A moratorium preventing hotels with at least 150 keys from having more than 20 percent of its rooms converted for residential use expired over the weekend, four years after it was initially approved by the City Council. The 2015 legislation was originally sponsored by Council Speaker—then councilmember—Corey Johnson, in part as a response to the loss of union jobs in hotels undergoing conversions.
The legislation rankled the Real Estate Board of New York, with REBNY president John Banks calling it “bad public policy and legally flawed because it was an end run around the city’s public review process.” The real estate industry-focused publication The Real Deal calls the legislation’s expiration “a major victory for hotel owners and advocates of property rights.”
The legislation was approved by the City Council in 2015 at a vote of 42-8 in the midst of a luxury real estate boom that saw legendary hotels like the Plaza—partially converted in 2007 and 2008—and the Waldorf-Astoria—still undergoing conversion—have hundreds of hotel rooms taken offline to become luxury condos.
The legislation was approved just as the Waldorf-Astoria conversion was being finalized, but a stipulation in the law exempted hotels that had been purchased within the last 24 months where the owners had expressed an intent to convert. The moratorium was extended for two more years in 2017, but quietly lapsed on June 2. Sources told the Real Deal the moratorium was not extended because “the city realized a few months ago that it would be impossible to defend the measure in court.”
“It’s not clear if the law’s expiration will result in a frenzy of conversions,” The Real Deal notes. “[N]o hotel owners attempted to convert their properties under the moratorium through a loophole that allowed them to do so by getting a waiver from the city’s Board of Standards and Appeals,” which itself seems somewhat telling.