NYC’s Dorm Rule Stifles Student Housing, Exacerbates Shortage

If New York City’s colleges and universities had more dorms, their students would be happier and would rent fewer apartments, freeing up units for everyone else.

So why don’t they?

Because of a chicken-and-egg problem created by the “dorm rule.”

The rule, established in 2005, says a developer can’t get a building permit to construct a Class A dorm without a signed lease by a school. But schools are hesitant to sign leases for a project that hasn’t even started. For several reasons, they don’t want to risk making such a commitment so early.

For one, it’s impossible to know if a dormitory will be ready for the fall semester until the project is well on its way to completion. If it doesn’t open on time, students have to scramble for housing in a city with a 1.4 percent vacancy rate. Their parents raise hell and sometimes sue. It’s a public relations nightmare.

Also, a signed lease must be carried as a liability on a tenant’s books, limiting the school’s borrowing capacity for years before a student can set foot in the new dorm. Schools can build a dorm on their own land, but that’s even riskier than leasing and is not feasible for many of them.

Land-use lawyer Ken Fisher explained this Catch-22 last week in an op-ed in amNY. He also pitched a solution.

Fisher suggests the Department of Buildings stop holding building permits hostage to lease signings. Instead, let developers start construction first and sign leases later, when schools have more confidence that the dorm will be ready for the academic year, and know how much space they want.

Why was the dorm rule created in the first place? Because community members feared developers would build oversized buildings, as dorms can be, then claim they can’t find a school to take the space — and file to convert it to traditional apartments.

“It is DOB’s job to enforce the Zoning Resolution, and prevent developers from circumventing the city’s zoning laws,” said Department of Buildings spokesperson Andrew Rudansky. “Our commonsense rule simply asks developers to demonstrate a commitment to partner with an educational institution in order to obtain a permit for a new dorm project.”

But the dorm rule, technically known as Rule 51, has had the unintended consequence of stifling dorm projects by developers for the past 20 years. As a result, many of the city’s 100,000 out-of-town students are renting apartments that would otherwise go to New Yorkers. That pushes rents up and availability down, exacerbating the housing crisis.

Rudansky said developers can avoid Rule 51 by building Class B dorms, without shared kitchens. But since 2005, rarely has that happened.

The market has spoken: Schools aren’t asking developers to build kitchen-less dorms because students don’t want to live in them.

If the Department of Buildings fears bait-and-switch projects, Fisher says, it could withhold a certificate of occupancy for any floor not leased by a school. That makes a lot more sense than not issuing building permits until the entire project is leased up — a recipe for inertia.

Buildings Commissioner James Oddo could make this change on his own, without legislation. The City of Yes proposal makes clear that the Adams administration wants more dorm-style housing. Why not actual dorms too?

As logical as it sounds, some community members would object — because they hate dorms more than they hate the housing crisis.

These neighbors imagine drunken students making noise on their blocks and vomiting in tree pits. Or they just favor another use for a site and like using the dorm rule to prevent a private owner from using the property the way he wants, as East Village activists did with the former P.S. 64, which has stood vacant since 1977. (Even after Adelphi University signed a lease, that developer was denied a building permit.)

The bigger problem is the housing shortage, and the 100,000 college students making it worse because they’re renting apartments, not dorms.

At the very least, the Department of Buildings should consider whether enough dorms have been built since Rule 51 was enacted. To the naked eye, the answer seems to be no.