With travel still stuck in the Delta doldrums, many hotels have fallen on hard times. Some policymakers see a chance to take advantage of the sector’s struggles by converting hotels into permanent housing for the homeless. California has led the way with Project Home Key, an extension of an early-pandemic experiment that has now led to more than 6,000 permanent apartments for the homeless in converted hotels, with another $2.9 billion coming into the program from the federal stimulus bill from earlier this year. Eric Adams, the presumptive next mayor of New York City, has said he plans to convert hotels to supportive housing, and other cities have experimented with using hotels to house the homeless as well.
Last week, I spoke with Noah Kazis, a legal fellow at New York University’s Furman Center and one of the authors, along with Elisabeth Appel and Matthew Murphy, of a recent white paper that lays out some of the challenges and opportunities for hotel-to-housing conversion in New York City. Our conversation has been edited and condensed for clarity.
Henry Grabar: Let’s start with something really basic. What has gotten people excited about the possibility of hotels becoming affordable housing?
Noah Kazis: Hotels are built for living in; they are designed to be shelter. So if you have a moment where there is intense housing need, and where these rooms are just sitting available—it becomes very intuitive and urgent to try and use those.
And we should say, too, that this is not a pandemic discovery. New York City has been housing the homeless in hotels going back at least a few years, right?
Decades. New York City housing policy has a constant return to hotels as a place to use as housing. That reflects something that is important. If you go back to the 19th, early 20th century, the line between housing and hotels wasn’t a clear line the way that it has become. People lived in short-term rentals. There were long-term hotel rooms. There wasn’t a strong regulatory requirement that houses have certain features, size, or quality. This idea that hotels are housing would have been really intuitive to people living in cities at the turn of the century—rooming houses, boarding houses, all of that was just part of the ecosystem. The pandemic, I think, has forced people to reconsider that line.
Let’s talk about some of the obstacles here in the context of New York, and I’m sure this is true of a lot of other cities: A lot of the hotel rooms are concentrated in the central business district, which means they are kind of expensive to acquire relative to your typical sites where you might decide to construct affordable housing.
Is it worth it? Are we getting more housing for people with these hotels than we would be by spending that money on, say, newly built permanent affordable housing in a neighborhood where land is a little cheaper?
That’s exactly the right question. Maybe this is a better place to put housing because it is more transit-accessible, closer to jobs, closer to services. Maybe it’s a worse place to put housing—in New York City, at least, we’ve had policymakers trying to protect the central business district from the encroachment of housing to preserve its vibrancy as a business district and its agglomerations.
Then there’s land-use restrictions. Is housing legal everywhere that hotels are legal?
No, not at all. We only looked into it for New York but I think there are parallel issues everywhere. One of the trends in hotel development over the last 20 years here has been the growth of hotels in light manufacturing districts [such as Long Island City, Williamsburg, and Gowanus]. Generally you can’t build housing in industrial districts in New York City. So those conversions are out of bounds. And then there’s a whole other set of properties where the layout of the building would make it difficult to convert to housing under current zoning, because commercial buildings like hotels and residential buildings are just treated under a different regulatory framework.
So there’s all these other rules about housing—minimum sizes for apartments, how big rooms should be, laws requiring kitchens, etc. And some of those may even date from the period where we were trying to get rid of hotels as this low-income housing solution.
They absolutely do. Striking that balance is really tough because we do want to protect tenants and make sure that people are living in quality housing. But we also know that something that happened in New York City and basically everywhere across the country, is that in trying to boost those minimum standards, we lost a tier of housing, just sort of regulated it out of existence and some people instead of moving up, moved down, into homelessness.
So if there are these various obstacles—whether it’s zoning, rules about the size of apartments, kitchens, disability access—but we’ve decided that we want to make this transition possible, why not just have nonprofit affordable housing developers apply one by one to the city with hotels in mind and say, “Here’s what we want to do”? And if the city wants to waive some of these rules to make this possible then they can go ahead and do that on a on a case-by-case basis. What’s wrong with that?
They can and they do. They did it pre-pandemic. The housing market has always had hotel-to-housing conversions. The issue is that doing a rezoning is expensive and it’s slow. So if the goal is to take advantage of a unique moment in the city’s history, in terms of higher vacancy rates and distressed properties, going through the city’s land-use approval process may push you pretty far out of that window of opportunity.
I know that there’s also now a state bill that provides $100 million for the state to take this on. Is that going to get the job done? What are the pros and cons here? I see there’s a number of restrictions on what’s permitted even with these conversions that the state is supposedly trying to facilitate.
$100 million is real money. And I think that we will see deals that use this pot of money on eligible projects. Not all hotels will be eligible, but I have to assume that with a big pot of money sitting out there waiting to be used in a city that badly needs housing, someone will find the right match. It’s a very different approach than with California.
Well, let’s talk about California—they have this much-lauded Project Home Key. They’ve created 6,000 units for $1 billion. That’s a lot of money, but it’s a bargain compared to the per-unit cost they spend on newly built affordable housing. What are the lessons from California’s approach? What are they doing right?
What they are doing is prioritizing speed. They moved much earlier than New York. And they put in a bunch of features of the program that really were meant to make it move quickly, zoning overrides being one of them. The way they structured the funds, the deadlines they put in, it really was meant to be about moving fast, which is not the way a lot of affordable housing works.
I mean, New York’s approach is not that. It’s not clearing away regulatory barriers. I don’t think that’s going to make projects move faster.
Is there a point at which you’re doing so much work on a site that you lose the advantage of the hotel being readymade housing and it becomes a case where that money would have been better spent on something built from the ground up?
One of the things that we point out in the paper is that there are probably more opportunities for that kind of conversion with very minimal renovations if you’re building supportive housing, which is under New York law treated under a pretty different regulatory framework. Those could go faster. I suspect deals that happen first will be in that category.
California was able to find a lot of sites, particularly motels, where they really didn’t have to do significant renovations at all. We definitely did talk to developers who were able to go very fast.
What makes supportive housing, with staff on site to work with residents, different from permanently affordable housing in the New York context?
It does mean services built-in, but what is important from a regulatory perspective is that it’s not considered housing, it’s considered a community facility. We talked about commercial, industrial, and residential, and this is sort of just a fourth category that in some cases will line up much nicer with hotels.
Are there any other disadvantages to making it easier to convert hotels into housing? One that comes to mind is that we might lose the hotel stock. And then when tourism comes bounding back, it’ll wind up in Airbnbs, which ended up taking the apartments of people who live here full-time.
Well, in New York Airbnbs are pretty heavily regulated and there are also new restrictions being considered on the construction of hotels. So I think there is the concern that you’d lose hotels now and you just would not gain them in any form in the future.
Jobs is a big concern and clearly one that was in the legislature’s mind. They have certain provisions to protect those union hotel jobs. Hospitality is a big industry in New York. It supports an even larger tourism industry. And if you’re taking hotels and turning them into housing, you’re going to be a smaller hospitality and tourism industry—or certainly it’s a risk. There’s no free lunch here. Using hotels as housing doesn’t get you out of the hard choices that land use requires, especially in a moment where we’re not building very much.
Let’s talk about that. New York has made it harder to build new hotels. How does that affect the prospects for conversions?
If there’s a worry that hotels would be a scarcer asset in the future, that’s just going to make them more valuable as hotels, and therefore less attractive as conversion opportunities.