Prepare for new regulatory hurdles in NYC

NEW YORK CITY – As of December 9, 2021, new hotel development, expansion, or enlargement within New York City requires issuance of a special permit (the “Special Permit”) by the City Planning Commission (“CPC”), a discretionary approval process requiring community outreach and the support of local elected officials. An applicant for a Special Permit must provide evidence through site plans and written narratives that:

• The proposed hotel site plan is designed to address potential conflicts between the hotel use and adjacent uses, such as the location of building entrances, refuse and laundry areas, and landscaping;
• The hotel use will not cause undue vehicular or pedestrian congestion, inhibit vehicular or pedestrian movement, or impact loading operations; and
• The hotel use will not impair the future use or development of the surrounding area.

The Special Permit permits the CPC to provide additional safeguards to minimize impacts to the community. As of September 1, 2023, no applications have been filed for the Special Permit.

To apply for the Special Permit, an applicant must first engage with the Department of City Planning (“DCP”). DCP conducts a preliminary review of the land use application. Simultaneously, the applicant begins environmental review pursuant to the City Environmental Quality Review (“CEQR”) procedures. Once DCP certifies the application as complete, a process that typically takes several months, the applicant enters the Uniform Land Use Review Procedure (“ULURP”).

ULURP is a statutorily mandated process totaling between five to nine months which requires public hearings at the local community board, borough board, and CPC, as well as input from the borough president and local council member. Ultimately, the ULURP process provides the City Council an opportunity to vote on the application and, in certain instances, the mayor may review the application as well. This creates the opportunity for community members to voice concerns, unions to push for specific employment terms, and elected officials to have the ultimate deciding vote in whether a Special Permit will be issued – creating a highly political process.

What does this Special Permit mean for hotel owners, operators, and investors?

If you are planning a new hotel or enlarging an existing hotel by more than 20%:

• Build at least one and a half additional years into your project timeline to work through the DCP pre-application and ULURP process.
• Put together a team consisting of experienced architects, land use attorneys, environmental consultants and government and community affairs consultants who understand the ULURP process and related public review.
• Consider what pre-application outreach should occur within the community and to local elected officials.
• If the hotel brand already operates within New York City, be prepared to address operational issues raised at other locations.
• If you are expanding a property, carefully consider the expansion size. If the expansion is less than 20%, the Special Permit is not required. Consider if the time and cost associated with the Special Permit application – typically a six-figure cost – is commensurate with the benefit of expansion, or if the expansion can be accomplished in a smaller footprint.

If your hotel is currently in construction: Generally, construction can continue if the application was filed at the Department of Buildings (“DOB”) before May 12, 2021, and approved by DOB before December 9, 2022. Special regulations apply to the Theater District which permit a later filing date. If construction is not complete by December 2027, (or December 2031 in the Theater District), an application for renewal must be filed with the Board of Standards and Appeals (“BSA”) – a discretionary approval process which requires community board feedback but does not require a full ULURP process. Make sure to diligently track progress. If construction is going to lag beyond December 2027, apply to the BSA well before December 2027 to avoid delays. The BSA process can take a year or more, and DOB may halt construction during that time.

If you are planning to re-open a hotel closed during the pandemic: You must do so before December 9, 2027, or be subject to the Special Permit requirements.

In all instances of hotel construction or enlargement, understand that these are new regulations being implemented by New York City agencies for the first time. Build additional time into your design and construction schedule for governmental review – even if you believe your project does not require discretionary approvals.

Hilary G. Atzrott Hamburg is counsel at Venable LLP, New York City, specializing in drafting and negotiating agreements related to the development, acquisition, and disposition of properties