New York State stands ready to spend $ 100 million to convert distressed commercial real estate into affordable housing after a recent law passed in Albany.
The statement, which passed both Legislative Houses, authorizes the New York Housing Trust Fund Corporation to finance the purchase of empty hotels and offices and then convert them into rental apartments for homeless and low-income New Yorkers.
Under the terms, eligible properties would be owned and managed by nonprofit landlords. The legislature requires that the apartments remain affordable for people who do not make up more than 80% of the median income of the area.
Governor Andrew Cuomo has yet to sign the bill. A spokesman said Mr. Cuomo’s office is still investigating.
After the Covid-19 pandemic closed the doors of thousands of hotels, offices, and other commercial properties, more cities and states began looking for ways to take distressed properties and convert them into homes. Last fall, the state of California launched a new $ 600 million program to convert hotels and other properties into affordable housing.
In New York City last year, hotel owners estimated that around 20% of the city’s hotels could remain closed permanently. According to a 2019 report by the National Low Income Housing Coalition, there is currently a housing shortage in the metropolitan area of around 772,000 units that is affordable for people earning less than 50% of the median income of the area.
The Park 79 Hotel on Manhattan’s Upper West Side is being converted into affordable housing for the elderly.
Photo:
FAIRSTEAD
With the 100 million dollars alone, many renovations in New York should not be financed. In Manhattan’s Upper West Side, property developer Fairstead is converting the 122-year-old Park 79 Hotel into affordable housing for senior citizens. Rebuilding 77 units is expected to cost approximately $ 55 million, said Will Blodgett, founding partner of Fairstead. Updating the aging property to the current residential coding standards is one factor affecting costs, Mr. Blodgett said.
Senator Mike Gianaris, the Queens Democratic deputy majority leader who sponsored the conversion bill, said he hoped the modest initial funding could be increased by $ 2 billion in federal pandemic aid already earmarked for New York state .
“We struggled for decades to get the right kind of affordable housing in New York,” said Gianaris. He cited property developer grants that finance apartments that are still too expensive for low-income earners. “Hopefully this will give us a model for the future of how you can really create living space for people who need it.”
At least half of the homes created through remodeling under New York law would be reserved for the homeless and include support services, while the other half would be reserved for those earning no more than 80% of the median income in the area.
Subscribe to Newsletter
property
From aspiring residences to large commercial businesses.
Mr Cuomo, a Democrat, has already put $ 100 million in his annual budget for real estate remodeling, but with fewer guidelines than what last week’s bill would mandate.
Many proponents of affordable housing support a more direct role for the state in building housing for the homeless and other low-income tenants. “I think there is a more than symbolic victory here,” said Shelly Nortz, assistant executive director for policies for the Coalition for the Homeless.
Development experts say converting old commercial properties into apartments comes with some unique challenges. Offices, for example, often have floor plans that are too large to provide sufficient natural light for traditional residential units. This may require building courtyards in the middle of buildings to let in more light.
Other challenges include navigating the nuances of building codes and zoning regulations. In New York City, many hotels have been built with a 20-foot backyard, but current rules call for apartments 9 meters behind the building. “It could mean trying to hack off the back of a hotel,” said Sheila Pozon, special advisor in the Kramer Levin law firm’s land use group. Ms. Pozon said she was hoping the conversion act would include more easing on building regulations to speed construction times and reduce costs.
Write to Will Parker at will.parker@wsj.com
Corrections & reinforcements
Will Blodgett is the founding partner of Fairstead. In an earlier version of this article, his last name was mistakenly spelled as Blodget. (Corrected June 20)
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
