N.Y. Senate Advances Bill To Help Fund Conversions Of Distressed Offices And Hotels To Affordable Housing
New York lawmakers are pushing forward with new legislation that will pave the way for hotels and office buildings in the city to be converted into affordable housing as part of a state government attempt to ease the housing crisis.
The bill, called the Housing our Neighbors with Dignity Act, passed a Senate committee vote Wednesday and is expected to go to a full vote by the end of the day on Thursday. The law would provide for the Housing Trust Fund Corp. to pay for the investments, The Real Deal reports.
“New York has seen a decades-long affordable housing crunch exacerbated by the COVID-19 pandemic and ensuing economic devastation,” Senate Deputy Majority Leader Michael Gianaris, a sponsor on the bill, said in a statement Wednesday. “This legislation is a good way to tackle the dual problems of distressed properties and lack of affordable housing. I am thrilled this is passing, and that we have a funded program that will provide real relief going forward.”
State-approved nonprofits would run the permanently affordable buildings, which would have to have at least half of the units allocated to homeless people, TRD reports. None of the apartments would be allowed to be rented to people who earn more than 80% of area median income. Some $100M was set aside for hotel and office conversions in April's state budget.
Real estate leaders are skeptical of the government initiative, with several office landlords telling Bisnow earlier this year they weren’t in rush to give up on their buildings as offices, despite slow market conditions. Most owners wouldn't be in a position to make use of the bill.
"This is a good first step, but the bill's effectiveness will be limited by the availability of state funding. It also does not enable residential conversion in buildings where residential use is not currently permitted under applicable zoning and housing codes," Kramer Levin Land Use partner Elise Wagner said in a statement. "There is still a need for legislation that would enable the conversion of distressed hotel and commercial properties into mixed-income housing developments by private developers."
Prolonged closures and a shortage of tourists have meant widespread furloughs and layoffs. As of mid-April, there were 116 hotels still temporarily closed in New York City, according to lodging research firm STR, and six had officially shut forever. Many have begun tentatively reopening in the last few months, but industry experts predict more permanent closures to be announced. There has been little momentum in turning recently shuttered properties into housing thus far.
