Mayor and Hotel Union Check Out Together

hilton garden inn property shark Mayor and Hotel Union Check Out Together Sam Chang, the inexhaustible builder of small, limited-service hotels, has this decade dotted New York with boxy architecture adorned with various fluorescent signs. “Holiday Inn Express,” “Hampton Inn” and their homogeneous brethren crackle from at least 35 of his inns citywide.

Options for the developer-legendary in development circles for his speed-will soon start to narrow.

Prodded by an aggressive and politically powerful hotel union, the Bloomberg administration is opening a battle against the proliferation of such hotels, the lower-cost, no-frills ones that have been the bulk of the city’s hospitality growth in the latest real estate cycle.

When Mr. Bloomberg was seeking support from labor leaders for his reelection, he and Mr. Ward went to a Yankees game together.

The first salvo in the battle: A rezoning of the 25-block district in northern Tribeca, which began the public approval process last week and includes the restriction that any new moderately sized hotel could be blocked by the City Council. City officials have also committed to similar restrictions in a long-planned rezoning of the garment district in midtown south and of Industrial Business Zones, manufacturing-focused areas that allow hotels.

The result is a relatively small but not insignificant chunk of Manhattan that will be off-limits to the likes of Mr. Chang-or certainly unavailable in the same manner, and at the same cost, at which such developers have been proceeding.

This policy, a top priority of the hotel union that would seem anathema to the normally pro-development Bloomberg administration, appears to be only in its nascent stages, as northern Tribeca and the other rezonings lay out a template for other neighborhoods.

The main force behind the push-back against the limited-service hotels is Peter Ward, the president of the New York Hotel & Motel Trades Council. His union is threatened by the explosion of such hotels-since 2005, the union estimates that more than 13,000 rooms in limited-service or boutique hotels have been developed or are in development. Given that the vast majority of the limited-service and boutique hotels have small staffs and are non-union, this draws business away from some venues that employ Mr. Ward’s membership.

By requiring new hotels to go before the City Council in these districts, the theory is that the generally labor-friendly Council would demand that the developers allow for easy unionization within the hotels before they are approved. (In northern Tribeca, hotels under 100 rooms would be exempt.)

“Part of what we’re seeing is something that we’ve never seen in New York City,” Neal Kwatra, political director for the hotel union, said of the limited-service and boutique hotel explosion. “We don’t know what the net impact will be on those neighborhoods that have never had that hotel product.  We think it’s prudent for the city to retain some flexibility as it relates to these developments.” 

 

MORE THAN ANYTHING else, the new policy speaks to the increasing power of a union that has carefully forged political alliances to the point where it was able to push an agenda on a pro-development, billionaire mayor.

Contrast that to, say, the Retail, Wholesale, and Department Store Union, which is pushing a bill for a living-wage standard in city-subsidized retail developments. The mayor, who has a poor relationship with RWDSU president Stuart Appelbaum, has dismissed the living-wage concept as unfeasible, and the bill is viewed as facing an uphill battle even in the labor-friendly Council.

By contrast, Mr. Ward, persistent and tenacious, has a history with the mayor, and his union has built up an effective political organizing arm. Mr. Ward was a staunch supporter of one of the mayor’s pet projects, a Jets stadium on the far West Side, and last year, when Mr. Bloomberg was seeking support from labor leaders for his reelection, the two went to a Yankees game together.

Electorally, the hotels union has become a major force, a fact not lost on any elected official who is weighing legislative or policy requests from Mr. Ward. Led by Mr. Kwatra, a talented operative with slicked-back black hair, the political arm is able to lend its door-knocking and organizing operation to candidates it supports (or against those it opposes), giving heft to its endorsements.

Take, for example, the situation at Tavern on the Green. As the mayor began gearing up for a third term-at the start of his process of cultivating endorsements-the union negotiated a deal with the city that effectively required any new operator to use union labor, a big win for the organization (the hotel workers’ union also represents restaurant workers). But earlier this spring, the new operator, Dean Poll, failed to reach a deal with the union; talks broke apart, Mr. Poll withdrew, and the vacant restaurant now awaits an operator that would, presumably, have to be ready to negotiate with the union.

As for the union’s land-use battle against limited-service hotels, resistance is relatively muted, in part because there is no effective structure in place to resist it.

The restrictions, after all, are sure to repress development of hotels in the targeted districts, given the added costs of unionization. “At the end of the day, this would tie the hands against a lot of the limited-service product that has gone up,” said John Fox, a hotel analyst at PKF Consulting.

But the developers of such hotels are generally not the most politically connected in New York City. Rather, they tend to be younger or less prestigious developers who lack the political gamesmanship to counter the union. There is no politically strong limited-service hotel coalition, and the Hotel Association of New York City is dominated by members who must by contract have a unionized workforce. (The association’s president, in a statement, supported the northern Tribeca rezoning as a “prudent public policy measure.”)

The real estate industry’s main lobbying arm, the Real Estate Board of New York, is opposed to such restrictions, but it does not seem ready to go to the mattresses. “We’re against it,” REBNY president Steven Spinola said. “The issue is, clearly, why are you making things complicated? What this is going to force people to do is to go make a deal with the unions.”

 

ON ITS FACE as a policy matter, this is not the type of issue the pro-development Bloomberg administration would typically take up on its own.

This is not to say that there is no policy justification. The union’s line-which has more merit in certain areas of the city than others-is that hotels can be particularly noxious to street life. They are densely packed, with tourists and visitors coming and going constantly throughout the day. They’re more likely to have bars or clubs than apartment buildings of similar size; deliveries are far more frequent. In many parts of Manhattan, they have shot up in tall, skinny structures that are often out of scale with surrounding buildings.

Thus, the solution, from the hotel union’s perspective, is to examine each hotel individually. Functionally, new hotels in the delineated districts would require a special permit, one that requires approval from the City Planning Commission, which the City Council can, in turn, veto. Typically, most development of apartments or hotels can be done freely by a developer, but an automatic requirement for a special permit puts hotels in the same category as large parking garages or electric substations. 

“The overall impact is to make hotels fit into the neighborhoods that they go up in, and have them more integrated into the neighborhoods,” Kevin Finnegan, an attorney who worked on the union’s pitch, said of the plan. “The impact of hotels is high-there’s a lot of people moving in and out.”

(There’s a bit of irony here: The hotel union is arguing that hotels can be a negative for neighborhoods, but apparently it’s worth the gain.)

In terms of northern Tribeca, the administration is pushing the neighborhood character argument, saying that specific regulation is needed for certain neighborhoods.

“Northern Tribeca is located within one of the city’s existing Special Districts, which enable this kind of tailored regulation based on unique area needs,” Andrew Brent, a spokesman for the mayor, said in a statement. “Requiring a special permit for hotels in Northern Tribeca would help ensure large, new hotels don’t interfere with the character of the neighborhood.”

As for whether the agreed-upon districts will give way to more of them, Mr. Brent did not rule out the concept.

“Whether such a provision will be warranted in future rezonings remains to be seen,” he said. “They are done individually and one does not set a uniform precedent for another.”

ebrown@observer.com