There was a net increase of 169 rent stabilized apartments in 2014, according to a report issued by the Rent Guidelines Board yesterday. This is the second year in a row that additions to the regulated stock from programs such as 421a, 421c, and J51 outweighed subtractions for high rent/high income decontrol, expiring benefit programs, and other reasons. The report noted that only 186 units were deregulated based on high tenant income last year, and fewer than 6,000 total since 1994.

A second RGB report, however,  found that new housing completions declined 6.4 percent. The number of new 421a units completed fell for the third year in a row, following 2008 legislative changes that began kicking into the construction stream after 2011.

Meanwhile, the fate of rent regulation and 421a was still hanging in Albany, with barely two weeks of the legislative session left. Mayor de Blasio went upstate to lobby for changes in both laws Wednesday, but apparently got mostly lip service from the Governor and  Legislative leaders who are widely reported to be too scared to do anything on the issues while under the eyes of prosecutors.

The Mayor also this week made clear his preference for building new subsidized housing over maintaining existing buildings…maintaining his belief in prevailing wages for building service employees but saying that union construction workers were too expensive for the “sacred mission” of building affordable housing. Apparently, that was too much for the Governor, who could not resist saying de Blasio’s 421a plan was a giveaway to developers at the expense of workers and came too late in the session to be debated properly anyway.

Requests for Proposals for private development of 10,000 units on Housing Authority land should start coming out in early Fall under a plan for revitalizing the Authority and  building housing announced by Mayor de Blasio this week. The report cites 11 acres of developable land in street-facing lots at NYCHA projects, without naming names, but press reports indicate the first sites targeted may be at the Van Dyke and Ingersoll projects in Brooklyn and  Mill Brook in the Bronx. Much of the housing would have to be 50 percent affordable in exchange for reduced land lease payments. Look for the RFPs on HPDs website. Meanwhile, the Mayor’s plan also details one reason public housing is not working…it is only collecting 74% of the rent due from tenants. The tenant share of rent at NYCHA averages only $484 a month, but 32,000 households out of 176,000 are delinquent.

The State Assembly fired the first salvo in the battle over renewing rent regulation in Albany, Tuesday, passing a bill that would end high rent/high income decontrol, make major capital improvement and individual apartment improvement increases into temporary surcharges, block adjustments to preferential rents on lease renewal, and drop the statutory vacancy allowance from 20 to 7.5 percent, among other changes. State Senate leaders and the  Governor have said they expect the rent laws to be renewed, but have not proposed any changes yet.

It looks as if developers can continue to use carried interest as an incentive for another year. Rep. Paul Ryan, chair of the House Ways and Means Committee, said changes in the tax provision were off the table until 2017.

Ever thought about testifying at the Rent Guidelines Board but did not know what to say? Watch a YouTube video of industry representatives from CHIP, RSA, REBNY, SPONY and CNYC making the case for higher rents at an RGB meeting and get the facts straight. Public hearings are scheduled around the boroughs June 8th, 11th, 15th, and 18th.

The Buildings Department yesterday announced an ambitious plan to cut plan approval times by one third, adding 159 plan examiners over two years. Eventually, DOB would like to have 100 percent of applications and payments filed online. There will also be more opportunities for self-certification of projects. At the same time, they want to add 34 inspectors and create a new ‘risk management’ unit to increase enforcement.

The changes are touted as part of the citywide effort to meet Mayor de Blasio’s affordable housing goals, but tenant and neighborhood opposition to the Mayor’s plans also rose this week as residents of areas targeted for new construction objected and advocates attacked the Mayor’s proposed reforms in 421a tax incentives as inadequate.

Even the Mayor apparently agrees with a City Council move yesterday to block conversion of hotel units to housing in order to protect union hotel workers jobs.

Next Friday is the quarterly deadline for ABO members to file for rebates on supplies they have already purchased from Delta, Lutron, Glidden, Honeywell and dozens of other manufacturers. These rebates are on top of any discounts or rebates already taken, so check out your member benefit right now.

ABO is formally combining operations with Community Housing Improvement Program, Inc., a leading association of residential owners and managers. We will have more details in a separate announcement soon. In the meantime, members are welcome at a CHIP seminar on Housing Maintenance Code Compliance, Wednesday, May 20th, from 9 a.m. to noon at the New York Lawyers Association, 15 Vesey Street. Registration is required.

Members can also celebrate the new relationship at CHIP’s annual golf and tennis outing, and summer cocktail and dinner party, June 1st at the Glen Oaks Club in Old Westbury. Please call 212 838-7442 or email rsvp@chipnyc.org for details.

Mayor de Blasio’s reform plans for rent regulation and 421a were released this week amidst turmoil in the legislative leadership in Albany that the Governor has said may block any changes.

Nevertheless, the Mayor wants to see an end to high rent decontrol, elimination of the vacancy allowance, and temporary MCIs. He believes 421a benefits should be modified to require 25-30 percent affordable housing components in all new developments in exchange for a 25 year tax break. A detailed report by Capitol New York on the 421a proposal implies that there would actually be little change in the economic impact for developers in the outer boroughs where the ‘affordable’ units would largely be at current market rents.

The Mayor yesterday also submitted his revised 2016 Fiscal Year budget proposal, showing a roughly 4.5 percent annual increase in general property taxes over the next few years.

An Appellate Division decision in Altman v. 285 W. Fourth LLC late last week threatens to wreak as much havoc in the industry as the Tishman Speyer J51 case did, unless overturned. The court ruled that an owner could not decontrol a high rent apartment on vacancy based on the legal rent which a new tenant would be charged, but only on the legal rent paid by the previous tenant. The courts and State regulators had always interpreted the law the other way until now. The Rent Stabilization Law currently exempts any apartment “with  a  legal  regulated  rent  of  two thousand  five hundred dollars or more per month at any time on or after the effective date of the rent act of 2011, which is or  becomes  vacant on or  after such effective date. This exclusion shall apply regardless of whether the next tenant in occupancy  or  any  subsequent  tenant  in occupancy  actually  is  charged  or  pays  less  than two thousand five hundred dollars a month.”

As the industry reeled from the decisions and proposals above, NYU’s Furman Center this week released The State of the City’s Housing 2014. The focus of this year’s study was population and housing density. Turns out the City has fewer people per square mile than in 1970, an average of 53,000 vs. almost 58,000. Interestingly, population density is not necessarily correlated with crowding. The Upper East Side, with a population density of 99,400 people per square mile — nearly double the city average — also offers the most square feet of living space per person, more than 600. Meanwhile, Central Harlem had a 26 percent reduction in population per square mile since 1970 and still remains the City’s densest neighborhood.

The 7-month Uniform Land Use Review Process for Mayor de Blasio’s signature East New York rezoning will likely begin in September. The Mayor is supposed to make an announcement today, but Purnima Kapur, executive director of the City Planning Commission told the audience at BuildingsNY, Wednesday, that it would begin after the summer. Kapur said the full planning and review process for a neighborhood rezoning typically takes two years from start to finish, and de Blasio targeted East New York in May 2014.  Most of the other five neighborhoods targeted for higher density housing so far were not named until this winter and Spring, so we are probably looking at Spring 2017 before developers fully know their options. In the meantime, Kapur said past rezonings in Jamaica and the South Bronx offered as-of-right development opportunities that had not yet been fully tapped.

Bronx Borough President Ruben Diaz Jr. emphasized the same untapped Bronx potential during the keynote panel at BuildingsNY, Tuesday. He said the major obstacle to building in the Bronx today was the lingering image of the Bronx of 20 years ago in bankers’ and builders’ minds. Still, Diaz and Queens BP Melinda Katz both warned that the Mayor could not adopt a one size fits all approach to any rezoning for new housing citywide. Diaz, for example wants affordable housing in some areas for much higher incomes than current programs allow, and Katz said housing in Long Island City should be aimed at students and future graduates of the Cornell-Tech research facility on Roosevelt Island.

Meanwhile, 2014 was a boom year for construction spending, with the Building Congress reporting a record $11.9 billion spent on residential building and renovation. Most of that went into Manhattan luxury buildings, however, and it produced only about 20,000 new units, as opposed to the 30,000 units produced annually from 2005 to 2008  for about half the cost.

With all the focus on building housing, the Mayor’s hand-picked Rent Guidelines Board appears intent on making operating it unprofitable. The Board this week proposed a range of stabilized renewal guidelines from 0 to 2 percent for one year leases and .5 to 3.5 percent for two year leases. Public hearings start June 8th and continue until a final vote June 24th.

Mayor de Blasio wants to eliminate garbage as we know it by 2030 and reduce the creation of greenhouse gases by 80 percent from 2005 levels by 2050 according to his OneNYC plan announced this week. Both goals will require major changes by building owners and operators, but details in the plan were skimpy and contradictory. The solid waste plan, for example, highlights the potential for “single stream recycling,” which means dumpster rental service is collecting everything at once. Later it is separated as opposed to the current system, say, of separating paper and metal or organics at the initial collection point. But the plan also suggests a “save as you throw” program which would somehow rebate owners for putting out less garbage in the first place…although it is not clear why you would want to do that under a single stream collection plan.

REBNY has issued a new report on the unintended consequences of Landmarks Preservation. Building on previous research showing that Landmark Districts have largely blocked affordable housing development, the new work looks at the demographics of Landmark Districts. It turns out that the percent of buildings with landmark or historical status in a neighborhood correlates perfectly with income and race. Neighborhoods in Manhattan and Brooklyn with the most landmarks are the richest and whitest.

What’s next for housing and development in the City, and what’s best for your business? Find out at BuildingsNY this coming Tuesday and Wednesday at the Javits Center. Register free online to avoid a fee and lines at the door. We’ll have more exhibits of products and services you need than ever before and two full days of education programs that you literally cannot afford to miss.

The Price Index of Operating Costs calculated by the Rent Guidelines Board rose only 0.5 percent for the year ending in March, according to a report issued yesterday. RGB staff estimated that ‘commensurate’ stabilized rent increases based on the index might range from plus 2 percent to minus 2 percent. The low index was due entirely to energy prices dropping 21 percent. Real estate taxes increased 4.2 percent and are projected to increase 7.7 percent in 2016. Insurance was up 7.2 percent. The RGB re-weighted the index components this year based on Real Property Income and Expense Reports. One of the biggest changes was an increase in the weight given administrative costs from 6.8 to 13 percent of overall operating expenses. The industry has argued for years that administrative burdens on owners had increased due to increasing government rules and regulations.

The City Council, in fact, added more rules yesterday, with actions that would ban employers from running a credit check on prospective employees, tighten pollution controls, and require tamper resistant electric receptacles or protective covers on all receptacles in public areas of multiple dwellings. The credit check bill has an exception for employees who would have spending authority over $10,000 or more. All three bills go to the Mayor for signature.

Two other items on the Council agenda this week are a proposal to require prevailing wages on any affordable housing development that uses discretionary city funds and a budget proposal to create a pied-a-terre tax to pay for 1,000 more policemen.

Meanwhile, over in Newark, Real Estate Weekly reports that year-old legislation tying rent increases to an anemic CPI increase has already led to layoffs of building employees and reduced spending on maintenance and renovation.

Average interest rates for new multifamily mortgages fell to 4.27 percent, according to the 2015 Rent Guidelines Board Mortgage Interest Survey released yesterday. The rate is the lowest since the RGB started tracking it in 1981. The report also found that 1,356 buildings with stabilized apartments were sold in 2014, down 5 percent from the year before. Average vacancy and collection losses in stabilized buildings fell to 3.25 percent, also the lowest in survey history.

The RGB also released its annual Income and Affordability study, reporting that tenants’ average gross rent to income ratio remained 33.8 percent, essentially unchanged since 2011. The number of non-payments actions decreased 3.4 percent and the number of evictions ordered fell 6.9 percent.

The State Budget approved early April 1st may mean some new transportation alternatives and development opportunities in the Bronx. New funding was provided for four planned Metro North stations at Co-op City, Morris Park, Parkchester and Hunts Point. The budget also extended the Brownfields tax credit program 10 years, but limited the availability of new credits in New York City except for sites with affordable housing or dire economics.

Affordable or not, we definitely are going to have a housing shortage for awhile, NYYimby reports. We have almost hit our projected 2020 population of more than 8.5 million five years early.

You cannot build affordable housing in much of the City according to a report from the Furman Center at NYU yesterday. As developers have been saying for years, the numbers do not pencil out. Creating Affordable Housing Out of Thin Air, the Economics of Mandatory Inclusionary Zoning estimated that a new one bedroom apartment in a mid-rise building in an outer borough neighborhood would have to rent for $3200 to justify development. Significantly, eliminating property taxes, would bring that number down to $2000. Neither calculation, however, includes land costs. The report did say that in the highest rent areas of Manhattan and Brooklyn, market rents were high enough to support some affordable units either on site or through credits elsewhere…highlighting the importance of 421a tax breaks.

Speaking of 421a, Herrick Feinstein reported on its website this week that the State Attorney General is investigating developers who get 421a benefits, looking for prevailing wage and tenant qualification violations.

Affordable or not, there will be one less neighborhood to build in. The Landmarks Preservation Commission this week designated another historic district in Crown Heights.

Water for existing buildings will be more expensive. The Water Board is looking at a 3.24 percent increase for the year starting in July.

There may be a way to save on water damage. The Mayors Office of Recovery and Resiliency is reminding property owners in areas that will be added to the flood plain that if they buy flood insurance now, before the official maps change, they can get lower base rates grandfathered in under federal rules.

Brooklyn Borough President Eric Adams has confirmed he will join Bronx BP Ruben Diaz Jr. on the ABO’s BuildingsNY keynote panel “Housing in the Boroughs: Who Wants It?” at 9 a.m. April 28^th in the Javits Center.

What goes up does not always come down. An average of $3000 in heat– and as much as $20,000 in taller buildings — is going up elevator shafts  according to a report by the Urban Green Council this week which highlights Building Code changes that let owners modify roof vents and save money.

Another way to bring energy costs down is to join the Spring ABO FS-Energy electricity group purchase being organized now. The program has beat Con Ed rates by an average of 16 percent. There are only two weeks left to be part of the Spring bid, so contact Thom Devlin for information today.

The battle for more housing with higher density is taking an unusual twist in the Broadway Triangle area of Brooklyn, according to Crains. Hasids apparently want tall buildings and Hispanics want taller ones. In any case, it shows that neighborhoods that really want more affordable housing can have it.