online business

New York Bids for Welfare Hotel, a Symbol of Homeless Plight

LEAD: New York City announced plans yesterday to buy and shut down the Holland Hotel, a midtown welfare hotel that has become a symbol of the plight of homeless families in the city. The city wants to renovate and convert the hotel to a residence for homeless people who are elderly or mentally ill. New York City announced plans yesterday to buy and shut down the Holland Hotel, a midtown welfare hotel that has become a symbol of the plight of homeless families in the city. The city wants to renovate and convert the hotel to a residence for homeless people who are elderly or mentally ill. Stella Schindler, a top aide to Mayor Koch, said that under the plan, most of the 153 families living at the hotel would be offered apartments in city-owned buildings by July. ''The Holland has been a symbol of everything that has been wrong with the system for homeless families,'' Miss Schindler said. ''Now it will be a symbol of our efforts to get out of the hotels.''

Under the plan, to be filed today in Federal Bankruptcy Court in Manhattan, the city would sign an agreement to buy the hotel and would immediately begin moving out the families. Both the owner and the operator of the hotel have filed for bankruptcy. After the city holds hearings on the purchase and takes title to the hotel, at 351 West 42d Street, it plans to renovate it and turn it over to a nonprofit group to run as a supervised residence for the elderly and mentally ill homeless, she said.

The plan was hailed by community groups and advocates for the homeless who have long opposed the use of privately owned hotels that charge an average of more than $1,800 a month to house a family of four in a single room. City officials said the Holland Hotel, which at times housed more than 273 families on welfare, stood out even among the squalor of other welfare hotels, for its poor security, uncooperative management and unsavory atmosphere a few steps away from Times Square. At one time the hotel had accumulated more than 1,000 violations, and the city is now seeking to have a former hotel operator jailed for contempt for violating a consent decree last year, in which he agreed to fix up the building. Rare Glimpse at Hotel Books The hotel also became a symbol of the system, when the owner of the hotel, a corporation controlled by Rajendra Sethia, a wealthy Indian businessman, went bankrupt in 1985, with several hundred million dollars in debts worldwide. The bankruptcy opened the hotel's books for a rare glimpse of how a welfare hotel operates, showing that the hotel made profits of $3 million to $4 million a year on revenues of $6 million, according to court records. The disclosure, disputed by the hotel's operator, created an image of wealthy hotel owners profiteering on the misery of homeless women and children that eventually led to a pending proposal by the Federal Government to cut off its emergency aid for welfare hotels. The Federal Government pays half the costs of an emergency hotel stay. John Pereira, a trustee appointed by the bandruptcy court, said that he would file the sale plan with Judge Prudence B. Abram today and that he hoped to schedule a hearing on the matter by next week. City officials said they would not disclose the purchase price, pending the court filing today. But one official put the price at between $10 million and $15 million.