Hotel rooms

Can Eric Adams really turn 25,000 hotel rooms into homes?

Photo: Andrew H Walker/Shutterstock

Last month, Eric Adams, New York’s presumptive 110th mayor, stood outside a barricaded hotel in Sunset Park, Brooklyn, to outline his plan to tackle the growing problem of homelessness. Convert enough properties like the one behind him into 25,000 permanent apartment rooms, as he proposed, and you’d have room for about half the people in the shelter system. It’s an idea that’s been part of the political landscape for months, as Adams and other Democrats vying to lead the city have proposed the return of single-room hotels, dormitory-style low-income housing largely banned. since the 1980s for its role in deteriorating social conditions in the city after World War II. But his plan, as it stands, had few other details except that it would be focused away from Manhattan and in the other boroughs. “If we invest now and streamline city rules to allow for these conversions, we can create tens of thousands of new supportive housing units to get homeless New Yorkers off the streets,” Adams said in a statement. communicated.

But in the weeks since, the proposal has raised pointed questions about how Adams can actually deliver on his plan. A campaign insider with direct knowledge of the plan said the 25,000-room figure was pulled from a survey of the hospitality industry that included buildings in Manhattan, and that Adams planned to bypass the usual convoluted process to carry out zoning changes with a process called “one-time rezoning”. – targeted changes to how individual buildings can be used, which happens to be unconstitutional in New York State. The rebound in the housing market, the reopening of international travel and zoning laws make the whole project unlikely to be quick or cheap, and the campaign is already assessing what other programs will need to cut to fund it.

The Adams plan aligns with the priorities of the New York Hotel Trades Council, the powerful union representing hotel workers, at a time when the future of the hospitality industry is unstable. The HTC, which backs the plan (and has endorsed Adams’ campaign), is also the force that strangled Airbnb in New York and put forward a proposal that would have effectively frozen new hotel construction. But critics of Adams’ plan fear it will have lasting effects on tourism – a major contributor to New York’s tax revenue – by permanently reducing the supply of available rooms, excluding all visitors except the wealthiest and reducing the amount of money collected to fund social programs that help the homeless in the first place. “The real question is, ‘Are we negatively impacting our economy by doing this and making it harder for one of our critical industries to come back? “said Ester Fuchs, director of Columbia University’s urban and social policy program and former adviser to Michael Bloomberg.

Hotels have been a growing target for conversions since the start of the pandemic, when the city paid for thousands of hotel rooms per night to reduce the spread of COVID-19 among the homeless population. Adams’ plan – which would turn those rooms into permanent accommodation – would rely on nonprofits, funded by the city, to buy the hotels and convert them. Shams DaBaron, an advocate for homeless people who supports Adams’ plan, said SRO private living spaces would make it easier for people to avoid drugs and alcohol – often a condition of probation – than settings. gathering currents. “If you get people into homes quickly, you can better stabilize them and provide them with the services they need,” he said.

These buildings have not yet been sold or even put on the market. Building the SROs will require the cooperation of perhaps 100 hotel owners, and convincing them to make a deal will be difficult, if at all possible. “The problem with my industry is that we don’t have, say, American Airlines, which owns all the planes. Almost every hotel owner is a different entity or person, so getting them to act in concert is very difficult,” Vijay Dandapani, president and CEO of the New York Hotel Association, told Curbed. There were, by his group’s tally, about 123,000 hotel rooms in New York in 2019, with about 19,000 more in the works. As of late, around 40,000 are empty, and a survey by the group found that more than half of them – around 25,000 – are likely to be permanently closed anyway, Dandapani said. The Adams insider said an “aggressive” plan would convert 5,000 to 10,000 in the first year, but acknowledged it would become harder to do so later.

There is also the question of zoning. Most hotels are zoned for industrial or manufacturing areas, which do not allow permanent residences. Changes to these rules generally require submission of proposals through the Uniform Land Use Review Procedure, then hearings before community councils, approval by borough presidents, going through city ​​council committees, the passing of the legislature and the signing of a law by the mayor. A 12-18 month process which when completed could see the tourism industry recover and more leverage to demand a higher price per room. In other words, the window in which the Adams administration could pull off such a feat may already be closing.

The folks at Adams want to act quickly, and an insider has described plans for targeted “spot rezonings” that would allow hotels to convert to SROs. “The current process is simply too slow. We must – we must had to – take advantage of the market,” said Evan Thies, spokesman for the Adams campaign. He added that Adams’ plans to change zoning laws is a process that would take three to six months, including a possible public comment period. After that, it would go to the New York City Department of Planning, which is controlled by City Hall.

The problem with that is that “spot rezoning” has been banned in New York since at least 1951. “Spot zoning, by definition, is illegal — period,” said Michael S. Hiller, a land use attorney. land whose litigation succeeded in stopping the Metropolitan Museum of Art from building deeper in Central Park. Thies was dismissive about these concerns. Adams, he said, “isn’t afraid to fight to create more affordable housing wherever he can and however he can, as long as it doesn’t reduce quality or have a negative impact. impact on the public safety of these areas and is done in a thoughtful manner.”

At the heart of any deal would be the price per building, and what owners find acceptable will vary widely. “Each building is different and each capitalization is different,” said Eric Anton, broker at Marcus & Millichap. “A building that was built in the 1930s, which has rent-stabilized housing and has been a low-end hotel, that could work. Whereas a more modern hotel – tall, lean, 25 stories, built in the last 10, 15 years – it probably wouldn’t. Edward Cardenas, who heads regional sales and marketing for Chase Hotel Group, which owns a hotel in Queens, said buying landlords at $225,000 to $250,000 per room would be a reasonable rate – compared to around 300 $000 a few years ago – and added that the cost of gut renovations to turn buildings into residences would roughly double the total cost. And some hotel owners will want more because they’re doing well — on occasion, outside the law. Ted Houghton, president of nonprofit Gateway Housing, said he offered $200,000 a room to buy a hotel in Manhattan last year, but the landlord would take no less than $350,000. — and would rather just illegally rent out the rooms as permanent residences than lose money on a sale. “You can’t do that,” Houghton recalled telling the owner. “He said, ‘Watch me. “And hotel owners will have less incentive to sell at low prices if the city council follows through on a plan requiring special permits to build new hotels, said Manhattan senior researcher Edward Kober. Institute and former Director of Housing, Economics and City Infrastructure Planning. “The city wouldn’t solve its housing problem in a fundamental way, but it would pay top dollar for hotel rooms scattered around the city and then it would have to pay more to convert them into housing,” he said.

City planners fear Adams’ plan could affect the future of tourism in the city, driving up the price per room to unaffordable levels and sending tourists elsewhere. When asked to respond to criticism that Adams’ plan is in line with HTC’s interests, Thies said, “I disagree with the premise of the question.” At its peak in 2019, tourism in New York brought in $80.3 billion, according to the New York State Comptroller’s Office. According to a tax revenue analysis conducted by the IBO for Curbed, the city would lose about $6 million a day in taxes if Adams’ plan were fully implemented and 25,000 units were removed from supply.

Yet the potential benefits of SRO living for homeless people could be major. Having safe and private spaces for people with on-site medical services could help people stay healthy and give them time to find jobs and resources to leave the shelter system, he said – which could ultimately reduce the public cost of medical services, too. “What are we going to do with all these people, many of them black and brown, who are going to head for the shelters?” he said. “We must act now to save people’s lives.”