Mayor’s Planning Department Proposal Will Constrain Hotel Development

July 16, 2021

Photo courtesy of The Peninsula Hotel

The planning department of the de Blasio administration has proposed a new measure requiring developers to obtain a special kind of permission from New York City in order to build new hotels.

Hotel development will undoubtedly be constrained by this restriction, which will take the form of a text amendment to the zoning code. This amendment will stipulate that builders need to undergo the Uniform Land Use Review Procedure, a standardized process in which applications affecting the land use of the city need to be publicly reviewed. Most importantly, this process will be mandatory irrespective of zoning. In order to come into effect, this measure will need to be passed by both the Planning Commission and City Council. 

Although the de Blasio administration had already implemented hotel special permit requirements in neighborhoods that the Mayor rezoned, such as Midtown East and the Garment District, and areas zoned for light manufacturing, there is still no tangible precedent for this process. The special permitting requirement has led to no hotels being approved in these areas, and therefore none being constructed either. 

Those promoting this measure cite giving communities a voice as the centerpiece for their support. In an effort to give New Yorkers the power to decide what developments should take place in their neighborhoods, this measure will allow districts to prioritize what they actually need – hotels are seemingly nowhere on the top of that list according to Councilman Justin Brannan, a Democrat who represents Bay Ridge. Democratic Mayoral Candidate Eric Adams also supports this proposal, stating that “Over the past few years, we have seen an over-proliferation of hotels around New York City that are not fulfilling their obligations as good neighbors to local residents…we need a fair process that allows for input from local stakeholders and City leaders to ensure that new hotels serve the community, and won’t undermine quality-of-life or public safety for the surrounding community.” He adds that “requiring public review of new hotels via a special permit is a smart way to promote the interests of New York City residents, tourists, and workers.” 

Nonetheless, many business owners, especially in the hospitality industry, are strongly opposing this measure. Cutting down on hotel developments will not only affect tourism and business travelers but also all of the businesses that depend on visitors to survive such as restaurants, stores, performance locations, and more. A Real Estate Board of New York representative recently cited a study on projected losses that such a measure could prompt, which anticipates that it would cause a loss of “75,000 permanent jobs, a lag in the creation of hotels behind the soon-to-increase demand for them, and a $10 billion loss in economic activity in non-hotel spending in the next 15 years due to reduced tourism and reducing tax revenue for the city.” 

Adding to the controversy, this measure is backed by the Hotel Trades Council. The union has long supported de Blasio in his political endeavours; most recently, it raised about 70% of total donations for his failed presidential bid. Such a partnership has raised extensive questions over whether this is another pay-to-play situation in which de Blasio is advancing the measure out of fealty to the union. 

Founded by attorneys Andreas Koutsoudakis and Michael Iakovou, KI Legal focuses on guiding companies and businesses throughout the entire legal spectrum as it relates to their business including day-to-day operations and compliance, litigation and transactional matters.

Connect with Andreas Koutsoudakis on LinkedIn.

Connect with Michael Iakovou on LinkedIn.

This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team, or fill out a new client intake form.