With travel still stuck in the Delta doldrums, many hotels have struggled. Some policymakers see a chance to profit from the struggles of the sector by converting hotels into permanent housing for the homeless. California led the way with Project Home Key, an extension of an early pandemic experiment that has now led to more than 6,000 permanent apartments for the homeless in converted hotels, with an additional $ 2.9 billion entering in the program of the federal stimulus bill from earlier this year. Eric Adams, the alleged next mayor of New York City, said he plans to convert hotels to supportive housing, and other cities have also experimented with using hotels to house the homeless.
Last week, I spoke with Noah Kazis, a lawyer at the Furman Center at New York University and one of the authors, along with Elisabeth Appel and Matthew Murphy, of a recent white paper that outlines some of the challenges and opportunities for the hotel industry to -conversion of housing in New York. Our conversation has been edited and condensed for clarity.
Henry Grabar: Let’s start with something really basic. What got people excited about hotels becoming affordable housing?
Noah Kazis: Hotels are built to live there; they are designed to be shelter. So if you have a time when there is an intense need for housing and these rooms are just available, it becomes very intuitive and urgent to try to use them.
And we should say, too, that this is not a pandemic find. New York City has been hosting the homeless in hotels for at least a few years, hasn’t it?
Decades. New York City’s housing policy constantly reverts to hotels as a place to be used as accommodation. It reflects something important. If you go back to the 19th, early 20th century, the line between accommodation and hotels was not as sharp as it has become. People lived in short term rentals. There were long term hotel rooms. There was no strict regulatory requirement requiring houses to have certain features, size or quality. This idea that hotels are homes would have been really intuitive to people living in cities around the turn of the century – rooming houses, guesthouses, it was all just part of the ecosystem. The pandemic, I think, has forced people to reconsider that line.
Let’s talk about some of the barriers here in the context of New York, and I’m sure a lot of other cities are: a lot of hotel rooms are concentrated in the central business district, which means that they are somewhat expensive to acquire compared to your typical sites where you might decide to build affordable housing.
Is it worth it? Are we getting more housing for people with these hotels than spending that money on, say, permanent, newly built affordable housing in an area where the land is a little cheaper?
This is exactly the right question. It may be a better place to stay because it is more accessible by public transit, closer to jobs, closer to services. This is perhaps a worse place to stay – in New York City, at least, we’ve had policymakers who have tried to protect the central business district from housing encroachment to keep it vibrant as a neighborhood. business and its agglomerations.
Then there are the land use restrictions. Is accommodation legal wherever hotels are legal?
Not at all. We only studied it for New York, but I think there are parallel issues everywhere. One of the trends in hotel development over the past 20 years here has been the growth of hotels in light manufacturing districts. [such as Long Island City, Williamsburg, and Gowanus]. Usually, you can’t build housing in industrial neighborhoods in New York City. These conversions are therefore out of range. And then there is a whole other set of properties where the layout of the building would make it difficult to convert to housing under the current zoning, as commercial buildings like hotels and residential buildings are simply treated under a different regulatory framework.
So there are all these other rules about housing – minimum sizes for apartments, room sizes, laws requiring kitchens, etc. And some of it may even date back to when we were trying to get rid of hotels as a housing solution.
They absolutely do. Finding that balance is really difficult because we want to protect tenants and make sure people live in quality housing. But we also know that something that has happened in New York and pretty much all over the country is that in trying to improve these minimum standards, we have lost a standard of housing, we have it in some way. sort regulated out of existence and some people instead of moving up, down, into roaming.
So if there are these various barriers – whether it’s zoning, apartment size rules, kitchens, disabled access – but we’ve decided that we want to make that transition possible. , why not just ask the nonprofit affordable housing developers to apply to the city one by one with hotels in mind and say, “This is what we want to do”? And if the city wants to deviate from some of these rules to make this possible, it can go ahead and do it on a case-by-case basis. What the hell is wrong with that?
They can and they do. They did it before the pandemic. The housing market has always seen conversions from hotels to housing. The problem is, rezoning is expensive and slow. So if the goal is to enjoy a unique moment in the city’s history, in terms of higher vacancy rates and distressed properties, go through the land use approval process. of the city can push you quite far from that window of opportunity.
I know there is also now a state bill that provides $ 100 million for the state to take care of. Is this going to do the job? What are the pros and cons here? I see there are a number of restrictions on what is allowed even with these conversions that the state is supposedly trying to facilitate.
$ 100 million is real money. And I think we’ll see deals that use this prize pool on qualifying projects. Not all hotels will be eligible, but I have to assume that with a big pot of money waiting to be used in a city in dire need of housing, someone will find the right partner. It’s a very different approach than California.
Well, let’s talk about California, they have this much loved project host key. They created 6,000 units for $ 1 billion. That’s a lot of money, but it’s a good deal compared to the unit cost they spend on newly built affordable housing. What are the lessons of the Californian approach? What are they doing well?
What they do is prioritize speed. They moved much earlier than New York. And they put in a bunch of features for the program that were really meant to get it moving quickly, with zoning overrides being one of them. The way they structured the funds, the timelines they set, that was really supposed to go fast, which is not the way a lot of affordable housing works.
I mean, the New York approach isn’t that. It is not about removing regulatory barriers. I don’t think it’s going to move projects any faster.
Is there a time when you work so hard on a site that you lose the benefit of the hotel being ready-made accommodation and that money would have been better spent on something built from the ground up? ?
One of the things we point out in the document is that there are probably more opportunities for this kind of conversion with very minimal renovations if you are building supportive housing, which is under the law of New York dealt with quite a different regulatory framework. These could go faster. I suspect that the transactions that occur first will be in this category.
California was able to find many sites, especially motels, where they really didn’t have to do any major renovations. We certainly spoke to developers who were able to go really fast.
How is supportive housing, with staff on hand to work with residents, different from permanently affordable housing in the New York context?
It means integrated services, but what is important from a regulatory point of view is that it is not considered housing, it is considered a community facility. We’ve talked about commercial, industrial, and residential, and that’s sort of just a fourth category that in some cases will align much better with hotels.
Are there any other downsides to making it easier to convert hotels to accommodation? One that comes to my mind is that we could lose the hotel stock. And then when tourism returns, it will end up in Airbnbs, which ended up taking apartments from people who live here full time.
Well, in New York, Airbnbs are pretty heavily regulated and new restrictions are being considered on building hotels as well. So I think you are worried about losing hotels now and not earning them in any form in the future.
Employment is a big concern and clearly one that was on the mind of the legislature. They have certain provisions to protect these union jobs in hotels. The hospitality industry is a big industry in New York. It supports an even bigger tourism industry. And if you take hotels and turn them into accommodations, you’re going to become a smaller hotel and tourism industry – or that’s definitely a risk. There is no free lunch here. Using hotels for accommodation doesn’t save you from the hard choices that land use requires, especially at a time when we don’t build much.
Let’s talk about it. New York has made it more difficult to build new hotels. How does this affect the prospects for conversions?
If you are concerned that hotels will become a scarcer asset in the future, it will simply make them more valuable as hotels, and therefore less attractive as conversion opportunities.