Challenges and Opportunities for Hotel-to-Housing Conversions in NYC

Research & Policy | June 11th 2021 | Alan Patterson

After the COVID-19 pandemic severely affected the hotel industry in New York City, policymakers considered whether to promote the reuse of distressed hotel buildings as housing. After all, hotels are constructed to offer shelter, they have been mostly empty during the past year, and New York City is in constant need of expanding its housing supply. However, carrying out these conversions is not simple. In a new working paper, the NYU Furman Center’s Noah Kazis details essential background information on the matter of hotel-to-housing conversions. He highlights the regulatory constraints on conversions, what types of properties would be more feasible to convert, and how new state interventions could impact the effort.

One important constraint on conversions is state and local land use law. Zoning designations govern where housing development is allowed, which in many cases is not where hotels currently are. Equally important, each building’s bulk and design could limit its potential for residential use. For example, residential buildings require larger rear yards than hotels. Floor-to-area ratios are capped for residential buildings, making it challenging to convert the largest hotels. Converting to residential use may also trigger accessibility requirements for persons with disabilities that hotels do not currently meet.  Because hotels and apartment buildings are differently regulated, many hotels will not be permitted to convert to residential use under current law or could do so only after extensive renovations.

Already, current law allows some conversions notwithstanding these regulatory barriers. The author points to provisions of the city’s Zoning Resolution, which allow for easier conversions of non-conforming uses, which hotels in residential zones might take advantage of. Article I, Chapter 5 of the Zoning Resolution provides another path for easier conversions of older buildings in certain parts of Manhattan, Brooklyn, and Queens. In addition, rezoning a property through the city’s Uniform Land Use Review Process (ULURP) can allow residential uses where the zoning code doesn’t allow them as-of-right. However, this process can be slow, costly, and uncertain. 

New state legislation could also facilitate conversions. As the working paper explains, multiple proposals from state lawmakers were introduced to waive land-use regulations and promote the easier conversion of hotels into housing.  However, the final version enacted by the State Legislature, known as the “Housing Our Neighbors with Dignity Act” (“HONDA”), did not include any provisions for regulatory relief.  Additionally, the author clarifies that state laws cannot supersede federal requirements around accessibility, limiting their potential benefit.

Additionally, Kazis’s working paper details other important considerations for the debate. First, the hotel industry provides numerous jobs in New York City, many of them unionized. Any reduction in the number of hotel rooms must account for the economic effects of losing those jobs, as well as the political support for protecting those jobs. Second, converting hotel rooms into affordable housing units presents a complicated financial endeavor, especially as hotels’ economic future looks brighter in light of the ongoing recovery from the pandemic. Policymakers will need to think carefully about when hotel conversions are a better use of scarce funds than other affordable housing opportunities. Third, different considerations apply to the use of hotels to provide supportive housing. Supportive housing is treated differently under New York City’s zoning regulations, in ways that may make conversions of hotels to supportive housing more feasible on certain sites. 

The pandemic has created an opportunity to convert unused hotel rooms into new housing units, but that opportunity is limited. The information provided in this working paper will help policymakers perform the tricky balancing acts involved in assessing when hotel conversions should be pursued.

Alan Patterson is a Master of Urban Planning candidate at the NYU Wagner School of Public Service, specializing in economic development and housing, and the Fall 2020 Wagner Fellow at the NYU Furman Center. Prior to enrolling at Wagner, he worked at OPI Analytics in Mexico City as a consultant in data science related projects for different government agencies, including the Mexican National Fund for Workers' Housing and the Mexico City Government. He is interested in economic analysis related to housing and income inequality. Alan holds a B.A. in Business Administration with a specialization in information systems from the Mexican Autonomous Institute of Technology (ITAM). 

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