New Law, Old News?

The State Legislature (probably temporarily) adjourned this week, but couldn’t leave Albany without passing a bill, to require rent stabilized lease riders to include information about ancillary service charges and describe them. If that sounds familiar, it’s because the rider already shows those items and amounts. If signed by the Governor, however, the rider will have to be revised within 120 days.

Mayor de Blasio’s plans for higher density housing in East Harlem were opposed by Community Board 11 at a raucous meeting this week. The  Board wants lower density and more units affordable to lower income tenants in exchange for approval, but protesters at the meeting opposed any change that might gentrify the neighborhood.

Some City Councilmen want to double the density of Airbnb guests permitted from two to four. The idea is to help B&B owners, but it isn’t clear how it squares with the Council’s general opposition to illegal occupancies. Several Long Island towns are taking the opposite tack. They now prohibit rentals for less than 14 days and want to raise the minimum to 30 days to discourage Airbnb hosts.

A Crown Heights building owner was found guilty, Tuesday, of three misdemeanor counts of illegally evicting tenants. The unusual case was brought by the State Attorney General in 2015. Meanwhile, Governor Cuomo launched a statewide multi-agency investigation of property owners using immigration status to harass tenants after an electrical contractor reportedly sent Queens tenants in a building he was working in a threatening letter.

Ossining, in Westchester County, is considering adopting Rent Stabilization although the consultant hired to review housing options noted that it depresses property taxes, encourages people to misuse space, and doesn’t have anything to do with tenant need.

The Rockland County Rent Guidelines Board on Monday approved increases of 0% for one year renewals and .5% for two year renewals, effective October 1st. New York City, Westchester and Nassau guidelines are all set to be voted this coming Tuesday. CHIP Executive Director Patrick Siconolfi testified at the New York City public hearing and faced a barrage of questions from tenant reps on the Board. His testimony highlighted the Board’s basic math error in considering gross income, including MCIs and Individual Apartment Improvement Increases, but ignoring capital expenses in computing profit margins. In questioning, he surprised the Board with proof of the increased and uncounted cost of compliance.  The City Council is passing a housing related bill into law an average of every two and one half weeks this year vs. every two and one half months in 2000, he noted.

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Storefronts Available, And More Available

There are 188 vacant storefronts on Broadway in Manhattan, with 55 of them north of 155th Street, according to a survey by the Borough President’s office released Monday.

President Trump is naming Lynne Patton, an event planner with no housing experience and questionable academic credentials, to run HUD Region 2, according to yesterday’s Daily News.

The New York Metro Area is on track to add about 100,000 apartments by 2030, but needs 278,000 according to an analysis released this week by the National Apartment Association. The New York apartment industry and residents add $3.5 billion a day to the economy, the report said.

Long Island needs more apartments too. The Long Island Association reported this week that the critical 20-34 year-old population increased by 36,000 from 2010 to 2015 after falling by almost150,000 in the prior 20 years.

Nassau County’s Rent Guidelines Board is having hearings June 20th and 26th, but apparently won’t decide final guidelines until September, playing havoc with required advance renewal offers.

What does even the threat of rent control do to multifamily property values? Offering prices for apartment buildings dropped 25% before a recent rent control referendum was defeated in Santa Rosa, California…if they could get an offer.

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Tax Levy Up $1.6 Billion

Property taxes overall will go up 6.6% under the Fiscal 2018 budget approved by the New York City Council, Tuesday. The Council added $200 million in estimated property tax revenues above the Mayor’s executive budget proposal–for a total increase of about $1.6 billion. The class 2 tax rate was set at $12.729, slightly lower than the current year’s, but will raise more due to assessment increases.

The City is issuing more violations according to a Furman Center study on the State of New York City’s Housing in 2016. There were 236 housing code violations per 1,000 privately-owned rental units in New York City in 2016, up about 3 percent over 2015, the report said. The study also looked at poverty in different neighborhoods and found that the share of households earning under $40,000 grew 3% from 2000 to 2015, while the share earning between $40,000 and $100,000 declined 3%.

One third of the 4500 audited tenants in low income units of 80/20 developments no longer meet the income requirements for new tenants, according to a study by the State Comptroller’s office. Some households earn more than $250,000 and “Each of the households with incomes of more than $250,000 paid rents of less than $1,000 per month, with the lowest monthly rent being about $780,” the audit found. “… it is not clear that New York State’s low-income households optimally benefit from the Program because many affordable units are occupied by tenants with relatively high annual incomes,” the report concluded. On top of that, the audit focused on four buildings with 363 subsidized units that received at least $427 million in tax incentives, or $1.17 million per subsidized unit.

No one can deny those units are in demand. 93,000 people applied for 104 new subsidized units at Essex Crossing in the latest housing lottery.

New York is not alone. The National Low Income Housing Coalition just released a report showing that a 40 hour per week minimum wage worker cannot afford a two bedroom apartment anywhere in the United States. In New York City, a person would have to work 130 hours at minimum wage to afford a two bedroom, 135 hours in Westchester, and 149 hours per week in Nassau/Suffolk.

Elected officials, however, keep discouraging new subsidized projects in their own neighborhoods. The most recent failure: a 72 unit project planned in Vinegar Hill, Brooklyn with 18 subsidized units that would have been “too big and too dense,” for the local councilman.

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Signatures Here and There

Mayor de Blasio, as expected Tuesday, signed legislation requiring apartment buildings to maintain minimum winter night time temperatures of 62 degrees between 10 p.m. and 6 a.m., beginning October 1st.

The bill was one of more than two dozen new laws signed, including several providing for more community input and delay in Board of Standards and Appeals decisions on zoning variances.

Operating rental housing in the City may get more complex every day, but the Mayor himself blew a simple building registration requirement because he forgot to sign the form.

And so-called housing advocates, including many elected officials, were out in force this week rallying against proposals for new privately built housing with 50% subsidized units because they weren’t 100% subsidized.

Meanwhile, HPD yesterday issued a Request for Proposals for development of 850 units on four city owned cites.

New York City Rent Guidelines hearings begin next week, as do Rockland and Westchester County’s. Rockland has a meeting at 7 p.m. June 12th in the Finkelstein Library in Spring Valley, with a vote June 19th at 7 p.m. in Haverstraw Town Hall. Westchester hearings begin Monday at 7 p.m. in Mt. Vernon City Hall and wind up June 27th at 7 p.m. in White Plains City Hall. The DHCR hasn’t posted the full hearing schedules for Rockland or Westchester online yet and hasn’t announced any schedule for Nassau.

How bad does a tenant have to be to get evicted as a nuisance? One housing judge accepted the testimony of 14 other tenants in 364 93rd Street LLC v. Clementine, only a year after the case began.

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Turning Up the Heat

Nighttime building temperatures will have to be a minimum of 62 degrees next winter, regardless of outside temperature, under legislation passed by the City Council yesterday and expected to be signed by the Mayor. CHIP and ABO opposed the measure, and an earlier version that proposed raising daytime temperature requirements to 72 was amended after our objections. Environmental groups also opposed the bill as a waste of energy.

President Trump’s budget proposal calls for reduced support for public housing and Section 8, and an increase in the rent that voucher tenants must pay out of pocket to 35% of income from 30%, but it is not clear that Congress will go along.

The Appellate Division, 1st Department, this week, agreed to the eviction of a tenant for renting space in her apartment through Airbnb. The court in Goldstein vs. Lipetz, was “unanimous in rejecting defendant’s primary argument … in which she contends that the 93 transient, short-term, paying guests she hosted over a year and a half were “roommates.””

A Democrat won a formerly Republican State Assembly seat from Long Island in a special election Tuesday, and another Democrat won a vacant Senate seat, bringing the ‘official’ total of Democrats in the State Senate to a majority of 32. The Independent Democratic Conference and Sen. Simcha Felder still caucus with Republicans, however, although no love is lost between them…with the IDC claiming the mantle of progressives and Felder arguing strangely for party unity.

Last week we reported that New York City was number one in the world in construction costs. This week the Lincoln Institute reported that we are still number one in property taxes. The effective tax rate on apartment buildings in New York City is five times the rate in Seattle, Boston, and Washington, DC, and four times the rate in Chicago or Philadelphia.

The Rent Guidelines Board this morning released reports on the Rent Stabilized housing stock and housing inventory generally. The net number of stabilized units only fell by 677 in 2016 after accounting for new units with tax incentives and deregulations. The number of in rem units managed by the City of New York has fallen to a record low 125, from a peak of about 100,000 in the 1980s, due to lien sales, third party transfers, and other programs.

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A Good Freeze

City water rates will be frozen at 2016 rates for another year per the Department of Environmental Protection’s recommendation to the Water Board yesterday.

A State Supreme Court Judge has threatened to put an apartment building into receivership if the owner continues to advertise illegal Airbnb rentals, according to a New York Post article this week.

New York City is number one, in construction costs. The Turner & Townsend International Construction Market Survey reports that New York has edged out San Francisco and Zurich for the title, with costs averaging $354 per square foot.

Mayor de Blasio, Tuesday,  announced the first significant drop in poverty in the City since the recession. Property owners played their part…the City counts the difference between regulated and market rents as income for poor tenants.

Illegal loft tenants are seeking State legislation to extend the June 15th registration deadline to legalize their units. They also want to strike a requirement for street facing windows and an eligibility requirement that units were occupied back in 2009.

Fed up with nitpicking HUD rules on lead paint, Section 8, Fair Housing, etc.? HUD is seeking suggestions for regulatory reform until June 14th.

In a non-traditional succession case, 541 Union LLC vs. Rivera, a Bronx Housing Court judge has granted rights to a lease to a man who claimed to have lived as if married to a deceased tenant…while still actually married to someone else.

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Bugging Owners

Building owners will be required to file annual reports on bedbug infestations and either send notices to tenants or post the information under legislation signed into law by Mayor de Blasio, Wednesday. The law goes into effect in six months.

The Mayor also signed a bill, effective in nine months, that would allow building owners to sign up for email alerts when 311 complaints are reported on the City’s online databases. Apparently, the Council was unaware that anyone can set up such alerts now  at  https://opendata.cityofnewyork.us/, although the database is not reliably updated.

In an attempt to crack down on illegal conversions and rooming houses, the City Council, Wednesday, passed a bill to fine owners $15,000 for three illegal units above the number listed on the certificate of occupancy.

They also voted to extend a moratorium on conversion of hotels to condominiums. The bill is a favorite of hotel union workers, who, perhaps coincidentally, endorsed de Blasio for reelection that afternoon. The idea is that the hotel industry is losing jobs to residential conversion, although, in fact, the City’s own tourism department reports that new inventory has exceeded losses for years and 25,000 more hotel rooms are in development.

Residential development is also booming again, thanks in part to the State Legislature agreeing to renew 421-a tax incentives. The Building Congress reported this week that  permits were issued for 6,343 residential units in the first quarter, nearly triple the prior year and the most for the quarter since 2007.

The latest digital map you didn’t know you needed shows every community facility in the City, including libraries, hospitals, city offices, parks, schools, youth programs, parking lot and more.

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Budget Reprieve, For Now

Congress, yesterday, gave final approval for increased funding for tenant and project based Section 8 for the remainder of the fiscal year ending September 30th–basically allowing for continued funding of existing benefits due to inflation–but the Trump administration is seeking deep cuts beginning October 1st.

Earlier this week, President Trump nominated Pam Patenaude as Deputy Secretary of HUD. Patenaude, who has worked in apartment management, HUD, and academia, was one of the industry’s top recommendations for Secretary before Trump appointed Ben Carson.

Airbnb has launched a new intensive lobbying effort in Albany to allow short term apartment rentals, but at the same time announced agreement with San Francisco to implement a host registration system that would  ensure compliance with local zoning and safety requirements.

The City Department of Buildings has release new interactive maps showing façade condition and Local Law 11 filing status for more than14,000 building and the age, location, and reason for about 7,500 sidewalk sheds.

The DOB has also been cracking down on improper self-certifications. The Real Deal reported this morning that seven architects and engineers have “voluntarily” surrendered privileges since March 24th.

Mayor de Blasio, yesterday, signed a new law barring employers from asking prospective employees about their previous salary. It will be effective in 180 days.

Fines levied by the Environmental Control Board increased about 40% from fiscal 2013 to fiscal 2016 according to a report issued this week by the City Comptroller. The Department of Buildings is generating $15 million more in fines. Recycling violations are up 82% and dirty sidewalk violations are up 125%.

ABO members can get additional rebates on building materials and equipment made by more than 50 manufacturers purchased since January. Applications must be filed by May 19th.

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Another Tax Hit

Mayor De Blasio’s 2017-18 Executive Budget Proposal, released Wednesday, anticipates a 5.9% overall increase in property taxes. As always, Class 2 residential would pay a disproportionate share.

A coalition of homeowner and industry groups, including CHIP, announced a lawsuit, Tuesday, attacking the City’s tax assessment system as racist and unfair. Effectively, the Class tax system gives breaks to homeowners in the wealthiest neighborhoods at the expense of everyone else. A similar lawsuit brought in 2014 by apartment renters was dismissed for lack of standing by the plaintiffs without ever getting to the core issues. Ironically, De Blasio and other politicians agree the system is unfair, but just don’t want the courts to order them to fix it for fear of a voter backlash.

Over industry objections, the City Council, Tuesday, approved a bill requiring apartment building owners to file an annual report on bedbug infestations in their buildings and either post it or distribute it to tenants. It would go into effect in 180 days if signed by the Mayor, as expected.

As reported earlier this week, the Rent Guidelines Board scheduled hearings on a proposed 1-3% increase for one year lease renewals and 2-4% increases for two year renewals. Contrary to many press reports, the Board does not have to approve guidelines in this range and could go lower, so get out there and testify June 8th, 12th, 14th or 19th. Call CHIP at 212 838-7442 and we will put you on the speakers’ list.

The City Planning Commission this week began the formal review process for rezoning East Harlem to encourage higher density housing development. This is the third of a dozen neighborhood rezonings De Blasio announced when he took office. Only one, in East New York, has been approved so far.

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 a $150 member discount on registration.

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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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