Hotelier Hank Freid has agreed to pay $1.1 million to settle allegations that he was running an illegal hotel operation on the Upper West Side, ending a five-year legal dispute and paving the way for at least one of the properties to be converted to affordable housing.
An entity tied to Freid sold the building at 258 West 97th Street, where he had operated the Royal Park Hotel, for $11 million at the end of January, property records show.
Mayor Eric Adams’ office announced Monday that the Fortune Society has acquired the building and will work with the Department of Housing Preservation and Development and the Department of Social Services to convert it to affordable housing.
“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,” Adams said in a press release.
Freid did not immediately respond to a request for comment.
All of the building’s 82 units will be “rent-restricted affordable,” according to the announcement, including 58 units set aside for formerly homeless New Yorkers and nine that will be filled through the city’s affordable housing lottery.
After hitting Fried with $15,000 in fines in 2017 for advertising units in the building on travel booking sites, the city sued him months later, claiming that three of his buildings — the Royal Park Hotel at 258 West 97th Street, the Marrakech Hotel at 2688 Broadway and The Broadway Hotel and Hostel at 230 West 101st Street — had been illegally converted from residences to hotel rooms.
Freid claimed the properties had been single-room occupancy hotels since the 1940s, and that transient use was permitted. The settlement notes that the Freid-affiliated entity that controlled the 97th Street building was among the plaintiffs in a 2017 lawsuit that sought to challenge changes to the state’s Multiple Dwelling Law in 2011 that barred landlords of most residential buildings from renting out units for fewer than 30 consecutive days.
Under the terms of the settlement, the city will receive a permanent injunction against illegally using or advertising the property for short-term rentals.
The $1.1 million settlement includes a $622,550 penalty for “sustained illegal activity” as well as $477,450 to clear 333 violations issued by inspectors from the Mayor’s Office of Special Enforcement — including $306,450 for 270 illegal occupancy and safety violations and $171,000 for 63 violations related to illegally advertising the buildings for short-term rentals.
The city said it previously obtained $521,500 from Freid to settle claims related to the Broadway Hotel and Hostel at 230 West 101st Street and $274,000 for claims tied to Freid’s Marrakech Hotel at 2686-2690 Broadway.
Freid remains in the hospitality business. In 2019, A company tied to Freid paid $44 million for a Marriott-branded hotel in Pompano Beach, Florida.