Thank you for the opportunity to testify on Intro. 601, a local law to amend the administrative code of the City of New York, in relation to the preservation of hotels. The effect of this legislation would be to restrict investment in New York City and set a bad precedent for future development. We urge that it not be approved by the Economic Development Committee or be considered any further.
The Building Congress is New York's largest and most diverse coalition of design, construction, and real estate organizations , involving more than 250,000 skilled professionals and tradespeople. Part of our mission is to support sound public policy that promotes the growth and success of the construction industry.
New York City's economy has been stimulated time and again by creative reuse of aging buildings and historic neighborhoods. In a City where new land is non-existent, creative reuse is the only way New York can constantly reinvent itself to remain competitive on a global scale. This practice creates new opportunities for residents and workers while preserving the historical architecture and character of the neighborhoods.
As it relates to the Plaza and other hotels, creative reuse, in this form converting an aging hotel into residential and commercial space, preserves the historical architecture and public spaces of an outdated hotel while creating new residential and retail opportunities. A portion of the original building will still function as a hotel and the new capital raised from the conversion will allow the owners to refurbish and update the entire building.
Intro. 601 would hamper hotel development and restrict creative reuse. If passed, development in New York City will be stifled. It would send a clear signal to investors to avoid purchasing hotel properties. Investors and developers will be much more hesitant to invest in the City and, in particular, older properties. Many of the aging properties in the City have outlived their original use, and this bill will cause a developer to question why it should purchase an older landmark if it cannot restore it in a manner that will be profitable. This bill will limit conversion opportunities and may result in the loss of many older properties with architectural and historical significance.
The bill's intent of protecting jobs does not take into consideration the considerable economic benefits of conversion. For example, conversion of the Plaza will yield $27 million in condominium transfer taxes, $34 million in deed and mortgage fees, $9 million a year in real estate taxes and $19 million in sales taxes. The construction payroll over 2 years will be between $100 and $120 million. And in addition, over 600 union jobs will be retained to operate the hotel portion of the building.
The solution to creating hotel rooms sufficient to support the booming tourism industry is to create incentives to encourage the development of more hotel space. It is not restricting the conversion of old properties to more appropriate uses. This legislation should be opposed in its entirety.
