Lawmakers race to allow commercial-to-resi conversions

Legislators say measure is “priority” before session ends in June

New York /
May.May 20, 2021 11:15 AM
Senate Deputy Majority Leader Michael Gianaris (Getty, iStock)

Sen. Michael Gianaris (Getty, iStock)

The state Senate is taking another shot at making it easier to convert distressed hotels and office buildings into affordable housing.

Lawmakers have amended a bill that would enable the state’s housing regulator to transform distressed hotels and office buildings into permanently affordable housing, which would then be managed by nonprofits. Such conversions were initially contemplated as part of the state budget, but the Gov. Andrew Cuomo’s proposal was panned by elected officials and housing advocates for overriding local zoning rules and not creating enough affordable housing.

Now, with 10 days left in the legislative session, lawmakers are racing to enact a new measure, dubbed the Housing Our Neighbors with Dignity Program. Senate Deputy Majority Leader Michael Gianaris, the bill’s sponsor, said in a statement that it’s a “top priority.” He pointed to the fact that the state’s budget included $100 million for conversions of distressed commercial properties.

“We included a down payment on this program in the state budget, and now we need to get it up and running,” he said.

Though a matching Assembly version is not yet publicly available, Assembly member Karines Reyes said revisions to that chamber’s measure have already been submitted.

The latest version of the bill applies statewide, not just in New York City. It also incorporates similar provisions from a separate bill introduced by Sen. Brian Kavanagh — namely, a possible shortcut for hotel conversions in the city. Hotels could get dual certificates of occupancy for permanent residency if the Department of Housing Preservation and Development approves, provided the hotel is within at least 400 feet of a residential district, but not located in an industrial business zone. (Kavanagh’s bill set a 800-foot requirement).

Kavanagh said he is “optimistic” that the bill will pass before the end of the session but noted that “it is not a done deal at this point.”

The revised bill still requires that 50 percent of all converted properties be set aside for residents who experienced homelessness immediately before moving into the new buildings. Such properties must be dedicated to residents making between 50 percent and 80 percent of the area median income, and the apartments would be rent-stabilized.

While the original bill also stipulated that nonprofits would own and manage these properties, the latest iteration of the measure puts a greater emphasis on social housing. The bill lists community land trusts as one of three mechanisms that can be used to ensure permanent affordability of apartments. Typically, under such a model, a nonprofit controls a property through a renewable 99-year ground lease, and rents out apartments solely to low- to moderate-income tenants or puts in place resale restrictions on homeowners.

The bill also creates a “social housing conversion fund” for grants, gifts, bequests or loan authority to finance the Housing our Neighbors with Dignity Program.

Rachel Fee, executive director of the New York Housing Conference, said there is an “urgent need” for allowing thesing conversions as part of the state’s recovery, as hotels and offices continue to struggle with high vacancy rates. She said her organization is hopeful that some funding from the proposed $2 trillion federal infrastructure bill could be dedicated to the program. She said NYHC also sees financing opportunities through the National Housing Trust Fund.





    Related Articles

    arrow_forward_ios
    A rendering of 165 Broome Street (Credit: Handel Architects)
    Nonprofit plans affordable housing development near Essex Crossing
    Nonprofit plans affordable housing development near Essex Crossing
    All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag
    All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag
    All Falls Down: Kanye West’s “Star Wars”-themed affordable housing plan hits snag
    30 East 14th Street (Google Maps)
    Witnick, Namdar, Gorjian buy 30 East 14th Street for $23.5M
    Witnick, Namdar, Gorjian buy 30 East 14th Street for $23.5M
    From left: Parkway Hospital in Forest Hills, Top Rock Holdings’ Uri Mermelstein, Joseph Yushuvayev, Madison Realty Capital's Josh Zegen and SYU Properties’ Josif Elishayev (Google Maps, LinkedIn, Getty)
    Parkway Hospital buyers land bridge loan from Madison Realty Capital
    Parkway Hospital buyers land bridge loan from Madison Realty Capital
    Winery owner Giovanni Borghese (Facebook via Borghese Vineyard)
    Rare vintage: Long Island’s oldest winery hits the market
    Rare vintage: Long Island’s oldest winery hits the market
    One Court Square tower in Long Island City (Getty)
    Target is coming to Long Island City
    Target is coming to Long Island City
    Stuart Miller of Lennar with The Maddox complex (Lennar, LMC)
    ING “green building” loan program targets energy upgrades
    ING “green building” loan program targets energy upgrades
    (iStock illustration by Kevin Rebong for The Real Deal)
    Morgan Stanley bans unvaccinated staffers from offices
    Morgan Stanley bans unvaccinated staffers from offices
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...