The Real Deal New York

REBNY gears up for a fight against de Blasio’s hotel-conversion moratorium

Trade group argues law diminish values of hotels owned by 29 members
June 28, 2017 10:30AM

Bill de Blasio and John Banks

The Real Estate Board of New York is taking on Mayor Bill de Blasio once again over his policy of putting a moratorium on converting hotels into condominiums.

REBNY filed an appeal to a 2016 court ruling upholding the mayor’s two-year moratorium on conversions, Politico reported. The mayor signed the law in 2015, and the City Council passed another law reinstating it last month.

The policy favors hotel workers and their politically powerful union, the New York Hotel and Motel Trades Council.

REBNY filed a lawsuit in 2016, but the court found that the influential trade group did not have legal standing to challenge the law. In papers filed in The State Supreme Court’s Appellate Division last week, REBNY said the ban on converting more than 20 percent of hotel space into other uses harms 29 of its hotel-owning members.

“For those 29 REBNY members, Local Law 50 directly limits their right to use their property to realize its full market value,” the appeal reads. “Indeed … the purpose and effect of Local Law 50 was precisely to preclude hotel owners, including REBNY’s 29 members, from engaging in transactions that were already occurring in the marketplace. … By effectively eliminating the possibility of a conversion for a two-year period (now extended for a second two-year period), Local Law 50 diminished the value of these properties.”

The appeal also makes the argument that the issue is a land-use matter that should have been dealt with by the City Planning Commission, not the City Council.

A spokesperson for the city’s Law Department said, “The lower court was legally correct and we will defend its ruling.”

But a real estate industry source said the appeal shows REBNY is not afraid to challenge legal decisions affecting its members, and could have implications on a bill currently under negotiation concerning increased requirements for construction-worker training.

“We’re not scared to be litigious,” the source said. [Politico] Rich Bockmann