NYC hotels ask mayor to stall interest payment on real estate tax debt

NYC hotels ask mayor to stall interest payment on real estate tax debt

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New York City hoteliers are calling on Mayor Bill de Blasio to give them a hand and suspend all interest payments on real estate tax debt until the pandemic comes to an end and tourists once again flock to the five boroughs. After up to 200 of the city’s 700 hotels [1] have shuttered due to the ongoing to COVID-19 pandemic, including the famous Roosevelt Hotel in Midtown over the summer, the Hotel Association of New York City led by Vijay Dandapani is telling the city to give them until vaccines reach critical mass for the collections to begin. With occupancy under 10% for hotels, Pandapani says it could be years before the big moneymaker for hotels, conventions, returns to provide solid income for the business. “Most of us paid it for the July 1 [deadline], it’s paid bi-annually. So the second payment on Jan. 4 became more problematic because what was originally a cash-crunch, a liquidity crisis, has now become a solvency crisis. So you literally don’t have money to go forward as a going concern,” Dandapani said. “Many hotels, if not most, were forced to escrow money for real property tax, and that’s a condition of your mortgage. And so they had the money at that time, or most did anyway. That’s gone. So we think there’s going to be high rate of default.” Dandapani said the interest rate for hotels that did default on the property taxes increases to 18%, which will only put more hotels out of business permanently. Dandapani, whose association represents 300 hotels across the boroughs, said hotels could turn to money lenders and the Paycheck Protection Program in the hope that the vaccination effort will bring the economy back to normal by the end of summer. “New York City lost billions in tax revenue due to the COVID-19 crisis,” City Hall spokesperson Laura Feyer said. “To ensure we have the resources needed to jumpstart our economy, we need our federal partners to secure direct state and local aid in any COVID relief package. Public health will lead our recovery, which is why we are doing everything in our power to get the virus under control.” But HANYC’s call goals are not without political backing. Borough presidents from Queens, Manhattan and Bronx are all calling the city to side with the industry which is a major employer for New Yorkers, which fell in the range of about 50,000 hotel workers. Dandapani noted that the industry did not see major layoffs during 2008 financial crisis or following 9/11. Dandapani argues that hotels, the ones that remain open, will be the “infrastructure” that facilitates a recovery as tourism and the hotel industry in particular. “With more hotel rooms than any other borough outside Manhattan, the economic independence of thousands of Queens families rely on Queens’ vibrant tourism and hospitality industry. But any potential large-scale closure of hotel properties across the city will only exacerbate the real and deep threats of housing, food and employment insecurity our families — especially families of color — have faced for months,” Queens Borough President Donovan Richards said. “Ensuring our hotels have the capital to keep their doors open is a direct investment in our families and our communities — an investment that must be made immediately.” While Dandapani understands the deficits on the city and state due to COVID-19, without beds for tourists to sleep in, he believes the recovery will be delayed. [1]

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