In a recent report by Epoch Times on May 3, 2025, it was revealed that the homeless shelter development project at 2501 86th Street in Bensonhurst, Brooklyn, has faced financial disputes involving the developer, Sandhu. Legal documents have shown that the origin of his dilemma can be traced back to a zoning policy passed by the New York City Council in 2018 – the “M1 Hotel Text Amendment.” Sandhu’s experience sheds light on the formation logic of the homeless shelter “industry chain” in New York City; to some extent, he can even be considered a victim of policy shift, while the ultimate pressure is still on the community residents.
On February 13, 2019, the New York City Department of Buildings (DOB) notified Sandhu of the revocation of the building permit for his short-term rental hotel project at 38-52 10th Street in Queens. The reason cited was that the project was in an M1 (light industrial) zone, and under the new regulations, proposed transient hotels are required to obtain a Special Permit issued by the City Planning Commission (CPC). Since the application was submitted after April 23, 2018, it couldn’t qualify for the old law exemption.
Developers could still apply for “continuance of construction rights” if they could prove that the foundation was completed before the amendment took effect; otherwise, they would have to halt construction.
This change stemmed from the “M1 Hotel Text Amendment” passed by the City Council on December 20, 2018, which stipulated that new hotels, motor lodges, or other short-term accommodation facilities in the M1 zone must obtain a Special Permit from the CPC.
After the amendment, developers could no longer directly build hotels in the M1 zone but had to go through the arduous “Uniform Land Use Review Procedure” (ULURP), involving detailed assessments of environmental, transportation, and community impacts, and requiring approvals from multiple checkpoints such as the CPC, community board, and ultimately city council voting, incurring high costs.
According to a report by real estate media The Real Deal at the end of 2022, one year after the implementation of the amendment, no development project had successfully obtained a Special Permit.
Akerman law firm’s comment in 2023 indicated that since the new law took effect, only two cases were submitted to the City Planning Department, and neither had completed a public review. The article also pointed out that completing the entire ULURP process typically took between 24 to 30 months, cost hundreds of thousands of dollars, and heavily depended on support from local council members, making it nearly impossible for most small and medium developers to overcome this hurdle.
However, the amendment included a crucial exemption clause: if a hotel is operated by the city government or a nonprofit organization contracted by the city government, and the purpose is for “public use” (such as a shelter), there is no need to apply for a Special Permit. In other words, as long as the developer claims the property will be used as a homeless shelter, they can bypass the cumbersome, time-consuming, and expensive Special Permit process and operate legally.
In 2021, the City Council further passed the citywide “Hotel Text Amendment,” expanding the Special Permit requirement to cover all new construction, change of use, and significant expansion of all temporary hotels, imposing even stricter regulations.
Under these restrictions, Sandhu’s hotel project in Queens received a stop-work order from the Department of Buildings at the end of 2019 and remains unfinished to this day. However, a few years later, his new development project at 2501 86th Street in Bensonhurst, Brooklyn, passed the review smoothly.
According to building department documents and design plans approved by the MTA, the project was labeled as a “transient hotel with community facility,” specifying a six-story building with 24 guest rooms for short-term stays not exceeding 30 days, equipped with a 24-hour front desk and daily cleaning service.
The documents explicitly stated, “The proposed transient hotel is operated for the public purpose of temporary housing assistance in New York City,” further supporting the argument to the building department for “exemption from applying for a Special Permit.”
However, according to the regulations of the New York City Department of Homeless Services (DHS) and nonprofit owner cooperation model, if it is a formal shelter project, the deed should include a “land use restriction” clause, expressly limiting the land to be used only for shelter purposes, committing to a minimum of 60 years.
The building department also mandated that developers must submit relevant contract documents to prove that their facility is used for the “public purpose of temporary housing assistance” by the city government.
On December 6, 2023, LaVicke Quincy Jones, Deputy Commissioner of Capacity Planning and Development at DHS, wrote to the building department, stating that they were partnering with the nonprofit organization “VIP Community Service” to establish a 150-bed adult shelter at 2501 86th Street. Yet, as per current deed records, there were no visible clauses on the intended use restriction, indicating that the nonprofit organization had not formally acquired property control rights or completed the contract process.
However, in a community meeting hosted by State Assemblyman Zheng Yongjia last night (May 2), Reda Shehata, Director of the Brooklyn Office of the Department of Buildings, stated that the DHS email was sufficient evidence as a commitment from the city government to operate, and as such, approved the project, allowing it to skip the Special Permit application. This came as a surprise to many in the community.
This operating model is not an isolated case. Since the zoning amendment in 2018, more hotel developers have chosen to collaborate with the city government or nonprofit organizations, transforming their properties into homeless shelters. This operational model has formed a tripartite structure:
Developers: Avoiding the Special Permit threshold through zoning exemptions to quickly initiate projects. City Government: Eager to sign high-priced contracts with developers based on shelter obligations and bed shortages. Nonprofit Organizations: Assuming operational and service roles, assisting in obtaining government funding grants. The three-party cooperation forms a stable, mutually beneficial “homeless shelter enterprise chain.”
This “shelter industry chain” meets policy demands and creates stable income for all parties, allowing some to profit handsomely and exposing corruption scandals. In the face of community backlash, the homeless shelter industry chain has become a focal point of controversy. Yu Jinshan, Chairman of the East Asian Association, bluntly stated, “Officials and businessmen collaborate to make big money, while the homeless enterprise benefits infinitely,” but it is the homeless and the community who are truly harmed.