This decision involved appeals arising from a plenary action and an Article 78 proceeding challenging Local law No. 50 (2015) (law). The law limits conversions of Manhattan hotels that have at least 150 units. It provides for a two-year moratorium, which was later extended to four years, on the “conversion to full-time residential use of more than 20 percent of qualifying hotels ‘primary hotel space’” which is defined “essentially as living and sleeping space for guests.” Conversions commenced in the 24 months before the law’s effective date are exempt. The law’s purpose is to permit “study of the effect on the city’s economy of such residential conversions of large hotels.” The Legislature found that large hotels “are essential to vacation and business travelers, important generators of well-paying jobs, and anchors for surrounding economic activity.” The Legislature also expressed its concern that “conversions are continuing apace and may be ‘irreversible’…..”

Although the law permits owners of qualifying hotels to seek a waiver from the NYC Board of Standards and Appeals (BSA), waivers are “not as a right.” When considering waiver application, the BSA must determine whether limits on the conversion permit a “reasonable rate of return” and consider “practical difficulties or unnecessary hardship” in the application of the law, “so that the spirit of the law shall be observed, the public safety and welfare secured, and substantial justice done….” The law provides “criteria for determining a ‘reasonable financial return’” and any waiver must be a “minimal waiver necessary to afford relief’.”