Bill de Blasio’s Hotel Cronyism

The mayor has run a bribe-oriented government, accepting money from entrenched interests in exchange for regulatory capture. His hotel proposal is the latest example.

September 11, 2019

Bill de Blasio’s leadership style rests on the contradictions that have defined other far-left leaders, from Fidel Castro to Hugo Chavez. The New York City mayor’s rhetoric is hyper-populist, bordering on socialistic, as he speaks of the need to confront the rich and redistribute money that’s now “in the wrong hands.” Yet he has governed like a lackey to monied interests, granting favors that help his political career but hurt average New Yorkers. The latest case is his effort to discourage new hotel development citywide. It appears to be an open quid pro with the hotel lobby; one the New York Daily News called “nakedly transactional politics.”

On August 26th, de Blasio asked the planning department to write a proposal that would force all new hotel projects to apply for special permits, rather than getting permits as-of-right. This would subject them to longer review periods and more bureaucratic hurdles, reducing their chance of approval.

If enacted, it would halt the city’s growing crop of budget hotels, which use non-union labor and open in less pricey areas (these harsher permitting laws have already been applied to some parts of the city, driving out prolific budget hotel developer Sam Chang). It would hurt the city’s economy, since tourism is its 4th-largest job sector. It would especially hurt the poorest New Yorkers, some of whom depend on these hotels to stay out of homelessness.

So why does de Blasio want this? Follow the money.

The two-term mayor has recently been in the spotlight – largely as a figure of ridicule – for his floundering presidential run. He’s polling at 0%; has the lowest approval rating of all the Democratic presidential candidates; and has had paltry grassroots support. Instead, 70% of his $1.1 million in donations have come from the Hotel Trades Council, a hotel worker union that has single-handedly kept his campaign alive. The union has long lobbied for the special permit requirements on new hotels.

The mayor claims this was not the tradeoff it seems to be. He said during his weekly appearance on NY1 that special permits are needed for hotels, so communities can have more chance to voice their concerns about traffic. The Real Estate Board of New York disagreed, suggesting during testimony that this decision had ulterior motives.

“The proposed action is an unnecessary constraint on the rights of property owners to address a market condition that needs no correction and appears to be motivated by factors unrelated to sound planning.”

This apparent cronyism has been common in de Blasio’s administration. Before the anti-hotel zoning, de Blasio was cracking down on Airbnb. His administration recently subpoenaed the company to hand over its listing information, and launched a special office to investigate illegal sublets. This is what first earned him the hotel union’s presidential endorsement; but will burden the thousands of hosts who rely on Airbnb for extra income, and the travelers (or resident New Yorkers) who seek this lodging as a cheaper alternative to hotels.

Last summer, de Blasio capped the number of private rideshare vehicles in the city, and extended the cap this year. The measure also limits how much drivers for companies like Uber, Lyft & Via can cruise city streets, which is the main way they find customers. The move was viewed as a sop to the taxi industry, which has donated over a half-million dollars to his campaigns. It will hurt thousands of drivers who can’t join the rideshare industry, and everyday New Yorkers who rely on it for mobility.

Then there are the many other campaign donations – from developers, restaurateurs, lawyers, and more – that have apparent conflicts of interest, and have gripped de Blasio’s mayoralty in alleged scandal and investigation. The biggest one was a deal with the Podolsky brothers, a notorious slumlord family. The city spent $173 million to buy 17 buildings from them, hoping to convert them to affordable housing. But the buildings were only worth $50 million according to tax rolls, and $143 million according to an independent evaluation, making this a big giveaway. It turns out that the Podolsky brothers’ lawyer was a donor to de Blasio’s presidential campaign.

In all these cases, the outcome of de Blasio’s cronyism is the same. A large entrenched interest is able to further corner the market through subsidies or regulatory favors. A much larger set of individual entrepreneurs are denied this, thereby reducing the chance for meritocracy. It is the opposite of the populism de Blasio preaches, and a sign that his biggest goal is to raise money for his own advancement.

Scott Beyer is a Catalyst Columnist Fellow on a 1.5-year research project through the Global South for Catalyst’s Market Urbanism Around the World series. He is the owner of Market Urbanism Report, a media company that advances free-market city policy. He is also an urban affairs journalist who writes regular columns for Forbes, Governing Magazine,, and Catalyst. Follow him on Twitter: @marketurbanist.
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