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Developer Seeks to Convert Stalled Hotel Project into Rental Building

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180 Ludlow Street.

Lawyers representing developer Serge Hoyda went before Community Board 3 last night, outlining plans to convert 180 Ludlow, a stalled hotel project, into a residential building. In a wrenching decision for CB3’s land use, zoning and housing committee, members tentatively signed off on the proposal.

Ordinarily, developers are called on to set aside a certain number of apartments in new residential developments for low and medium income residents. But, given the economic realities, Hoyda’s attorney, Jessica Loeser, explained, “we are here right now because we cannot continue as a hotel,” and she added, “we cannot find a bank that will finance (a residential building) with an affordability component.”

Hoyda has already applied for a variance with the NYC Board of Standards and Appeals. The Community Board’s approval is not required – but would bolster his application with the city.

The committee reluctantly signaled its support for the conversion, in part, due to a novel proposal from the developer. “In an act of good faith,” Loeser said, “Serge is willing to offer, or kind of donate, five apartments to be affordable. He is doing this without any government program. He is doing it without any government incentives as an act of good faith, understanding the importance of affordable housing.”

Committee members proposed an alternative that would make it possible for Hoyda to provide more than five “affordable” units by permitting residents to use federal housing subsidies. In a resolution that passed 6-1 (with 3 abstentions), the committee agreed to support whichever arrangement is a better deal for the community.

A final vote will take place at CB3’s full board meeting next Tuesday. By that time, Loeser said, Hoyda’s accountants will have crunched the numbers. The resolution details a number of other concessions: a stipulation that no bar or restaurant selling liquor will be allowed in the ground floor retail space, that a meeting room will be made available for community events, that Hoyda will look to hire local construction workers and contractors and that residents in Community Board 3 will have the first shot at the “affordable units.”

Hoyda bought the building site at 180 Ludlow in 2007, reportedly for $100-million. This is what his web site (via Curbed) said back then about the plans for 180 Ludlow:

Hotel Ludlow will be a new, nineteen story, independently-run boutique hotel, featuring 170 guest rooms including several large suites, a signature restaurant, a basement spa, a fitness center, a business center, a sun deck and an exclusive rooftop lounge.

Last night, Loeser said there were many complications that caused construction costs to skyrocket. The foundation had to be excavated and a new foundation built. And contractors had to work around a very shallow subway tunnel. Then, as Loeser put it, “the world changed. The ground kind of opened up under a lot of people,” when the economy collapsed last year. When the financing dried up, Hoyda was forced to pay a steep termination fee to the firm hired to operate the hotel. “What he’s trying to do,” Loeser said, “is close up the site, make it safe, bring construction jobs into the community, bring street life back to Ludlow Street. There are two other sites right in that area that are also stalled construction. This is a way to “un-stall” this construction.”

The conversion plan calls for creating 158 units, all rent stabilized. There would be some one and two bedroom apartments, but mostly studios. The studios would rent for $1200-1300. Loeser said, “this is not a luxury building. This is a market-rate, no frills building. It’s not obscene and it’s not affordable. It’s somewhere in the middle.”  Explaining why they’re in such a bind, another Hoyda representative explained, “the years in which people were paying inflated prices for market rate rents that allowed developers to produce affordable units in their buildings are past us.”

There was some opposition to the proposal last night, specifically from Joel Finegold of Good Old Lower East Side (GOLES), the affordable housing advocacy organization. He said, “there is an affordable housing crisis in this neighborhood. People are being displaced on a massive scale. We’re all familiar with this, and this is an opportunity to create a tremendous number of affordable housing units.” Loeser responded, “If you can find us a way we’ll do it, but we cannot find a bank that will finance it with an affordability component.”

A committee member and affordable housing advocate, Mary Spink, summed up the difficult choice before the board.  “As much as I would like everything to be affordable to the community,” she said, “the building was being developed by a market rate developer. It’s very very difficult to get financing. It’s not like it’s sitting there and some government agency is going to say ‘here community, take it over.’ So (the alternative is) it sits there and it’s empty, and it continues to be a problem, which it has been in the past, for the block  -it’s a difficult decision to have to make.”

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  1. great reporting, I think a residential building even if its not affordable housing is better than a hotel and much better than a stalled construction site.

  2. Oh, $10 mil makes more sense — I don’t know anything about real estate, but $100 mil sounded unlikely to me.
    Great, great reporting, this is amazing. I love knowing the what’s and why’s of the neighborhood.

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