BBG News

Conversion of Hotels to Residential Housing

Jun 15, 2022

On June 7, 2022, Governor Hochul signed legislation permitting the conversion of hotels to permanent residential housing units.  This new law will make it possible for developers to build more affordable homes for New Yorkers in vacant and underutilized hotels, particularly in the wake of the COVID-19 pandemic.  The new law unlocks $200 million originally allocated to the “Housing Our Neighbors with Dignity Act” (HONDA), and eliminates many of its bureaucratic hurdles, particularly since developers will not need a new or amended Certificate of Occupancy to convert their hotels to residential space. It will allow conversions without cost-prohibitive land use review processes or renovations.

Under this new legislation, Class B multiple dwellings – which include hotels, dormitories, and other transient lodging – may be converted into affordable or supportive housing.  These conversions are permitted within a residential zoning district or within four-hundred feet of a residential zoning districts, provided they are not located in an industrial business zone. 

The Department of Housing Preservation and Development (HPD) will need to approve the conversion to affordable, residential space.  At this time, HPD has published a bare-boned application, which includes requests for basic property details, and a brief summary of the work to be done as part of the conversion.

In the event that the hotel workers are represented by a union, they must be notified in writing of the conversion to residential space.  The union must also mutually agree and inform HPD in a separate writing.

The renovations must be financed by New York State in accordance with HONDA. Further, the conversion must be purchased, acquired or financed by HPD for the purpose of creating supportive or affordable housing by a non-profit organization dedicated to affordable housing, families experiencing homelessness, or otherwise approved by HPD. This must be done pursuant to a regulatory agreement or contract with a local agency for low-income households (i.e., NYCHA, HUD, HPD), or people experiencing homelessness prior to tenancy.   

In regards to eligibility, these affordable units must earn no more than 60% AMI, and all units must be rent stabilized and subject to permanent affordability restrictions. 

Since this program is so new, not many details are available.  However, due to the current staff shortage at HPD, it is likely the application process will still involve a few hurdles.

Should you require assistance regarding the new legislation, please do not hesitate to contact your BBG attorney on record or email us at info@bbgllp.com. We are glad to review the legislation and current program requirements with you.

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