Cuomo Pushes Rent Control

Governor Cuomo wants to move quickly this Spring to end “vacancy decontrol,” presumably meaning either luxury decontrol or vacancy allowances, if Democrats take a Westchester Senate seat in a special election next week. It’s part of his plan to move left to undercut his primary challenge from Cynthia Nixon and to pressure State Sen. Simcha Felder to rejoin mainline Democrats.

Discounting rent increases based on tenant rent burdens “confiscates property…In so doing, the RGB has transformed a statutory price control into a public assistance program funded directly by property owners,” according to testimony submitted by CHIP Counsel Joseph Condon to the Rent Guidelines Board, Thursday. The Board, meanwhile, has announced public hearing dates in June and a final vote June 26th. Plan to testify at one of the hearings!

New York City is developing regulations for posting Energy Letter Grades in apartment buildings  beginning in 2020, but the Energy Star scores the ratings are based on are being modified this month in a way that will lower scores based on the source of energy used—a factor pretty much up to utilities and out of owner control.

The City’s plan to “preserve affordability” at the Linden Plaza Mitchell-Lama complex is too expensive, according to a lawsuit brought by the tenants council. They say the improvements and rent increases provided by the plan are more costly than if the buildings had simply exited Mitchell-Lama and were just subject to rent stabilization.

The City Department of Environmental Protection has announced grants up to $250,000 and 25% rate reductions for projects that allow buildings to re-use water.

Two pyrrhic court victories for owners were reported in nuisance eviction this week. The court in Westchester Plaza Holdings v. Furlow agreed that a tenant who had to be brought to court for non-payment eight times in 30 months should be evicted, then stayed its own order to see if the tenant could manage to pay on time for the next six months. In 529 W. 29th St., v. Reyes (subscription required), the Court acknowledged that a tenant with mental problems had caused two fires, but ruled he should be allowed to remain in occupancy to see if new medications helped.

Just 140 apartments in several projects either built or proposed prompted the Village of Mamaroneck in Westchester County to declare a six-month moratorium on multifamily housing, in the latest kneejerk reaction of Not In My Backyard.

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Apartment Price Index Up 4.5%

The Rent Guidelines Board Price Index of Operating Costs rose 4.5% since last year, according to a report issued Thursday. The “commensurate” rent increases suggested by the analysis range from a low of 1.75% and 3% for one and two year renewals to a high of 3.5% and 6.25% depending on assumptions about inflation and lease renewals vs. vacancies. The Board will vote on proposed guidelines April 26th, with a final vote after hearings in June.

The RGB also received a Mortgage Survey indicating that rates were up about a half percent in 2017, and vacancy and collection losses dropped to the lowest level ever at 2.83%. Stabilized building sales dropped 32% from 2016 to 2017, to 793 buildings.

Local 32B-J building employees authorized a strike Wednesday night at a rally attended by both Governor Cuomo and Mayor de Blasio (at separate times), but the Realty Advisory Board, the industry organization negotiating the contract that expires April 20th said talks are continuing and noted that the union has voted to strike during every negotiation since 1994.

The New York City Council, Wednesday, approved legislation effective April 1, 2019 that will require every employer with 15 or more employees to conductannual anti-sexual harassment training. The training could be an online course to be developed by the Human Rights Commission.

Cynthia Nixon, who is challenging Andrew Cuomo for the Democratic gubernatorial nomination, was endorsed this week by New York Communities for Change (formerly ACORN) for her pro-tenant positions. Based on past history, Cuomo is likely to adopt a more pro-tenant stance going forward to undercut the challenge.

City Council Speaker Corey Johnson is pushing for a new homeowner tax credit for low income families, at the same time seeking tax reforms which would probably raise rates on one-two family homes.

Beleaguered NYC Housing Authority Chair Shola Olatoye finally quit this week, and will be replaced temporarily by 80-year-old Stanley Brezenoff.

ABO/CHIP members can get a discounted admission to a full day Tri-State Conference on Changes to Federal and State Regulations Governing Lead-Based PaintJune 26th.
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Facebook F*iends

Sure, Facebook lets foreign governments manipulate you, but now the social media giant is accused of fostering housing discrimination. Seems the ability to target your apartment ads to young singles with no kids, or not show it to people self-identified as Hispanic, or who “like” handicapped parking permits, could be misused.

If you didn’t protest your property tax assessment last year you didn’t share in $577 million in New York City tax savings agreed to by the Tax Commission.

$1.1 Billion in tax dollars will go to house the City’s homeless in hotels over the next three years, at an average of $174 a night (more than $5,000 a month). The City’s plan is reported to be “controversial.”

Buildings Commissioner Rick Chandler said Wednesday that he is trying to figure out how to implement new construction safety training requirements without creating records that would expose undocumented workers to federal authorities.

Fifty percent more people aged 26-34 left New York State as moved here in 2016, and more than twice as many people over 34 left than came here, according to a new analysis at the Harvard Joint Center for Housing Studies. Even Brooklyn lost population.

NIMBYs on the Upper West Side are fighting against a 51-story apartment building already under construction at 69th and Amsterdam. The Buildings Department issued a permit for the building as-of-right, but neighbors complain that the method of calculating air rights (used by the Department for forty years) was flawed. The new tower will be just three blocks north of a 60-story building.

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The Usual Emergency

There will be a rental housing emergency through April 1, 2021, according to legislation approved by the New York City Council, Thursday. The Council extended the local declaration of emergency for three more years, subject to State renewal of local authority in 2019.

The emergency in public housing continued with thousands of tenants losing heat and hot water before and during this week’s snow storm and the Governor and Mayor bickering over who will pay for repairs and manage the work, and when.

Subsidized housing programs will get increased federal aid under the bi-partisan budget deal announced this week, including more Section 8 vouchers, increased capital funds for public housing, and the option to use income averaging in determining Low Income Housing Tax Credit eligibility.

LIHTC eligibility is at issue in a Mount Vernon property where the non-profit that vetted tenants is being sued for mistakes that cost the developer tax benefits, and tenants who don’t meet the criteria are fighting eviction…a cautionary tale for other projects.

The Kushner Companies were attacked this week for allegedly failing to disclose regulated tenants in occupied buildings for which they sought building permits. Failure to check the right boxes on the PW-1 application is a common problem that was explained in detail in the November 2016 New York Housing Journal.

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No “Right” To Housing Quality

A federal judge has denied a request by New York City Housing Authority tenants to appoint an independent monitor over the Authority’s lead abatement and maintenance efforts, noting that there is no federal law or constitutional right guaranteeing “a certain quality of housing.”

State authority over NYCHA was also in play, as Governor Cuomo held press events and meetings to variously criticize the de Blasio administration, push for an independent board and construction manager to take over responsibility for dealing with lead paint and heating issues, and try, with limited success, to split de Blasio and Council Speaker Corey Johnson on the issues.

Johnson, meanwhile, this week proposed spending $2 billion over four years to build senior housing on vacant land in NYCHA developments. It is not clear how this will mesh with Mayor de Blasio’s existing plans for private development of affordable housing on the same sites.

Any new housing construction will be more expensive thanks to tariffs on steel proposed by President Trump. Crain’s New York is reporting a 10-20% increase in steel beam costs even before the tariffs have gone into effect.

New York City is rolling back 421a tax benefits for 1788 properties, ranging from condos to entire buildings, that allegedly never filed final certificates of eligibility. Owners have until May 1st to clean up the record.

About 48% of new Manhattan, Brooklyn and Queens leases in February had some sort of landlord concession, according to the latest Elliman Report by Miller Samuel. Owners are getting creative with offers of reduced security deposits, free cable and wi-fi, and incentives for tenants to bring their friends to a building.

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Honesty

Mayor de Blasio responded honestly, Monday, to a radio interviewer’s question about “affordable housing”. “ ‘If you are saying ‘100% affordable,’ you are saying ‘all taxpayer-funded.’ Let’s be honest about this,’ ” the Mayor said.

The City Council Housing and Buildings Committee will hold a public meeting March 19th to decide if a 3.63% rental vacancy rate means there is still a “housing emergency.” The latest Housing Vacancy Survey also shows a 7.4% vacancy rate for apartments with rents over $2,000 a month, and 8.74% for apartments with rents over $2,500. The survey authors also made a judgment that more than 78,000 apartments being renovated or awaiting renovation are “unavailable to rent.”

Politicians continue to pile on the New York City Housing Authority for failure to maintain heating systems or deal with lead paint problems. The State Senate Independent Democratic Conference compared the lead situation, hyperbolically, to Flint, Michigan’s water woes, and tenants announced a lawsuit to have the courts appoint an independent monitor for the Authority.

If you want to turn thin air into housing in the West Chelsea neighborhood, the City is willing to sell you air rights at $625 a foot.

And if you have a private site that might be suitable for modular housing construction, HPD will consider expediting approvals for affordable components.

Sticking to the subject of affordable housing, a court decision reported this week in DD 11th Ave. v. Sands stood up for the proposition that someone who claims they make $25,000 to qualify for a $722 a month apartment should not really make $238,000 or more.

In Royal Terrace v. Singh, also reported this week, the building owner got possession of a stabilized unit and a judgment for eleven months rent after seven years of litigation over whether the unit, a garage space, was stabilized and whether it could be used for storage.

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Apartment Boom Slowing

Spending on new apartment construction, alteration, and renovation in New York City is projected to decline to $11.6 billion in 2018 from $16 billion in 2016 and continue to drop, according to the Building Congress.

The State Division of Housing and Community Renewal posted new instructions online for initial registration of 421-a apartments subject to the post-2015 or earlier program rules. Also, as we blasted earlier this week, there are new required stabilized lease riders for New York City and ETPA areas.

The annual Rent Guidelines Board circus kicks off with a preliminary vote April 26th at the Great Hall at Cooper Union. The RGB hasn’t posted dates for hearings or a final vote yet.

Title Insurers are suing the State to overturn regulations effective February 1st that prohibit paying for golf outings, baseball tickets, and such to win business, but in the meantime there is still no free lunch. Even recipients can be fined under the rules

It is not too soon for apartment developers and managers to plan for a day with no parking. Crain’s reports that Manhattan parking garages are taking a heavy hit from ride and car-sharing services. Self-driving cars could dramatically reduce individual car ownership and alternate uses for even existing apartment garage space may need to be found.

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Housing Court Changes Coming

More evening hours and advice to tenants on free legal counsel on notices of petition are among the Housing Court reforms endorsed by NYS Chief Judge Janet DiFiore in her State of the Judiciary speech this week, echoing the recommendations of a Special Commission on the Future of the New York City Housing Court. The Commission also called for more judges, staff, and space, anticipating that already crowded courts would face more delays from motion practice as tenants received more legal representation.

Coincidentally, Mayor de Blasio this week announced a new program of free legal services for commercial tenants.

Still more bad State budget news as details of Governor Cuomo’s 2018 recommendations are revealed: the Governor wants to eliminate the sales tax exemption on energy purchased from ESCOs.

Shola Olatoye, chair of the New York City Housing Authority, testified at a hearing Tuesday that more than 80%, 320,000 of 392,000 Authority tenants, had experienced at least one day without heat or hot water so far this winter. Mayor de Blasio later commented that the City did the best it could with the money it had. Even City Council members noted the difference with how private owners were treated.

And speaking of Council members, it was revealed this week that Deputy Mayor Alicia Glen gave sworn testimony in November that, on housing issues, Council members “are often extremely confused and ill-informed and not that smart.” Well, she was under oath.

The Division of Housing and Community Renewal has issued updated instructions regarding SCRIE and DRIE tenants, including the latest ETPA local income limits.

An analysis of construction worker demographics by the Building Congress released this week says that the workers are getting older, whiter, and more likely to be immigrants.

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Laws and More Laws

Another dozen new laws approved by the New York City Council in December were either signed by the Mayor or enacted by default this week, including provisions to

  • Add requests for proof of citizenship status to the definition of harassment, except is where “otherwise required by law” or “requested for a specific and limited purpose,” such as, presumably, a credit check. Ask for Tax i.d. rather than SSN.
  • Require annual apartment inspections for mold and allergens.
  • Further limit construction noise, including noise from interior apartment renovation, to be further defined by regulation.

See more bills and details in the February New York Housing Journal.

Breaking down the tentative 2018/19 City assessments we reported Wednesday, billable assessments on rental units citywide went up 14% (Class 2 overall up 11.51%) and, unusually, the percentage increase in assessments on Brooklyn and Queens apartments reportedly increased more from physical changes than market forces.

Governor Cuomo proposed a roughly $5 million increase in spending, to about $48 million, for the Office of Rent Administration, plus $4.5 million to separately fund the Tenant Protection Unit, in his executive budget proposal, Tuesday. Head count was projected to remain the same, so it is not clear what the money is for.

The City Planning Commission, Wednesday, approved rezoning a 92 block area around Jerome Avenue in the Bronx, creating about 155 development sites. The plan now goes to the City Council.

Meanwhile, one of the new laws rushed through the Council last month allowed Council members and Borough Presidents to jump the queue on zoning requests. Council Member Margaret Chin and Manhattan BP Gale Brewer are wasting no time using the provision to try to stop new housing development on the Lower East Side.

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More MCI Proof Required

DHCR’s latest Operational Bulletin 2017-1, Major Capital Improvements, Confirmation of Costs, indicates that multiple forms of proof of payment will now be required with all MCI applications, and large cash payments will have to be supported by bank withdrawal records.

Mayor de Blasio, Monday, signed legislation requiring energy scores to be posted in apartment buildings. Not only the industry questions the wisdom of the plan.

New York Yimby reported this week that multifamily construction applications stabilized at around 19,000 units in 2017, after two years of massive drops. But Cushman & Wakefield warned of a potential glut in new office space ahead.

It could all wash out if controversial new flood maps are right. The City and the Federal Emergency Management Agency are in critical discussions over where it is safe to build, and who will have to pay higher insurance costs. Short term, winners and losers will be negotiated. Long term, Mother Nature will decide.

How did RXR get shovels in the ground in New Rochelle in eleven months, after spending eleven years getting to the same point for a similar project in Glen Cove? Scott Rechler explained in a Real Deal interview this week, that also points to 6 million more square feet of potential development in New Rochelle that could be approved in 90 days from an application.

The scoop from NY1 this week is that Robert Cornegy  is likely to be named chairman of the NY City Council Housing Committee and Rafael Salamanca will chair Land Use.

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