According to recent media stories, New York City Mayor Bill de Blasio has announced that he is directing his Department of City Planning (DCP) to study expanding regulations prohibiting as-of-right development of hotels throughout the City. If such a proposal were adopted, it would likely be similar to other recent actions taken that prohibit development of hotels in certain areas without first obtaining a special permit through New York City's lengthy Uniform Land Use Review Procedure (ULURP). For instance, such restrictions now apply in light manufacturing districts (M-1), the East Midtown Area of Manhattan and some other neighborhoods.

At this date, the timing surrounding the proposal is unclear, but it is likely that the mayor will seek to have it approved before his term ends on Dec. 31, 2021. Any new restrictions on hotel developments must go through ULURP and undergo environmental review prior to becoming law. The New York City Council, which has been very supportive of past restrictions on hotels, will also need to pass the proposal. The Hotel Trades Council is the principal proponent of proposals to limit hotel development and if a special permit requirement is adopted, it is likely that the City Council will de facto require that a hotel agree to accept restrictions on its operation as a condition for receiving final approval (e.g., sign an agreement with the Hotel Trades Council).

It is expected that an organized lobbying effort will be made against any proposal that further restricts as-of-right hotel development in the City. However, the adoption of the M-1 and East Midtown prohibitions demonstrate that similar proposals had strong political support and that, if the DCP does propose to expand the special permit requirements, it will be an uphill battle to defeat such a proposal.

In the event that the City does expand restrictions on as-of-right hotel development, then unless, prior to the effective date of the zoning change, the foundations have been completed, the special permit will be required. The exception to this rule is that where it can be demonstrated that there has been substantial progress and expenditures made toward completion of the foundations prior to the effective date, then an application to the New York City Board of Standards and Appeals can be filed within 30 days of the effective date of the zoning change to continue construction under the old zoning.

For the reasons discussed above, it is important to account for the potential restrictions discussed in this alert being adopted by the City with respect to any hotel project under consideration or development in New York City.