Thursday, July 25, 2013
Couple renting out rent stabilized apartment as hotel
When something intended to be helpful ends up being overused or abused, it’s called adverse selection in professional parlance. The way in which a couple has used New York City’s rent stabilization program gives adverse selection a whole new meaning, according to their landlord, and that meaning is unbelievably negative. The couple is accused of using their rent stabilized apartment as a hotel room or bed and breakfast, and reaping six-figure, untaxed profits as a result.
“I think this is for her a business,” said Ken Podziba, referring to his tenant, Amy Parness. Podziba, along with his sister, Susan, own 250 Elizabeth Street, an eight-apartment rental building. It’s nestled among designer boutiques where shopping is by appointment only, and very hip cafes and restaurants in one of the city’s hottest neighborhoods. It’s an ideal location for a widely sought-after bed and breakfast.
The problem is, according to Podziba, Parness has been running the b-and-b out of his apartment, which she’s supposed to be renting at a rate intended to promote affordable housing. ”And she’s not paying the IRS,” Podziba told PIX11 News, “so she’s profiting 100 percent.”
For the last 12 years, Podziba said, Parness has rented an apartment on the third floor of his building. For at least the last four years of that period, she has listed the apartment as the NoLita Nest on airbanb and other bed and breakfast listing websites.
Online, the apartment is displayed as a home away from home for tourists, who pay anywhere from $220 to $260 or more per night for the one bedroom, one bath railroad apartment.
The landlords were able to confirm their suspicions about their tenant’s activities when they learned that Parness was having unlicensed contracting work done to the apartment. A climb up the stairs to the floor where she’s renting reveals a notable absence on one of the walls. Where an entry doorway had been for over a century, there is now only a wall, and at the other end of the third floor landing, where there had once been only a wall, there’s now a deep green wooden door. The door contrasts sharply with all of the black, metal fire code-compliant doors in the five-storey walkup.
PIX11 News knocked on the green, wooden door, and a woman answered, without opening. Her description of herself was consistent with that provided by Podziba. Her boyfriend is renting the apartment for the summer, she said.
They’re paying $4000 per month, according to the landlord. Parness is renting from him for $1400 per month. So when the apartment is not being used as a bed and breakfast apartment, Parness is renting it out at a nearly 300 percent profit.