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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Taxes, Fuel Drive Price Index Up

The Price Index of Operating Costs released by the Rent Guidelines Board yesterday showed an overall 6.2% increase. The index reflected a 7.8% increase in property taxes, the largest area of expense, and a 24.6% increase in fuel costs. Accordingly, the PIOC report suggests a renewal increase ranging from a low of 3% for one year leases to a high of 8.5% for two year leases, depending on methodology, but the Mayor continues to applaud the idea of a rent freeze, and the RGB in the past has been unwilling buck the Mayor’s intentions. Keep in mind that the 2014 PIOC was 5.7% and the RGB adopted increases of 1% for one-year renewals and 2.75% for two-year renewals.

The RGB’s Income and Affordability Study, also released yesterday, showed employment up and poverty down slightly from the prior year. Homelessness was up 2.8%, however, with an average of 58,770 people per night in city shelters. The number of non-payment filings in housing court declined for the fifth year, while the number of evictions was up slightly to 22,089 after steep declines in the prior two years. More than 20% of calendared cases are against public housing tenants.

The State Attorney General and New York City Council are both calling this week for legislation to stop alleged landlord harassment. The AG, Eric Schneiderman, wants to eliminate the state requirement for injury to a tenant for conviction of a landlord, because there has never been a successful case proven. Apparently, the idea that it just rarely happens has never occurred to him. Meanwhile, the Council has announced hearings next Wednesday on a package of anti-harassment bills, including one that would create a rebuttable presumption that, say, unsuccessful attempts to evict for non-payment or to buy a tenant out were harassment.

The 421-a tax incentive program was re-created as the “Affordable New York Housing” program in the State Budget approved late Sunday. The details are included in Part TTT of this budget bill. A good summary is here.

Apartments in post-1974 construction, much of it built under the 421-a program, have an average turnover rate of 20%, vs. 11 percent in older buildings, according to an Independent Budget Office analysis released this week. The Battery Park City and Lower Manhattan neighborhood, with the most new units, had the highest turnover rate–32%. But a few neighborhoods with older housing such as Morningside Heights, Astoria, and Bay Ridge had above average turnover as well.

State Senator Kevin Parker could have used a tax incentive. The NY Post reported, Monday, that he owes more than $50,000 in property taxes and water and sewer charges. “Part of my electoral success is I live in the same circumstances as my constituents,” Parker commented.

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How Much?

The New York City Council, Wednesday, passed legislation prohibiting employers from asking job applicants what they were paid at their last job, or relying on that information to make salary offers. If signed by the Mayor, as expected, employers will not be able to ask for salary information when checking references either.

California apartment owners breathed a sigh of relief this morning when the sponsor of a bill to repeal the State’s Costa Hawkins bill was reported to have withdrawn the measure until at least next year. Costa Hawkins prevents localities from regulating rents in buildings built since 1995 or regulating vacancy rents generally.

In Albany, NY, efforts by the Assembly to tie renewal of 421a development tax incentives to rent regulations’ 2019 renewal appear to have failed, but then the entire State budget deal is still up in the air this morning.

What’s a concierge worth in New York? An average of $54 a month in increased rent, according to a survey and study by the National Apartment Association released this week. A washer and dryer in the unit is worth $6.17 a month, on average, and a fitness center is worth $48.45.

And if access to public transit increases rent, check the new ferry stops coming on line. Mayor de Blasio announced yesterday that Rockaway service starts May 1st, with new northern Queens stops coming this summer.

Trash receptacles put out for curbside pickup are now officially limited to 55 gallons under a Department of Sanitation rule effective Wednesday.

The City Department of Buildings has extended the application period for anyone interested in working on advisory committees on revising the Building Code until April 14th. Engineers, architects, plumbers and developers are encouraged to apply.

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RGB Season Starts

Owners’ net operating income rose 10.8% in 2015 according to Income and Expense data reported by the Rent Guidelines Board yesterday. Expenses rose 1.1%. The tightest margins appeared to be on 11-19 unit Bronx buildings with average rents of $913 and expenses of $804 per month.

The RGB Mortgage Survey, also released yesterday, found little change in 2016, with average rates up 26 basis points to 4.26% and average maximum loan to value ratios of 73.7%.

The City Department of Investigations is criticizing the New York City Housing Authority for not evicting criminals and families of criminals. Perhaps they didn’t get the memo that the City Council doesn’t want landlords to even ask employees about their criminal history and that HUD has raised questions about whether rejecting new tenants with arrest records is a form of discrimination.

State Supreme Court Judge Debra James, Tuesday, dismissed RSA’s challenge to last year’s 0% rent guideline increase. An appeal is expected.

State legislators and the Governor were expected to work all weekend on the State budget, due today. As of this morning, it looked like some form of 421a tax incentive program would be included, but negotiations on benefits for outer borough condos and co-ops were up in the air. Workers compensation reforms were also on the table at the last minute.

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Be There or Be Square

Today is CHIP’s Annual President’s Club lunch. A major announcement is planned for the event.

Republican State Sen. Robert Ortt was indicted yesterday for alleged election law violations. Ortt’s removal from the Senate, if convicted, could tip the balance of power  to Democrats.

Four borough presidents, Wednesday, endorsed the proposal for a new Home Stability Support program to fill the gap between the shelter rent allowance and fair market rents when tenants are facing eviction or homelessness.

Thousands of owners and managers visited our BuildingsNY show Tuesday and Wednesday. There was standing room only at CHIP’s City Hall at BuildingsNY program with speakers and caseworkers from multiple agencies. Keynote Speaker Jerry Howard, CEO of the National Association of Homebuilders, warned owners not to expect any increase in Section 8 voucher funds in coming years; said an income tax cut was likely, but only after Congress finishes with health care; and thought the Low Income Housing Tax Credit would survive in some form. He gave President Trump’s 2018 budget proposals, including elimination of Community Development Block Grants, less of a chance.

The Bronx is up again. The borough added 6,524 people in the year ended July 1st, the Census Bureau reported yesterday.  The other boroughs trailed, but all grew. The City’s overall population rose by 21,171 to an estimated 8,537,673. The State lost 1900 people. Only eight counties north of Westchester gained.

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