By Joy Bergmann
A residential building that the city says operated as an illegal hotel for years has been sold, and now appears to be empty. The new owners of the Park 79 at 117 W. 79th Street, Fairstead Capital, won’t say what’s next for the property, but hanging in the balance are 108 units of permanent affordable single room occupancy (SRO) housing. SROs are small apartments with few amenities — the bathroom is often shared — with regulated rents.
Larry Goldstein of DLRH Associates, the building’s previous owners, told WSR that tourist operations ended in 2016. In November 2015, the City had issued 13 transient use violations against DLRH for serving tourists instead of renting to permanent tenants as required by the building’s Class A SRO Certificate of Occupancy. All of the violations were upheld in administrative court, according to the Mayor’s Office of Criminal Justice (MOCJ). In April 2016, DLRH paid $51,600 in related penalties, according to the Office of Administrative Trials and Hearings.
Goldstein would not disclose the price he and his partners paid for the rental building in 1985. But when the $22.5 million sale to Fairstead Capital closed in July 2016, “the property was not delivered vacant,” he said.
A couple of long-term tenants had remained in residence, according to Larry Wood of the Goddard Riverside Law Project. One was relocated to a studio apartment on 75th Street; the other has, “negotiated a significant buyout through a private attorney.”
The relocated man, Ray Zaccarino, 82, has signer’s remorse. “I was dumb. I was gullible and I thought they were being nice,” he says. After living in a two-room apartment at the Park 79 for over 20 years, the retired actor considered the management as extended family. Zaccarino says that after the Fairstead sale, one manager took him to lunch and “put a piece of paper in front of me and I signed it.”
Zaccarino says he did not seek legal advice, doesn’t have a copy of the agreement and does not believe it includes any cash settlement beyond reimbursement for some new furniture. He is, however, living rent-free with paid utilities in his new place. But knowing that the holdout tenant may be receiving a huge sum has him kicking himself. “I would like to have had more money to give to animal charities and relatives,” he says. “I’m very depressed!”
A Fairstead spokesperson said the company won’t comment on its plans for the building or arrangements they make to relocate tenants.
Speculation has been that Fairstead will pursue a residential conversion of the Park 79 to luxury rentals or condos. There are considerable costs to cover. A Department of Finance spokesperson confirmed that the 2018 property tax bill for the site will be $709,269. Fairstead could reduce or eliminate its taxes if it chose to redevelop the building as affordable housing through various HPD tax-incentive programs.
Roderick Jones, the executive director of Goddard Riverside, said in a statement that his organization has worked for decades to preserve affordable SRO housing in Manhattan. “I hope this is returned to a SRO through a long public-private partnership benefiting the current owners, lower income workers, the surrounding neighborhoods, and employers of hourly wage workers needing affordable housing.”
Assemblymember Linda B. Rosenthal says “Optimally, those units would be restored to the former hotel-regulated status. The new owner of the building is the beneficiary of the previous owner’s illegal hotel activity, which caused the building to be nearly empty today. Presumably, the new owner was well aware of the tax burden at the time of purchase, and it’s incumbent on Fairstead Capital to ensure that the units are restored to affordability,” she said.
Apartments meant to be used as affordable housing have increasingly been turned into short-term lodging, city officials say. Multiple buildings with Class A SRO Certificates of Occupancy have been fined for operating transient hotels. According to the Department of Buildings’ web site and the MOCJ, the Morningside Inn received transient use violations in March of 2015 and November of 2016, and has racked up $126,000 in total unpaid penalties for various infractions. The Park West Hotel – formerly operating as Astor on the Park – has $158,940 in total outstanding penalties including transient use violations from January of 2015 and June 2017. And the City’s lawsuit continues against Hank Freid seeking the ceasing of operations at his Hotel Marrakech, Broadway Hotel and Royal Park Hotel. In 2016, a court ruling against the Imperial Court Hotel established a precedent that SRO buildings cannot rent rooms to tourists for less than 30 days.
“The City is bringing an unprecedented number of nuisance abatement lawsuits against intransigent illegal hotel operators and winning record-setting seven-figure settlements, said MOCJ spokesperson Patrick Gallahue. “Landlords who ignore administrative fines are being made to pay a steep price.”
Thanks to Steven for the tip. A quote from Roderick Jones was edited for clarification after publication at Goddard Riverside’s request.