NYC Zoning Rules & New Rockefeller Center Hotel

Chair of Herrick's Land Use and Zoning practice, Mitch Korbey, and co-chair of the Real Estate Hospitality team, Yariv Ben-Ari, were quoted in a Law360 article covering the 2021 change to the zoning law in New York City noting that hotel building projects are no longer permitted in New York on an "as-of-right" basis, a privilege hotels had enjoyed since 1916, when the city adopted the country's first zoning resolution, according to the City Planning Commission. The article covers Aspen Hospitality's plan to open a 10-story hotel in Rockefeller Center and how they became the first company to take on a hotel special permit process that the New York City Council introduced just as Mayor Bill de Blasio was leaving office in late 2021.

The article states, "Yariv Ben-Ari, a partner at law firm Herrick, Feinstein LLP, which is advising Aspen Hospitality on its Rockefeller Center project, said hotel developers in New York who previously assumed they had an as-of-right building with a specific time horizon for opening must adjust their thinking on what they can expect during the special permit process. That new reality has slowed down the pipeline of hotel projects as the industry recovers from the COVID-19 pandemic, Ben-Ari said."

Yariv is quoted as saying, "Now it's a two-year period where it's a public process not in the developers' control, and they have to factor that into the development costs, the timeline and the carry expenses of the project as they think through the development, which may be part of the reason why we're not seeing new hotel development in New York City," he said. "And this applies not only to new hotels, but also to hotels that have been shut down and want to bring the property back to life."

The article continues, "Another Herrick lawyer advising the Little Nell Hotel on the Rockefeller Center project, Mitchell Korbey, said hotels were unquestionably as-of-right in New York City until about 2019. During that time, de Blasio was entering the 2020 presidential race and seeking political support from interest groups, Korbey said."

Mitch adds, "Up until a few years ago, hotels were as-of-right in New York. That is to say, you simply followed the building code, and you could put up a hotel in any commercial or manufacturing zone in the city. But beginning in the middle of the de Blasio administration, it became a 'drip, drip, drip' in making hotel construction more difficult and not as-of-right. Frankly, it was a lot of interest group politics."

"But limiting developments in manufacturing zones doesn't bring manufacturing jobs back. It began there, and toward the end of the de Blasio administration, it ended up in not allowing hotels as-of-right anywhere in New York City," Mitch said. "Just before the pandemic, in 2019, we had 67 million tourists visiting New York City. We're starting to get these tourists back, and they need a place to stay. At the end of the day, I believe the hotel special permit was a use of the zoning resolution that was inappropriate. Ultimately, we're encouraged by the economic factor of having increased tourism."

Read the full article on Law360. Access may require a subscription.