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Who is getting hurt by the ban on vacation rentals in New York City?

August 16, 2010

First in the series of testimonials: Fergus O’Brien’s story

The legislation banning short-term rentals in New York City was promoted by its co-sponsors Assemblyman Gottfried and Senator Krueger as the “illegal hotels” legislation.

The alleged rationales behind it were to (1) preserve affordable housing units in New York City and (2) protect the safety and health of tourists and permanent residents.

To achieve this alleged goals the law would make it illegal for any multiple dwelling (any building with over 2 rentals units) to rent even 1 of their units out for under 30 days (including brownstone and townhouse owners unless their property has 2 or fewer units).

The co-sponsors of the legislation chose not to reflect on the negative impact that this law might have on small property and business owners across New York City.

At a time of economic uncertainty, this legislation will:

–  increase unemployment

–  raise the foreclosure rate

–  and harm property values across the City.

The new law also delivers a severe blow to the tourism industry, which has already taken a huge hit during this recession.  Restaurants, museums and cultural sites, and any other small business dependent on tourism will suffer huge revenue losses as a result of this bill.

Every week, we will be posting on our website, protect-vacation-rentals.com, the testimony of a small property or/and business owner on how they will be affected by this law.

Here is Fergus O’Brien’s story.  He is the owner of a small B&B establishment, Country Inn the City

AUGUST 9, 2010

In 1989 we were almost evicted from the townhouse we owned courtesy of a tenant who refused to pay rent on a technicality as a result of the city’s nebulous rent laws. She and her boyfriend were trying to claim the prime lease on what was a sublet and when we wanted to return to our apartment after spending a year working in London we were unable to and therefore had to move into a smaller furnished studio apartment within the same townhouse that we hadn’t rented.  We took them to court and finally settled at a huge expense. We had our house back (originally purchased in 1978 before the gentrification of the Upper West Side began) and swore that we would never give up any of our apartments to renters again. This was the second case in as many years and we were very nearly bankrupted whereupon we were forced to take out a second mortgage.

And so, on nothing but good credit, we decided to open up our apartments for short term stays, that is in order to protect ourselves from would-be ‘professional tenants.’ If we kept stays to  under 30 days then no one could legally claim the lease of any of our apartments. And so our bed and breakfast like establishment was born, built on borrowed funds and sweat equity. We began tentatively with one apartment and grew to four within 4 years, as existing tenants moved out by volition NOT by force. Once settled we started to attract the press and really took off when we were featured in the fall issue of Conde Nast Traveler in 1996. And then came the internet when things really started to take off and full independence at relatively low cost was achieved.

Our first major obstacle came several years ago when the city and state decided to charge all businesses like us back taxes…using an arbitrary date that caught us all off guard. We all fought this one hard at some expense and came to a reasonable solution. Years later we are still in compliance with local and state laws as far as tax collection and even though we don’t provide the sorts of services that hotels do we pay the same taxes.

And then along comes bill 6783  which was rushed through recently without, it would appear, a moment’s thought for how it might impact New York City tourism, the number one source of revenue for the city. This very poorly written bill has by lumping us together with what have been deemed ‘the illegal operators’ by both the state assembly and city, imposed the 30 day rule on all stays for short term alternative accommodation businesses. This decision has effectively put our operation, the one that we have worked so hard to build, out of business. If we rent for 30 days or more we go back to square one and that is that we run the risk of having to offer a lease to anyone who should stay with us, quite apart from the fact that we would be losing income, an income which also helps us to subsidize two full time rentals.

Why, I would like to know, has the city and state decided that it has a right to tell me what to do with MY property if what I am doing is providing a valuable service to those tourists who prefer not to stay in hotels while collecting taxes. Additionally we are far from an encumbrance on existing tenants as per one of the main focuses of the bill. Does the city truly prefer the kind of operator that one typically associates with townhouses throughout the city, meaning poorly maintained buildings that are run by absentee landlords. Neither do they satisfy the city’s needs for affordable housing nor do they generate anything like the same kind of income for the city. As far as we are concerned this is a bill in which everyone loses, and we plan to do everything to everything we can make sure this does not happen.

Stay tune for the next testimonial

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