Inside Slate’s hotel conversion
JFK Hilton overhaul to create 318 affordable rentals for $470,000 per unit
An ambitious hotel conversion in Queens has breathed life into a moribund affordable housing program, but could prove to be an exception rather than a prototype.
Slate Development Group and RiseBoro Community Partnership have partnered to transform a 13-story Hilton near JFK Airport into more than 300 apartments, all of them affordable. They estimate the South Ozone Park conversion will cost $150 million, which breaks down to $470,000 per unit.
It’s the first project born from the 2021 state law known as HONDA, which critics had written off as a failure. The Queens conversion by itself does not prove them wrong, but a look under its hood reveals complex finances that are not readily scalable.
Slate and RiseBoro’s funding includes $48 million from the state’s $200 million HONDA fund. Another third of the budget comes from city subsidies for low-income and supportive housing.
The residence, once completed, will be owned by RiseBoro Community Partnership, a Brooklyn-based provider of social services and affordable housing. Its nonprofit status gives the hotel conversion access to an atypical revenue stream in the real estate market: 501c3 bond financing through the city’s Housing Development Corporation.
“This was something that was able to be acquired at a price that made the numbers pencil out,” said David Schwartz, co-founder and principal of Slate Property Group. “By having true, 100 percent nonprofit ownership, it allowed the use of these bonds.”
Another chunk of cash came via MSquared, a real estate impact investment firm, which provided a $4.4 million pre-development loan through its Affordable NYC Fund.
HONDA — the Housing Our Neighbors With Dignity Act — was given new life last year when the state legislature did away with some of the red tape for hotel conversions, CityLimits reported.
But identifying the Hilton at 144-02 135th Avenue as HONDA’s debut project involved a rigorous screening process that examined hundreds of hotels for their conversion potential, Schwartz said. The exhaustive search, along with the hotel industry’s comeback as the pandemic slowly petered out, suggest that no wave of similar conversions is coming.
Hotel owners might also be more inclined to keep their properties as lodging because a 2021 city law requiring a special permit for hotel construction has brought hotel development to a virtual standstill, limiting the threat of future competition.
To comply with HONDA, half of the units in Slate and RiseBoro’s project will be for homeless or recently homeless New York City residents. The rest will go to households with low to moderate incomes.
The demands of the resident mix — which include amenities and administrative spaces to help occupants transition from city shelters — made the JFK Hilton the “perfect” location, according to RiseBoro CEO Scott Short.
The conversion will set aside 20,000 square feet for those amenities. The hotel’s first floor, which already hosts offices, will be used as administrative space where residents can connect with case managers. Elsewhere, the property will offer a computer lounge, a laundry area and an on-site Meals on Wheels program.
The developers are also looking to fill in the hotel pool to create an outdoor recreational area.
Construction, expected to begin in July, will transform the building into 318 units ranging from 290-square-foot studios to 800-square-foot two bedroom apartments, all with their own kitchens.
The hotel’s location in a food desert — and a stone’s throw from the Belt Parkway and Van Wyck Expressway — makes the space particularly tricky. Without a commercial strip and accessible groceries nearby, RiseBoro and Slate have reimagined the hotel’s commercial kitchen as a commissary-type grocery.
Altogether, the development is a mish-mash of new ideas stacked on the hotel’s old bones. It’s a recipe that Slate and RiseBoro predict will allow apartments to begin renting in as little as a year and a half.
“All conversions of any building are tricky, no matter what type,” said Schwartz. “It was important that we didn’t have to do a lot of knocking down rooms and starting over, because then you lose the benefit” of using an existing structure.