State to Fund Hotel and Office Conversion to Low-Income Housing
The Housing Our Neighbors With Dignity Act was recently passed by the New York State Legislature. It will allow some distressed hotels to be converted into permanent low-income housing units. Sponsored by Senate Deputy Majority Leader Michael Gianaris and Assemblymember Karines Reyes, the bill allows the state to partner with nonprofit organizations to finance the acquisition and conversion of distressed hotels and commercial office space into low-income housing.
The context: The COVID-19 pandemic has left more New Yorkers vulnerable to homelessness and has left many hotels and commercial office spaces vacant. Nationwide, more cities and states began looking for ways to take distressed real estate and turn it into housing after the pandemic closed the doors of many commercial properties. Last fall, California created a new $600 million program to convert hotels and other properties into low-income housing.
In New York City, hotel owners last year estimated that around 20 percent of the city’s hotels could remain closed permanently. According to a 2019 report from the National Low Income Housing Coalition, the metropolitan area currently has a roughly 772,000-unit shortage of housing for people making less than 50 percent of median area income,
One level deeper: Housing units created by this bill will be made available to low-income households and people experiencing homelessness immediately before entering such housing. According to the bill’s text, tenants who are approved to rent these units won’t spend more than 30 percent of their income on rent.
The properties will be owned, operated, and managed by select nonprofit organizations through government agency funding. At least 50 percent of all units will be set aside for individuals and families experiencing homelessness. The remaining units will be limited to an 80 percent AMI. Also, units must be rent stabilized in localities that have adopted or opted into the rent stabilization law.
The bottom line: The state budget in April included $100 million to fund this project, which is not that much when you consider the state will have to finance the purchase of empty hotels and offices and then redevelop them into rental apartments.
Senator Gianaris, the Democratic deputy majority leader from Queens who sponsored the conversion bill, said he hopes the modest initial funding can be fortified by $2 billion in federal pandemic relief that is already earmarked for New York State.
The bill has been sent to Governor Andrew Cuomo’s desk for signature. The full legislation can be found here.