Boho blues: The battle to save the Chelsea Hotel

After 125 years of entertaining Twain, Dylan, Monroe, Burroughs and countless other infamous guests, the Chelsea Hotel is showing its age. A new British manager believesthat iPod docks and mini-bars are the future – but first he has to convince a hard core of eccentric long-term residents that he's not about to destroy Manhattan's last great artistic refuge

We are two weeks from Christmas but Andrew Tilley, the general manager of New York's illustrious, defiantly decrepit Chelsea Hotel, is low on cheer. Bookings are way down for the season thanks to the economy blowing its gaskets. Then there is all the other stuff he has had to contend with since taking the job in July last year – like someone anonymously sending a pair of women's knickers to his wife.

"I knew it was going to be difficult, but not to this degree," muses Tilley, a 47-year-old Briton who came to the Chelsea – a one-off establishment if ever there was one – from the Hard Rock hotel and restaurant chain. "It has been ridiculous," he goes on, his demeanour alternating between exhaustion and cheerful determination. "Under normal circumstances, I wouldn't have touched this place with a bargepole."

No question, the Chelsea casts a spell on those who cross its threshold on West 23rd Street, though, as Tilley will gladly tell you, not always a kind one. Its 12 floors of brick and wrought-iron balcony balustrades exude a beguiling eccentricity, whether it is the ragged wiring or quirky artworks that decorate the lobby (the old papier-mâché lady on a swing needs a dusting) or the odd pyramid that rises from the roof that, it turns out, still has some determinedly dippy soul living in it.

Built in 1883 as grand apartments and at the time the tallest edifice in all of Manhattan, the Chelsea was made into a hotel at the turn of the last century and became – and remains today – a mixed-use residence, about 40 per cent reserved for hotel guests with the remainder occupied by long-stay tenants. Like a batty dowager aunt, she also has many stories to tell. There have been murders, suicides and lonely deaths here. But above all, it is the tradition of the Chelsea as a sanctuary for artistic types, many on the fringes of society, which makes it unlike any other address in New York.

The pyramid, currently occupied by a young film-maker from New Jersey, is where Marilyn Monroe and Arthur Miller spent part of their honeymoon. Andy Warhol met his tragic muse Edie Sedgwick there, and made films in the hotel. Authors who have trailed ink at the Chelsea have included Mark Twain, Thomas Wolfe, William Burroughs, Tennessee Williams and Arthur C Clarke, who wrote 2001: A Space Odyssey in room 322. There have been unhappier episodes at the Chelsea too. It was in the roof-top pyramid that the decomposing body of the gay rock singer known as Jobriath was found 25 years ago. Notoriously, Nancy Spungen was found stabbed to death in room 100, a crime for which her boyfriend Sid Vicious of the Sex Pistols was arrested. And Dylan Thomas's final, fatal drinking binge – 18 glasses of whiskey – took place at the hotel.

"Oh, I guess the Chelsea's not too bad," Janis Joplin, the late singer who met her alleged one-time lover Leonard Cohen while living under its roof, once conceded. "All my friends stay here, a lot of funky things happen in the Chelsea. Just like the California communes. Only it costs a bit more."

It is primarily that historical funkiness –Bob Dylan hung out here too and Jimi Hendrix – that has caused many of its fans, including not a few of the residents still living in it, to be gripped by a shared, faintly delinquent, nostalgia for it. New York has been under siege by an army of property developers and sanitisers, first unleashed by ex-Mayor Rudy Giuliani and then his money-minded successor Michael Bloomberg. While every other neighbourhood or establishment with even slightly shady associations has been cleaned up in this city, at least the Chelsea has stayed true to its dotty DNA.

"This," explains resident Ed Hamilton, "is the last outpost of Bohemia." When Hamilton is not promoting the ' book he has recently written about the place, Legends of the Chelsea Hotel, he is composing a daily blog of the same name that is dedicated to the notion that those currently in charge, notably Tilley, are engaged in a plot to strip the place of all its beauty and charm, evict its tenants and turn it into just one more hyper-designed, boutique hotel for rich folk. "This is the last stand right here," Hamilton adds, all his worldly goods, including an antique table-football game, crammed into room 819. "You may have all the power, you may have all the money but you can kiss my ass. I am not going."

The current nastiness began in June 2007 when a schism between heirs of the three families that gained control of the building in the late-1940s ended in a boardroom shoot-out. The one heir who had been running the place, Stanley Bard, was ejected from the hotel and told firmly not to return. He had been running it with a kind of dysfunctional benevolence for five decades that extended to allowing some residents to pay rent with artworks if they didn't have cash. The two remaining shareholders, David Elder, a tax auditor by training, and Marlene Krauss, a healthcare executive, took charge, instantly hiring a hotel management company, DB Hotels, which already had a string of mostly boutique hotels across the city, to run the Chelsea and prepare it for a top-to-bottom renovation.

The response of most of the residents ranged from befuddlement to fury. Even 18 months later a large banner still hangs from a balcony on a lower floor with the slogan, "Bring Back Stanley Bard". Hamilton's blog amounts to an almost daily litany of complaints and charges directed at those who displaced Bard, whose return he is lobbying for. But that is most unlikely to happen – at least not for several years.

Upstairs in the pyramid with its sloping, concrete-slab walls, French garret windows and Spartan, white-painted interior, the film-maker Sam Bassett is trying to avoid the invective being traded in the corridors below. Yet, he is close to completing a documentary film about Bard and makes no secret of his belief that the coup that removed him was a betrayal of everything the building is supposed to stand for.

"It was built for creative people and should be maintained as a sanctuary for creative people," he says, facing a parade of flat-screen monitors for video and sound editing. "It's a place where one can expand freely upon one's creative instincts and that's a beautiful thing and the legacy of Stanley Bard."

The blond-locked Bassett shares the concerns of others that Krauss and Elder are concerned mainly with profits. "If we were to look at this building in terms of just money, history would not shine too favourably upon us," says Bassett, who has other editors working at more screens on the pyramid's lower floor. To get down there you must navigate narrow wooden steps which, where they turn a corner, boast a six-inch "safety barrier" composed of miniature Frosted Flakes boxes and a cactus. He was especially dismayed by DB Hotels when it took over. "They were not pleasant. Their leadership and the people they brought here, the way they handled things, was at a pretty low, mean level," he says.

But the co-founder of DB, Ira Drucker, has not been inside the Chelsea for a while. That is because Krauss and Elder fired him and his firm in the summer – and replaced them with Tilley. In the 10 months that Drucker and his team were there, he says they tried to get some of the irregularities at the hotel straightened out, including identifying tenants who are not registered with the city as they should be. Other problems, according to Drucker, included doors that were too narrow and a patchwork of private gardens on the roof, which violated all manner of fire-safety regulations. Bassett has the largest of all the roof gardens, famous as the location for a photograph of Janis Joplin leaning against its wall.

Drucker is so concerned about the hotel's physical structure that he dares to give disgruntled residents such as Hamilton some advice: "They should get themselves a lawyer, because that place could be a lawsuit waiting to happen," he says. "They wouldn't have to pay rent ever."

Having Drucker stick his oar in again is all his successor needs. Tilley has never before spoken so frankly about his frustrations. "I honestly believe this could be one of the most important hotels in New York City with the right kind of renovation," he says. On arriving, he was instructed to hire the architects and designers to launch its rehabilitation. His dreams took shape quickly. Among many other things he would love to blow out the wall behind the dingy registration desk to create a much larger lobby area for resident artists and hotel guests to mix socially, and also extend the brass-rail staircase – one of the most handsome in the city, it soars all the way to the roof skylight – to the ground-floor level. (For now, it begins on the first floor.)

But even before he began the job, Tilley discovered to his anger that his CV had found its way into the hands of residents who saw fit to publish it on the internet. Tilley assumes it was the same person or persons who got hold of his wife's email address and subscribed her to 79 different periodicals and magazines. Then came the final straw: the arrival through their letterbox of the package with the women's underwear and a note insinuating that Tilley was up to no good at the hotel and she should make him leave.

The scepticism he met centred on the claim that, whatever else happened, there would be no attempt to force out permanent residents – so long as they were in good standing with rent. Tilley said it again at an informal meeting with residents in August. "If you pay your rent, you're fine," he insisted. If you don't? Well, in the autumn he gave a three-day eviction notice to about 10 residents who together owed 46 months of rent. That it sent some tenants into an indignant spin hardly bothers him. "How dare we possibly ask for rent? It's a novel thing, isn't it, to ask for rent? I mean, how dare we?

"For the most part the residents are very hospitable and very pleasant. Then there are a few who would be quite happy for us to do absolutely nothing. They would be happy if we didn't charge rent, and a lot of the complainers are the ones who don't pay the rent," he notes.

The price for their attitude, he contends, is that one day their cherished Chelsea will "fall around their ears. That doesn't quite make sense to me." But critics such as Hamilton are unlikely ever to be moved by Tilley's appeals, as they don't believe what he says about tenants not being thrown out to make way for higher-earning hotel rooms. "He is lying," Hamilton says with utter conviction. "They would like to get rid of us all eventually."

Yet, seek out long-term tenants and it seems to be the case that even among those who have been at the Chelsea for ever, there are plenty who either think Tilley is being straight with them or that he is indeed treating them as well as Bard had. And they are exasperated by the blog maintained by Hamilton. "This is the moment that guy has in some silly pathetic sun. It's really pathetic in my opinion," says David Linter, a novelist who has lived here for 15 years and who almost died in his room seven years ago after suffering a brain haemorrhage. It was three days before he was found – and in the nick of time, he says, making a tiny space between his forefinger and thumb. "I died and I was resurrected at the Chelsea."

"It's too easy to just keep on complaining," adds Rita Barros, a photographer originally from Portugal whose portfolio includes a book of pictures taken in the hotel's rooms, corridors and landings. She moved into the place 28 years ago. "I think they are trying their best and it's an old building."

But December was the cruellest of Tilley's six months at the hotel so far. He was lambasted by the blog and some other residents for starting renovation work on a room once favoured by Dylan, but which had an unsafe wall. He instructed workers to demolish it, triggering a furore that reached the New York tabloids and brought a stop-work order from the Department of Buildings, as removing the wall had not been in the renovation plan submitted to it. (Another resident, a well-known painter, suggests the room in question was better known as an S&M sex den than for its Dylan connection.)

Then there was the worsening of the economy, which has already caused Elder and Krauss to instruct Tilley significantly to scale back the renovation plans at the hotel – at least for the time being. With occupancy rates plummeting at every hotel in New York right now, there is every chance that financial strictures – not protests or nostalgia – will end up putting any serious overhaul of the Chelsea Hotel on hold. "I think obtaining bank loans now is not going to be the easiest thing," Tilley – who may instead have to be satisfied with updating individual rooms piecemeal and biding his time for the more far-reaching work – concedes.

Whether you lament a likely delay in the remaking of the Chelsea into something grand again or celebrate it as some kind of happy reprieve will depend on which side of the fence you find yourself: do you think the ghosts who occupy the Chelsea, from Williams to Thomas, Spungen to Wolfe, would welcome the refit the owners imagine – iPod docks, minibars and room service included – or, spinning in their graves, abhor it? A refurb might at least lower the collective blood pressure at the place and restore those most Bohemian of qualities to the hotel's corridors and landings that have been conspicuously missing these past several months: mutual respect and tolerance.