While there, my girlfriend dug up a bunch of stories about the neighbors complaining about condo unit owners leasing out units to this place. I can understand both sides of the argument; if I'd just bought a condo in a building I wouldn't be happy about a large majority of the other units being rented out every night to tourists.
I got the distinct impression that there had been a problem with crime and people being disruptive in the buildings recently, although the whole time we were there it was quiet.
Apparently the owner of this hotel has approached a bunch of building owners with vacant condos and offered to lease them. The building owners are very happy (as apparently they are getting more then they would to rent them as apartments).
I will say that I stayed in a giant two bedroom loft in Williamsburg for about half the cost of a "regular hotel"; so it's definitely appealing.
After checking out, I actually got an email from the hotel with the number for New York Speaker's office asking us to call them about bill Bill A10008.