MCIs and Professional Fees

The State Division of Housing, this week, issued Policy Statement 2017-1 on the Eligibility of Non Construction Costs, i.e. professional fees, to be included in Major Capital Improvement Rent Increases. Bottom line, if the services of an architect or engineer are required to get a permit, then it is included. Also, as urged by CHIP, professional fees for architects and engineers will be allowed when they are “necessary and customary” for the job.  Construction management fees, however, are generally not allowed. Municipal filing fees are not covered, and profit and overhead figures in cost-plus contracts will be considered if “reasonable.”
A lender is suing a Manhattan owner to prevent the sale of air rights on a property, which is claimed as collateral on the mortgage because of its inherent tie to the land. While the issue wends through the courts, borrowers are advised to protect themselves in mortgage language on new loans.
In case you missed it, effective October 1st, air conditioning charges for electric inclusion buildings were reduced 63 cents a month to $26.02 under the latest update to DHCR Operational Bulletin 84-4.
Cambridge, Massachusetts eliminated rent control in 1995, but the good news keeps coming. Researchers this week reported that the elimination of rent control led to a reduction in crime.
TRData is selling a database of construction timeline information culled from New York City records as a way for buyers to spot troubled projects, but the norms aren’t so hot either—it takes an average of 1205 days (3.3 years) for a 25-50,000 sq. ft building project to go from first DOB filing to certificate of occupancy.
Thousands of protesters rallied at New York City Hall, Monday, to call for 15,000 new units of senior housing on public housing authority land, at a cost of$3.83 billion, rather than Mayor de Blasio’s current public/private affordable housing development plans. There was apparently no discussion of the roughly 11,000 individuals, mostly seniors, currently under-occupying NYCHA apartments and refusing to trade units with larger families.
Yonkers property owners are suing to get their buildings inspected more often, or at least get a refund for fire inspection fees they pay without getting any service. The plaintiffs say their buildings were not inspected for a decade despite paying annual fees. The City budget shows that $3.5 million in fees are collected annually for the fire inspection program, but only $1.7 million is spent.
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It’s Not So Cold Anymore

New night time hearing requirements (62 degrees regardless of outside temperature) took effect Sunday and the long range forecast indicates it will become an issue Wednesday. Coincidentally, that’s when we hold a seminar on the subject at 8:30 a.m. at Scandinavia House, 58 Park Avenue. You should attend if 1) You need to comply with the new night time heating requirements, 2) You own or manage a building between 25,000 and 50,000 sq. ft. subject to new benchmarking requirements, or 3) You use energy in your property for heating, cooling, or light. RSVP now.
The City Planning Commission this week approved an East Harlem rezoning aimed at increasing density an affordable housing. It now goes to the City Council for a vote.
Renters are different than just ten years ago, according to the National Rental Housing Landscape report issued by the Furman Center yesterday. Median renter household income is higher because, in part, the universe of renters is better educated. The percentage of renter households where someone has a college degree rose from 28.6% in 2006 to 35% in 2015 and the percentage with some college education rose from 24.4% to 28%, while the percentage with high school or less dropped almost 10 points. The less educated, lower income renters, however, are more severely rent burdened than before, the study showed.
Mayor de Blasio’s plan to stop using hotels for the homeless isn’t working out so well. Five hotels are no longer being used, but twelve new ones have been added at rents of about $5,000 a month per unit.
On Tuesday, the Mayor named Vincent Sapienza, a 35-year veteran of the department, as the new commissioner of the Department of Environmental Protection.
Edgewater, New Jersey is the latest community to oppose waterfront development that includes affordable housing, apparently thinking a public works storage facility is a better use of the old Hess oil site.
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Save Energy, Or Else

Mayor de Blasio, yesterday, announced he would introduce legislation to fine owners of up to 14,500 commercial and residential buildings over 25,000 square feet if they don’t meet energy conservation goals by 2030. Details are not yet available.

Meanwhile, beginning next winter, heating oil in Westchester, Nassau and Suffolk counties will have to contain at least five percent biodiesel under legislation signed Wednesday by Governor Cuomo.

The Governor also signed a bill requiring every board member of a co-op or condo in the State to file an annual statement, beginning in 2018, indicating whether or not they voted on any contracts with related parties.

DHCR issued a new Fact Sheet this week on discrimination against foreign born tenants, including, for example, that “ An owner who only requests background information and proof of citizenship status from individuals of South Asian origin and not all others will be in violation of the law.”

The New York Times analysis of Tuesday’s primary elections began: “If voters sent any discernible messages in the contested Democratic primaries for New York City Council, they were that gentrification is bad…”

We’re not the only ones with crazy politicians. The Newark City Council last week responded to a tenant initiative by reducing the amount of rent increase an owner could get from improvements to a vacant apartment costing one year’s rent to 10 percent, vs. the previous 20% for an expenditure equal to eight months’ rent.

The National Apartment Association has published its annual survey of apartment operating expenses. Not surprisingly, the average cost nationally of property taxes on a mid to high rise apartment in 2016 was $1653—about half what it is in New York. The median cost to income ratio nationally for mid to high rise units was about 46%, vs. around 64% in New York.

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Gas Shut-offs Rising

Gas shutoffs are increasing due to a combination of a crackdown on illegal connections; publicity about gas safety, including a new City law requiring owners to advise tenants to call 911 if they smell gas; and a new statewide requirement for utilities to inspect pipes all the way to the building meter instead of just to the curb connection. Beginning in 2019, City law will also require inspection of exposed pipe and gas detection tests every five years. CHIP, ABO and other industry representatives met Wednesday with Con Edison to work on protocols to minimize shutdowns and limit the portions of buildings effected. We will keep members informed as new information is developed. Please contact the CHIP office if you have specific questions or concerns.
Rensselaer is the latest of thirteen New York counties that have decided that if they can’t stop Airbnb, they can at least tax it. They reached a deal to have the home sharing company collect hotel taxes for them on rentals.
The New York City Council, yesterday, approved a Downtown Far Rockawayrezoning plan to encourage more and higher density housing. At the same time, they approved an East Shore Resiliency plan limiting development in areas of Oakwood Beach, Graham Beach and Ocean Breeze prone to flooding.
If you want to have a personal hand in rezoning the City, the Deputy Mayor for Housing and Economic Development is recruiting a Senior Advisor on Land Use. Good luck.
Meanwhile, the City Council yesterday also amended its recent law expanding the definition of tenant harassment to include acts by owners of one and two family homes…but unlike multifamily owners, the small owners aren’t guilty until proven innocent.
Not everything is about real estate. Oh, wait. It is. Turns out the sale of the NY Daily News this week was all about the value of its Jersey City printing plant and 25 acres next to Liberty State Park.
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Good Neighbors?

A condo building is asking $15,000 a month for the pain of being next to construction at a midtown library in a case that could establish new ground on adjacent construction disputes.

Thousands of apartments rented to non-profit cluster housing providers for the homeless could be declared subject to rent stabilized rents under a lawsuit brought by the Legal Aid Society. The suit basically alleges that the contracts with the non-profits create illusory tenancies.

The battle over rezoning East Harlem for higher density housing development boils down to a potential 751 apartment, 187 of which would have subsidized rents, according to Crains analysis. The total potential additional units under the Mayor’s initial proposal are only 1,878, with 625 of those subsidized.

The Division of Housing and Community Renewal has issued a new RTP-19 form, Owner’s Application to Restore Rent, dated 8-17. The major difference with the old form appears to be a clear warning that filing a false instrument could result in imprisonment. And, yesterday, DHCR changed the layout of its Rent Administration website, but they claim everything is still there somewhere.

As of Monday, August 28th, antenna and curb cut job filings at the City Department of Buildings, have to be done online through DOB NOW.

“Micro” units in the suburbs may be about 50% bigger and 30% cheaper than Manhattan, but they are just as popular according to the pre-leasing figures for Uno in Yonkers.

HPD, yesterday, issued a Request for Expressions of Interest to redevelop the Greenpoint Hospital campus in Brooklyn with 500 units of 100% affordable housing, a 200 bed shelter, commercial space, community facility space, and public open space.

Anyone wishing to help out survivors of Hurricane Harvey in Texas can find reputable agencies through ABO’s NAHB affiliates, and, if you are worried about the next flood here, the NAA has a library on emergency preparedness to check out.

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No More 80-20

The New York State Division of Homes and Community Renewal has stopped providing tax exempt bond financing for 80-20 projects. It will only be funding 100% affordable projects for the time being, according to the Commissioner.

Proposed rezoning of the Jerome Avenue area in the Bronx moved into the formal Land Use Review process this week, despite controversy.

Mayor de Blasio is holding a hearing today on a bill creating a rebuttable presumption that owners are harassing tenants if, for example, they contact them at work without prior written approval. He is expected to sign it along with a host of other bills affecting building owners, including a requirement to have a written smoking policy.

New York City Councilwoman Margaret Chin doesn’t think elected officials have enough power to block development. She is so opposed to a residential project on the Lower East Side that she has introduced legislation to allow the Mayor, Borough President, or a vote by two thirds of the Council Land Use Committee to shortcut the required time frames to change zoning. She is apparently hoping to make the project illegal before it can be built.

U.S. Rep. Joe Crowley from Queens this week touted his Rent Relief Act, providing tax credits to low and moderate income renters who pay more than 30% of their income in rent. No predictions on the likelihood of how the proposal from a Democrat congressman will fare in the Washington budget battles.

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Glug, Glug

President Trump, Tuesday, reversed an Obama-era Executive Order that would have resulted in expansion of regulated flood plain areas, including large swaths of Brooklyn, Lower Manhattan, southern Long Island and the lower Hudson Valley. The changes would have increased flood insurance costs in those areas and potentially barred federally insured mortgages. Even Mayor de Blasio opposed new flood maps that were originally proposed. Meanwhile, NIMBYs used the flood threat to oppose new housing in Long Island City this week.

HUD this week also backed away from the controversial Small Area Fair Market Rent plan to adjust Section 8 rents by zip code, suspending implementation for at least two years.

New York’s top multifamily lenders also happen to lend to owners on NYC Public Advocate Tish Jame’s Worst Landlords List. She issued a list of bank names on Tuesday. Most of the banks that commented insisted that they only lend on existing rent rolls and that they demand escrows for repairs when dealing with troubled properties.

Claims that preferences for local residents when renting new subsidized housing discriminate against minorities have expanded to the suburbs, with the latest lawsuit filed against the Town of Bedford in Westchester.

Asking rents in New York City have increased 33% since 2010, according to a StreetEasy analysis, although the growth rate has slowed since 2012. Asking rents on the bottom 20% of the market grew about 3% in the last year while rents in the top tier stagnated, the report said. Rents on high end units in San Francisco, Seattle, and Los Angeles, meanwhile, grew at an even faster rate than in New York.

A study by OneTitle identified 541 vacant buildings in New York City, or, as they styled them, redevelopment opportunities. The report is free with registration at onetitle.com.

If you have a super paying even partial rent in a stabilized unit, don’t expect to get the unit back if you fire him or he quits, a recent Housing Court decision in Richards v. Barrows confirms. Payment of any part of the rent puts the unit into regulation, the court said.

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Pay Lawyers, Not Rent

Mayor de Blasio has scheduled a noon press conference to sign the tenant right to counsel bill into law.

As we blasted in our email alert yesterday, the New York City Council, passed almost 20 anti-owner bills Wednesday under the banner of tenant protection. Among the more egregious was a bill creating a rebuttable presumption that owners are guilty of harassing tenants if an essential service is “interrupted,” contacting the tenant at work without prior written approval or contacting them outside of 9-5 weekdays. Full details of all the  new legislation will be in the September New York Housing Journal.

In other action, the Council approved a major rezoning of midtown east to encourage new office construction, although the benefits may be long in coming.

Finally, in an action packed session, the Council extended the law barring smoking in common areas of multiple dwellings to smaller 3-10 unit buildings. Previously, only buildings over 10 units were covered. Further, every building will have to adopt a smoking policy and notify residents of the rules, if any, annually and with leases or purchase agreements, beginning one year after the Mayor signs the bill—which is expected shortly.

Meanwhile, Council members keep coming up with new ideas to increase operating costs. A bill is being introduced to require buildings with more than 100 units to have a translator on staff for any language spoken by more than 10 percent of the tenants.

If your mortgage is set to adjust to Libor in 2021 or later, you have a problem. Libor won’t be available. Check your mortgage documents and make sure new mortgages provide for a mutually agreed rate.

Amazon isn’t content to just deliver to your building anymore, they want to provide a package reception facility. They are offering storage boxes, but haven’t announced pricing yet.

Those foreign buyers you hear so much about? Canadians buying in Florida, according to a recent report. And New York isn’t even in the top five states for foreign buyers, 60 percent of whom become residents, not absentee owners.

New York City says it has stepped up recycling enforcement this month. Let us know if you are getting more recycling violations. Email info@chipnyc.org.

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Look, Up In The Air

It’s summertime, and the City Buildings Department is turning its attention to outside space, issuing a reminder that balcony screens or enclosures need to have a permit, and suggesting, surprisingly, that rooftop terraces and recreation areas need enclosures.

REBNY launched its expanded residential listing service Tuesday, with the capacity for brokers to syndicate listings to Realtor.com and other sites, but not Streeteasy.

Ten X Commercial this week issued a residential vacancy forecast of 11% for the New York metro area by year-end 2018, based on a projected 40,000 new apartment completions and flat or declining job growth. It’s a theory.

The Bronx Borough President, Wednesday, announced $7 million in capital funds would be directed to 10 apartment development projects to fund 1589 “affordable” units. That works out to $4,405 per subsidized unit on top of other benefits the projects are receiving.

Median rents and median asking rents are two different things. A report by RentHop analyzing asking rents citywide (with a neat interactive chart) found the median asking rent for a two bedroom on the lower east side was $3,495—134% of median income and three times the actual median rent in the neighborhood.

ABO members can register this month for free show passes and discounted education programs at the International Builders Show scheduled January 9-11th in Orlando. And, ABO members have until August 25th to file for additional rebates on products they’ve bought from April thru June from 50 manufacturers such as Lutron, Delta, Carrier, and Sherwin Williams.

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Can’t Do It In Person Anymore

Today is the last business day to submit 2017 NYC Boiler Inspection filings in person. Electronic filing will be required beginning August 14th.

Effective August 1st, the City Department of Sanitation will be enforcing new commercial recycling rules adopted last year. Stepped up residential enforcement can be expected while the inspectors are out. Look for an article detailing all the changes in the September New York Housing Journal.

An unwritten rule requiring proof of an access agreement with effected adjacent properties before the City Buildings Department will issue a permit is being reported by law firm Tarter, Krinsky, & Drogin.

The State Attorney General’s office is now requiring documentation to allow review of rent histories of regulated apartments before approving co-op or condo conversions, delaying decisions while records are gathered, according to law firm Herrick.

The Governor signed legislation, Tuesday, increasing the income level for eligibility for the Senior Citizen Homeowners Exemption (which applies to co-op and condo owners) to $50,000—the same as the current SCRIE level.

The New York City Housing Authority hasn’t been doing required lead paint inspections, according to a Daily News story yesterday about a probe of the agency by federal prosecutors.

The City Council Land Use Committee gave approval to a plan for rezoning midtown east for higher density office construction, almost guaranteeing eventual adoption. The City would tax the sale of new air rights transfers under the plan at 20% or $61.49 per foot, whichever is greater.

Prospect Lefferts Gardens is the toughest zip code in the City to add residential density, according to a BuildZoom analysis. Barely 500 units were added between 2000 and 2015. Number two area, Sunnyside, actually lost almost 500. But it turns out all you need to get new housing is for government to welcome it. New Rochelle has opened its doors.

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