State’s $100 million hotel conversion program got only one applicant

The New York State’s $100 million fund to turn struggling hotels into affordable housing failed to draw applicants. 

Last summer, former Mayor Bill de Blasio’s administration passed a law in an effort to provide additional housing for low-income families and homeless people by converting underused hotels and commercial office space into residential units. But so far, the program got only one applicant, Politico reports. 

The bill requires all converted properties to set aside at least 50 percent of units for people experiencing homelessness and the other half for families making up 80 percent of the area median income (AMI). In addition, all units under this program will be rent-stabilized. 

The experts interviewed by Politico suggest that current zoning restrictions and building code requirements make the process of converting distressed hotels too logistically challenging and costly. Earlier versions of the bill included measures to ease zoning and building code requirements. However, later, they were removed from the final legislation.

Some of the bill requirements also pose an obstacle. For example, all converted units must include either a full kitchen or a kitchenette with at least a 24-inch refrigerator, sink, and cooktop. 

Housing commissioner RuthAnne Visnauskas supported “easing restrictions on the conversion of hotels and commercial buildings into housing” during her testimony at the Senate budget hearing on Monday. 

The recent REBNY report suggests that New York City needs to build 560,000 additional housing units to keep up with the population growth. The conversion of underused hotels and office space could help the city meet its current and future housing production needs. But this program cannot succeed unless zoning and building code requirements are addressed. 

Resources:

“State's $100M program to convert hotels into housing drew just one applicant,” by Janaki Chadha (Politico, 2022)

“Only One Group Applied To New York's $100M Hotel Conversion Fund,” by Miriam Hall (Bisnow, 2022)

“N.Y. Senate Advances Bill To Help Fund Conversions Of Distressed Offices And Hotels To Affordable Housing,” by Miriam Hall (Bisnow, 2021)

“Joint Legislative Public Hearing on 2022 Executive Budget Proposal: Topic Housing,” (The New York State Senate, 2022)

“Testimony of RuthAnne Visnauskas Commissioner/CEO New York State Homes and Community Renewal,” (The New York State Senate, 2022)

“Senate Bill S5257C,” (The New York State Senate)