Volume 81, Number 7| July 14 - 20, 2011
West and East Village, Chelsea, Soho, Noho, Little Italy, Chinatown and Lower East Side, Since 1933

Photo by Sam Spokony

Toshi General Manager Jason Montello, right, talking to a tenant in a room at 316 W. 14th St. that Montello claimed would only be rented for 30 days or more. But the tenant, on his way to the subway later on, told a reporter he was staying for “just a few days.” By his accent, he sounded like he was from Germany or possibly Eastern Europe.

Hotel Toshi flouts new law while claiming to follow it

BY SAM SPOKONY

On May 1, a new state law solidifying the statutes against illegal hotels went into effect, finally giving the city a solid basis by which it can begin to prosecute buildings in violation. As a result of what Mayor Bloomberg called “ambiguities in the law [that] hindered our ability to take enforcement actions,” owners of illegal hotels have taken root throughout the city over the past several years. The nature of their business is marked by the unlawful conversion of Class “A” (residential) apartments into cheap boarding rooms for tourists.

The new law erases that previous ambiguity by explicitly defining transient — and therefore, illegal — occupancy as any period of time less than 30 days. In an effort to strengthen enforcement and remove loopholes, the law also states that the use of any single unit of a residential building for transient guests is illegal. Previously, a majority of units needed to be for transient use for a building to qualify as illegal.

Following an immediate crackdown by the city’s Office of Special Enforcement, four buildings received a full vacate order because of “imminently dangerous conditions,” and four received a partial vacate order.

Of the seven buildings that were simply cited for violations, four were listed in the Mayor’s Office’s press release under the name “Hotel Toshi.” Those buildings are located at 316 W. 14th St., 203 E. 14th St., 65 Bank St. and 808 Driggs Ave. in Brooklyn.

Toshi claims innocence in light of violations.

This reporter contacted Toshi and scheduled a meeting with General Manager Jason Montello at 316 W. 14th St., between Eighth Ave. and Hudson St., on June 13. The company changed its name from Hotel Toshi to Toshi Apartments after May 1 — and upon speaking with Montello, it was clear he attempts to create the appearance that the company no longer engages in illegal rentals.

“Yes, the short-terms were great; they were moneymakers,” said Montello as he led a tour of the building. “But now, with the occupancy laws in effect, this place is pretty much just going to be used for anything over 30 days.”

The profit incentive
Montello was referring to the high profits managers of illegal hotels make through the rooms they rent. Because the apartments used for unlawful rentals are not registered with the Department of Buildings and are not subsequently zoned as commercial use, owners pay far less in taxes than they would if operating a legitimate hotel. As a result of lower taxes, Toshi can charge lower prices to tourists, creating a situation that is both immensely lucrative and never short on prospective vacation renters.

Not only did he continue to deny the fact that Toshi still uses its apartments as illegal hotels, Montello claimed that the company had been victimized by the new state law and Bloomberg’s crackdown.

“Personally, being someone who came from the hotel industry [he is a former Hilton employee] to the vacation rental industry, I’m a little confused with the laws, because it’s not like anyone came to us and explained the thin line of what we can and can’t do,” Montello said. “The building has a sprinkler system. It has everything you need to feel safe. So I didn’t understand why we got hit with so many violations. They gave a lot of silly violations, and it was just nitpicking.”

While Montello was not lying when he stated the rooms at 316 W. 14th St. were refurbished to comply with the fire codes they had previously violated (fire extinguishers and means of egress), Toshi remains actively engaged in the illegal hotel business.

When Montello was asked if the two European tourists spotted in the building — who he acknowledged were Toshi guests — were staying for more than 30 days, his response was, “Exactly.” When this reporter asked those tourists the same question about an hour later, they stated that they were only planning to be in town for a few days. They also said that they had never met Montello.

The illegal activity at 316 W. 14th St. is known and condoned by the building’s management company. When asked about his knowledge of the rentals, the building superintendent replied with a reference to the Toshi offices — saying, “Oh, you want a room? I’ll call the office.” After ringing the office, he gave the reporter a phone number to call.

A woman who is a permanent resident of the building stated, as she entered, “It’s a hotel, and so what?”

‘Garbage, luggage, vans’
But many other legal tenants at Toshi’s various buildings throughout the city are not as content with the illegal rentals that take place outside their doors. A resident of 323 E. 10th St. complained of frustrating conditions that result from the current use of apartments in No. 325, the building next door, as hotel rooms.

“I have to deal with their garbage and luggage outside my place all the time,” he said. “It pisses me off. And the van that picks them up or drops [the tourists] off usually comes at least once a day, anytime, sometimes in the middle of the night.”

On Nov. 19, 2010, 325 E. 10th St. was served a violation for “Occupancy contrary to Department of Buildings records.” A complaint regarding illegal hotel use in the building was referred to the Mayor’s Office on June 2, 2011 — but no actions have yet been taken on that information.

Part of Toshi’s ability to avoid more frequent violations and investigations is most likely due to the underground nature of their rental process. This reporter was able to arrange prospective reservations for four or five nights (under an alias) through Toshi’s cover name, Smartapartments.com — but because the transactions weren’t finalized, exact addresses were not provided: The company refuses to name the exact location of its buildings to customers until they finalize their purchases and arrive in New York.

The approximate locations of all of Toshi’s hotel sites, along with photos, can be found online at flickr.com/photos/smartapartments/sets/.

Along with those mentioned at W. 14th St., this reporter spoke personally with tourists staying illegally at the following Toshi locations: 325 E. 10th St., 203 E. 14th St., 808 Driggs Ave., 65 Bank St. and 352 W. 39th St.

A legal tenant at 356 W. 39th St. said his building had illegal hotel tenants and confirmed that the neighboring 352 W. 39th St. had them, as well.

“Tourists are always making noise by moving in and out everyday,” he said of the next-door building. However, 352 and 356 W. 39th St. are not yet identified as illegal hotels by the Mayor’s Office.

Deception not so smart
Montello repeatedly claimed during the tour of 316 W. 14th St. that Toshi and Smart Apartments (the “company” that runs the aforementioned rental Web site) are two entirely separate entities. They are, in fact, the same illegal rental company. During the reporting for this article, a yellow van marked “Smart Apartments” (though some of the lettering had been peeled off) was spotted outside 316 W. 14th St., and two more were seen outside Toshi’s building at 808 Driggs Ave. Also, the address given on the side of the vans as the headquarters of Smart Apartments, 174 Fifth Ave., is registered under the name Toshi Apartments. However, it was clear from what could be seen that the “office” is actually being used as a barbershop.

Tom Cayler, chairperson of the West Side Neighborhood Alliance’s Illegal Hotel Committee, understands very well the reasons why a company like Toshi would want to hide its unlawful operations, and has had experience dealing with the shadowy circumstances that often surround them.

“There’s a claim that illegal hotel operators are bringing money into the city, but what they’re doing is robbing the city. They’re defrauding the city,” said Cayler. “And if everything is straight and taken care of, why don’t they list the location? Why don’t they tell you the addresses?”

He also stressed the fact that, even with the new law’s help, the penalties in place for those caught are not high enough — starting at a mere $800 — to provide an impetus to stop the illegal practice.

“They continue making tenants’ lives miserable, and it’s for the profits,” Cayler said of the illegal hotel operators. “The landlords make great money from Toshi. They can get a hell of a lot more from them than they can from a rent-stabilized unit. Instead of a single unit making them $1,200 to $1,500 under rent stabilization, they can then make maybe $5,000 a month. So do they feel like they’re being victimized now? Yeah, because they were making unbelievable amounts of money, and now the law’s been clarified and they can’t do it anymore.”

Life in an illegal hotel
Danielle Green has been a tenant of 325 E. 10th St. since last October. She said that Icon Realty Management, the company that owns her building, cares more about appeasing Toshi than catering to legal residents.

“I didn’t have gas until the end of April, six months after I moved in,” Green said. “Every single rental room had heaters immediately before it got really cold, and they had AC put in promptly when the weather got warm. We didn’t have heat in January — I was sleeping in three layers of clothing. Then I found out that there were space heaters in the basement that they were taking out and putting in all of the rental rooms. And when we mention anything about the vacation rentals up front, they just ignore it. Anything in the e-mail complaints we’ve sent doesn’t get addressed.”

Icon also owns the building used by Toshi at 316 W. 14th St., and the company doesn’t seem to care that it’s involved in an illegal activity. Icon was called for a comment from the manager, but a leasing coordinator named Latifa refused to comply — and shared her own opinion of the situation.

“Yes, we’re aware of what Toshi does with the apartments,” she said. “And no, we haven’t taken any action to stop them. They have their own business clients, so we’re not worried about it.”

Just who is Toshi?
Toshi Apartments, formerly Hotel Toshi, was founded by former actor Robert “Toshi” Chan. Chan is best known for a small role in “The Departed” and a stint on “Late Night With Conan O’Brien” from 2003 to 2004. He began (legally) renting apartments at 186 South Eighth St. in Brooklyn in 2001. Once the company — with Chan as its president — entered the short-term rental market, its flagship became the building at 808 Driggs Ave., and has remained so up to the present day — when that practice has become explicitly illegal. The building at 808 Driggs was cited for violations in the city’s May 1 crackdown.

Although Montello also told this reporter that Toshi no longer has a hand in rentals at 808 Driggs, it’s clear that the building is still an illegal hotel hot spot. A Toshi receptionist named Jennifer said that calls made by tourists to the “office” for reservations are handled not at 174 Fifth Ave. (the apparent barbershop that Montello previously described as the company’s headquarters), but at an unidentified apartment or room in the 808 Driggs building. The building’s basement is also used to process laundry from all of Toshi’s illegal hotel locations — and that, in addition to the constant party atmosphere, is so frustrating that even a dog walker who works for a tenant of the building finds it all despicable.

“There are people who are drunk in the hallway making crazy noise all the time, in and out,” he said. “They’re f---in’ wasted right in the foyer. If I’m coming in or going out, sometimes they’re just so f---ed up that they don’t move, or they’re just really obnoxious and they’ll just sit there. I’m only here for a half-hour every week, and it still pisses me off.”

When informed of the new law that went into effect on May 1, he added, “If they get caught, I hope they all go to jail, because it all seems to me like something I couldn’t even imagine living with.”

One tenant who is in his second year of living at the Brooklyn building said, “There were undercover cops banging on our doors at 8 a.m. on May 1, seeing who was a permanent resident and who wasn’t. And nothing’s really happened since then. There’s been no pressure from the city that we know of.”

The tenant stressed that, while the constant presence of transient tourists isn’t usually dangerous, it’s not a good way to live.

“I didn’t know this was going to be the case when I moved in, and I think the people who stay here on vacation have no idea that there are permanent residents in the building,” he said. “And your peace is basically at the mercy of transients — always a stranger in your hallway. You know, there are issues you can clear up when you move into an apartment if you have a permanent neighbor. ‘Can you please not slam the door when you come in after midnight?’ But we have constantly approached strangers to ask them not to do things like that.”

Flagship flouts the law
Though the May 1 law has created a better foundation from which to prosecute illegal hotels, the tenant said he believes the Mayor’s Office has taken a lax approach when it comes to enforcing the statute at Toshi’s home base at 808 Driggs Ave.

Robert Chan did not respond to questions regarding the activity of his company, as attempts to reach him through Montello or other Toshi representatives were unsuccessful.

“I mean, it could be worse,” said the Driggs Ave. tenant. “But there’s just a feeling of mistrust, and a feeling that these guys [Toshi] are saying, ‘Oh, these stupid tenants, they don’t know what’s going on.’ And it’s just illegal.”

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