New York City Bill Protested

I acknowledge the bill will be a huge problem for small hostels, but as a former urban planning student I say it makes a lot of sense.

If a city has no control over how and for what buildings are used, zoning laws and most of the urban planning are completely pointless.

How do new hotels open?

They lease or buy an entire building and convert it. As opposed to apartment buildings, hotels usually need more elevators, smaller rooms, a second stairwell (fire escape) and other stuff an apartment building doesn´t have.
In case the zoning plan allows mixed use, small hostels or hotels can open in an apartment building - if they can comply with other regulations, like the fire code.

Does it affect any hotels? Why do 2 hotel associations and an SRO group support it? (Just curious if the law would have any effect on hotels at all)

Of course it does. Converting a building is expensive. The prices hotels charge reflect that. They don´t like to be undercut by illegal hostels or hotels. They can offer better rates because they often don´t care about things like fire regulations - or because they are located in buildings which are cheaper to rent - because commercial use isn´t allowed.

If the bill passes, will opening new hostels (or getting City approval for existing hostels) just be a matter of having the zoning changed from "residential" to "hotel/hostel"?

The point of zoning is not to change it all the time. Good urban planning takes decades to have good impact, so it has to be consistent. Exceptions are usually only made for big investors. If somebody wants to open a big business which brings hundreds of new jobs but insists on doing it in a particular building which has the "wrong" zoning regulations, it can be worthwile to change the zoning - it´s a tricky thing, it usually has to go through a court and objections of neighbors have to be dealt with (they usually expect cash to reconsider their concerns), so there´s no point doing this for a small hostel.

If you have small hostels in apartment buildings, there are obvious disadvantages: the guests make noise, other people can´t sleep. While the hostel makes money, there are external costs not covered by the hostel: the worth of the other apartments in the building is reduced - especially if there are several hostels in the same building. A possible result is that eventually all inhabitants are driven out and the hostel takes over the entire building, buying up floor after floor - for little money because nobody else wants to live there any more. I have seen examples of that.

A gross example to make the point clear: imagine you open a hog feeding business in the middle of an upmarket residential area. It´s a very smelly thing, so you can expect your posh neighbors to sell their homes and move away pretty soon. Of course, a villa next to a piggery isn´t worth much, so you can buy up those houses really cheap. When you have bought 20 of them, you shut down your hog house and consequently your 20 houses will triple in value. You will have made loads of cash at the expense of other people. That´s why there are zoning laws. They don´t allow residential use for thousands of pigs.

Does it only affect hostels that run in part of an apartment building as opposed to the whole building?

New zoning laws are usually designed in a way so they don´t affect an existing business - if it has a license. The problem in New York seems to be that they don´t, or that there is a legal grey area within they operate.

Is it more difficult for hostels than hotels to get zoning approval? (from the City and/or neighbors)

There´s no need for an approval - there are 100% residential areas, where no business whatsoever is allowed, there are residential areas where some sorts of business are allowed, or only allowed on ground floor, and there are commercial zones where anything goes. Before you rent or buy a property, you just have to have a look at the zoning plan. If it allows to run a hostel in a particular building, there´s not much the neighbors can do and the city council has to license it.

I wonder how many of the hostels are run as part of a residential apartment building.

In Budapest, nearly all of them. This has two reasons:

• Renting out rooms privately has a long tradition in Hungary - during communist times, there wasn´t a sufficient number of hotel rooms, so this was tolerated by the bureaucracy and people got used to it.
• Budapest´s urban planning department is either careless, incompetent, corrupt or doesn´t have the power to enforce their zoning plan. Probably a combination of all.

Result:

• People who live in an apartment building with a hostel in it have to live with the noise the guests make. The housing market is somewhat distorted because many apartments are used for hostels.
• Instead of ten large hostels, there are 120 small ones. Instead of ten hostel owners making heaps of money, 120 make a decent living. 120 small hostels also employ more staff than ten large ones would. The revenue is spread around more equally. Small hostels are usually better than large ones, so it´s good for the guests, too.

It was signed:
http://www.walletpop.com/blog/2010/07/26/new-york-apartment-owners-barred-from-renting-to-tourists/

Although the politicians have consistently stoked fear, framing the matter as one of protection for consumers and renters alike, some small-time New York City accommodations providers have claimed the city is deliberately targeting mom-and-pop properties. One hostel owner went so far as to allege the changes are part of a clandestine campaign orchestrated by the hotels lobby.

Whether or not that's true, the hotel industry is the clear winner. Budget travelers have lost an important option for legitimate money-saving accommodations in one of our country's most expensive cities.

I saw this comment on a Huffington Post article:

First an excerpt from the article:

NYC Vacation Apartments BANNED By Paterson

Really? Among everything else this state is handling, Paterson decides to ban this? NY Governor David Paterson has signed a bill that makes short-term, vacation apartment rentals illegal in New York City, a defeat for those who think it will limit choices for Big Apple budget travelers, according to USA Today.

The new law, which outlaws New York apartment rentals for less than 30 days, "fixes problems caused by illegal hotels and improves quality of life in traditional residential apartment buildings, while also meeting the needs of visitors. By removing a legal gray area and replacing it with a clear definition of permanent occupancy, the law will allow enforcement efforts that help New Yorkers who live in SRO units and other types of affordable housing preserve their homes," said Paterson in a prepared statement. "By making the effective date of this law May 1, 2011, property holders, business owners and not-for-profit corporations will be able to adjust the uses of their properties to the provisions of this law, or to dispose of the properties at issue so that they may find alternate sites for their current uses."

The comment:

"You hit the nail on the head. Major hotel chains have been lobbying the city about this for quite sometime. This isn't so much about a couple who visits NY and stays over at an apartment as a paid guest but more about the budget travelers, usually young people, who stay at these apartments which have turned into hostels. There has been a surge of apartments turned into hostels. A hostel is basically a hotel but with shared rooms, usually bunk beds, this is a much cheaper way to travel.

Just think about it; a 3 bedroom apartment in NYC can make you a nice six figure income. Rent out a three bedroom apartment in Upper Manhattan (where the rent is cheapest in the island). Clear it all out and put in bunk beds. You figure out that you can fit 4 bunk beds a room, that's 24 beds available for your potential guests. The going rate in a NYC hostel is $25 a night. Your only expenses are the rent, maintenance, maybe food if you offer free breakfast but that is all irrelevant. Even with these expenses it is extremely lucrative.At full capacity, you'll be making $600 a night, earning over $200,000 a year on a cash business, no tax, nothing. This is all underground economy stuff. Because these budget travelers go to these hostels, who do you think is losing out? You can go down the list; the Marriot, Hilton, Holiday Inn, etc........"

What do you think? By next summer will there be a large decrease in New York City hostels?