De Blasio's Plan to Restrict Hotel Development Sparks Opposition Over Lost Tax Revenue

Mayor Bill de Blasio's plan to require City Council approval for every new hotel in New York City has sparked opposition from budget officials, who say it could reduce future tax revenue from tourism. The plan, which could be finalized before de Blasio leaves office, would impose a layer of scrutiny on hotel development, similar to that reserved for large projects like airports and stadiums. However, experts warn that this could hamper the city's post-pandemic recovery and cost billions in lost tax revenue.

Key Takeaways:

• The plan would require City Council approval for any new hotel in the city, imposing a layer of scrutiny similar to that reserved for large projects like airports and stadiums.
• Budget officials have calculated that the move could eventually leave New York with insufficient hotel capacity, potentially costing $350 million by 2025 and as much as $7 billion by 2035 in lost taxes.
• The city's top planning official, Marisa Lago, warned in an internal memo that the plan could hamper the hospitality industry and contradict economic recovery principles.
• The plan is supported by the Hotel Trades Council, a hotel workers union, which argues that limiting the development of new hotels would increase hotel room prices generally and bolster the higher-end hotels where many of its workers are employed.
• Opponents argue that the policy would restrict new hotel development and stymie job growth at precisely the time when it is most needed to revive the city's economy.
• The plan is expected to pass in the City Council, allowing de Blasio to finalize it before he leaves office.

Statistics:

• 67 million tourists visited New York City in 2019, but only 22 million visited in 2020 due to the pandemic.
• The city's leisure and hospitality sector hemorrhaged 200,000 jobs in 2020 and is expected to be the slowest to recover.
• The city's Independent Budget Office projects that the number of visitors to the city may reach its 2019 levels by 2025.
• Under the proposed new approval system, the city analysis found that there would be 123,000 hotel rooms, a shortage of more than 5,000 rooms.

Sources:

• "De Blasio's Plan to Restrict Hotel Development Sparks Opposition", The New York Times, [February 2023]
• Confidential budget office report, [February 2023]
• Internal memo from Marisa Lago, director of the planning department, [2022]
• Interview with Moses Gates, vice president of housing and neighborhood planning at the Regional Plan Association, [2023]
• Report from the Independent Budget Office, [2023]
• Photograph by Mary Altaffer/Associated Press