We appreciate being invited by the New York State Assembly Committee on Housing to participate in this timely hearing.
Regional Plan Association has been examining potential commercial properties suitable for residential conversions. New York City has approximately 27,500 commercial parcels. Almost 70% of these are classified as stores, about 26% as office buildings, and 4% as hotels. A preliminary estimation suggests that approximately 1,800 or 6% of the total commercial parcels are likely to meet suitable residential conversion criteria. With the right policy incentives and budgetary commitments, many of these underutilized commercial spaces could contribute to the city’s housing stock of affordable units. These conversions could be in the form of single-room occupancy (SRO), supportive housing, and mixed-income conversions, among others.
Conversion of hotels to Single Room Occupancy and/or Supportive Housing represents the largest opportunity to add affordable housing to the city and make a dent on our crisis of homelessness. While hotels represent the smallest share of total commercial real estate, given their architectural design compatibility with permanent living quarters and the economic hardship endured by the hospitality industry, hotels offer the most appropriate conditions for residential conversions. Hotels with access to inner courtyards or backyards, and substantial community facilities would be most suitable for supportive housing conversions. Passive recreation areas and congregate dining facilities are desirable by supportive housing providers and highly utilized by their tenants. Parcels with lower lot coverages and a smaller proportion between commercial floor area and total building area are useful indicators to take into consideration when searching for these two characteristics.
Exemptions to local zoning and the multiple dwelling state law (MDL) should be considered as a way to facilitate these conversions, particularly those that would offer supporting services for residents in need. Mixed zoning districts typically allow a greater amount of commercial floor area (office and hotel uses) when compared to residential. Under current rules and in order to comply with local zoning, housing providers seeking to convert underutilized commercial space would be forced to retain a certain amount of floor area for hotel rooms. Waivers should be considered for conversions seeking to include affordable and supportive housing, providing flexibility on zoning regulations that specify the amounts of floor area permitted for different use groups. Similarly, some requirements imposed by MDL, particularly those associated with legal windows, can present significant challenges. Such requirements can present a hindrance to residential conversions as they would involve costly renovations and laborious operations, increasing costs to a degree in which the conversion is no longer feasible. Projects that seek to convert commercial properties into affordable housing, particularly those providing supportive housing services, should be granted exemptions to some of these rules.
Other types of restrictions are associated with grants and capital programs dedicated to projects seeking to convert buildings into supportive housing. Requirements for individual kitchenettes are a good example. A significant amount of supportive housing tenants do not use a full kitchen. In many cases, a simple microwave and small refrigerator setup in combination with shared dining facilities and communal kitchens is preferable. While the typical hotel room is not large enough to accommodate a kitchenette, grants and resources provided by the Department of Homeless Services for conversion projects, often require kitchenettes in every new unit. Similar to land use regulations, these can increase costs to the degree where the conversion project is no longer feasible. Exemptions to these requirements that favor shared facilities and communal dining areas should be considered.
Similar waivers should be contemplated for ADA requirements. Only 5% of hotel rooms are required to be accessible, but all supportive housing units have to meet ADA requirements. Given the space constraints in hotel rooms, gut rehabs would be required in most cases (i.e. to accommodate wheelchair turn around in bathrooms). While conversion projects for affordable housing units and supportive housing should comply with ADA in shared facilities and communal areas, requiring these standards for all units can be cost prohibitive. The City and state should reach out to ADA advocates and identify appropriate thresholds for compliance.
Finally, while the recently announced DHS master RFP for a commitment of a 30-year operating contract with non-profits is significant, specific conditions and requirements for hotel conversions present significant challenges. In many cases, these resources alone are not enough to perform a full gut rehab. A combination of additional state funding and exemptions to the aforementioned regulations should be considered to promote more hotel conversions into affordable housing.
There is also the possibility of converting office towers into standard (non-SRO) apartments containing mixed-income housing. Here we urge the legislature and City to approach this on the basis of good neighborhood planning, similar to the deliberate decision to encourage more residential housing in Downtown Manhattan in order to facilitate a more mixed-use neighborhood. Any conversions will be years-long processes, and decisions should be made based on long-term considerations. An analysis of neighborhoods in Manhattan which need more mixed-income housing in order to facilitate a better mix of uses and more affordable housing opportunities - most notable in Midtown - should be conducted, and special districts created in order to facilitate these neighborhoods. Similar to the SRO discussion, we urge the Legislature to help with these transformations through needed MDL changes, any changes to the permitting or construction process which could expedite these conversions, and other state actions as needed.
RPA appreciates the time offered by the New York State Assembly Standing Committee on Housing. Thank you for your time and consideration.
