At the height of the Covid-19 pandemic, the Paramount Hotel, sitting empty in Times Square, was on the verge of turning into a residential building, offering a rare opportunity to create affordable housing in Midtown Manhattan.
A nonprofit was planning to convert the hotel into apartments for people facing homelessness. But after 18 months of negotiations, the plan collapsed this year when a powerful political player intervened: the Hotel and Gaming Trades Council, the union representing about 35,000 hotel and casino workers in New York and New Jersey.
The union blocked the conversion, which threatened the jobs of the workers waiting to return to the 597-room hotel. Under the union’s contract, the deal could not proceed without its consent.
The Paramount reopened as a hotel this fall, an illustration of how the union has wielded its outsized political power to steer economic development projects at a critical juncture in New York City’s recovery.
The pandemic presented a devastating crisis for the city’s hotel workers, more than 90 percent of whom were laid off. But as the union has fought harder to protect them, its political muscle has also drawn the ire of hotel operators and housing advocates, who say the group’s interests can be at odds with broader economic goals.
The union’s impact ripples throughout New York. It can block or facilitate the conversion of large hotels into housing and homeless shelters, a consequential role in a year when homelessness in the city reached a record high of about 64,000 people. The union pushed for the accelerated expansion of casinos, which could transform the neighborhoods of the winning bids. And it was a driving force behind a new hotel regulation that some officials warned could cost the city billions in tax revenue.
The union’s influence stems from its loyal membership and its deep pockets, both of which it puts to strategic use in local elections. Its political strength has resulted in more leverage over hotel owners, leading to stronger contracts and higher wages for workers.
In this year’s New York governor’s race, the union was the first major labor group to endorse Gov. Kathy Hochul, whose winning campaign received about $440,000 from groups tied to the union. The group was also an early backer of Eric Adams, whose mayoral campaign was managed by the union’s former political director.
“H.T.C. is playing chess while everyone else is playing checkers,” said Chris Coffey, a Democratic political strategist, referring to the union’s more common name, the Hotel Trades Council. “They’re just operating on a higher playing field.”
Origins of the union’s power
Historically, the Hotel Trades Council avoided politics until its former president, Peter Ward, started a political operation around 2008.
Mr. Ward and the union’s first political director, Neal Kwatra, built a database with information about where members lived and worshiped and the languages they spoke. This allowed the union to quickly deploy Spanish speakers, for instance, to canvass in Latino neighborhoods during campaigns.
Candidates noticed when the Hotel Trades Council, a relatively small union, would send 100 members to a campaign event while larger unions would send only a handful, Mr. Kwatra said.
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To recruit members into political activism, the union hosted seminars explaining why success in local elections would lead to better job protections. Afterward, members voted to increase their dues to support the union’s political fights, building a robust fund for campaign contributions.
The Hotel Trades Council ranked among the top independent spenders in the election cycle of 2017, when all 26 City Council candidates endorsed by the union won. Some of these officials ended up on powerful land use and zoning committees, giving the union influence over important building decisions in New York.
In a huge victory before the pandemic, the union fought the expansion of Airbnb in New York, successfully pressuring local officials to curb short-term rentals, which the union saw as a threat to hotel jobs.
Mr. Ward stepped down in August 2020, making way for the union’s current president and longtime general counsel, Rich Maroko, who earned about $394,000 last year in total salary, according to federal filings.
The union’s sway has continued to grow. Some hotel owners, speaking on the condition of anonymity, say they are fearful of crossing the union, which has a $22 million fund that can compensate workers during strikes. In an interview, Mr. Maroko pointed out that the hotel industry is particularly vulnerable to boycotts.
“The customer has to walk through that picket line,” he said, “and then they have to try to get a good night’s rest while there are people chanting in front of the building.”
The Hotel Trades Council’s contract is the strongest for hotel workers nationwide, labor experts say. In New York City, where the minimum wage is $15 an hour, housekeepers in the union earn about $37 an hour. Union members pay almost nothing for health care and can get up to 45 paid days off.
During the pandemic, the union negotiated health care benefits for laid-off workers, suspended their union dues and offered $1,000 payments to the landlords of workers facing eviction.
Along the way, the union has become known for its take-no-prisoners approach to politics, willing to ally with progressives or conservatives, with developers or nonprofits — as long as they support the union’s goals.
“There may be no union which has more discrete asks of city government on behalf of its members,” said Mark Levine, the Manhattan borough president, who was endorsed by the union. “You can’t placate them with nice rhetoric. To be a partner with them, you really need to produce.”
Political wins during the pandemic
Last year, the union scored a victory it had sought for more than a decade, successfully lobbying city officials to require a special permit for any new hotel in New York City.
The new regulation allows community members, including the union, to have a bigger say over which hotels get built. The move is expected to restrict the construction of new hotels, which are often nonunion and long viewed by the Hotel Trades Council as the biggest threat to its bargaining power.
Budget officials warned that the regulation could cost the city billions in future tax revenue, and some developers and city planners criticized the rule as a political payback from Mayor Bill de Blasio in the waning months of his administration after the union endorsed his short-lived presidential campaign in 2019. Mr. de Blasio, who did not return a request for comment, has previously denied that the union influenced his position.
In the next mayoral race, the union made a big early bet on Mr. Adams, spending more than $1 million from its super PAC to boost his campaign. Jason Ortiz, a consultant for the union, helped to manage a separate super PAC to support Mr. Adams that spent $6.9 million.
Mr. Ortiz is now a lobbyist for the super PAC’s biggest contributor, Steven Cohen, the New York Mets owner who is expected to bid for a casino in Queens.
The union, which shares many of the same lobbyists and consultants with gambling companies, will play an important role in the upcoming application process for casino licenses in the New York City area. State law requires that casinos enter “labor peace” agreements, effectively ensuring that new casino workers will be part of the union.
A new threat
During the pandemic, as tourism stalled, there was growing pressure to repurpose vacant hotels. With New York rents soaring, advocates pointed to hotel conversions as a relatively fast and inexpensive way to house low-income residents.
But the union’s contract, which covers about 70 percent of hotels citywide, presented an obstacle. A hotel that is sold or repurposed must maintain the contract and keep its workers — or offer a severance package that often exceeds tens of millions of dollars, a steep cost that only for-profit developers can typically afford.
Earlier this year, Housing Works, a social services nonprofit, planned to convert a vacant Best Western hotel in Chinatown into a homeless drop-in center. There was opposition from Chinatown residents, but city officials signed off on the deal. It was set to open in May.
Right before then, however, the Hotel Trades Council learned of the plan and argued that it violated the union’s contract.
Soon, the same city officials withdrew their support, said Charles King, the chief executive of Housing Works. He said they told him that Mr. Adams would not approve it without the union’s endorsement. Mr. King was stunned.
“Clearly they have the mayor’s ear,” Mr. King said, “and he gave them the power to veto.”
A spokesman for the mayor said the city “decided to re-evaluate this shelter capacity to an area with fewer services,” declining to comment on whether the union influenced the decision.
The Chinatown hotel remains empty.
An obstacle to affordable housing
In the spring of 2021, state legislators rallied behind a bill that would incentivize nonprofit groups to buy distressed hotels and convert them into affordable housing. They sought the Hotel Trades Council’s input early, recognizing that the group had the clout to push then-Gov. Andrew M. Cuomo to oppose the bill, according to people involved in the discussions.
The union supported the conversions, but only if they targeted nonunion hotels outside Manhattan.
Housing groups have said that, unlike large Midtown hotels, nonunion hotels are not ideal candidates for housing because they tend to be much smaller and inaccessible to public transit.
As a compromise to gain the union’s support, the bill allowed the Hotel Trades Council to veto any conversions of union hotels.
“While we certainly support the vision of finding shelters and supportive housing for the people that need it,” Mr. Maroko said, “our first, second and third priority is our members.”
One housing advocate involved in the legislation, who spoke on the condition of anonymity, said she warned elected officials that the veto provision would diminish the law’s effectiveness.
The law, which passed last year, came with $200 million for conversions. Housing experts criticized the legislation for not sufficiently loosening zoning restrictions, prompting another law this spring that made conversions easier.
Still, no hotels have been converted under the new law.
Now, with tourism rebounding, housing nonprofits say the window of opportunity has largely passed.
“It’s not like hotel owners are clamoring to sell the way they were two years ago,” said Paul Woody, vice president of real estate at Project Renewal, a homeless services nonprofit.
How the Paramount deal ended
In the fall of 2020, the owners of the Paramount Hotel began discussing a plan to sell the property at a discount to Breaking Ground, a nonprofit developer that wanted to turn it into rent-stabilized apartments for people facing homelessness.
But as the deal neared the finish line, Breaking Ground failed to anticipate pushback from the Hotel Trades Council. In a series of meetings last year, the union said its obligation was to fight for every hotel job and it proposed a range of solutions, including keeping union employees as housekeepers for residents. Breaking Ground, however, said the cost was too high.
The nonprofit even asked Mr. Ward, the union’s former president, to help facilitate the conversion. Mr. Ward said he agreed to call Mr. Maroko to gauge his interest in Breaking Ground’s severance offer.
This spring, lobbying records show, union representatives met with Jessica Katz, Mr. Adams’s chief housing officer, and other officials about the Paramount. Soon after, Ms. Katz called Breaking Ground and said city officials would not be able to make the conversion happen, according to a person familiar with the conversation.
A spokesman for the mayor said the city “cannot choose between creating the housing the city needs and bringing back our tourism economy,” declining to comment on whether the union swayed the decision on the Paramount.
The failed conversion saved about 160 hotel jobs, and the Paramount reopened to guests in September.
It was a relief for workers like Sheena Jobe-Davis, who lost her job there in March 2020 as a front-desk attendant. She temporarily worked at a nonunion Manhattan hotel, making $20 less per hour than at the Paramount. She was ecstatic to get her old job back.
“It is something I prayed and prayed for daily,” she said.
Source: Elections - nytimes.com