Motel Sucks

Exploiting a Depression-era loophole, more landlords are booting renters for short-term hotel guests

In March, Brewer introduced a bill that would ratchet up the fines to a maximum of $20,000 for a third offense, and tack on additional per-day fines based on how many units had been illegally converted. The December 3 hearing for the bill drew dozens of residents from apartment buildings and SROs across the city, but the council has not yet voted on it. Housing advocates are still pushing for an additional bill that would close the 30-day clause, which currently allows landlords to legally have new tenants each month in any deregulated unit. It's a loophole that has so far protected One Bank Street.


In the days since the conversions there started, the city has received at least nine complaints that the building is operating as an illegal hotel. Investigators from the Mayor's Office of Special Enforcement have visited the building three times, but have not been able to prove that any short-term guests have stayed for fewer than 30 days.

"We're not doing anything nightly or weekly; it's mostly for corporate relocations, people who are taking care of relatives in the hospital for a month," says property manager Fred Marolda. (Bhalla didn't return calls from the Voice.) "We think we can maximize the rental potential in the units. I mean, what's wrong with that? I really don't see how it affects anybody."

A handmade replica of One Bank Street, created by a six-year resident, adorns the Christmas tree each year.
photo: Kate Lacey
A handmade replica of One Bank Street, created by a six-year resident, adorns the Christmas tree each year.

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Renters around town are getting ousted from illegal hotels.

So far, it has mostly affected the new generation of market-rate renters in the building, who are the first to be kicked out so their apartments can be flipped and marketed as high-priced "corporate apartments" or "extended-stay" hotel rooms. Each new vacancy has been followed by renovations in those apartments, furniture being brought in, and out-of-towners arriving with luggage. Residents say about six units have been fully converted into hotel rooms, several are being renovated currently, and at least 10 more long-term tenants have received their walking papers.

Discarded artwork made by residents has found a home in the basement.
photo: Kate Lacey
In September, Wilking got a short, matter- of-fact letter informing him that his lease was being terminated at the end of the year. He asked for an extension so his son could finish out the school year without interruption, but Marolda said no. After all, Marolda says, he and Bhalla are completely within their rights to kick out market-rate residents, since they are not protected by rent-stabilization laws. "At this point, we still don't think we're doing anything wrong," he says. But at least in Bhalla's case, that has never stopped him before.


In the summer of 1992, Lucky Bhalla bought One Bank Street. A few months later, he was named in news stories about a failed Florida savings and loan. Bhalla and a partner, Greek citizen John Avradinis, had taken over a company called Housing Mortgage Corporation, which provided mortgages to families in Western Pennsylvania. According to court documents, the two men borrowed money from several banks and allegedly faked scores of mortgage agreements for condos in New York City. The Kentucky bank that had loaned $15 million to Housing Mortgage Corporation specifically for Pennsylvania mortgages became suspicious and began cold-calling the mortgage recipients. In the bank's court complaint, it alleged that the recipients were all renters in New York City living in apartment buildings that were linked to Avradinis and Bhalla. Not one of the purported mortgage recipients had ever heard of Housing Mortgage Corporation, much less signed mortgage agreements with the company.

The Kentucky bank's seven-year federal lawsuit resulted in the shuttering of a Florida bank also owned by Avradinis and Bhalla, and a settlement, reportedly of $23 million. A confiscation of properties and bank accounts wiped out Avradinis, who had left the country. But Bhalla managed to hang onto One Bank Street.

"We never thought we had learned all there was to know about Lucky Bhalla's assets," says Tom Johnson, who represented the Kentucky bank in the lawsuit against Housing Mortgage Corporation. "I don't know where he got his money—maybe through clever business dealings, possibly from his father or family."

Residents say there have been bad feelings about Bhalla for years, but they did not band together until the wave of lease terminations began in late summer. At a November 12 meeting, they gathered in a parish hall just a couple blocks from their building to strategize. One resident, a make-up artist and former competitive disco dancer, policed the door for potential spies from the property manager's office, while another greeted an impressive array of city and state representatives that had come to answer questions about illegal hotels. Representatives from the offices of City Council Speaker Christine Quinn, State Assemblywoman Deborah Glick, the Office of the Manhattan Borough President, the Mayor's Office of Special Enforcement, and the Greenwich Village Society for Historic Preservation were all there, but it was State Senator Tom Duane who stole the show.

"Look, your landlord is a creep! He's a bad guy—bad, bad, bad!" he bellowed, rising from his seat. "But landlords have a lot of power." Duane theatrically took off his jacket and paced in front of the skeptical audience, his voice rising with each point he made. "When I am mayor or governor, I would be incredibly tough on landlords like yours. But I'm not the mayor and I'm not the governor. . . . I wish I could wave a magic wand. I wish, because of who I am, I could make this creepy landlord go away and leave you alone—but landlords have a lot of power!" He suggested that the residents form a tenants' association, hire a lawyer, start giving Bhalla hell, and hope for the best.

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