Governor Hochul signs legislation to transform vacant hotels into affordable housing

The law will ease the current rules for converting underutilized hotels into residential units and unlock the $200 million state fund to finance this transformation. This measure aims to help resolve the growing housing crisis. 

The bill, signed by Governor Hochul, allows for Class B hotels within residential zoning districts or within 400 feet of such districts to operate as permanent residences. The legislation also lets these hotels keep their certificates of occupancies instead of acquiring new ones.    

"As New York's housing crisis continues to impact families, we're taking bold action, embracing innovative ideas and thinking outside the box to help ensure that New Yorkers can access safe, livable, and quality affordable housing," Governor Hochul said in a statement. "This new law allows us to tackle the affordability crisis head-on and convert empty, underutilized spaces into homes.”

The proposal to turn underused hotels into permanent affordable housing received support from Mayor Eric Adams. Earlier this year, Mayor Adams urged Albany to pass this legislation and ease the current zoning restrictions. These restrictions stopped hotel owners from applying for the state's "Housing Our Neighbors with Dignity act", which includes a hotel conversion fund. 

Now, the bill would amend the multiple dwelling law and exempt the hotel conversion projects from undergoing a lengthy review process. However, even with the new changes to zoning laws, hotel conversion remains an expensive project.

To transform hotel rooms into permanent homes, owners need to add a cooking facility into each unit. But most hotel rooms are too small to accommodate a kitchen, which means that these projects would require costly renovations that include moving walls to add extra space, according to Gothamist. 

So far, the hotel conversion fund did not receive any applications. In addition, the recent increase in travel activity might motivate some owners of vacant hotels to hold on and not sell their properties. 

The city is expected to welcome 56.4 million visitors this year, which would be a 70 percent jump from 2021, Business Insider reports. However, this increase in travel activity is still lower than what we saw in 2019 when over 66.6 million people visited NYC.

Resources:

“Hochul signs law that unlocks New York’s underused hotel space for use as affordable housing,” by Michelle Cohen (6sqft, 2022)

“Governor Hochul Signs Landmark Law Unlocking Underutilized Hotel Space for Affordable Housing,” by Governor Kathy Hochul (New York State, 2022)

“Gov. Hochul Signs Legislation to Expand Hotel to Housing Conversions,” by Celia Young (Commercial Observer, 2022)

“Hotel hope: Hochul signs legislation to convert hotels into housing,” by Dean Moses (amNY, 2022)

“Can NY’s plan to convert hotels into affordable housing help alleviate homelessness? Some hope it will,” by Chau Lam (Gothamist, 2022)

“New York City is still waiting for its high-spending tourists to come back,” by Hillary Hoffower (Business Insider, 2022)