The large eight-story building on the corner of Grand Street and Bowery in Manhattan’s Chinatown was supposed to have re-opened later this month as a homeless shelter offering private rooms and medical services to nearly 100 homeless people living on the streets and in public spaces.

But three weeks before its debut, set for May 23, Mayor Eric Adams’ administration abruptly canceled those plans, according to the shelter’s would-be operator, Housing Works.

Adams’ spokespeople did not say why the city changed course at the last minute, although the scuttling of this deal and the cancellation of another shelter proposed for Chinatown stands at odds with the mayor’s pledge to open more specialized shelters to help move unhoused New Yorkers indoors. These and a third shelter proposed for the neighborhood have drawn fierce opposition from the local community. Some of those involved in the process said a labor dispute was the likely cause of the cancellation of the proposed shelter at 231 Grand St., which was once known as the Best Western Bowery Hanbee Hotel.

At the center of this dispute is a contract between the property owner and the Hotel Trades Council, said Rich Maroko, president of the New York Hotel and Gaming Trades Council, a powerful union and an ally of Adams. If the hotel is sold or the building changes its use, he said, a provision in the union contract requires the new owner or management to hire the union’s workers, two dozen of whom were employed at the hotel before it closed in 2019.  Housing Works would also have had to honor the terms of the union contract, which expires in 2026.

“What we had said is all we can ask of you is to comply with the contract. They said they would not. And that’s it,” said Maroko.

Charles King, Housing Works’ chief executive director, told Gothamist that Adams informed him on April 29 that, for the shelter to move forward, the organization had to work out an agreement with the Hotel Trades Council. King said the message was repeated on May 1 through a mutual friend.

“The mayor made clear to us, verbally with a friend of Housing Works […] that community opposition was not of concern to him,” King said. “But by the end of the day Monday, we had to have an agreement with the union.”

On May 2, Housing Works and a representative of the building’s owner tried to reach an agreement with the Hotel Trades Council, according to King and the representative. The deal collapsed after the parties were unable to reach a deal. Maroko blamed the building’s owner and Housing Works for refusing to meet the terms of the existing contract.

“They were essentially asking can we simply tear up the contract, pretend it didn't exist,” Maroko said. “So, to the extent that you want to characterize that as a negotiation, I guess. That's not what I would call it.”

But King and the building owner’s representative accused the union of blocking the shelter from moving forward in an attempt to force the owner to re-open the facility as a hotel.

“I said, ‘What is it that would make you happy?’ And they go, ‘Well, we just want this to go back to being a hotel,’” said the owner’s representative, who did not want to be named out of fear of reprisal from the Hotel Trades Council and City Hall.

"The mayor is deeply committed to bringing unsheltered New Yorkers inside and connecting them to resources and support," said Kate Smart, a spokesperson for Adams. "From the unprecedented $171 million investment in safe havens and stabilization beds, to enhanced outreach efforts on the subways and streets, this administration will continue to prioritize getting people housed and on a path to stability."

The administration’s decision to drop the plans for the Grand Street shelter is a loss for the city, King said. The shelter would have provided 94 stabilization beds, a type of shelter that offers social services and fewer restrictions than dorm-style shelter.

Last month, Adams announced plans to open at least 900 new such beds by the middle of 2023 to provide housing for homeless people living on the streets after his homeless sweeps of encampments drew criticism. Homeless services advocates say stabilization shelters are essential for housing more street homeless people, who tend to eschew large congregate shelters.

“I think we would’ve moved a lot of homeless people off the streets and the community would have benefited,” he said.

About 60 Housing Works employees who would have worked at the shelter will lose their jobs, King said. The hotel’s two dozen former employees will not return to work because the representative for the building’s owner said there is no intention to re-open the property as a hotel.

“After reviewing planned shelter sites scheduled to open in Chinatown, we have decided to re-evaluate this shelter capacity to an area with fewer services and shelter for those experiencing unsheltered homelessness,” Julia Savel, a spokesperson for the Department of Social Services, said in a statement. “Our goal is always to work with communities to understand their needs and equitably distribute shelters across all five boroughs to serve our most vulnerable New Yorkers."