Eric Adams Touts Hotel Conversions in Plan to Address Homelessness

The Democratic nominee for mayor says he wants to convert shuttered lodgings outside Manhattan into 25,000 units of supportive and permanently affordable housing. While his plan is light on details, it’s excited housing advocates.

The empty hotel on 39th Street in Sunset Park first closed in 2015, after a police raid exposed it as a brothel. The next year, the Flushing-based owner of the property leased the place to a new operator, who promptly changed the name. The Phoenix Hotel was supposed to connote a fresh start, though many neighbors wanted a school at the site instead. 

Then the Phoenix went under. The boarded up shell, with dingy curtains still dangling in the windows, is one of three hotels on a two-block stretch of 39th Street.

On Monday, Eric Adams called for one more rebirth of the Phoenix, this time as permanent supportive housing for New Yorkers experiencing homelessness. The 44-unit hotel would serve as a piece of Adams’ plan—light on details—to convert shuttered lodgings outside Manhattan into 25,000 units of supportive and permanently affordable housing.

Adams, the Democratic nominee for mayor, said he will release more information about the hotel conversion plan on his website, but noted that he wants to improve coordination among city agencies and streamline the bureaucratic process that delays affordable housing production.

“When someone tries to convert this, what they must go through every time we try to do a conversion is just layers and layers of really outdated bureaucracy,” Adams told reporters in Sunset Park. “We have made the rules to fit around what the city no longer looks like and so we need to do a close deep dive into whatever rules we have in place and whatever agency that is to keep up those rules to get them out of the way so we can make this conversion.”

A spokesperson for Adams’ campaign, Evan Thies, said the ambitious 25,000-unit target is based on an estimate from the Hotel Association of New York City, which says 20 percent of the city’s hotel rooms may be permanently shuttered as a result of the pandemic. But many of those rooms probably won’t be part of Adams’ nascent proposal. For one, most are located in Manhattan, and Adams says he wants to convert hotels priced cheaper in the other four boroughs. And two, several of the 160 hotels that are currently closed are old and likely too expensive to easily convert to housing, said HANYC President Vijay Dandapani. 

Whatever the actual target, Adams’ support for hotel conversions has excited housing advocates, social service providers and nonprofit developers, who say a centralized strategy from City Hall will make the projects a reality. The proposal builds on New York’s new Housing Our Neighbors With Dignity Act (HONDA), which unlocks $100 million in state funding to turn commercial buildings and hotels into affordable housing specifically for New Yorkers and individuals experiencing homelessness—a fraction of what it would cost to purchase and convert hotels across the city.

“Let’s go bigger and better. This crisis demands a pretty expansive response,” said Laura Mascuch, the executive director of the Supportive Housing Network of New York.

HONDA-financed properties would set-aside 50 percent of units for people experiencing homelessness and 50 percent for New Yorkers earning no more than 80 percent of Area Median Income—equal to $66,880 for a single adult in the five boroughs. There were 45,305 people staying in Department of Homeless Services homeless shelters on Sunday, including 16,162 single adults, according to the city’s most recent census.

Adams said Monday that he supports the creation of “modernized SROs,” or single-room occupancy units, as a low-cost way to address the affordable housing and homelessness crises. Nonprofit developers favored legislation that would allow for the creation of new SROs, which historically featured shared bathrooms and kitchens but were outlawed in the 1950s. The HONDA legislation mandates that each apartment have a kitchen and bathroom, however.

The HONDA law also limits the number of hotels that can be converted as-of-right to include only buildings located within residential districts. All other residential conversions would have to go through the city’s land use process, prolonging the development. The Phoenix is located within an M1 light manufacturing district, a few dozen feet from residential zoning, according to a Department of City Planning map. An earlier version of the legislation would have allowed as-of-right conversion for buildings deeper in manufacturing districts 400 feet or less from residential zoning.

Adams’ website currently calls for “some zoning tweaks and other rule changes” that “can allow appropriate conversions and add desperately needed housing stock—particularly at hotels in the outer boroughs.” He did not provide specifics when asked about those tweaks might be.

Finding a way to bypass those constraints would speed up the projects, which already get delayed by the city’s regulatory requirements, said Breaking Ground Executive Director Brenda Rosen. Her organization has converted various hotels to supportive housing and is currently overhauling a 500-unit building in DUMBO.

State Sen. Michael Gianaris, the lead HONDA sponsor, said the legislation is an important start but will only fund a fraction of the needed units. As a general rule, nonprofit developers say it costs about $500,000 to convert hotel rooms into permanent housing, and Gianaris said the large-scale purchase and conversion of hotels will take a citywide focus.

“Having a partner in City Hall will help,” he said.

Though the pandemic has devastated New York City’s tourism economy, there were more than 25,000 hotel rooms under construction in July, according to the hospitality consultancy Lodging Econometrics. There are now more than 150,000 hotel rooms in New York City, more than double the roughly 74,000 in operation in 2007.

Since 2012, at least 214 hotels have received a certificate of occupancy enabling them to open to customers, with 29 coming online since the start of 2020, the Department of Buildings said.

Residential conversion proposals have earned support from the city’s Hotel Trades Council (HTC), a hotel workers’ union that endorsed Adams in the Democratic primary, which says the oversaturated market threatens union jobs.

​​“Even before COVID drastically reduced tourism we saw unchecked hotel overdevelopment jeopardize good-paying jobs and community safety, and now with thousands of rooms to be built but no customers to fill them the problem has only gotten worse,” said HTC President Rich Maroko.

Dandapani, the head of the Hotel Association, said selling may be the best option for owners with little hope of recouping their losses from the past 18 months. Earlier this month, hotels were at 64 percent occupancy, compared to 90 percent in a typical year, he said. Revenue is down 45 percent industrywide, he added.

But Dandapani disputed one assertion made by Adams: Many “hotels in the outer boroughs were really built as homeless shelters,” Adams said Monday. 

Dandapani said he has heard that theory often, but finds it improbable that someone would go through the necessary certification and construction processes just to attract lucrative shelter contracts from the city. 

“You have crises and they saw the cyclical stuff so they said let me have a hedge? Let me go out and create a hotel that looks like a hotel but is really a homeless shelter,” he said. “That’s ill-informed … Anybody that says this is done deliberately doesn’t have a global picture.”

The properties won’t come cheap, warned Yariv Ben-Ari, an attorney in Herrick’s Real Estate Department who works with hotel owners.

“Buildings in those areas may not be performing well and may opt for a new source of revenue,” Ben-Ari said. “But if my building is worth $20 million, I’m going to get paid $20 million.”

It’s unclear if the owners of the Phoenix Hotel are interested in selling the property at 517 39th St..

Hang Dong Zhang, the real estate agent listed as owner on property records, did not respond to phone calls seeking comment for this story. The building is owned by an LLC called Kings King realty.

But the cost of purchase and conversion should be secondary to benefits of permanent affordable housing for New Yorkers experiencing homelessness, said Shams DaBaron, an activist who goes by the name Da Homeless Hero.

DaBaron secured permanent housing after spending years in city shelters, and overcoming COVID-19 early in the pandemic—an experience he said led to his rebirth. 

“I almost fell from this deadly virus but it was after this experience that I rose like a phoenix from those ashes,” he said. “But despite being housed, my brothers and sisters, including over 14,000 children, still don’t have permanent housing.”