NYC Homeless Hotel Racket: Owners Got $12.5M in Rebates & Tax Breaks - The Jewish Voice
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Monday, February 6, 2023

NYC Homeless Hotel Racket: Owners Got $12.5M in Rebates & Tax Breaks

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By Hellen Zaboulani

The owners of recently-built homeless hotels, in the five boroughs of NYC, are saving millions of dollars on city taxes through a rebate program. A total of 44 homeless hotels appear to have received both the Industrial and Commercial Abatement Program (ICAP) rebate and homeless subsidies in the last four years, according to city records. As reported by the NY Daily News, in the 2018-2019 tax cycle alone, dozens of these hotels have been spared of paying a total of $12.5 million in taxes. Furthermore, a bulk of the tax breaks are benefitting just three hotel developers, namely Sam Chang, Harshad Patel and Riverbrook Equities, according to a New York Hotel Trades Council analysis.

There are a total of 151 hotels that get ICAP rebates. The ICAP, an updated version of the Industrial and Commercial Incentive Program, offers a partial abatement of taxes for up to 25 years, for eligible industrial or commercial buildings that are constructed, modernized, rehabilitated, or expanded. It is part of the New York City Economic Development Corporation’s mission is to boost economic growth. From 2015 to 2019, homeless hotels that got the rebates saved themselves more than $30 million in taxes. At the same time, some of them got paid by the city to house the homeless, and brought down their vacancy rates. “Many New Yorkers question whether city tax break programs really deliver the promised benefits,” said spokesman for the city’s Independent Budget Office, Doug Turetsky. “Providing tax breaks to the owners of some of the same hotels where the city is spending millions of dollars to shelter the homeless seems like a prime example of a tax break gone awry.”

Chang’s McSam Hotel Group has built 49 hotels since 2006. Of those, 14 have been subsidized to house the homeless, and five have received ICAP rebates. The tax savings for the 2018-2019 year was roughly $2.3 million, as per city records. A spokeswoman for the company said it did nothing wrong in receiving the rebates. “McSam Hotel Group complies with New York City laws, rules and regulations in building hotels. We never build hotels with the intent of housing homeless persons,” said spokeswoman Lisa Linden. “McSam Hotel Group makes no decisions regarding whether homeless persons are housed in hotels. The management companies make those decisions.”

In 2018, under Mayor Bill de Blasio’s administration, NYC spent about $384 million housing homeless people in hotels, due to a dire shortage of affordable housing in NYC. The city expects to spend an estimated total of $2.1 billion in 2020 on the homeless crisis. It is widely agreed that the less spent in hotels the better. The city’s goal in 2017 was to open about 90 new homeless shelters, to eliminate the need for hotels and cluster apartment sites. So far it has opened 30 new shelters.

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