Not Every Rent Frozen

The Rent Guideline season continued to heat up this week with the release of Mayor De Blasio’s tax returns, showing he raised the rent on one of his apartments an average of 2.6% per year since 2009. No freeze there. CHIP offered testimony at an RGB meeting yesterday, noting that the Board hasn’t fully accounted for increased maintenance costs and new compliance requirements in older buildings.

Speaking of new compliance expenses, the Mayor, Wednesday, proposed requiring every building owner to adopt a formal smoking policy and notify tenants of the rules annually. The proposed regulation would create penalties for failing to create and disclose the policy, but none for tenants who violate it. A City Council hearing on the bill is scheduled  Thursday.

The City Council, Monday, will hold a hearing on phasing out the use of #4 oil by 2025, five years earlier than the current 2030 deadline.

And Councilwoman Rosie Mendez is threatening to block development of a City-backed Union Square Tech Hub unless development heights are reduced on neighboring streets. She was apparently inspired by Councilman Corey Johnson’s recent successful trading of a zoning variance for creation of South Village Historic District. The trend doesn’t augur well for as-of-right development.

The latest tech tool you didn’t know you needed is an interactive map of apartment rents by subway stop. The map, created by Renthop, shows one-bedroom rents increased the most, year-over-year, around the Parkside stop on the Q train; and dropped the most near the 4/5/6 N/R/W 59th Street  stop.

Meet 10,000 other owners and managers June 21-24th in Atlanta at the National Apartment Association Education Conference, featuring programs on everything from water management to leasing technology to business management. ABO members get the $150 member discount on registration.

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Taxes, Fuel Drive Price Index Up

The Price Index of Operating Costs released by the Rent Guidelines Board yesterday showed an overall 6.2% increase. The index reflected a 7.8% increase in property taxes, the largest area of expense, and a 24.6% increase in fuel costs. Accordingly, the PIOC report suggests a renewal increase ranging from a low of 3% for one year leases to a high of 8.5% for two year leases, depending on methodology, but the Mayor continues to applaud the idea of a rent freeze, and the RGB in the past has been unwilling buck the Mayor’s intentions. Keep in mind that the 2014 PIOC was 5.7% and the RGB adopted increases of 1% for one-year renewals and 2.75% for two-year renewals.

The RGB’s Income and Affordability Study, also released yesterday, showed employment up and poverty down slightly from the prior year. Homelessness was up 2.8%, however, with an average of 58,770 people per night in city shelters. The number of non-payment filings in housing court declined for the fifth year, while the number of evictions was up slightly to 22,089 after steep declines in the prior two years. More than 20% of calendared cases are against public housing tenants.

The State Attorney General and New York City Council are both calling this week for legislation to stop alleged landlord harassment. The AG, Eric Schneiderman, wants to eliminate the state requirement for injury to a tenant for conviction of a landlord, because there has never been a successful case proven. Apparently, the idea that it just rarely happens has never occurred to him. Meanwhile, the Council has announced hearings next Wednesday on a package of anti-harassment bills, including one that would create a rebuttable presumption that, say, unsuccessful attempts to evict for non-payment or to buy a tenant out were harassment.

The 421-a tax incentive program was re-created as the “Affordable New York Housing” program in the State Budget approved late Sunday. The details are included in Part TTT of this budget bill. A good summary is here.

Apartments in post-1974 construction, much of it built under the 421-a program, have an average turnover rate of 20%, vs. 11 percent in older buildings, according to an Independent Budget Office analysis released this week. The Battery Park City and Lower Manhattan neighborhood, with the most new units, had the highest turnover rate–32%. But a few neighborhoods with older housing such as Morningside Heights, Astoria, and Bay Ridge had above average turnover as well.

State Senator Kevin Parker could have used a tax incentive. The NY Post reported, Monday, that he owes more than $50,000 in property taxes and water and sewer charges. “Part of my electoral success is I live in the same circumstances as my constituents,” Parker commented.

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How Much?

The New York City Council, Wednesday, passed legislation prohibiting employers from asking job applicants what they were paid at their last job, or relying on that information to make salary offers. If signed by the Mayor, as expected, employers will not be able to ask for salary information when checking references either.

California apartment owners breathed a sigh of relief this morning when the sponsor of a bill to repeal the State’s Costa Hawkins bill was reported to have withdrawn the measure until at least next year. Costa Hawkins prevents localities from regulating rents in buildings built since 1995 or regulating vacancy rents generally.

In Albany, NY, efforts by the Assembly to tie renewal of 421a development tax incentives to rent regulations’ 2019 renewal appear to have failed, but then the entire State budget deal is still up in the air this morning.

What’s a concierge worth in New York? An average of $54 a month in increased rent, according to a survey and study by the National Apartment Association released this week. A washer and dryer in the unit is worth $6.17 a month, on average, and a fitness center is worth $48.45.

And if access to public transit increases rent, check the new ferry stops coming on line. Mayor de Blasio announced yesterday that Rockaway service starts May 1st, with new northern Queens stops coming this summer.

Trash receptacles put out for curbside pickup are now officially limited to 55 gallons under a Department of Sanitation rule effective Wednesday.

The City Department of Buildings has extended the application period for anyone interested in working on advisory committees on revising the Building Code until April 14th. Engineers, architects, plumbers and developers are encouraged to apply.

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RGB Season Starts

Owners’ net operating income rose 10.8% in 2015 according to Income and Expense data reported by the Rent Guidelines Board yesterday. Expenses rose 1.1%. The tightest margins appeared to be on 11-19 unit Bronx buildings with average rents of $913 and expenses of $804 per month.

The RGB Mortgage Survey, also released yesterday, found little change in 2016, with average rates up 26 basis points to 4.26% and average maximum loan to value ratios of 73.7%.

The City Department of Investigations is criticizing the New York City Housing Authority for not evicting criminals and families of criminals. Perhaps they didn’t get the memo that the City Council doesn’t want landlords to even ask employees about their criminal history and that HUD has raised questions about whether rejecting new tenants with arrest records is a form of discrimination.

State Supreme Court Judge Debra James, Tuesday, dismissed RSA’s challenge to last year’s 0% rent guideline increase. An appeal is expected.

State legislators and the Governor were expected to work all weekend on the State budget, due today. As of this morning, it looked like some form of 421a tax incentive program would be included, but negotiations on benefits for outer borough condos and co-ops were up in the air. Workers compensation reforms were also on the table at the last minute.

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Be There or Be Square

Today is CHIP’s Annual President’s Club lunch. A major announcement is planned for the event.

Republican State Sen. Robert Ortt was indicted yesterday for alleged election law violations. Ortt’s removal from the Senate, if convicted, could tip the balance of power  to Democrats.

Four borough presidents, Wednesday, endorsed the proposal for a new Home Stability Support program to fill the gap between the shelter rent allowance and fair market rents when tenants are facing eviction or homelessness.

Thousands of owners and managers visited our BuildingsNY show Tuesday and Wednesday. There was standing room only at CHIP’s City Hall at BuildingsNY program with speakers and caseworkers from multiple agencies. Keynote Speaker Jerry Howard, CEO of the National Association of Homebuilders, warned owners not to expect any increase in Section 8 voucher funds in coming years; said an income tax cut was likely, but only after Congress finishes with health care; and thought the Low Income Housing Tax Credit would survive in some form. He gave President Trump’s 2018 budget proposals, including elimination of Community Development Block Grants, less of a chance.

The Bronx is up again. The borough added 6,524 people in the year ended July 1st, the Census Bureau reported yesterday.  The other boroughs trailed, but all grew. The City’s overall population rose by 21,171 to an estimated 8,537,673. The State lost 1900 people. Only eight counties north of Westchester gained.

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So Much For Independence

Mayor de Blasio this week acknowledged “instructing” the Rent Guidelines Board members who froze rents the past two years. There are two vacancies on the Board that he is expected to fill shortly, and a preliminary guidelines vote for next year has been scheduled April 25th.

President Trump’s proposed 2018 budget, released yesterday, would cut Housing Choice Section 8 vouchers statewide by about 9 percent, according to the New York Housing Conference. Elimination of the Community Development Block Grant program would gut the City Housing Department budget, where federal funds pay nearly half the staff, and the plan would also eliminate the HOME Investment Partnership and Choice Neighborhoods programs.

Jerry Howard, CEO of the National Association of Home Builders, will talk about this and other key housing policies under the Trump administration at 8:45 a.m. this coming Tuesday, March 21st in the Javits Center to keynote our BuildingsNY trade show. Register today.

Multifamily building permits issued in January and February tripled from the prior year, but an analysis by the Real Deal found many were additional permits for units that got foundation permits prior to the expiration of the 421a tax incentive program the year before.

Meanwhile, the 421a debate continues in Albany. The State Senate introduced a “one house” budget bill expanding on the Governor’s latest proposal by adding benefits for new homeownership projects up to 80 units (from 35) and with assessed values up to $85,000 (from $65,000). The State Assembly staked out its position with a one house bill that didn’t include any 421a program.

Any architects, engineers or developers with opinions on New York City’s building, plumbing, and mechanical codes have until March 30th to volunteer for official Department of Buildings advisory committees conducting a triennial code review.

The Electrical Code is not up for review, but the City Council, yesterday, passed legislation doubling fines for performing unlicensed electrical work

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421a Is About Unions Not Housing: Gov

Governor Cuomo told the Building and Construction Trades Council last week that “421a is not about an affordable housing program, 421a is about the principle (of protecting union labor).” Surprise.

Cuomo,  yesterday, trumpeted a $1.4 billion plan to revitalize central Brooklyn with healthcare, housing, parks, and jobs programs, concentrating funds already included in his 2017 budget proposal.

The Governor was silent, however, on the appointment of RuthAnne Visnauskas as Commissioner for Housing and Community Renewal. The announcement was made by her predecessor, James Rubin.

Catch 22. The New York Law Journal reported this week that a Brooklyn Housing Court Judge dismissed a nuisance holdover in 757 Miller Owners LLC vs. Smith, because the owner offered a stabilized renewal lease during the pendency of the case, as required by law. The decision implied that the owner should have made the offer conditional.

CHIP is challenging the latest State Department of Labor minimum wage order that says the value of an apartment’s rent in 1975 has to be used in determining the cash value of free rent today. Jerrold Goldberg of Greenberg Traurig made our case to the Industrial Board of Appeals last week, and a decision is expected by the end of the month.

Federally assisted housing, including Section 8 voucher units, will have to do lead paint risk assessments of the unit and common areas when a child is found to have blood lead levels of just 5 micrograms per deciliter under a new HUD rule adopted one week before Trump was sworn in as President, and effective in July. The old trigger was 10 ug/dl. This is separate from local abatement and investigation requirements.

Federal funding for housing is in play with reports this week that the New York City Housing Authority will get $35 million less this year than anticipated from Washington under cuts already in the works, and HPD Section 8 will be cut $23 million more. President Trump is also considering slashing 14% or $6 billion from HUD programs overall. Jerry Howard, CEO of the National Association of Home Builders, will talk about this and other key housing policies under the Trump administration at 8:45 a.m. March 21st in the Javits Center to keynote our BuildingsNY trade show. Register today.

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Good Enough For Government Rent Increases

Mayor de Blasio may want to freeze rents on rent stabilized housing again, but he wants two percent minimum annual maintenance increases in HDFC low-income co-ops in order to ensure all buildings are “functional in the long run.” The minimum is included in a new proposed regulatory agreement the City is considering…in part to deal with deep financial problems in buildings that haven’t increased maintenance regularly.

Emergency rent grants under the Family Eviction Prevention Program will be increased for the first time since 2004 under a settlement reached this week between the State and the Legal Aid Society. The old limit for a family of three was $850 a month, vs. $1515 under the new agreement, but the increased rental assistance is still only triggered after a tenant faces eviction in court.

Crain’s has guesstimated where 90 new homeless shelters proposed by the Mayor will be located. The plan is to try to keep people in their current neighborhoods, and nearly half of the city’s shelter population comes from just six areas: Central Brooklyn, Central Bronx, High Bridge/Morrisania, Bronx Park/Fordham, East New York/New Lots and Hunts Point/Mott Haven. The zip code currently sending the most people to shelters is 10456 in the Bronx.

Michael Hyman , First Deputy Commissioner at the  NYC Department of Finance, testified at a budget hearing yesterday that “The Real Property Transfer Tax, which is an indicator of the health of the real estate market, has declined by 15 percent so far this fiscal year, down from an average growth rate of 19 percent in the previous three fiscal years. ”

Aimco, the national apartment REIT, is suing Airbnb in California and Florida for encouraging tenants to break lease provisions and creating safety, noise, and nuisance issues for legal renters.

New York State is offering to pay to test resident water samples for lead under a $1.5 million program announced Wednesday.

Ben Carson was confirmed as the new Secretary of HUD, yesterday, over the opposition of both New York’s U.S. Senators.

Granger MacDonald, chairman of the National Association of Home Builders, was invited to the White House, Tuesday, to see President Trump begin rolling back the controversial Waters of the United States regulations that developers opposed in many parts of the country, and managed to touch base with Trump, Vice President Pence, and EPA Administrator Scott Pruitt on various environmental and regulatory issues affecting housing. Jerry Howard, CEO of the NAHB, will talk about this and key federal housing policies under the Trump administration at 8:45 a.m. March 21st in the Javits Center to keynote our BuildingsNY trade show. Register today.

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Morningside Heights

Renovation and development just got harder between Amsterdam Avenue and Riverside Drive from 109th to 119th Streets with the creation, Tuesday, of a Morningside Heights Historic District.

The value of residential construction citywide fell from $19.5 billion in 2015 to $11.5 billion in 2016, although it was still higher than the five year average, the Building Congress reported yesterday. Commercial construction increased slightly.

New offices may not be as much in demand, however, according to a report from Green Street Advisors that said New York City added only 21,700 office jobs last year, compared to 44,900 in 2015, and that only small increases are predicted through 2018.

A Manhattan Supreme Court Judge yesterday rejected property owner Kamran Hakim’s challenge to the Worst Landlords list, saying that even though the buildings cited were vacant, they might still be dangerous to potential squatters.

Federal immigration policy is a housing issue too. Twenty-two percent of construction workers are estimated to be foreign born; and legal and illegal immigrants have created  450,000 households needing housing a year–most of it rental–for the past 20 years. Jerry Howard, President of the National Association of Home Builders, will talk about this and other key federal housing policies under the Trump Administration at 8:45 a.m. March 21st in the Javits Center to keynote our BuildingsNY trade show. Register today.

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Thirsty?

The Appellate Division, First Department, yesterday agreed that water rates for 2016-17 should continue to be frozen for all, rather than increased for multifamily customers so that single family homeowners could get a credit. The Mayor’s plan for the homeowner credit at other ratepayer’s expense was arbitrary and capricious, according to the decision in Prometheus Realty vs. NYC Water Board.

The Mayor plans to spend $93 million more in tax dollars over the next five years for lawyers for tenants in Housing Court.

Meanwhile, the City Council, Wednesday, passed a package of bills intended to make it harder for the Police to evict tenants committing nuisances such as drug dealing. The Mayor is expected to sign them.

Another bill passed Wednesday would require building address numbers to be put on all public entrances to a building. If a building has addresses on two streets, the appropriate number for that street will be required. If the address is only on one street, a public entrance from the other street would need both the number and street name from the official entrance. The Mayor is expected to sign the bill which would take effect for existing buildings in one year.

State Department of Environmental Conservation inspectors are reportedly out enforcing new rules adopted more than a year ago that changed the definition of “underground storage tank” to a tank that “has ten

percent or more of its volume beneath the surface of the ground or is covered by materials.” This apparently includes many tanks previously thought to be above ground, so check with your oil company if you have any question.

Jamie Rubin, Commissioner of the State Division of Homes and Community Renewal, has been tapped by the Governor as the new Director of State Operations. A new DHCR Commissioner hasn’t been named yet.

State Senator Bill Perkins is resigning his seat after winning a special election for City Council, Tuesday, altering the Democrat-Republican balance in the State Senate at least through budget season.

The Court, this week, awarded apartment owners damages for the unconstitutional taking of their property by rent regulation. The Court was the European Court of Human Rights and the constitution was the Czech Republic’s.

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