Considerations for Conversion of Hotels to Residential Use

With the COVID-19 emergency, many clients have asked us about the possibility of converting existing hotels to multifamily residential use. Hotel and residential uses are subject to different regulations under the Zoning Resolution, the Multiple Dwelling Law (MDL), the Building Code and other applicable laws. If a building has a certificate of occupancy for hotel use, it is generally limited to stays of 29 days or less. Residential use, on the other hand, is considered to be stays of 30 days or more.

Here are a few questions to consider if you are thinking about converting an existing hotel to residential use.

First, is the building located in a zoning district in which residential use would be permitted (e.g., a residential or C1-C7 commercial zoning district)?

Second, would the building satisfy residential bulk regulations — for example, does it have a 30-foot rear yard, or is it located on a full block such that it is exempt from rear yard regulations?

Third, could the building be altered to comply with those residential bulk regulations (e.g., by demolition to create complying rear yards or courts)?

Fourth, to the extent the building does not satisfy the residential bulk regulations of the Zoning Resolution, is it possible that the building would be eligible for conversion pursuant to the resolution’s Article I, Chapter V? The provisions of that chapter apply to certain pre-1961 buildings, and they allow conversion to residential use notwithstanding the underlying residential bulk regulations; instead, they prescribe more liberal standards under the MDL.

Fifth, are any discretionary approvals (e.g., variances or special permits) applicable to the property? If so, approval of the granting agency — the Board of Standards and Appeals or the City Planning Commission — might be required to convert.

Sixth, is the building subject to any incentive programs (e.g., ICAP, ICIP) that might complicate discontinuation of commercial use?

Note also that many transient hotels have established special status under the MDL, as evidenced on their certificates of occupancy, which can facilitate conversion in compliance with the MDL and the Building Code. However, additional requirements and limitations may apply in individual cases under the Zoning Resolution, the MDL, the Building Code and other laws.

Please reach out to Kramer Levin’s Land Use Department with any questions about potential conversion projects.