favor before the city’s Environmental Control Board and the city’s Criminal Court, court papers say.

Airbnb has drawn the attention of New York State Attorney General Eric Schneiderman, who in a report this month said that 70 percent of the web sites listings in New York City were illegal.

While the case against the Kermanshah’s was a first for the de Blasio administration, the type of illegal hotel enforcement through a lawsuit is nothing new. Bloomberg used it as part of his effort to rid the city of such hotels.

“This sounds like just a continuation of the Bloomberg Administration,” real estate attorney Adam Leitman Bailey, who isn’t involved in the case, said.

Related Articles

Alex Sapir and the NoMo Soho hotel at 9 Crosby Street (Credit: NoMo SoHo)

Sapir Corp.’s stock drops in Tel Aviv

181 Varick Street (Credit: Google Maps)

Claremont Companies buys Soho Marriott for $59M

Rendering of the Staybridge Suites at 38-59 11th Street

Long Island City hotel project moves forward with construction loan

Heritage Equity Partners’ Toby Moskovits, Benefit Street Partners real estate managing director Micah Goodman, and the Williamsburg Hotel at 96 Wythe Avenue (Credit: Google Maps)

Toby Moskovits’ Williamsburg Hotel is headed for receivership following $68M loan default

461 West 34th Street with Marx Development Group's David Marx (Credit: Google Maps)

David Marx lands $202M refi for Hudson Yards hotel

30 West 31st Street and 52 West 36th Street (Credit: Google Maps)

South Korean firm snaps up two Midtown hotels for $137M

Brookfield Property Group CEO Brian Kingston and 652 11th Avenue (Credit: Google Maps)

Brookfield drops $83M on Hell’s Kitchen hotel

Mensur Cekic, Hudson Yards’ director of residences

From private tutors to meditation sessions, inside NYC’s new amenities battle