SKM 95817110315280€¦ · Short Changing New York City: The Impact of Airbnb on New York City's...

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK: CIVIL BRANCH

--------------------------------------------------------------------X X Index No. 451883/2017

THE CITY OF NEW YORK,Hon. James E. d'Auguste, J.S.C.

Plaintiff IAS Part 55

-against- Motion Sequence No.: 001

HANK FREID; IMPULSIVE GROUP LLC; BRANIC

INTERNATIONAL REALTY CORP; TERRILEE 97TH

ST. LLC.; HELMS REALTY CORP.; THE LAND ANDBUILDING KNOWN AS 2686 BROADWAY BLOCK

1874, LOT 45, County, City and State of New York; THE

LAND AND BUILDING KNOWN AS 2688

BROADWAY BLOCK 1874, LOT 44, County, City and

State of New York; THE LAND AND BUILDING

KNOWN AS 2690 BROADWAY BLOCK 1874, LOT 43,

County, City and State of New York; THE LAND ANDBUILDING KNOWN AS 256-258 WEST 97™

97 ST.,

BLOCK 1868, LOT 59, County, City and State of New

York; THE LAND AND BUILDING KNOWN AS 230

WEST 101st101 ST. Block 1872, Lot 54, County, City and

State of New York; JOHN AND JANE DOE NUMBERS1 THROUGH 20, fictitiously named parties, true names

unknown, the parties intended being the managers or

operators of the business being carried on by Defendants

and any person claiming any right, title or interest in the

real property which is the subject of this action,

Defendants.

----------------------------------------------------------------------X X

MEMORANDUM OF LAW OF AMICI CURIAE IN SUPPORT OFPLAINTIFF THE CITY OF NEW YORK'S MOTION FOR A

PRELIMINARY INJUNCTION

MOBILIZATION FOR JUSTICE, INC.

Matthew Longobardi, of counsel to

Jeanette Zelhof, Esq.

100 Williams Street, 6 1 Floor

New York, New York 10038

(212) 417-3892

Attorneys for Amici Curiae

FILED: NEW YORK COUNTY CLERK 01/17/2018 12:25 PM INDEX NO. 451883/2017

NYSCEF DOC. NO. 276 RECEIVED NYSCEF: 01/17/2018

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.

TABLE OF CONTENTS

TABLE OF AUTHORITIES..................................................................................................ii ........

STATEMENTS OF INTEREST OF THE AMICI CURIAE ......................................1

Elected Officials......................................................................................................................1 ...........

Mobilization for Justice, Inc...............................................................................................2

Goddard Riverside Law Project..........................................................................................2

Housing Conservation Coordinators, Inc. .......................................................................2 2

ARGUMENT................................................................................................................................3 .....................................

I.DEFENDANTS' SHORT TERM RENTALS OF CLASS A SRO BUILDINGS

ARE CONTRARY TO THE MDL.......................................................................................3 ........

A. SRO Buildings Were Intended To Provide Affordable Housing To NewYork City's Most Vulnerable Populations And Were Not Intended To Be

Operated As Illegal Hotels ...............................................................................................3 3

B. The City Increased Its Enforcement Efforts In Order To Prevent SROBuildings From Being Operated As Illegal Hotels....................................................6 .......................

C. Operating SRO Buildings As Illegal Hotels Has Diminished The

Affordable Permanent Housing Stock For New York City's Most Vulnerable

Populations............................................................................................................................9

D. Appellate Courts Have Rejected Efforts By SRO Operators To Engage

In Illegal Short-Term Rentals........................................................................................11....................................................................

E. Rentals of Less Than 30 Days Are Illegal InDefendants'

Class ABuildings Even Though The Buildings Contain SRO Units.................................13...............

CONCLUSION.............................................................................................................................20

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,

York'

T ABL E O F AU THORITIE S

Cases

Amelius v. Grand Imperial LLC, 2016 NY Slip Op 32330(U) (Sup. Ct. N.Y. Cty. 2016)...... 12, 18

City of New York v. 330 Continental LLC, 18 Misc.3d 381, 845 N.Y.S.2d 705 (Sup. Ct. N.Y.

Cty. 2007)..................................................................................................................................... 7..7

City of New York v. 330 Continental LLC, 60 A.D.3d 226, 873 N.Y.S.2d 9 (App. Div. 1st Dep't

2009)............................................................................................................................. 6, 7, 16, 17.......................6,7,16,17

Dexter 345. Inc. v. Cuomo, 663 F.3d 59 (2d Cir. 2011) .................................................... 11, 12, 17

Grand Imperial. LLC v. N.Y.C. Bd. of Standards & Appeals, 137 A.D.3d 579, 27 N.Y.S.3d 158

(App. Div. 2016), leave to appeal denied, 28 N.Y.3d 907, 68 N.E.3d 104 (2016).. .. 12, 13, 15, 18

Matter of Terrilee 97th St. LLC v. N.Y.C. Envtl. Control Bd., 146 A.D.3d 716, 46 N.Y.S.3d 553

(App. Div. 1st Dep't 2017)................................................................................................... ...................................... 13, 19

N.Y.C. v. Helms Realty Corp., ECB Appeal No. 1601233 (Feb. 2, 2017).................................... 16

N.Y.C. v. Lexington Associates. LLC, ECB Appeal No. 1600696 (Sept. 8, 2016)....................... 16

Statutes

Chapter 225 of the Laws of New York State of 2010...................................................................... 8

Emergency Tenant Protection Act, § 3, Chapter 576 of the Laws of New York State 1974...................... 9

..Multiple Dwelling Law § 248(1).................................................................................................... ... 14

Multiple Dwelling Law § 4(16)............................................................................................ 9,.....9, 14, 16

Multiple Dwelling Law § 4(8)(a) ......................................................................................... 8, 19, 20

Other Authorities

Assemblymember Richard N. Gottfried, Community Update (June 2014)...................................... 5

BJH Adivsors LLC for Housing Conservation Coordinators Inc. and MFY Legal Services, Inc.,Short Changing New York City: The Impact of Airbnb on New York City's Housing Market

(June 2016)........................................................................................................................... 10, 11

Brian J. Sullivan and Jonathan Burke, Single Room Occupancy Housing in New York City: The

Origins and Dimensions of a Crisis, 17 CUNY L. Rev. 113 (2013) ....................................... 3, 4

Debra S. Vorsanger, New York City's J-51 Program, Controversy and Revision, 12 Fordham Urb.

L.J. 103 (1983) ............................................................................................................................. 4

Eylzabeth Gaumer and Sharee West, N.Y.C. Department of Housing Preservation &Development, Selected Initial Findings of the 2014 New York City Housing Vacancy Survev

(Feb. 9, 2015) ............................................................................................................................... 9

Illegal Hotels Working Group, Room by Room: Illegal Hotels and the Threat to New York's

Tenants (June 2008) ............................................................................................................. 3, 5, 6

Marti Weithman and Gerald Lebovits, Single Room Occupancy Law in New York City, N.Y. Real

Prop. L.J., Vol. 36, No. 3 (Summer 2008) ................................................................................... 3

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N.Y.C. Department of Housing Preservation & Development, HPDonline Glossar3 ............ 14, 15

N.Y.C. Office of the Mayor, Mav or Bloombere Creates the Office of Special Enforcement to

E_xpand Enforcement Initiatives Across the Cit and Improve Qualits of Life in all Five

Borough_s (December 14, 2006) ................................................................................................... 6

N.Y.S. Attorney General Eric T. Schneiderman, Airbnb In The City (October 2014).............................. 4, 9, 10

New York Communities for Change & Real Affordability For All, Airbnb in NYC: Housine

Report (2015).............................................................................................................................. .... ........................................................ 10

New York State Senate, Memorandum in Support of Legislation (S. 6873-B, 233rd Leg. N.Y.

2010)............................................................................................................................................. .. .................................. 8

United States Census Bureau, New York City Housing and Vacancy Survey .................................. 9

111111



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Curiae" (" City"

STATEMENTS O F INTEREST OF THE AMICI CURIAE

New York State Senator Liz Krueger, New York State Assembly Member Richard N.

Gotffried, Manhattan Borough President Gale Brewer, Mobilization for Justice, Inc., Goddard

Riverside Law Project, and Housing Conservation Coordinators, Inc., (collectively, the "Amici

Curiae") submit this brief urging the Court to grant Plaintiff The City of New York's ("City")

motion for a preliminary injunction (motion sequence number 001). The City's interpretation of the

law at issue is correct. The Defendants are not legally permitted to use their Class A single room

occupancy ("SRO") buildings for short term rentals in violation of the Multiple Dwelling Law

("MDL"). Further, there is no doubt that the buildings at issue are Class A multiple dwellings, and

are exactly the types of buildings targeted by the 2010 amendments to the MDL, which makes it

illegal for a building owner to rent Class A multiple dwelling units for a period of less than 30 days.

The existence of so-called illegal hotels has negatively impacted the quality of life of New

York City tenants and has limited the City's already depleted affordable housing stock. Because

of the far-reaching implications of this matter for their constituents and clients, the Amici Curiae

have a substantial interest in the outcome of this case.

Elected Officials

The three elected officials-Senator Krueger, Assembly Member Gottfried, and Borough

President Brewer-represent New York City residents who are directly impacted by the

interpretation of the MDL as it relates to the transient use of Class"A"

multiple dwelling units.

Each has been involved in the effort to ensure that the law reflects good public policy and works to

protect the lives, health and safety of their constituents as well as visitors to the City of New York.

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Mobilization for Justice, Inc.

Mobilization for Justice, Inc. ("MFJ"), formerly known as MFY Legal Services Inc.,

envisions a society in which no one is denied justice because he or she cannot afford an attorney.

To make this vision a reality, for over 50 years MFJ has provided free legal assistance to residents

of New York City on a wide range of civil legal services, prioritizing services to vulnerable and

under-served populations, while simultaneously working to end the root causes of inequities

through impact litigation, law reform and policy advocacy. MFJ provides advice and representation

to more than 10,000 New Yorkers each year. For over 25 years, MFJ's SRO Law Project has

provided free legal services to the City's SRO population, protecting clients who are vulnerable to

landlord abuse. MFJ's clients face harassment, poor building conditions, and sometimes the threat

of homelessness because of their precarious position as poor and low-income renters in New York

City's unforgiving housing market. MFJ has seen the safety and quality-of-life issues experienced

by permanent tenants living in residential SRO buildings that are being rented on a short-term basis.

Goddard Riverside Law Pro ject

Goddard Riverside Law Project ("GRLP"), formerly known as the West Side SRO Law

Project, was founded in 1981 to provide free legal services and tenant organizing assistance to low-

income residents of SRO buildings on Manhattan's West Side. GRLP provides free legal

representation and tenant organizing to individuals and families to address a wide array of housing

problems, including eviction and harassment, and to strengthen and preserve affordable housing.

Housin g Conservation Coordinators, Inc.

Housing Conservation Coordinators, Inc. ("HCC") is a community-based, not-for-profit

organization anchored in the Hell's Kitchen/Clinton neighborhood of Manhattan's West Side.

Since its founding in 1972, HCC has been dedicated to advancing social and economic justice and

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fighting for the rights of poor, low-income and working individuals and families. With a primary

focus on strengthening and preserving affordable housing, HCC seeks to promote a vibrant and

diverse community with the power to shape its own future. HCC provides legal representation,

tenant and community organizing, and installation of energy efficient building systems through its

weatherization program.

ARGUMENT

I. DE FENDANTS' SHORT TERM RENTALS OF CLASS A SROBUILDINGS ARE CONTRARY TO THE MDL

A. SRO Buildings Were Intended To Provide Affordable Housing To NewYork City's Most Vulnerable Populations And Were Not Intended ToBe Operated As Illegal Hotels

New York City tenants, elected officials, and community-based organizations have been

combatting the problem of illegal short-term rentals in Class"A"

multiple dwellings for at least the

past 15 years. The illegal hotel industry began to emerge in New York City residential buildings in

the early 2000s, and the earliest signs were seen in residential SRO buildings on the Upper West

Side of Manhattan.1 This is not surprising, since SROs have similar layouts to European-style

hostels, with most consisting of single rooms with shared bathroom facilities located in the common

areas of thebuilding.2building. Many lack access to kitchen facilities of any sort. With significantly lower

monthly rents than traditional apartments and housing a relatively older, poorer, and more

vulnerable population, SROs have long been considered New York City's "housing of last resort."3

1 Illegal Hotels Working Group, Room by Room: Illeeal Hotels and the Threat to New York's Tenants 5 (June 2008),available at http://www.hec-nyc.org/tenorg/documents/IHWG_Report_2008.pdf (hereinafter "Room by Room").Room"2 See Marti Weithman and Gerald Lebovits, Single Room Occupancy Law in New York City, N.Y. Real Prop. L.J., Vol.

36, No. 3 (Summer 2008) at 21.3 See ; See also, Brian J. Sullivan and Jonathan Burke, Single Room Occupancy Housing in New York City: TheOrigins and Dimensions of a Crisis, 17 CUNY L. Rev. 113, 117-118 (2013).

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("

Many owners of Class A SRO buildings, including the Defendants, readily recognized the

significant profits to be made by renting transiently and charging exorbitant nightly rates - often

netting the equivalent of an entire month's lawful rent in only a few nights. But for the MDL's

prohibition against transient rental of Class A SRO buildings, discussed more fully infra Part I.B.,

the profit potential would motivate owners to decimate the SRO tenant population.

SRO owners have historically harassed tenants out of their homes to make way for more

lucrative occupants, or to simply warehouse rooms until a building is empty.4empty. The potential for

substantial profits and the opportunity to deregulate units created enormous incentive for SRO

owners to harass long-term rent-stabilized tenants from their homes to make room for their illegal

hotel operations.5 See Affidavit of Senator Liz Krueger, dated November 2, 2017 ("Krueger Aff.")

¶ 7; Affidavit of Assembly Member Richard N. Gottfried, dated November 3, 2017 ("Gottfried

Aff.") ¶ 4. Virtually overnight, permanent tenants found the buildings in which they lived, once

fully occupied with other permanent tenants, transformed into full-blown commercial hotels.

Unsurprisingly, this transmogrification caused myriad problems for permanent tenants and the

respective communities, including quality of life, safety and security concerns and the loss of

affordable housing.6housing.

By 2005, tenant advocates, community organizations and elected officials, including amici

herein, were receiving complaints from tenants about illegal hotels in their buildings. See Krueger

Aff. ¶ 3. These complaints included excessive noise from late night parties, overcrowding of

4 See Debra S. Vorsanger, New York City's J-51 Program, Controversy and Revision, 12 Fordham Urb. L.J. 103, 143

(1983) (discussing the role J-51 tax benefits played in encouraging the use of arson to remove SRO tenants); see also,Sullivan & Burke, supra note 3, at 123-125.5 See Sullivan & Burke, suprra note 3, at 124.6 See generally, g; see also N.Y.S. Atty Gen. Eric T. Schneiderman, Airbnb In The City (October 2014) at 2, availableat https://ag.ny.gov/pdfs/AIRBNB'/020REPORT.pdf

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common bathrooms, excessive garbage in the common areas, congested elevators, dangerous

overcrowding of rooms with multiple bunk beds in small single rooms, lack of building security

and strangers entering and leaving the buildings.7buildings. h Krueger Aff. ¶ 10; Gottfried Aff. ¶ 3.

In response to these complaints, tenant advocates and elected officials joined forces in 2006

to create the Illegal Hotels WorkingGroup.8 See Krueger Aff. ¶ 3. The Illegal Hotels Working

Group worked with tenants living in illegal hotels and advocated on their behalf to bring awareness

to the issue and seek avenues of enforcement by theCity.9City. See Krueger Aff. ¶¶ 9-10. It was during

this period that recognition of illegal hotels increased and the issue received media attention.10

The Illegal Hotels Working Group conducted a study on illegal hotels in the City and, based

on the data collected, issued the report, "Room by Room: Illegal Hotels and the Threat to New

York'sTenants,"

in June 2008.11 The report identified the large number of complaints regarding

illegal hotel activity and residential buildings in Manhattan in which rooms or apartments were

being rented to persons for periods of less than 30 days and reflected that this illegal use was a

growing problem. The report also highlighted the very serious quality of life and security issues

faced by permanent tenants living in these affectedbuildings.12

The report specifically noted that

the problem impacted SRO buildings which were intended historically for permanent residents,

including Defendant Hank Freid's building located at 230 West 101st Street (referred to by the

7 Spe Room by Room smra note 1, pp. 6-10.8 Assemblymember Richard N. Gottfried, Community Update (June 2014), available athttp://assembly.state.ny.us/member files/075/issues/community_update/?update=201406.php.9 Id.10S.ee Schneiderman, smra note 6, at 2, 5; J. David Goodman and Joshua Brustein,AsTouristsFindRooms,TenantsFace Disruptions, N.Y. Times, September 17, 2007, available at

http://www.nytimes.com/2007/09/17/nyregion/17hotel.html; News from Assemblymember Linda B. Rosenthal,Not

for Tourists: The Fight for Permanent Affordable Housing for New Yorkers, Fall 2007, available athttp://assembly.state.ny.us/member_files/067/20070906/.11 See Room by Room, supra note 1.12Id. at 6-7; see also, Krueger Aff. ¶ 8.

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parties in this action as the "Helms Building").Building"

The report found that although the Helms Building

historically had been used for permanent rent stabilized tenants but by 2008 only 12 permanent

tenants remained and the building catered to tourists and students.13Although these Class A SRO

buildings had been intended for and historically used as permanent residences for New York's must

vulnerable tenants, more and more of the buildings were being used for short term rentals.

B. The City Increased Its Enforcement Efforts In Order To Prevent SROBuildings From Bein g 0 crated As Illegal Hotels

In 2006, the City created the Mayor's Office of Special Enforcement ("OSE") in order to

coordinate the City's enforcement of the illegal conversion of apartment buildings intohotels.14

This was partially in response to the increase in complaints from tenants living in SRO buildings

being illegally used as hotels. The OSE is a multi-agency task force with inspectors from the New

York City Department of Buildings ("DOB"), Police Department ("NYPD"), the Fire Department

("NYFD"), the Department ofHealth ("DOH"), and the Department of Finance ("DOF"). The OSE

has the authority to conduct inspections, issue violations including vacate orders, and commence

affirmative litigation against buildings that are being operated as illegal hotels.15

In 2007, the City commenced litigation against an owner of three SRO buildings located on

Manhattan's Upper West Side seeking, among other relief, an injunction to stop theowners'

illegal

hotel operations. See City of New York v. 330 Continental LLC, 60 A.D.3d 226, 873 N.Y.S.2d 9

(App. Div. 1st Dep't 2009). As discussed more fully infra Part I.E., the types of buildings targeted

by the City had certificates of occupancy ("C/O") that were nearly identical to the Defendants

13 Id. at 12.14N.Y.C. Office of the Mayor, Mayor Bloombere Creates the Office of Special Enforcement to Expand EnforcementInitiatives Across the City and Improve Quality of Life in all Five Borouchs (December 14, 2006) available athttp://wwwl.nyc.gov/office-of-the-mayor/news/434-06/mayor-bloomberg-creates-office-special-enforcement-

expand-enforcement-initiatives-across. The OSE replaced the prior Office of Midtown Enforcement which focused on

quality of life issues in midtown Manhattan, including at Times Square. LL In addition to enforcement of illegal hotelsthe OSE is empowered to address other quality of life issues throughout the City. Id.15 Id.

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buildings'in this case. As with the instant action, the City's case was based on the defendant's

violations of relevant State and City laws and statutes, including the MDL. The MDL had

historically been interpreted by the City to require occupancy of Class A multiple dwellings for

periods of at least 30 days. In September 2007, the City obtained a preliminary injunction against

the owners. City of New York v. 330 Continental LLC, 18 Misc.3d 381, 845 N.Y.S.2d 705 (Sup.

Ct. N.Y. Cty. 2007). On appeal, the First Department, reversed, interpreting the relevant sections

of the MDL as equivocal, and permissive oflimited transient use in the subject Class"A"

buildings.

City of New York v. 330 Continental LLC, 60 A.D.3d 226, 873 N.Y.S.2d 9 (App. Div. 1st Dep't

2009).

The First Department's reading of the MDL in the 330 Continental LLC opinion did not

comport with the City's long-held interpretation.16 Faced with the decision, the City's enforcement

agencies, in conjunction with members ofthe Illegal Hotels Working Group, decided that amending

the State and City laws was essential to clarify any confusion and to ensure the City's long-held

interpretation was codified into law. S_ee Gottfried Aff. ¶ 5; Krueger Aff. ¶¶ 11-12.

In 2010 a bill to amend the MDL and the New York City Administrative Code ("Admin.

Code"Code") to clarify the permissible uses of Class

"A"buildings was introduced by Senator Krueger

and Assembly Member Gottfried. The Sponsor's memorandum in support of the bill explained the

justification for the amendment:

There are substantial penalties for owners who use dwellings

constructed for permanent occupancy (Class A) as illegal hotels.

However, the economic incentive for this unlawful and dangerous

practice has increased, while it is easier than ever to advertise illegal

hotel rooms for rent to tourists over the internet. . . . In most cases

tourists responding to such advertisements are unaware that the

rooms are being offered in violation of the law. Not only does this

practice offer unfair competition to legitimate hotels that have made

16The First Department's decision, however did not question whether these buildings were Class "A" buildings. 60A.D.3d at 228. See discussion infra Part LE.

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substantial investments to comply with the law but it is unfair to the

legitimate"permanent"

occupants of such dwellings who must

endure the inconvenience of hotel occupancy in their buildings and

it decreases the supply of affordable permanent housing. . . .

Recently, law enforcement actions against illegal hotels have been

hindered by [the Appellate Division's decision in 330 Continental

LL_C]. It is impossible to enforce the law against illegal hotels if the

law is interpreted in the manner compelled in this case. This bill

will fulfill the original intent of the law, as construed by enforcing

agencies, including the New York City Department of Buildings, by

modifying the specific provisions of the Multiple Dwelling Law and

applicable local codes that have been cited by defendants in

enforcement proceedings as authority for the use of Class Adwellings as illegal transient hotels.

New York State Senate, Memorandum in Support of Legislation (S. 6873-B, 233rd Leg. N.Y.

2010) at "SponsorMemo," "Justification." 17

The bill was subsequently passed and the MDL was amended to clearly prohibit the rental

of Class"A"

multiple dwellings for fewer than 30 days. Chapter 225 of the Laws of New York

State of 2010. The amended text makes clear that that Class A multiple dwellings are for

permanent residents only:

A class A multiple dwelling shall only be used for permanent

residence purposes. For the purposes of this definition, "permanent

residencepurposes"

shall consist of occupancy of a dwelling unit bythe same natural person or family for thirty consecutive days or more

and a person or family so occupying a dwelling unit shall be referred

to herein as the permanent occupants of such dwelling unit.

MDL § 4(8)(a).

The amendments did not, however, change the definition of what buildings constitute Class

A buildings. Included in "classA"

buildings are "tenements, flat houses, maisonette apartments,

apartment houses, apartment hotels, bachelor apartments, studio apartments, duplex apartments,

kitchenette apartments, garden-type maisonette dwelling projects, and all other multiple dwellings

17The Sponsor's Memorandum is available at: https://www.nysenate.gov/legislation/bills/2009/S6873/amendment/B.

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except class'B'

multipledwellings."

Id. In the section defining "single roomoccupancy,"

the

MDL further provides that "[w]hen a class A multiple dwelling is used wholly or in part for single

room occupancy, it remains a class A multipledwelling." MDL § 4(16). Therefore, the Legislature

clearly intended that Class A SRO buildings would be prohibited from rentals of less than 30 days.

C. Operating SRO Buildings As Illegal Hotels Has Diminished The

Affordable Permanent Housing Stock For New York City's Mos t

Vulnerable Populations

Despite the 2010 amendment to the MDL clarifying the definition of permanent residence,

illegal short-term rentals proliferated throughout the City largely thanks to the advent of online

rental platforms, such as Airbnb. Report after report has made clear that, in addition to the

significant quality of life, and safety and security issues experienced by permanent tenants living

in illegal hotels, short-term rentals have had and continue to have a significant and detrimental

impact on the City's affordable permanent housing stock. According to the 2014 New York City

Housing and Vacancy Survey, the City's vacancy rate is 3.45 percent.18 New York State law

defines a vacancy rate of less than five percent for New York City as a housingemergency.19

In 2014, the New York State Attorney General issued a report based on data obtained from

Airbnb for the period between January 1, 2010 to June 2,2014.202014. According to the report, 72 percent

of the listings on Airbnb's website violated the law.21law. The report further highlighted the gravity

and breadth of the problem and its effects on the City's residential housing supply. The report

18 Eylzabeth Gaumer and Sharee West, N.Y.C. Dep't of Housing Preservation & Development, Selected Initial

Findinus of the 2014 New York City Housing Vacancy Survev (Feb. 9, 2015), available athttp://wwwl.nyc.gov/assets/hpd/downloads/pdf/2014-HVS-initial-Findings.pdf. The Housing and Vacancy Survey is

conducted every three years, and therefore the 2014 report is the most current available at this time; the results of 2017

survey are expected in early 2018. United States Census Bureau, New York City Housing and Vacancy Survey(NYCHVS), https://www.census.gov/housing/nychvs/ (last visited Oct. 25, 2017).19 See, e.g., Emergency Tenant Protection Act, § 3, Chapter 576 of the Laws of New York State 1974.20

Schneiderman, supra note 6, at 4.21 Id. at 8

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2013.

year.

present.

stock.

.

found that thousands of residential units listed on Airbnb were dedicated to private short-term

rentals, including over 4,600 unique units that were booked as private short-term rentals on Airbnb

for three or more months in 2013.22Nearly 2,000 of those unique units were booked for at least

182 days of the year.23 ' The sheer number of units and the length of the booking times indicate that

the units were largely unavailable for permanent residential rental and indicate that the buildings

were being operated as illegal hotels.

A 2015 report jointly issued by two organizations, New York Communities for Change and

Real Affordability for All, featured findings based on data available from Airbnb's website.24The

report found that nearly 16,000 Airbnb listings are in direct violation of State and City laws because

they list the entire apartment available for rental without the leaseholder present.25 5 These units had

been effectively removed from the rental market. The report also reveals the dire impact that illegal

hotels have on the increase in rents in neighborhoods where illegal hotel activity is most

concentrated by identifying that rents rose faster in these areas than in the cityoverall.26overall.

In 2016, MFJ and HCC commissioned a report that also demonstrated the deleterious of

short-term rentals on the City's housingstock.27 The report, Short Changing New York City, found

that if all listings that were regularly used for commercial purposes were made available as

22 Id. at 12.23 Id.24N.Y. Communities for Change & Real Affordability For All, Airbnb in NYC: Housine. Report (2015) available athttp://www.sharebetter.org/wp-content/uploads/2015/07/AirbnbNYCHousingReportl.pdf. The data was from a"webscrape" of Airbnb's website by www.InsideAirbnb.com, an independent website not affiliated with Airbnb orwith the report's authors. The data was then paired with U.S. Census's Bureau's 2009-2013 American CommunitySurvey.25 Id. at 2.26 Id. at 3. For example, average rents increased more than the citywide average in the top 20 zip codes for Airbnblistings from 2007-2009 to 2011-2013. From 2002-2014 the average rents increased by at least 45 percent in all of the

top 20 Brooklyn zip codes for Airbnb whereas rents increased only by 32 percent city wide. R at 10.27BJH Adivsors LLC for Housing Conservation Coordinators Inc. and MFY Legal Services, Inc., Short Changine NewYork Cits: The Impact of Airbnb on New York Cits 's Housing Market (June 2016), available athttp://mobilizationforjustice.org/wp-content/uploads/Shortchanging-NYC.pdf/.

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permanent housing, the number of vacancy rental units citywide would increase by 10 percent and

the vacancy rate would rise from 3.5 to 4.0 percent.28percent. Although illegal hotel operators cannot be

forced to open their buildings to permanent residents, they likewise cannot be permitted to use their

properties in contravention of the MDL and other applicable State and City laws, particularly where

such uses have identifiable impacts on the lack of affordable housing throughout the City. As

discussed supra Part I.B., the 2010 amendments to the MDL were designed to protect the lives and

safety of occupants as well as to preserve affordable housing. Both goals are undermined by the

proliferation of the illegal transient rentals of Class A multiple dwellings.

D. Appellate Courts Have Rejected Efforts By SRO Operators To En gage

In Illegal Short-Term Rentals

The owners of Class A SRO buildings have long attempted to evade the City's housing

codes and enforcement efforts in order to operate illegal hotels. Nevertheless, the weight of

authority, including from the First Department has recognized that the 2010 Amendments to the

MDL disallow short-term rentals in precisely the types of buildings operated by the Defendants.

Following these amendments, the City's enforcement efforts continued despite SRO

buildingowners'

attempts to find ways to use their buildings in contravention ofthe newly amended

laws. After the 2010 amendments were enacted but before they went into effect, several owners of

Class A SRO buildings sought a preliminary injunction in federal court enjoining the

implementation of the 2010 Amendments. S_e_e Dexter 345, Inc. v. Cuomo, 663 F.3d 59 (2d Cir.

2011). The District Court denied the preliminary injunction and the Second Circuit affirmed,

28R at 6. The report identified and analyzed a subset of Airbnb listings which it called "Impact Listings." & at 4.Impact Listings were those were most likely to result in reduction in the supply of residential rental units, due to thefact they were rentals of entire homes or apartments, were booked for periods of less than 30 days, and were identifiedas "commercial" listings. R The report identified 8,058 Impact Listings. R at 6.

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finding that the lower court had not abused its discretion in finding that the owners had failed to

show an irreparable injury. Id. at 64.

The operator of the Imperial Court Hotel, another Class A SRO building, took a different

approach and sought a Letter of No Objection from the DOB stating that it could rent for periods

of less than 30 days. The DOB denied the request and the Board of Standards and Appeals affirmed

the denial in 2014. The owner then filed an Article 78 proceeding challenging this determination.

The First Department rejected the owner's arguments, recognizing that the MDL's 2010

amendments extinguished any right that Imperial Court may have had to rent for periods under the

MDL's "savingsclause."

Grand Imperial, LLC v. N.Y.C. Bd. of Standards & Appeals, 137 A.D.3d

579, 27 N.Y.S.3d 158 (App. Div. 1st Dep't 2016), leave to appeal denied, 28 N.Y.3d 907, 68 N.E.3d

104 (2016). The Appellate Division further recognized that the legislature's intent was clear in that

the "30-day minimum occupancy requirement would apply toall"

Class A buildings "with only

narrow, specifiedexceptions." R

Even after the Appellate Division's clear pronouncement, the Imperial Court continued with

its short-term rentals. Several permanent tenants of the building brought a suit to enjoin the illegal

short-term rentals and the City intervened as a plaintiff. See Amelius v. Grand Imperial LLC, 2016

NY Slip Op 32330(U) (Sup. Ct. N.Y. Cty. 2016). The Court granted the City's motion for a

preliminary injunction. While the motion was pending, and despite that the tenants had obtained a

temporary restraining order, the Imperial Court persisted with its short-term rentals based on its

purported need to "honor existingreservations."

In granting the City's preliminary injunction, the

Court relied on a memorandum from then-Govemor Patterson stating that the transient use of Class

A multiple dwellings poses fire hazards, removes affordable housing from the market, creates unfair

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..R .»

competition with law-abiding hotels, and that there was clear legislative intent in enacting the

amendments. See id. at 6.

SRO buildingowners'

latest tactic to evade the 2010 Amendments to the MDL is precisely

what the Defendants argue in this action: SRO buildings are not Class A multiple dwellings, but

rather"hybrid"

buildings to which the MDL's 2010 Amendments do not apply. This is not

supported by the law and has been explicitly rejected by the First Department. In Matter of Terrilee

97th St. LLC v. N.Y.C. Envtl. Control Bd., the First Department held, in a case involving one of

the Defendants herein, that "none of the units in petitioners Class A multiple dwelling may be used

for occupancy periods shorterthan30days."

146 A.D.3d 716, 716, 46 N.Y.S.3d 553, 554-555 (App.

Div. 1st Dep't 2017). In that case, the owner appealed a violation it had received for short-term

rentals. The Court found meritless the owner's suggestion that it had received"grandfathered"

rights because it had operated its SRO Building units transiently prior to the 2010 amendments.

The Court rejected the owner's argument, reasoning that the "amendments extinguished the accrued

rights which petitioner otherwise would have enjoyedunder"

the MDL's savings clause. Matter of

Terrilee 97th St. LLC., 146 A.D.3d at 716 (citing Grand Imperial, 137 A.D. 3d at 579, 27 N.Y.S.3d

at 158). Despite this clear ruling, the owner and Defendant herein, continues to assert that it has a

right to engage in illegal short-term rentals.

E. Rentals of Less Than 30 Days Are Illegal In Defendants' Class ABuildin gs Even Though The Buildings Contain SRO Units

As discussed above, under the 2010 amendments to the MDL, Class"A"

buildings must be

operated for permanent residences only. This has been affirmed twice by the Appellate Division

First Department. See Grand Imperial, 137 A.D.3d 579, 27 N.Y.S.3d 158; Matter of Terrilee 97th

St, 146 A.D.3d 716, 46 N.Y.S.3d 553. Defendants herein argue that they are entitled to continue

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with prohibited short-term rentals because their SRO buildings are not Class A buildings and,

therefore, not subject to the 2010 amendments to the MDL; the weight of authority is otherwise.

Defendants are correct that SRO buildings are not defined as Class A or B buildings.

However, the MDL is clear that "[w]hen a class A multiple dwelling is used wholly or in part for

single room occupancy, it remains a class A multipledwelling."

See MDL § 4(16); see also MDL

§ 248(1) ("A [SRO] dwelling occupied pursuant to this section shall be deemed a class A dwelling

and dwelling units occupied pursuant to this section shall be occupied for permanent residence

purposes"). Additionally, under the MDL, buildings are only either Class A or Class B. See MDL

§ 4(7). Therefore, Defendant's SRO buildings, which are clearly Class A tenements as per their

C/Os, are subject to the MDL's prohibition against rentals for less than 30 days.

Defendants here attempt to conflate the usage of "ClassA"

and "ClassB"

in the MDL and

the with the "Aunit"

and "Bunit"

configurations used by the City's regulatory agencies. The

MDL's definitions of Class A and Class B buildings, which governs whether buildings are for

permanent or transient usage, is completely distinct from the New York City Department of

Housing Preservation and Development's ("HPD") use of "A units"and "B

units,"which

differentiate between which units have bathrooms and cooking facilities and which do not. HPD,

per its glossary, states that:

A "B"unit can be a rooming unit, single room occupancy unit or a

hotel unit. A rooming unit shall mean one or more living rooms

arranged to be occupied as a unit separate from all other living

rooms, and which does not have both lawful sanitary facilities and

lawful cooking facilities for the exclusive use of the family residingin such unit. A single room occupancy unit is the occupancy by one

or two persons of a single room, or of two or more rooms which are

joined together, separated from all other rooms within an apartment

so that the occupant(s) thereof reside separately and independentlyof the other occupant(s) of the same apartment. A hotel unit is a unit

in an inn having thirty or more sleeping rooms.

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("

N.Y.C. Department of Housing Preservation & Development, HPDonline Glossary.29Glossary.

Conversely, HPD defines an "Aunit"

as "an apartment, which includes one or more living

rooms occupied as a unit separate from all other rooms within a dwelling, with lawful sanitary

facilities and a lawful kitchen or kitchenette for the exclusive use of the family residing in such

unit."LL Therefore, the HPD building registration information, along with the historical I-Card

information which used similar terminology, only describes the layouts of various types of units

within a building, i.g, whether a unit has a bathroom and cooking facilities, but does not describe

the SRO building's occupancy classification under the MDL, i.g, whether the building is to be used

for permanent resident purposes or transient uses.30

As established above, an SRO building remains a Class A building for the purposes of the

MDL when it contains SRO units. It is not surprising, therefore, thatDefendants'

Class A SRO

buildings contain "Bunits"

in City records. This only demonstrates that the units lack kitchens

and/or bathrooms, Le., that they are set up as SROs as is indicated on thebuildings'

C/Os. The

Defendants'attempt to mislead the Court by conflating "B

units"with transient uses, when this

simply indicates the layout of the SRO unit. The First Department has clearly found that Class A

buildings are not permitted to have transient rentals. he Grand Imperial. LLC v. N.Y.C. Bd. of

Standards & Appeals, 137 A.D.3d 579, 27 N.Y.S.3d 158 (App. Div. 1st Dep't 2016) ("[I]n enacting

the amendments, the legislature's intent that a 30-day minimum occupancy requirement would

29 The HPD glossary is available at https://hpdonline.hpdnyc.org/HPDonline/help__glossary.aspx (last accessed on Oct.

26, 2017).30HPD also has an entirely distinct letter classification system for to define "Building Class". See id. These letterclassifications are again distinct from the building's classification for purposes of the MDL. For example, an Old LawTenement is given the letter "A" and New Law Tenement is given the letter "B" per HPD's glossary. However, bothtypes of tenement buildings are "Class A" under the MDL. E

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apply to all, with only narrow, specified exceptions, was sufficiently clear that petitioner's saving

clause right to continue renting for the shorter period was extinguished.").

The Defendants cite to two decisions by the Environmental Control Board ("ECB"), which

muddy thesedistinctions.31distinctions. They are not binding on this Court and should not be controlling on this

issue. In those decisions, the ECB incorrectly conflated the "Bunits"

from the HPD registrations

and historical I-Cards, with Class B buildings under the MDL. The MDL is clear that units

configured as SROs (i.e_., "Bunits"

as defined by HPD) may exist in Class A buildings, but that

such buildings remain Class A for the purposes of the MDL. See MDL § 4(16). These ECB

determinations are, therefore, contrary to the weight of authority that recognizes that Class"A"

SRO buildings are prohibited from short-term rentals despite that they may contain SRO units

labeled by HPD as "Bunits."

This result is underscored by all of the above-mentioned decisional authority involving the

2010 Amendments, as well as the litigation that led to those amendments. All of those buildings,

like those owned by Defendants herein, are Class A buildings with SRO units. All of the courts that

heard the cases interpreting the MDL, including the Appellate Division First Department and the

Second Circuit, and the building owners themselves, agreed that the buildings at issue were Class

A for the purposes of the MDL.

For example, in 330 Continental, which led to the change in the MDL. the C/Os for the thre

buildings at issue indicated they were Class A buildings. Two of the buildings, the Montroyal,

located at 315 West 94th Street, and the Continental, located at 330 West 95th Street, each had

C/Os with occupancy classifications of Class A multiple dwellings and SRO buildings. The third

31 Defendants rely on N.Y.C. v. Helms Realty Corp., ., ECB Appeal No. 1601233 (Feb. 2, 2017), available at

http://archive.citylaw,org/wp-content/uploads/sites/12/ecb/Long%20Form%20Orders/2017/1601233.pdf; and N.Y.C.v. Lexington Associates. LLC, ECB Appeal No. 1600696 (Sept. 8, 2016), available at http://archive.citylaw.org/wp-

content/uploads/sites/12/ecb/Long%20Form%20Orders/2016/1600696.pdf

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building, the Pennington located at 316 West 95th Street, had a C/O with an occupancy

classification of "New Law Tenement & SRO."

Although the court in 330 Continental interpreted the prior version of the MDL, it clearly

â€”found-and the defendants in that case did not challenge-that all three buildings were Class A

multiple dwellings. The court observed that "[e]ach building's certificate of occupancy provides,

either expressly or by implication, that the building is a class A multipledwelling."

See City of

N.Y. v. 330 Continental LLC, 60 A.D.3d 226, 228, 873 N.Y.S.2d 9, 11 (App. Div. 1st Dep't 2009).

In a footnote, the court further explained that:

The Continental and Montroyal each has a certificate of occupancy

describing it as a class A multiple dwelling. While the Pennington's

certificate of occupancy describes it as a 'New Law Tenement Single

Room Occupancy,'without specifying the building's class, [MDL] §

4 (8) (a) provides that'tenements'

are included within the categoryof class A multiple dwellings. In any event, defendants do not dispute

that all three buildings are class A multiple dwellings.

Isl: at n.1. There is no meaningful distinction between the C/Os at issue in 330 Continental and those

of theDefendants'

buildings. All are Class A buildings despite that they contain SRO units (or "B

units"lacking private kitchens and/or private bathrooms under HPD's rubric).

Similarly, in Dexter 345, discussed above, the Second Circuit observed that "[t]he Dexter

Appellants own and manage a 270-room Class A single-room occupancy ("SRO") building . . .

Appellant Esplanade 94 LLC ("Esplanade")(" Esplanade"

owns a 240-room Class A SRO building."Dexter 345,

Inc. v. Cuomo, 663 F.3d 59, 62 (2d Cir. 2011). The Dexter Hotel, which is located at 345 West 86th

Street, has a C/O with an occupancy classification of "New Law Tenement Class A Mult Dwell-

Single Room Occupancy.32Occupancy. Similarly, the Esplanade building, which is known as the Alexander

32£_ee Certificate of Occupancy No. 30085 for 345 West 86th Street, dated December 9, 1943, annexed toAffirmation of Matthew Longobardi, dated November 3, 2017 ("Longobardi Affirmation"),

Affirmation" as Exhibit B. The C/Ofor any building can be located from the building's DOB website, http://wwwl.nyc.gov/site/buildings/index.page, by

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Hotel and is located at 306 West 94th Street, New York, New York, has a C/O indicating it is a

"Old Law Tenement, Class A, Mult. Dwell., Single Room Occupancy."33 The owners clearly

believed they were subject to the 2010 MDL amendments, as they attempted to prevent the

amendments from going into effect, despite the fact that the C/Os lists SRO use and that their

buildings contain "Bunits"

as defined by HPD.

The Imperial Court, which was also subject to litigation over the 2010 amendments to the

MDL discussed above, is located at 307 West 79th Street, New York, New York. Its C/O has an

occupancy classification as a "New Law Tenement Class'A'

Mult. Dwell. & Single Room

Occupancy."34 The First Department recognized that the building was a "class A residential

building"and that the building owner's right to rent for periods of less than 30 days was

extinguished by the 2010 amendments. Grand Imperial, LLC v. N.Y.C. Bd. of Standards &

Appeals, 137 A.D.3d 579, 27 N.Y.S.3d 158 (App. Div. 2016), leave to appeal denied, 28 N.Y.3d

907, 45 N.Y.S.3d 375 (2016). Similarly, in the subsequent litigation to enjoin the Imperial Court's

continued transient rentals, the Supreme Court observed that the Imperial Court, "since it was

granted its first certificate of occupancy in March 1943, it has been classified as a class A building

within the meaning of the Multiple DwellingLaw."

Amelius v. Grand Imperial LLC, 2016 NY

Slip Op 32330(U), at 3 (Sup. Ct. N.Y. Cty. 2016). In a footnote, the court noted that "[w]hile

defendants refer to the Imperial Court as a new-law tenement, it does not appear that the

denomination carries with it a legal significance that distinguishes it from other class A multiple

inputting the building's address, clicking the link for "View Certificates of Occupancy," and then clicking the link for

the .pdf of the C/O.33h Certificate of Occupancy No. 31742 for 306 West 94th Street, dated May 1, 1946, annexed to Longobardi

Affirmation, as Exhibit C.34h Certificate of Occupancy No. 53010 for 307 West 79th Street, dated Nov. 7, 1960, annexed to Longobardi

Affinnation, as Exhibit D.

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dwellings."Id. Like

Defendants'buildings, the C/O providing an occupancy classification of Class

A building controls whether transient rentals are permissible or not.

Most recently, the First Department rejected the arguments of one of the Defendants herein,

holding that the building located at 256-258 West 97 Street, New York, New York, is Class A

multiple dwelling and subject to the restrictions in the 2010 MDL amendments. Matter of Terrilee

97th St. LLC v. N.Y.C. Envtl. Control Bd., 146 A.D.3d 716, 716, 46 N.Y.S.3d 553 (App. Div. 1st

Dep't 2017). The Terrilee C/O indicates that the building has an occupancy classification of "Old

Law Tenement Class'A'

Mult. Dwelling & S.R.O."35 The Appellate Division clearly rejected the

owner's arugment that their 1947 I-card, which recorded the subject building for "Class B sleeping

rooms, and not the most recent 1964 certificate of occupancy, controled the building's lawful

occupancy."IL

In the instant case, and as set forth in the City's Memorandum of Law of in support of its

preliminary injunction, at page six, each of theDefendants'

buildings is a Class A building. This is

reflected in their C/Os or, in the case of the one of the buildings, its I-Card. Three of the buildings,

the Terrilee Building, the Branic 1 Building, and the Branic 2 Building have C/Os which explicitly

state they are Class A multiple dwellings and, therefore, have legal occupancy that is identical to

the Imperial Court, the Dexter Hotel, the Alexander Hotel, the Montroyal, and the Continental

discussed above. The Terrilee Building, in fact, has also been recognized by the Appellate Division

to be a Class A building without a right to engage in transient rentals. Although the Helms

Building's C/O does not explicitly list "ClassA,"

it does provide that it is a"tenement"

which

means the building is Class A under the MDL. See MDL § 4(8)(a). This is exactly what the First

Department determined as to the Pennington in 330 Continental. 60 A.D.3d 226, 228 n.1, 873

35 See Certificate of Occupancy No. 59417 for 256-258 West 97 Street, dated April 8, 1964, annexed to Longobardi

Affirmation, as Exhibit E.

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~7

N.Y.S.2d 9, 11 n.1. Finally, the Branic 3 Building does not have a C/O; therefore, the City relies

on the building's I-Card to determine its permitted uses. The I-Card and HPD records indicate the

building should have nine class"A"

apartments and that it is an Old Law Tenement, thus a Class A

building. See MDL § 4(8)(a).

In all the litigation over short-term rentals in SRO buildings, the courts have recognized that

these types of buildings, based on their C/Os, are Class A multiple dwellings, despite that they also

contain SRO units. These types of buildings are, therefore, subject to the prohibitions on short-term

rentals as provided in the MDL, and theDefendants'

arguments that they should be permitted to

continue such short-term rentals should be rejected by this Court.

CONCLUSION

For the reasons set forth herein, the Amici Curiae, respectfully request that the Court grant

the City's motion seeking a preliminary injunction to prevent the Defendants from continuing to

blatantly violate the MDL by using their Class A buildings for illegal short term rentals. Such rentals

are a disturbance to the quality of life of permanent tenants and have a negative impact the City'sCity'

housing stock. For these reasons the Legislature clearly prohibited the use of Class A buildings for

less than 30 days. There is no doubt theDefendants'

building are Class A buildings despite that

they are SRO buildings. The Court should reject theDefendants'

arguments that short term rentals

are permitted in these buildings. Defendants should not be permitted to continue with this illegal

practice.

Dated: November 3, 2017

New York, New York

Matthew Longù1iardi, of counsel to

Jeanette Zelhof, Esq.

Mobilization for Justice, Inc.

100 Williams Street,6826 Floor

New York, New York 10038

Counsel for the Amici Curiae

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