A bill that aims to turn distressed hotels and offices into affordable housing will go to the governor’s desk.
The state Assembly passed the bill Wednesday night, paving the way for a government-funded conversion program run by nonprofits.
Under the measure, the state agency who administers housing vouchers and other federally funded programs will gain the authority to finance the purchase and conversion of hotels and offices on behalf of state-approved nonprofits. The Senate passed the bill that same day.
The bill, called the Housing Our Neighbors with Dignity Act, or HONDA, requires that at least 50 percent of converted units be reserved for residents who experienced homelessness immediately prior to moving in. The properties would be dedicated to residents who earn an average of 50 percent and no more than 80 percent of the area median income.
Apartments created must be permanently affordable through a regulatory agreement with the state or local housing agency, or through some other type of agreement. Units must also remain rent stabilized.
“There are obvious tools to address the state’s historic homeless crisis and end the perpetual suffering of so many, and turning hotels into high-quality, permanent affordable housing is one of them,” said Paulette Soltani, political director of Vocal NY, an advocacy group that backed the bill.
The latest version of the legislation, sponsored by Senator Michael Gianaris and Assemblywoman Karines Reyes, includes a provision that will benefit the 32BJ SEIU Construction Services Workers Union. Although the measure applies statewide, it requires construction service workers in converted buildings in New York City to receive current wages.
The Council of Hotel Trades, which represents hotel workers, has also indicated its support for the measure, which requires that any hotel with an active collective bargaining agreement must notify and obtain the approval of union representatives before moving forward with a conversion agreement. .
It’s unclear what Governor Andrew Cuomo’s position is on the bill. He had initially proposed a measure that facilitates the conversion of hotels and offices as part of the state budget, but it was criticized for overriding local zoning and not creating enough affordable housing. Ultimately, the state budget included $ 100 million for dilapidated commercial building conversions, but did not specify how it will be spent.
Sheila Pozon, a real estate attorney for Kramer Levin, said funding for the program appears to be limited to $ 100 million, as the bill says nonprofits will have to resort to grants, vouchers, rentals and other sources of income to cover operating expenses. .
The approved version of the bill does not include the creation of a social housing fund to accept grants, gifts, bequests or loan authorization to finance conversions.
The hotel industry was hit by the pandemic, and occupancy rates are not expected to return to 2019 levels until 2025, according to a April CBRE Study. Still, some 13,000 hotel rooms are expected to be online in the city this year and more than 60 percent of office workers in Manhattan he is expected to return to office in September.
That means the window for HONDA conversions can be short, if it opens at all. Its success will depend in part on the owners not having better options. Pozón noted the efforts of the de Blasio administration to require special permits for the construction of new hotels, which is expected to restrict new supply and enhance the value of existing hotels.
“I think there will be some hotel owners who will just try to hang on,” he said.