New York Lags Behind California in Converting Hotels to Affordable Housing

Martin Z. Braun reports on what some critics call New York's failure to seize the "once-in-a-generation opportunity to quickly expand affordable housing" afforded by the drop in hotel occupancy during the pandemic. "New York is proposing to spend too little, and at too slow a pace" to make a significant impact.

A bill approved by state lawmakers in June, known as the "Housing Our Neighbors with Dignity Act" has yet to be signed by Governor Cuomo. Meanwhile, the bill's language "doesn’t override local zoning rules that constrain conversions in hotel-rich neighborhoods like the Garment District and Long Island City" and only allocates $100 million to the program, "a compromise sum which advocates say is not enough to capitalize on the scale of opportunity." "California, by contrast, has already awarded $800 million for local governments to purchase hotels and motels and convert them into permanent housing for people at risk of or experiencing homelessness."

At the same time, "the window for taking any action may be closing" as hotel guests return and hotel owners are less motivated to sell their assets at affordable prices for non-profit housing developers. "Besides the higher hotel acquisition prices, there’s a provision in the New York bill that would require converted hotel units to have kitchenettes and private bathrooms, which would raise costs further. And it doesn’t ease zoning rules on hotel conversions in manufacturing districts, where about 160 of the city’s 720 hotels are located." Developers, says Meghan Altidor,  a partner in the law firm Nixon Peabody LLP’s affordable housing and real estate practice, are "feeling as if there needs to be a funding source for acquiring the hotels and converting them into affordable housing. That seems to be the biggest missing piece."