The Real Deal New York

REBNY to sue city over hotel-conversion law

Local Law 50 places 2-year moratorium on residential conversions in large Manhattan hotels

October 01, 2015 03:04PM
By Rich Bockmann

From left: John Banks and Corey Johnson

From left: John Banks and Corey Johnson

The Real Estate Board of New York plans to file a pair of lawsuits Thursday afternoon challenging a law the city passed earlier this year limiting large Manhattan hotel owners from converting their buildings to apartments, according to sources familiar with the matter. 

Lawyers for REBNY seek to challenge the constitutionality of Local Law 50, which prevents hotels with more than 150 rooms from converting more than 20 percent of their space to residential or non-hotel use.

One lawsuit will claim the law, enacted in June, violates the due process and equal protection clauses of the United States and New York State constitutions. The other will assert the law to be procedurally defective, claiming the city failed to follow requirements of the City Charter and the state Environmental Quality Review Act.

“Creating and protecting quality jobs are important objectives,” said Kramer Levin’s Jeffrey Braun, who is representing REBNY. “The real estate industry, for example, plays a critical role in creating quality jobs in New York City. However, those objectives should not be pursued through unconstitutional legislation that seeks to skirt the City’s land use review process. We believe the courts will strike down this legislation.”

The bill, sponsored by Councilman Corey Johnson, placed a two-year moratorium on hotel owners converting more than 20 percent of their rooms to condo units without explicit board approval. In the interim, the city said it planned to study the effect of hotel conversions on the local economy.

The initial bill called for a permanent ban on conversions, but negotiations brought it down to two years when the law passed in May.

Hotels that changed hands in the last two years or whose owners demonstrated interest in converting some rooms, like the Waldorf Astoria, are exempt from the law.

Mayor Bill de Blasio and the Hotel Trades Council supported the bill.