Mayor still bent on limiting new hotels: sources

As hotel owners stare down dramatic drops in revenue and ponder an uncertain future, Mayor Bill de Blasio is still pushing for a proposal that would severely limit hotel construction throughout the city, according to multiple industry sources.

Last year, the mayor said he supported requiring developers to obtain a special permit to build hotels throughout the five boroughs. Some criticized him for championing the proposal, noting that it followed the powerful Hotel Trades Council’s endorsement of de Blasio’s ill-fated presidential bid.

Mandating special permits would mean hotel projects would require approval by the City Council, which could compel developers not to oppose unionization efforts once the hotels were staffed.

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De Blasio called on the Department of City Planning to do a study, which representatives for the agency said Friday is still underway. Though there’s no public timeline for its release, industry sources say the mayor is still determined — despite the pandemic’s having crushed the hotel business — to get the policy in place before he leaves office in 17 months.

“This is not something that belongs on the agenda for recovery,” said Mitch Korbey, land use and zoning chair at Herrick Feinstein.

“To limit hotels citywide is an improper use of the zoning resolution,” he added. “Once a zoning mechanism like this is put on the books, it will be extraordinarily difficult to get it off.”

Hotel Trades Council is one of the city’s most politically active unions. It has been coping with a proliferation of nonunion hotels as tourism grew in the past two decades.

Over the past few years, the city has required special permits for new hotels in specific areas. They were made mandatory in Midtown East and the Garment District as part of rezonings of those areas in 2017 and 2018, respectively. The requirement was added for light manufacturing zones in 2018.

Then in February, Morris Kalimian of ELK Investors sued the city to block its plan to require special permits for hotel construction in an area south of Union Square. Kalimian alleged that the city was trying to gradually require special permits for all hotel construction by changing the zoning of individual neighborhoods.

A spokesperson for City Planning said the agency is “working to complete its study” on the citywide permit proposal and has no timeline for completion.

One source close to negotiations over the proposal said citywide permits are just one of many issues the City Planning Commission will start considering when it begins meeting remotely next month. The city’s land-use review process, which has been on hold since March, resumes in September.

The source noted that limiting hotel construction could help prop up existing hotels that are struggling.

But another industry source said pushing the citywide plan when the economy is crumbling “defies logic.”

“I think now, in the current environment, it makes no sense whatsoever,” said architect Gene Kaufman, who specializes in hotel design and has been a vocal opponent of limiting hotel construction.

Ross Moskowitz, a partner at Stroock & Stroock & Levan, said if such a proposal moves forward, the city faces the challenge of “establishing a land-use and planning rationale that could withstand likely lawsuits.” He expects part of the rationale would be that special permits give members of communities more say in local development.

The timeline for making a zoning text amendment — the likely route for the special permit proposal — is similar to the city’s seven-month long Uniform Land Use Review Process, though text amendments don’t require review by borough presidents. To gain approval before the end of de Blasio’s term, then, the application for citywide special permits would need to start the public review process by next spring.

Write to Kathryn Brenzel at kathryn@therealdeal.com