De Blasio supports restricting hotel development in NYC. Here’s why that matters

Mayor Bill de Blasio’s presidential campaign may not be gaining traction, but it’s poised to potentially leave its mark on New York’s hotel industry and the city’s broader land use system.

On Monday, Crain’s reported that after the politically powerful Hotel Trades Council backed the mayor’s long-shot presidential campaign, de Blasio asked the city’s planning department to devise a proposal that would restrict hotel development across the city. Specifically, he requested that the Department of City Planning (DCP) add a citywide hotel special permitting policy, a measure backed by the hotel union that has in recent years been implemented in pockets of New York.

DCP confirmed that the agency has been looking into the idea. “The city continues to explore how to implement a citywide hotel permit,” agency spokesperson Melissa Grace said in a statement. As of now, there is no concrete timeline for a study into the proposal, which DCP says was requested by the mayor’s office and has been in the works since April.

This isn’t the first time that de Blasio has expressed support for the undertaking. “I think special permits are a very good idea,” he told reporters after being endorsed by the hotel union in June. “I think we should extend it as far as we can with the City Council, because what it does is it gives us the opportunity to determine what a hotel will mean for a community.”

In recent years, the de Blasio administration has included hotel special permitting in recently rezoned neighborhoods like Midtown East, the Garment District, and Inwood, as well as in light manufacturing zones.

The potential citywide version, though, takes things a step further. If implemented, there would be no as-of-right hotel construction, meaning every new hotel would require the applicant to seek permission from the city, regardless of the underlying zoning in the area where they want to build—a move that will either allow for more community input in the process, or stymie hotel development altogether, depending on whom you ask.

When a developer wants to build a hotel, they may do so on certain parcels without going through a lengthy public review process. City land that is zoned for commercial use (and, until recently, light manufacturing uses) is opportune for hotel development, for example. In areas where as-of-right construction is allowed, the developer simply files plans with the Department of Buildings and can then break ground to construct a hotel.

But if a special permit is needed, a developer must go through a lengthy public review process, similar to the Uniform Land Use Review Procedure that’s required for a rezoning. That monthslong permitting process includes input from community boards, the City Planning Commission, the mayor, and the historically labor-friendly City Council.

The new permitting process is unduly onerous, its opponents charge—so much so that it sent prolific developer Sam Chang, who specializes in developing budget hotels in manufacturing zones in New York City, packing. The de Blasio administration is “pretty much putting me out of business,” he told the Wall Street Journal in May.

Some real estate insiders allege such measures stymie the city’s ability to serve the more than 60 million tourists who visit New York City every year.

“The proposed action is an unnecessary constraint on the rights of property owners to address a market condition that needs no correction and appears to be motivated by factors unrelated to sound planning,” the Real Estate Board of New York said in testimony last fall, regarding the proposal to add a special permitting requirement in light manufacturing zones. “It is unclear why the city is advancing a proposal that will impose heavy restrictions on hotel development, and the hotel study submitted fails to make a case for its need.”

Others charge that this is an example of de Blasio pushing a policy a political ally likes in lieu of advancing good policy, with real estate attorney and former City Councilmember Kenneth Fisher calling the move “pure politics under the guise of planning.”

According to a City Planning Commission spokesperson, no developers have so far applied for a special hotel permit in neighborhoods where they are now required. An analysis from the Real Deal found that applications for hotels with fewer than 70 rooms have declined sharply in 2019.

Still, many in the hotel industry and the politically powerful Hotel Trades Council support permitting because it prevents non-union hotels from opening. Because new budget hotels in less pricey parts of the city are typically staffed with non-union labor and built without discretionary approval, adding the labor-friendly City Council—or more specifically, the relevant local Council member—to the equation helps to restrict open-shop hotels.

City Council speaker Corey Johnson (whose bid was supported by the Hotel Trades Council), is open to a broader permitting process, telling Politico that he “support[s] the concept of special permits for hotels.”

De Blasio, meanwhile, has long been an ally of the Hotel Trades Council (and organized labor more broadly), so it’s not surprising he would back a cause they support. But when he instructed DCP to look into a citywide permitting policy raises the question of if he’s supporting it on the merits, or as a political transaction.

Indeed, it wasn’t until he was running for president that he publicly backed citywide hotel special permitting, so was this just a favor de Blasio did to a union in exchange for the union backing his presidential bid? (Since his campaign began, hotel union workers have made up 70 percent of de Blasio’s donors, as the New York Post reported earlier this month.)

The mayor, of course, denies this is the dynamic at play. During his weekly appearance on NY1’s Inside City Hall, de Blasio said characterizing his support for citywide hotel special permitting as a reward to the union for supporting him for president is “inaccurate in every way.”

“This is who I am as a human being, who my team is: we make decisions based on the merit and the fact,” he said. “This discussion of special permits goes back years and years. In multiple meetings we’ve had—tried to determine with City Planning, with other agencies, what’s the best way to handle this.”

De Blasio went on to say that since “we’ve got so much development in our city,” and a hotel induces “a lot more activity [and] vehicular traffic” than a run-of-the-mill residential development, neighborhood input should be required before a hotel is allowed to be constructed.

“[A hotel] has an impact that’s different than a residential building, for example,” he added. [T]his is a policy that we have been moving for in stages and I think it’s a very community-friendly policy. I am someone who believes very strongly in organized labor, but I think this policy is good not just for working people, I think it’s good for communities as well.”