Class Not Dismissed

Two Housing Rights Initiative suits against property owners, both involving deregulation of units in buildings with J-51 benefits, were granted class action status by judges in Manhattan and the Bronx. These are the first cases of more than 40 initiated by HRI where class action status was granted.
 
Adding to the list of anti-owner legislation on the so-called progressive agenda, State Senator Brian Benjamin has introduced legislation to extend the statute of limitations on rent overcharge complaints from four to six years.
 
Federal subsidies, particularly for public housing and Section 8, are the solution to meeting affordable housing needs according a report issued Thursday by theCitizens Budget Commission. Analyzing 2017 Housing Vacancy Survey Data, the report found that 921,000 New York City households paid more than 30% of income for rent, and half of them paid more than 50%, after accounting for rent and nutrition subsidies. Looking at low income households that aren’t rent burdened, the report noted that 91,000 received Section 8 benefits; 82,000 were in public housing; and 50,000 were in rent stabilized apartments.
The IRS hasn’t finalized rules and the suggested census districts won’t be officially adopted until April, but it is already getting late to begin organizing investment funds for the Opportunity Zones created by the 2017 Tax Cuts and Jobs Act. The progam will allow real estate investors to exclude capital gains from investments in the zones held for ten years, and also exclude gains from sales elsewhere that are reinvested in the zones.
 
The New York City Council is moving forward October 22nd with a hearing on the “Small Business Jobs Survival Act” which would entitle any commercial tenant to a ten year renewal lease, arbitration of terms with the building owner, and right of first refusal on leases negotiated with new prospective tenants.
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But the facts are…

New York’s City Health and Housing Commissioners gave strong lip service support to the Council’s package of lead poisoning prevention bills at a hearing last week, but the written testimony suggests that virtually all the bills need amendment and some make no sense. Regarding requiring every property owner to test and abate soil and water lead, the Department of Health reported that an analysis of 219 children who had blood lead levels above 15 mcg/dl in 2017 found one child with an exposure to lead in soil and one with an exposure to lead in water, but that both were also exposed to paint hazards.

City rules covering Living in Communities (LINC) rental assistance; the City Family Eviction Prevention Supplement and City Family Exit Plan Supplement (CITYFEPS) programs; the Special Exit and Prevention Supplement (SEPS) program; and the HRA HOME Tenant-Based Rental Assistance Program (HRA HOME TBRA) and New York State Family Eviction Prevention Supplement are being amended and merged beginning October 29th. Anyone with tenants in these programs should review the changes.

The New York Times investigation into President Trump’s taxes this week explores an alleged scheme in the early 1990s to inflate the costs of individual apartment improvements and major capital improvements by running purchases through a family-owned company before reselling them to the properties. The State Division of Homes and Community Renewal has indicated it will look at the claims.

Sackman Enterprises is proposing giving the City of White Plains $260,000 cash in lieu of 18 parking spaces at a downtown apartment development site because the units will be targeted at Millenials.  “Millennials don’t have cars, as a practical matter. They’re big users of Uber and Zip Cars,” a spokesperson said. Parking requirements have long been a target of affordable housing developers as well.

The Brooklyn District Attorney, Wednesday, announced the indictments of five people and two businesses for illegally removing asbestos, filing false instruments with the Department of Buildings, forgery, reckless endangerment and other crimes related to renovating four properties.

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AC Rates Up With Fall Arriving

Air conditioner charges in rent stabilized and rent controlled apartments with electricity included in the rent will increase to $26.42 per month effective Monday, October 1st, per the Division of Housing and Community’s Renewal’s latest Operational Bulletin 84-4 update, posted online yesterday.

A State Supreme Court judge this week denied New York City’s motion to dismiss the complaint by Tax Equity Now, a coalition of community and real estate groups, that City property taxes are assessed unfairly.

City Comptroller Scott Stringer counted wrong. First he said the City ‘lost’ one million apartments renting for less than $900 since 2005; then he said it was 425,000. In a report Tuesday (corrected Wednesday) he blamed deregulation of stabilized units for rising rents, ignoring the Rent Guidelines Board’s latest findings that operating expenses for the average apartment, without profit or debt service, rose from $679 to $985 a month since 2005, including property taxes that have more than doubled.

The City Council held hearings Thursday on 23 lead safety bills opposed by CHIP. Supporters complained in a new report this week that HPD enforcement is lax because only  two violations have been issued since 2005 for failure to do interim controls on apartment turnover, but downplayed the 307,000 peeling paint violations in the same time. Meanwhile, the City’s Independent Budget Office revealed that lead in water is rare, and confined mostly to smaller, older buildings with under 2 inch service lines in a handful of neighborhoods.

The New York Times, Monday, ran a profile of Aaron Carr of the Housing Rights Initiative in advance of a press conference with Councilman Ritchie Torres accusing landlords of failing to check of the box that they have rent stabilized tenants on building permit applications. Torres wants owners prosecuted.  A Department of Buildings spokesman explained that, at most, the filing errors found involve just 3 percent of construction permits. “More importantly, checking the wrong box on a permit application does not mean that any improper work happened.”

In a decision with significance for Long Island development generally, the Suffolk County Legislature’s Public Works Committee voted down a plan for 9000 apartments and offices in Brentwood because of concerns over sewer capacity and the water aquifer.

Mayor de Blasio appointed Sarah Carroll as the new Chair of the Landmarks Commission. She was the executive director since 2014 and has been on the Landmarks staff for 24 years.

The link for ABO member savings from the National Association of Home Builders in September’s New York Housing Journal was broken. The correct link is www.nahb.org/savings.

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Lead Time

The New York City Council holds hearings Tuesday on a package of lead bills, opposed by CHIP and ABO, that would require property owners to abate all apartments on turnover (as opposed to current interim controls), test and abate soil outside buildings annually, and lower the allowable lead in paint tests so that previously cleared properties might be subject to new abatement requirements. This despite new reports this week that the number of children with elevated blood lead levels continued to decline in fiscal 2018, down 11 percent.

The Department of Housing Preservation and Development finalized rules for a speculation watch list, to be posted online beginning October 27th, that will highlight buildings acquired at any cap rate below the borough median for the prior twelve months. The theory, apparently without any particular evidence, is that this will be an indicator of likely tenant harassment.

NIMBYs (and tenant activists) may complain about traffic, displacement, gentrification, and architectural integrity, but what really irks them is developers making money, according to a new research report from UCLA. Opposition to new development proposals increased by 20 percent when test subjects were given the argument that a developer was likely to earn a large profit from a building.

The latest tariffs on Chinese goods will add $1 billion to the cost of housing production, and additional levies set for January will bring the tally to $2.5 billion, according to the National Association  of Homebuilders. Products affected include granite, portland cement, framing lumber, cast iron pipe, nails, kitchen cabinets and electrical fixtures, among others.

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Primaries Next Thursday

State primaries on Thursday could offer a view into what may happen in the November elections. We’ll be watching and will report to you.

Zephyr Teachout, endorsed for Attorney General by the New York Times this week, has expressly called for targeting the real estate industry.

More than $1.5 billion in Buildings and Sanitation fines are unpaid, according to a report this week, not counting $500,000 just levied on the Kushner Companies for failing to check the box that they had stabilized or controlled tenants on building permit applications.

Another $285,000 in fines was just levied on building owners accused of illegal short-term rentals through Airbnb, although the largest amounts seem to be against an SRO disputing whether its use is illegal and a single-family homeowner.

DHCR updated five fact sheets concerning new leases and renewals on its website Thursday, including:

  • Fact Sheet #5: Vacancy Leases in Rent Stabilized Apartments – [ PDF ]
  • Fact Sheet #26: Guide to Rent Increases for Rent Stabilized Apartments in New York City – [ PDF]
  • Fact Sheet #31: Guide to Rent Increases for Rent Stabilized Apartments in Nassau County – [ PDF]
  • Fact Sheet #31a: Guide to Rent Increases for Rent Stabilized Apartments in Rockland County – [ PDF]
  • Fact Sheet #31b: Guide to Rent Increases for Rent Stabilized Apartments in Westchester County – [ PDF]

Westbury, on Long Island, has begun the process to rezone 25 acres near the LIRR station for transit oriented development.

A Westchester single-family home development is suing the State for permission to convert to condominium status solely to get its property taxes reduced. The case has wider implications for the taxation of apartment buildings, as it fuels arguments by legislators who have already proposed eliminating the assessment of coops and condos as if they were rentals.

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Public Housing Predictably Poor

Rent Stabilized and market rent housing quality has been steadily improving, but public housing not so much, according to an analysis of 2017 Housing and Vacancy Survey data by the Citizens Budget Commission.

Democrat Assemblyman Brian Barnwell and Senator Michael Gianaris apparently think Rent Stabilized housing is too good and want to eliminate Major Capital Improvement Rent Increases. They’ve filed a rather confusing bill that would eliminate MCIs retroactively and give the State Division of Homes and Community Renewal discretion to grant unspecified tax credits for unspecified improvements instead.

Meanwhile, during Wednesday night’s Democratic Gubernatorial debate, Cynthia Nixon and Andrew Cuomo vied to sound more pro-tenant, with Nixon calling for universal rent control while Cuomo called for raising the high rent decontrol rent threshold and attacked NYCHA.

New requirements to distribute Fire and Emergency Preparedness Guides to tenants in New York City by October 1st have been delayed until April 30, 2019. Existing fire safety posting requirements are being changed, however, and new signs will be required as of October. Look for an email blast from CHIP with more details next week.

The new owners of a lower Manhattan building discovered that a dead rent stabilized tenant had been renewing her leases for twenty years. They are trying to evict the man who signed her name and used the apartment as an illegal office.

Mayor de Blasio announced that the City is beginning the rezoning process for development of 4.5 million square feet of commercial, academic, cultural, and institutional space on Governor’s Island. No residential use is foreseen.

Governor Cuomo has signed legislation requiring marshals to look for and provide for the safe removal of pets when performing evictions. The law stemmed from a case where a marshal apparently didn’t notice a pit bull.

It turns out that activists opposing new housing for fear of gentrification have it backwards. The more housing gets built, the fewer people are actually displaced, according to new reports.

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Universal, or Something

Democrat Gubernatorial hopeful Cynthia Nixon and Lieutenant Governor candidate Jumaane Williams called for universal rent control this week, but had trouble defining it. Tenant groups statewide are making the slogan a rallying cry.

Anita Laremont was appointed Executive Director of City Planning, Wednesday. She has been general counsel to the Planning Department since 2014 and was heavily involved in drafting mandatory inclusionary zoning and the midtown East plan.

The best new interactive map of the week comes from the New York City Department of Buildings. You can click on the location of every new building permit or Alt 1 building enlargement permit and get all the details.

A family needs to earn $103,235.16 to afford the median priced New York metro area home according to an HSH.com analysis. We’re number 7. You need $274,623.19 to afford the median priced San Jose, CA home and $109,411.27 for a Boston area home. It’s all in the metro vs. city calculations, with the New York area median home price only $410,500 vs. San Jose’s $1,405,000.

How hard is development in the New York metro area? Southampton Town is buying an old motel and planning to resell it for condo development with all permits and plans in place—because prospective private buyers were scared off by the Town permit and planning process.

When you can’t build in a town, however, one possibility is to build a new one. There are at least six developments in the Hudson Valley built, or planned to be, effectively, mini-cities. “Live, work, play” is the design idea.

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Four Years=Four Years

The industry won a major victory upholding the 4 year rule in overcharge cases in the matter of Regina Metropolitan, in which CHIP played a key role.

The Inwood rezoning approved last week apparently had an element ofcommercial rent control quietly inserted. New developments with more than $2 million in assistance from the City Department of Housing Preservation and Development will have to designate up to 5,000 square feet to be rented to businesses with ten year leases and limited rent increases.

Environmentalists and real estate organizations announced agreement this week on plans to reduce energy consumption by buildings in New York City by 20 percent by 2030, with a special carve out for rent stabilized and subsidized housing. In an attempt to avoid Major Capital Improvement rent increases, stabilized buildings will be asked to take limited energy saving measures instead of shooting for percentage savings.

The State Division of Homes and Community Renewal this week postedsummary rent guideline increases for New York City, Nassau, Westchester, and Rockland counties.

Supporters of a California referendum to expand rent control got a $10 million boost from an AIDS Healthcare Foundation with a contradictory record of calling for affordable housing and fighting new housing development.

HUD, meanwhile, is looking at revising its controversial Affirmatively Furthering Fair Housing efforts to attack local zoning that limits housing production.

As lower and lower blood lead levels are used to trigger paint inspections, other sources of lead seem more likely to be the actual cause. Consumer Reports,Thursday, issued a report identifying lead and other heavy metals in common baby foods.

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Inwood is Up-Zoned

The New York City Council, Wednesday, approved a rezoning of the Inwood area of Manhattan, allowing about 3,900 more apartments to be built than previously permitted. Two thirds of the units would be ‘affordable’ under various programs.

Mayor de Blasio this week signed legislation putting tough new reporting requirements on Airbnb, in an attempt to limit illegal occupancies.

Thousands of tenants in buildings owned by Steven Croman are eligible to share in an $8 million restitution fund to compensate them for harassment, whether they were harassed or not. They can qualify for having lived in one of his buildings sometime between 2011 and 2017 according to the State Attorney General.

Freddie Mac is taking a different approach to housing affordability, offering to trade low interest mezzanine loans for ten years of voluntary rent limits.

A new economic snapshot released by the Department of City Planning reports that, outside of New York City, the labor force of 25-54 year-olds is growing exclusively in New Jersey along rail corridors with access to the City. In fact, since 2000, Northern New Jersey added 230,000 more housing units than jobs and the City added 253,000 more jobs than housing units.

The State Division of Housing and Community has posted updated Fact Sheets on Security Deposits and Demolition.

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“Racial Impact Study” Not Required

A State Supreme Court Judge has rejected arguments that the City should have done a racial impact study before approving the rezoning of the Broadway Triangle site in Brooklyn for 1,146 units, including 287 affordable units.  The project “will probably extend a predominantly white area (Williamsburg) closer to black (Bedford-Stuyvesant) and Hispanic (Bushwick) areas,” the judge acknowledged, but “This appears not to be the result of some nefarious midnight plot but, rather, the inexorable, on-the-ground realities of population growth (Hasidic) and income disparity (White compared to People of Color).”

The 2014-15 development bubble caused by building code changes and the legislative cliffhanger over extension of 421-a tax benefits resulted in a sharp drop in building permits filed for the next two years, but filings for the first half of 2018 are more than double 2017’s. We’re on track for about 30,000 new apartment units to be filed by year end according to New York Yimby.

The New York City Housing Authority is different from private housing. Following federal directives, it implemented a no smoking in apartments policy this week and was apparently able to force tenants to sign lease riders accepting the change under threat of eviction.

On the other hand, NYCHA doesn’t follow all directives. This week’s public housing scandal is that managers directed water tank inspectors not to report dead birds and homeless people polluting their tanks.

Rezoning Inwood for higher density development took a major step forward this week with approval by a Land Use subcommittee after local Councilman Ydanis Rodriguez negotiated an exemption from the changes for the core area around Dykman Street, 207th Street and Broadway that was most likely to interest developers.

In a nod to the 21st century, a Housing Court judge has granted a building owner in Renaissance Equity Holdings LLC v. Webber (New York Law Journal, subscription required) the right to discovery regarding the social media accounts of a person claiming succession to see if they indicate where she was living during the relevant time period.

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