Rooftop cooling towers must be inspected for Legioinella  bacteria within two weeks of the building receiving a Department of Health Order issued yesterday. Towers must also be disinfected regardless of whether the bacteria is found. The move comes after an outbreak of Legionnaire’s Disease in the Bronx. Mayor de Blasio is expected to announce details of a legislative proposal for cooling tower registration and ongoing maintenance later today. Meanwhile, there are doubts even among testing labs as to whether a two week deadline is manageable.

Earlier in the week, Mayor de Blasio revealed more details of his mandatory inclusionary zoning plan, beginning the City Planning review.  It was also reported that he changed his position on ‘double dipping’ by developers so that projects will be able to, say, count the same affordable units to meet the requirements of zoning density bonuses, 421a benefits, tax exempt bond programs, and the Low Income Housing Tax Credit.

Two construction companies and their supervising employees were indicted, Wednesday, on charges of manslaughter and criminally negligent homicide in the death of a worker crushed in a trench without proper supports. The indictment claims the supervisors failed to react promptly or responsibly to warnings by safety inspectors.

If more of your eviction actions seem to be winding up with tenants getting a one-shot grant from the City, it is not your imagination. The Post reports that  the Human Resources Administration is spending more than $7 million a month on emergency rent grants, up more than 50 percent since the end of the Bloomberg administration.

ABO update will be on vacation next week. There will be no news, or we will catch up the week after.

Never mind whether you are building in one of the 15  neighborhoods targeted for upzoning or seeking 421a tax incentives, every residential project that requires any rezoning will have to have at least 25 percent affordable apartments according to a report in Capital New York this morning. The e-zine says Mayor de Blasio will announce the details soon.

That could bring a crashing halt to the record number of new building permits issued this year–driven largely by fears of the 421a program expiring or changing, as Crains noted this week. Even without new affordable housing requirements, projects that might have begun in 2016 or 2017 were rushed into the ground to beat legislative deadlines and a drop in permits next year is likely.

New and existing buildings will pay 14.1 percent more in property taxes due to rising assessments from 2016 to 2019 according to a NY Financial Control Board analysis issued Tuesday. As usual, Class 2 can expect to pay a disproportionate share.

Just when you thought Uber was Uber Alles, Airbnb is back in the news. NY Communities for Change issued a report this week claiming that more than 20 percent of the rental apartments in Williamsburg, the East and West Villages, and the Lower East Side were being listed as illegal full-year rentals on Airbnb. Airbnb spokesmen called the claim “faulty.” Interestingly, the 2014 New York City Housing Vacancy Survey showed the number of units held vacant for occasional use, which would probably include illegal hotel units as well as traditional pied-a-terres, declined by 10,000 units citywide since 2011, to about 54,000.

The Tenant Protection Unit at the State Division of Homes and Community Renewal now has a little brother, the City Tenant Support Unit, that is sending teams to canvass tenants for potential harassment claims. Ironically, some tenant activists are concerned about City employees taking their jobs.

Reminder: See the attached flyer for the New York State Builders Association summer event at Turning Stone Resort, August 27th. Golf and gambling go together.

Reminder II: You have until August 21st to apply for extra manufacturers rebates on products you have bought since January from companies such at Delta Faucets, Boise Cascade, Honeywell and dozens more. No receipts and free money. Check it out.

Luxury condo or building buyers cannot hide their identity behind an LLC as easily under new rules adopted by the City, the New York Times reported this week. Instructions for the Real Property Transfer form now require the name and social security or EIN for every member.

At the other end of the economic spectrum, the Wall Street Journal reported analyzing Independent Budget Office data that shows one third of more than 1,000 low income co-ops created by the City are delinquent on property taxes. Many others have already been foreclosed. Some might remember that the co-ops were created under the Tenant Interim Lease program after the former private owners were foreclosed…because they could not collect enough rent from the same residents to pay taxes.

Two L&T cases reported this week highlight how the courts don’t work. In Jacob Marion LLC vs. Doe the judge reviewed a rental history back to 1986 to determine an overcharge, without once discussing the four-year statute of limitations on reviewing rent records. In NYCHA v. Morales, the housing authority was blocked from evicting a tenant whose family was using the apartment to store illegal drugs because, the judge opined, the tenant was disabled and presumably unable to look under the couch where the drugs where found.

Like golf and gambling and upstate New York in summer? Join us at New York State Builders Association summer event at Turning Stone Resort, August 27th. Contact associatedbuilders@abogny.com for information.

Another NYSBA benefit is a surer bet than the casino. You have until August 21st to apply for extra manufacturers rebates on products you have bought since January from companies such at Delta Faucets, Boise Cascade, Honeywell and dozens more. No receipts and free money. Check it out.

Does a vacating tenant’s legal regulated rent have to be $2700 or more before the unit can be deregulated, or does the legal rent for the incoming tenant after the vacancy just have to add up to $2700 whether or not the previous rent was that high? Lawyers disagree on everything except that the law amended in June was not crystal clear, according to the Wall Street Journal. See you in court.

Post-war oil burning buildings are the biggest energy hogs with the greatest potential for savings, according to Retrofitting Affordability, an analysis of citywide benchmarking data by the Building Energy Exchange. Depending on building size, age, and fuel type the lowest cost/fastest return on investment energy conservation measures tend to be building management systems, domestic hot water separation, and lighting replacement, according to the report.

Apartment sales represent about one third of like-kind exchanges according to a new study funded in part by NAHB. The researchers found that 88 percent of the transactions wound up eventually being sold again on a taxable basis, with taxes amounting to 19 percent more than they would have been on the original sale. The average investor also generally adds money and reduces debt on an exchange. The report, targeted at proposals to end like-kind exchanges, also found that they result in more transactions than otherwise would occur, promoting jobs and property values. Eliminating like-kind exchanges would also effect cap rates, likely causing rents to increase.

Does the 421a tax incentive make sense? An analysis of One57 — the poster child for problems with the old certificate program — by the City’s Independent Budget Office certainly raises questions. According to the IBO, “The 421-a abatement for One57 is generating 66 units of affordable housing in the Bronx at a cost of $905,000 per apartment. Had the city provided an affordable housing developer with a cash grant equal to the amount of One57’s 421-a tax expenditure, IBO estimates that nearly 370 affordable apartments at a cost of $179,000 per unit could have been produced.” Ironically, the analysis points out a much greater City subsidy for the One57 condos from the tax policy of assessing coops and condominiums as rental buildings instead of single family homes. The 421a benefit was worth less than $10 million to the building’s owners in 2014. The assessment policy saved them $16 million.

Two shoes dropped in the wake of last week’s disparate impact ruling by the Supreme Court. The Anti-Discrimination Center filed suit, Tuesday, against the City’s policy of offering a local preference in affordable housing lotteries. The objection is that when new buildings are built in largely white neighborhoods, the preference for existing area residents favors whites. On the flip side, elimination of the local preference would destroy one of the City’s major tools for overcoming local opposition to affordable housing projects. Displacement is the first objection many neighborhoods raise to development. Meanwhile, HUD released a new rule on Wednesday that requires communities receiving federal housing assistance to submit plans on how they will Affirmatively Further Fair Housing. Local preferences might prove unacceptable under these guidelines as well. And, as reported last month, HUD is seriously considering setting Section 8 Fair Market Rents by zip code rather than metro area, so as to allow recipients to move into better neighborhoods. Apartment associations are cautioning that this may result in tenants unable to pay the difference between lower voucher amounts and actual current rents in neighborhoods such as the Bronx. The HUD Secretary touted this proposal this week in the context of additional efforts to end discrimination.

In further HUD news, the agency this week released an unsurprising study that found issuing homeless families permanent housing vouchers was more successful  at getting them permanent housing than any form of temporary help such as counseling.

Locally, the Queens housing market is apparently proving that supply and demand theory works. The New York Post reported that Douglas Elliman found average rents in the borough were down 5 percent from a year ago. And, while median luxury rentals were essentially unchanged, the ‘entry level’ high end rent was down almost 10 percent due to an ‘influx of inventory.’

Yesterday, Mayor de Blasio held a press conference trumpeting the removal of 8 miles of sidewalk sheds at public housing projects where there was no active construction. There was no discussion of whether the work was done, whether unsafe conditions remained, or whether the City would have to pay to put them back soon.

On Monday the Rent Guidelines Board approved a 0 percent increase (nada, zilch) for one year stabilized lease  renewals starting in October, and 2 percent for two year leases.

Earlier Monday, the Mayor signed a new law prohibiting employers from asking prospective employees if they have a criminal record until after they are offered a job. Just what you want to deal with when hiring someone who will have access to tenant apartments.

The new City budget effective Wednesday forecasts a 4.5 percent increase in property tax revenues. Class 2 customarily pay a larger share because of preferences for single family homes.

Reinforcing its inability to administer the rent laws in any fashion, the New York State Division of Homes and Community Renewal sent the following email Tuesday, after 5 p.m.: “The DHCR online filing system is currently down and not operating. ALL owners who need to file an LD petition or MBR application by the end of the day- June 30th, are advised to access the paper forms on our website and complete them and submit them by mail or to a DHCR office by the end of the day with copies being stamped for proof of submission.”

In a speck of good news, the State Court of Appeals this week allowed New York University to continue development plans on some temporary parkland in Greenwich Village, because the paperwork originally allowing public use clearly said it was only to be used as a park temporarily. The case took three years.

Lawyers are still parsing the incredibly poorly drafted extension of rent regulations and 421a last week. Crains reported that some developers might challenge the 421a changes because the legislature hinged new provisions on private associations reaching a labor agreement. More likely, however, developers will take the tax breaks and then some NIMBY group objecting to a particular project will challenge the entire law putting everyone at risk.

Finally this week, as expected, the Housing Authority issued a Request for Proposals to build new 100 percent affordable housing on sites in three existing housing projects, one in the Bronx and two in Brooklyn.

The Legislature tonight approved a four year extension of rent regulations that will raise the high rent/high income deregulation threshold from $2500 to $2700 immediately, and increase it again annually, beginning next January, by the one year renewal lease guideline set by the Rent Guidelines Board. The Big Ugly bill also reduces the return on Major Capital Improvements to 1/96th in buildings with 35 or fewer units and 1/108th for larger buildings, but does leave the increases permanent. It will also reduce the statutory vacancy allowance from 20 percent to a range of 5-20 percent on units that had preferential rents and had their last vacancy less than four years ago. Fines for harassing tenants are increased, as well. Current 421a tax abatement provisions are continued until December 31st. After that, a menu of complicated affordability options will allow developers to receive up to 35 year tax breaks, but “only on the condition that on or before January Fifteenth, Two Thousand Sixteen, a memorandum of understanding is executed by one, or more, representative of the largest trade association of residential real estate developers, either for profit or not-for-profit, in New York City as well as one, or more, representative of the largest trade labor association representing building  and construction workers, with membership in New York City…regarding…wages for construction worker on buildings over 15 units”…whoever and whatever that means.

The Big Ugly is called that because it is a legislative session-ending sausage that includes many unrelated items. In addition to rent regulations and 421a, this year, it includes property tax rebates, extension and modification of the condo and co-op tax break, a loft law extender, energy credits, charter school changes, education aid, mayoral control of schools, various motor vehicle taxes, and a provision that lets the Governor perform marriages.

Because of the temporary lapse in the rent laws last week, the New York City Rent Guidelines Board postponed its vote on increases for the year beginning October 1st until Monday, June 29th. Meanwhile, the Westchester Rent Guidelines Board took advantage of the temporary extender to meet and pass one and two year guidelines of  1.75 percent and 2.75 percent, respectively.

The Supreme Court, Thursday morning, voted 5-4 to allow disparate impact challenges under the Fair Housing Act — essentially saying that private developers or government agencies could be guilty of discrimination based on the results of policies or business decisions rather than the intent. At the same time, the Court said that “Policies, whether governmental or private, are not contrary to the disparate-impact requirement unless they are ‘artificial, arbitrary, and unnecessary barriers.’” In other words, anything you do can be challenged and it will be up to the courts to decide each case ad hoc.

The City Economic Development Corporation is looking for expressions of interest in developing 4.75 acres in Hunts Point on the site of the Spofford Detention Center. The City wants “live-work” proposals for affordable housing and job creation.

But it will be harder to build or preserve housing on the Upper West Side because the Landmarks Preservation Commission, Wednesday, added 344 buildings in the area from 94th to 108th Street between West End Avenue and Riverside Drive to the Riverside-West End Historic District.

State legislators, exhausted by four days of waiting for three men in a room to make a deal on extending rent regulations extended the law until Tuesday night, so they could go home for the weekend.  The only agreement seemed to be that leadership would keep talking.

The headline writers missed it, but the 421-a tax abatement program was also extended, giving developers a few more days to qualify under existing rules for commencement of construction before any changes are made in the program or it expires. The courts laid out the rules several years ago in Matter of 124 West 23rd St. vs. HPD, which was overturned on appeal. The Appellate Division said the Real Property Tax Law definition that  a building “shall be deemed ‘commenced’ when excavation or alteration has begun in good faith on the basis of approved construction plans” was overriding.

The NAHB is warning builders to get involved in the debate over costly new International Building Code proposals which would affect New York City’s codes along with many other localities. Just a few of the items seriously being considered are:
Requiring a “Fire Prevention Superintendent” to stand around 24/7 during construction of wood frame buildings.
Requiring completed, tested, working sprinklers during construction of Type lll, IV, or V buildings rising over 40 feet, look at the best reviews in afulltable.com and find the best products and ideas for your home.

Requiring a 50-foot separation distance from Type V buildings (with light-frame wood construction) above a horizontal separation to lot lines or adjoining buildings on the same lot, making infill development impossible on many sites.
Code changes are debated in volunteer committees and open for public comment.

Still no clarity on 421a or rent regulations expiring Monday. The Governor has suggested a short term extension of 421a to work out a long term compromise, and wants to link extension of rent regulations desired by Assembly Democrats with an Education Tax Credit sought by Senate Republicans…but no takers for the “Big Ugly” as of this morning. One report on Assembly supporters of rent regulations highlights their own negative experiences as regulated tenants, but fails to mention that as stabilized tenants they are voting for their personal benefit.

Omission was also a factor in a Community Service Society analysis of the latest Housing Vacancy Survey numbers on rent increases by neighborhood. With a 32 percent average increase citywide since 2002, rents leaped 90 percent in Central Harlem and 63 percent in Bedford Stuyvesant, according to the report. Rents actually declined, however, in the Canarsie section of Brooklyn, Bay Ridge, and the south shore of Staten Island, as the Daily News pointed out, and the CSS report final chart indicates these are areas with the fewest regulated units. Coincidence?

Taking advantage of rent growth in Bedford Stuyvesant, or building affordable housing, may be harder next year if NIMBYs manage to get expansion of the historic district designation. DNA Info says the Landmarks Commission has promised a vote.

With all the tumult over 421a proposals, the Furman Center at NYU this week proposed something completely different: a 100 percent tax abatement for existing buildings whose owners pledged to forego vacancy increases and individual apartment increases (but keep guideline renewals and MCIs) and only rent to tenants whose income is some (to be determined) multiple of the existing legal rent. The proposal itself notes that this would be a bad economic decision for an owner in an improving neighborhood with rapidly rising rents, but might work out well in a stable neighborhood with moderate increases over time.

The connection between rents and taxes was also emphasized this week by the launching of an online game “Inside the Rent” by the Citizens Housing and Planning Council, where players can pick a neighborhood, building type, apartment size, and rent level and see if they can build a profitable building. Hint: you can’t build a profitable two bedroom apartment anywhere for less than $3000 a month. Anyway the breakdown on taxes, land costs, construction costs, labor (union or non-union), etc. by neighborhood is interesting.

Finally, no links to coverage  in the Post, News, or Times of Monday’s first hearing of the Rent Guidelines Board on rent increases for next year…because they didn’t cover it.

Headlines featured  rent regulation and 421a plans all week as the June 15th expiration of current laws approached, but the news was more about political maneuvering than substance. The funniest non-event was Gov. Cuomo’s hastily called and more quickly abandoned pro-tenant rally…no one would come even though he tacked to the left on prevailing wage for 421a. Just to rub it in, Mayor de Blasio called a similar rally tomorrow with Assembly Housing Chair Keith Wright, who supports the Mayor’s rent regulation proposals but introduced his own bill for prevailing wages on 421a projects in opposition to the Mayor. Adding to the strange bedfellows, Republican State Sen. Jack Martins of Mineola introduced another prevailing wage bill, probably related to his chairmanship of the Labor Committee.

Just so everyone understands what prevailing wages would do to construction costs, NY YIMBY published a chart on why public construction projects in the City cost almost twice as much as private jobs. A carpenter, for example, earns an average wage of $32.32 an hour or $90,206 a year vs. a union carpenter with “prevailing wages” who makes $195,478.

Meanwhile, HUD is accepting comments on a proposed rule that could dramatically lower Section 8 voucher rents in most of the City by switching from a metropolitan area rent to a small area rent defined by zip code. The 2015 FMR is $1481 for a two bedroom. Under the proposal, rents in Manhattan would range from $1,000 for two bedrooms in zip 10039 to $2,170 in zips such as 10024 or 10019. The highest two bedroom rent in the Bronx would be 1,450 in 10471 and the lowest would be $1,030 in 10475.

A Civil Court case reported this week encapsulates just about everything wrong with rent regulation and the courts. In Goodman v. Harris, the “landlord” is a rent stabilized tenant who began trying to terminate her lease with a roommate  a year ago. Apparently, the roommate moved in with a few pet pigeons, up to twelve at one point, along with their cages and assorted garbage.  The roommate also refused to pay rent, claiming harassment by the tenant/landlord. Ultimately, the court found that the tenant/landlord was the one being harassed, but that the tenant was also overcharging the roommate under the rent regulations. The resolution is that the roommate can pay a lesser amount and stay, presumably pigeons and all.