Real Estate Sounds Off on Citywide Hotel Special Permits

Gene Kaufman (Kaufman Architects, iStock)

A “death bell” for Midtown hotels. A “big foot for the rest of the world”.

These were just some of the comments made by real estate professionals on Wednesday about a move requiring special permits for new hotels across the city.

The town planning commission held a hearing on the text change that would force hotel projects to survive the city’s seven-month land use test. The proposal has the support of the hotel union and various elected officials, but has drawn the ire of land use experts, property developers and hoteliers. City planning officials have also expressed doubts.

Gene Kaufman, an architect whose business focuses on hotel work, said the move would effectively halt hotel construction in the city, noting that a similar project had already stifled projects in light industrial districts.

Calling the application, “New York’s keen interest in the rest of the world said ‘don’t come here'” and said it would lead to a proliferation of homeless shelters: hotels intended as temporary accommodation for homeless New Yorkers are from the special authorization requirement.

The decision will shape the future of hotel development for an industry devastated by the pandemic. The city’s hotel market is in an economic depression, according to a report by the American Hotel & Lodging Association. Revenue per available room was $ 95 in May, up from $ 249 in May 2019. State lawmakers passed laws this year to help convert hotels and office buildings into affordable housing.

At the beginning of the hearing, at least three city planners cite a lack of land use reasons for the application. Commissioner Larisa Ortiz criticized the idea of ​​highlighting a type of use in commercial areas. Calling it bad policy, Commissioner Alfred Cerullo III said: “There is no data to show that there is actually a problem to be fixed”.

Even if there was a justification for land use, Cerullo said, the devastation caused by the pandemic should take it off the table.

“Which rational government would do this at this point?” asked the President of the Grand Central Partnership and former city councilor.

The commissioners have also opened up the possibility of creating a sunset clause so that the city can phase it out if it proves problematic.

Several city council members said they support the plan and said it would give parishioners more say in what is being built in their neighborhoods. You mentioned questions of quality of life such as noise and traffic.

“I believe that getting more input from the community is always a good thing,” said Justin Brannan, a member of the Brooklyn city council, a candidate for city council spokesman. Councilor Antonio Reynoso, who is slated to become Brooklyn’s next district president, said an explosion of new hotels had “put significant strain on surrounding residential areas.”

Manhattan District President Gale Brewer, who had spoken out against an earlier attempt to restrict hotel development in Union Square through a special permit mandate, spoke out in favor of the city-wide initiative. She noted that the hotel unions were open to discussions about a carveout for Times Square.

The union endorsed Brewer’s campaign for the city council earlier this year, as well as Reynoso’s bid for district president. Both won their democratic primaries.

Before Wednesday’s meeting, the Real Estate Board of New York presented an analysis it had commissioned on the plan. The study by the planning office AKRF predicts that the economic activities related to the construction will be reduced by 37.8 billion US dollars between 2026 and 2035.

The analysis also warned that limiting hotel construction could encourage more short-term rentals through Airbnb and other such companies.

City officials own estimates that the need for a special permit could cost the city $ 350 million in tax revenue by 2025 and up to $ 7 billion by 2035, the New York Times reported. According to City Planning’s final draft of the scope of work, the New York 47,000 hotel room proposal would remain below demand in 2035.

However, agency officials have stressed the need to create a “unified zoning framework” that will ensure that new hotels do not collide with neighboring properties.

Chairwoman of the Urban Planning Commission Marisa Lago

Behind the scenes, administrators are more critical of the proposal supported by Mayor Bill de Blasio. In a memo to City Hall last year, chairwoman of the town planning commission, Marisa Lago, reportedly warned that this “could be viewed as inconsistent with the principles of economic recovery and sound planning.”

Some former city planning officials have criticized the motion because it has no justification for land use and poses a threat to tourism-dependent industries. On Wednesday, a former city planning spokeswoman, Rachaele Raynoff, rejected the proposal on Twitter.

The special permit for the hotel is as poorly thought out as the mayor’s presidential election and far more damaging. If this goes as suggested, he will be remembered not for universal pre-K, but for stunting an industry that employs tens of thousands and is an economic engine for the city. https://t.co/PC7YrLyAm2

– Rachaele Raynoff (@ thoughtsin2type) July 14, 2021

Moses Gates, vice president of housing and neighborhood planning for the Regional Plan Association, said the proposal does the opposite of creating a unified framework and instead installs a “highly discretionary” “ad hoc” process for approving new hotels .

He questioned the wisdom of restricting hotel development, but not cemeteries, fertilizer manufacturers, petting zoos, temporary carnivals, and other uses.

The mayor has made the proposal a priority, a move some see as a favor to the Hotel Trades Council, the only union backing his short-lived presidential election. With special permits having to be approved by the city council, the union would gain leverage to facilitate the unionization of new hotels as a condition of approval.

A Hotel Trades Council attorney Christopher Rizzo noted that commercial parks in the city are increasingly encompassing residential uses and said residents should be able to evaluate a hotel’s design and quality. He stated that he had a personal reason for supporting hotel development restrictions: he lived near two hot sheet hotels.

“There’s a reason hotels aren’t allowed in residential areas,” he said.

Calling the city’s hotel market oversaturated, he said restricting new developments is critical to supporting existing hotels.

The Hotel Trades Council funded a study by the Pratt Institute that supports a citywide special permit requirement, arguing that it would enable officials to ensure adequate social services are available in the event the hotel fails and is converted into low-cost housing. Income and homeless.

The report warns that unrestrained hotel development could lead to the growth of the “lower, less capitalized hotel business,” which “threatens the stability of the industry and its distinctive quality jobs.”

“The industry is already seeing a decline in revenue per available room,” the report said. “At some point this decline will affect industrial wages.”

According to the union-funded report, requiring additional permits could also encourage local recruitment of hotel workers and avoid land use conflicts.

The city previously took a phased approach to curtail hotel development by requiring special permits in certain areas, including Midtown East, the Garment District, and light manufacturing zones. City Hall has ditched a similar proposal for Union Square to pursue a city-wide version. Hoteliers and property developers argue that the special permits put off hotel building, as special permits add months and costs to project schedules.

Paul Selver, an attorney at Kramer Levin who called the proposal a “death bell”, said the cost of running a project through the city’s unified land use assessment process can go into the seven-digit range. If the process leads to hotels with unionized staff, operators would have to pay higher wages.

“You really don’t want to get caught up in a process where you end up being voted up or down on issues that have nothing to do with land use,” he said in an interview. “And that happened.”

Contact Kathryn Brenzel