The Real Deal New York: Hotel owners ask NY for break on tax penalties
Ad campaign by trade group seeks to rally New Yorkers to cause
By Erik Engquist
January 20, 2021
Hotel owners are hurting, but they have scraped together some coin for an ad campaign to rally New Yorkers to their cause: a break on property tax penalties.
It’s a modest request, by pandemic standards. The Hotel Association of New York City wants the city to stop charging 18 percent interest on overdue property taxes during the pandemic.
The city has its own fiscal problems, of course. Mayor Bill de Blasio just presented a $92.3 billion budget that closes a $5.3 billion deficit, and has been seeking $9 billion in federal aid. Gov. Andrew Cuomo, for his part, wants $15 billion from Washington.
But neither the city nor state government is hurting anywhere near as much as hotels. Citing a Manhattan Lodging report, the Hotel Association says about 61,450 Manhattan hotel rooms, representing 58 percent of total inventory, are closed. Occupancy at those still open has been hovering around 40 percent for months, and industry revenue is down 80 percent.
A spokesperson for the industry group said the vast majority of hotels in the city cannot pay their property tax bills. Thus, according to the spokesperson, suspending interest payments will not cost the city revenue at the moment because it is not receiving payments anyway. The budget for the ad campaign is in the seven figures.
Thanks to a big year for Wall Street and pandemic aid from Congress for individuals and businesses, city and state tax revenue has fallen by less than was expected when Covid shutdowns cost the city nearly 1 million jobs. But business travel and tourism remains moribund, and many hotels have turned to housing the homeless.
Vijay Dandapani, president of the industry group, said, “We are not asking for a tax break or a handout. We are merely asking not to be penalized for late tax payments so that we can keep our doors open and keep workers employed.”
If the request were granted, it is not clear whether hotels would be required to stay open to receive the break, or whether hotels that have been closed during the pandemic would be eligible.
The City Council last year passed a bill giving smaller commercial properties — but not hotels — a break on interest for overdue property taxes.