Pyrrhic Victory for City in Hotel Lawsuit: No More ‘Illegal’ Occupancy, But SRO Housing to Be Demolished

The Marrakech Hotel at 2688 Broadway (103rd Street)

By Joy Bergmann

After more than two years of legal battles, the City of New York reached a settlement this week with Hank Freid, ending tourist occupancy at his Marrakech Hotel property located at 2686, 2688 and 2690 Broadway [103rd Street].

The City had sought an injunction to stop Freid from renting rooms to tourists – transient occupancy of under 30 days – believing such occupancy violated the 2010 Multiple Dwelling Law requiring buildings with Class ‘A’ SRO [Single Room Occupancy] Certificates of Occupancy to be used for permanent housing. The Marrakech buildings have an SRO designation, but Freid contested that he was forbidden from tourist use.

In court appearances and documents, City attorneys had emphasized the need to preserve permanent housing units – especially affordable housing like SROs – for low and middle-income New Yorkers.

In the settlement, Freid does not admit to any wrongdoing, but does agree to end all transient occupancy at the Marrakech. He also agreed to pay the City $274,400.

The City declared victory. “This resolution ends the nuisance of the Marrakech Hotel once and for all, and paves the way to ensure the site is restored to permanent residential units used as homes for New Yorkers,” said Christian Klossner, Executive Director for the Office of Special Enforcement.

What Klossner did not say was the type of permanent housing apparently coming to replace the Marrakech Hotel’s 100+ rooms: luxury condos.

According to the court settlement documents, the buildings are in contract to be sold to “a property developer” who “plans to demolish the [Marrakech Hotel] buildings…and thereafter build in their place luxury condominiums and has no intention of ever operating…as a transient hotel or for short-term rentals.”

Freid’s attorney Ronald J. Rosenberg  told WSR in a statement that the hotel owner “made the strategic decision that coupling the end of litigation with the sale of the properties resulted in a terrific opportunity for the company to achieve a great return on its long term investment.” He added, “This is a great outcome for [Freid] and for the future use of the property at a time when the market is demanding luxury condos in the heart of Manhattan.”

Rosenberg would not comment on the identity of the purchaser or the sale price. He did confirm that the sale includes ground-floor retail spaces currently occupied by a Starbucks and a dollar store in addition to the Marrakech Hotel.

The settlement received mixed reviews from affordable housing advocates at Goddard Riverside.

“We applaud the City’s effort to ensure landlords operate properties in a manner consistent with their lawful use,” said Rod Jones, Goddard Riverside’s Executive Director, in a statement to WSR. “It’s also important to preserve desperately needed affordable housing. Not for profit organizations would be a good option to serve as an operator of these properties as Supportive Housing. Preservation of affordable housing is a key issue beyond operating the property outside of code.”

Meanwhile, the City’s “illegal occupancy” lawsuits against two other Freid SRO properties continue. But tourists looking to stay this summer at his Royal Court Hotel & Hostel at 258 W. 97th Street or the Broadway Hotel & Hostel at 230 W. 101st Street need look no further than Booking.com to snag a bed on the Upper West Side.

July 31st screenshot from Booking.com 

NEWS, REAL ESTATE | 18 comments | permalink
    1. Bill Williams says:

      LOL!!!! You have to love NYC and it’s politicians, commissioners, lawyers, and community boards. Their incompetence is unmatched.

    2. Sherman says:

      This is a victory for the neighborhood.

      I’d rather have a shiny new luxury condominium in the neighborhood than a grimy old SRO (which is a step above a homeless shelter).

      This building should have been torn down years ago.

    3. Wynn Nguyen says:

      Much, much prefer luxury condos to SRO hotels, cheapo tourist hotels, ‘affordable’ housing, or ‘supportive’ housing.

      Why not building affordable housing in the bike lanes?

      • Nadine says:

        Wynn, have you read over your comment? More importantly, have you devoted any thought to your distaste for those in greater need than yourself? Sure, luxury condos typically make for more courteous neighbors than do supportive housing programs….but do you realize that in the absence of supportive and affordable housing, the number of homeless people rises? Will you then request they, too, occupy the bike lanes? Get a heart.

    4. Rob G. says:

      Funny how our politicians have no problem loading up our neighborhood housing with transient drug addicts and mental patients, but they squeal like stuck pigs when it comes to “transient” tourists that are beneficial to our local businesses.

      Score one for the good guys on this one at least. I’ll take a luxury condo any day over another flophouse.

    5. Amanda says:

      For all its faults and general skeezy-ness, at least the gritty old New York had SRO’s, rooming houses and flops so that people who had the least could have a roof over their heads, in comparative safety and stability. I lived in an SRO for a time when I had no job. Was it great? No, it wasn’t, but it was what I could afford and I was able to move up. I don’t judge people who live in those situations one bit, because I know what it’s like to be poor in this city.

    6. Scott says:

      Congrats to Freid for sticking it to the city’s “homeless” mafia and turning a buck for himself. I welcome the future condos.

    7. Jerome36 says:

      It is truly amazing how many SROS, low income housing, and homeless shelters there are on the UWS. I have walked by that hotel for 10 years and never had a clue it was an SRO. I only saw tourists walking in with luggage. In a broader sense, it feels as if the City takes advantage of the upper West Side’s benevolence, liberalism, and general fairness to put an inordinate amount of these facilities in our neighborhood.

      • B.B. says:

        Those residence hotels were always on UWS. Many date back to late 1800’s or early 1900’s.

        As times and tourist tastes changed residence hotels fell out of favor. Some like the Barbizon for Women did well enough, but the rest either closed down (and property demolished/redeveloped), became rental or co-op housing, or just busted down the ranks from tourist to fleabag hotel.

        While SROs could be fleabags, some did manage to remain rather decent. However by the 1960’s and certainly the 1970’s wave of de-institutionalization of mentally ill swept over USA.

        No local government followed through with creating nearly enough supportive community housing, so mentally ill ended up in SROs, again of which UWS had plenty. The mentally ill receive various benefits, including Medicaid. SRO owners found they could make a tidy sum off those poor unfortunate souls.

        The arrival of vast numbers of mentally ill forced most remaining “decent” persons out of SRO housing. So pretty soon only ones left were mentally ill, homeless, and or perhaps those with shady backgrounds.

        The homeless and others are shunted into SROs because city doesn’t have many other options.

        NYS like many other states banned creation of new SRO hotels back in the 1950’s. Mayor Koch turned a blind eye as his real estate pals torched, gutted, and otherwise did everything possible to empty out SROs so property could be redeveloped. Thus what is left is all that there is, and much of it lies on west side.

        Here is a link to an old tourist book from 1919 listing residential and other hotels in NYC. Looking down the list you’ll find names familiar today as welfare, SRO, and homeless hotels/residences.

        https://books.google.com/books?id=kt9LAQAAMAAJ&pg=RA1-PA66&dq=Hotel+Saint+Andrew+broadway+New+York+City&hl=en&sa=X&ved=0ahUKEwiEqpH86_DVAhWC2YMKHY8WB5w4ChDoAQg1MAM#v=onepage&q&f=false

    8. B.B. says:

      This isn’t exactly unexpected news.

      It was revealed when WSR last covered 2688 Broadway that city had granted permits for demolition. So that is now that.

      Well it will be until Gale Brewer gets wind of things, and mounts a protest. *LOL*

    9. Jose Habib says:

      Awesome! A win-win!

    10. Christian says:

      I lived in that building when it was known as the Malibu Studios Hotel. I moved to NYC with little money, no job, and no place to live. I could afford the rent there and no place else. We need to keep out another luxury condominium, and keep low and middle income housing. This neighborhood is beautiful, and adding yet another “luxury” condo will be unwelcome, at least by me. Change is inevitable, but we need to keep the UWS diverse and available to all.

      • Effy says:

        You could’ve lived somewhere – Queens, Brooklyn, the Bronx (like I did), Staten Island, Yonkers, Mount Vernon etc. at the very least. You mean, you wanted to live cheap in Manhattan.

        It’s not that dramatic and no one has a “right” to live in Manhattan.

    11. allen swan says:

      I’m curious as to how many SROs there are on the Upper East Side. For that matter, why do I not see any homeless on the Upper East Side either. Is there, as Jerome36 pointed out regarding our West Side neighborhood, no “benevolence, liberalism, and general fairness” in that part of our fair city?

      • B.B. says:

        Hotel Wales on Madison and 92nd had or has SRO units: https://nypost.com/2017/08/22/hotel-wales-future-uncertain-after-selling-for-35m/

        You can find an exhaustive listing of SRO, supportive, etc… housing here: https://shnny.org/images/uploads/Community-Units.pdf

        UES has a few scattered supportive housing. They are blended in with rest of Yorkville.

        One is located at 211 East 81st: https://www.ncsinc.org/supportive-housing

        There was or still is another on East 77th between Third and Second, but cannot recall exact address.

        As for there not being any homeless on UES, that is a laff. They are all over UES as they are any other part of Manhattan.

        Homeless, those from shelters/supportive housing like UES because quite frankly the wealthy throw away lots of nice things. You see them nightly going through garbage bags put out for collection in front of residential buildings.

        Then there are all the shops, stores, supermarkets, bakeries, etc… which make for happy “dumpster diving” for food by going through their garbage bags.

        Know people who live on UES and Yorkville and they complain that things have gotten worse homeless/vagrant wise since SAS opened. If you’ve ever ridden the “Q” train you’d know it is filled with homeless as well, especially nights/over night.

    12. Bruce E. Bernstein says:

      the bottom line for the people who are against affordable housing is that they want a neighborhood without poor and working class people, who are disproportionately people of color. in other words, an homogeneous upper middle class and upper class community.
      I’m in favor of alleviating the housing shortage for working class and poor people. It’s not only a shortage: people have to pay exorbitant rates for housing. So anything we can do that actually works towards solving that problem is worthwhile to the residents of NYC. they take precedence over tourists.

      and no, getting rid of rent stabilization does not alleviate the affordable housing shortage. that’s a right wing ideologically based myth. Rents just go up.

      the idea that “our streets have been taken over by the homeless” is also a myth. sure, you’ll see a few panhandlers and homeless. Count them some time, it is very very few, unless you are down at Penn Station late at night. People just don’t want to see any, they want a neighborhood that is pristine and pure. maybe a gated community?

    13. B.B. says:

      Toll Brothers purchased the Broadway property for $44 million.

      https://therealdeal.com/2019/08/07/toll-brothers-buys-controversial-marrakech-hotel-site-for-44m/

      Hank Freid made a nice profit there, and now can move onto other things.