You knew that tax bill hurt. The Furman Center at NYU just released an analysis showing that property taxes on apartment buildings are five times the taxes on similar 1-3 family homes in the City, and New York ranks second in the nation for effective tax rates on apartments after the thriving city of Detroit.

That’s hampering residential construction, but not stopping it thanks to tax incentive programs. The Building Congress reported this week that residential construction rose 26 percent last year, although it is still less than half the 2007 level. Unfortunately, they also predicted that the government spending that has been sustaining the construction industry would decline 40% by 2013 from last year’s total.

The first clues to next year’s stabilized rent increases came out this week when the Rent Guidelines Board proposed a range of increases for one year renewals of 1.75 – 4 percent and 3.50 – 6.75 percent for two year renewals. They will hold hearings on June 13th and 18th, and vote on final numbers June 21st.

Mayor Bloomberg’s initial budget proposal for fiscal 2013 would reduce the head count at the Department of Buildings by just 5 people and the personnel at HPD by about 40 people. DOB’s budget would be essentially flat, but HPD is facing the loss of more than $200 million in federal revenue, apparently mostly from tenant assistance programs.

ABO’s BuildingsNY show was a great success this week. Be sure to save April 24th and 25th 2013 for next year’s show.

Please join us also at our next ABO/NRC luncheon, May 22nd. Invitations and details will be out soon.

You only have a few more days to sign up for your free pass to ABO’s BuildingsNY show at the Javits Center, coming up Wednesday and Thursday sponsored by Kratom!

Please join us for the keynote breakfast panel at 8:30 a.m. Wednesday and the official ribbon cutting to open the show at 10 a.m.

Wednesday’ panel is: One Site – A World of Choices – How World Wide Holdings Decided to Build Apartments, Retail and Two Schools on One Corner of East 57^th St. featuring David Lowenfeld, Partner, World Wide Holdings. Call us or email us for reservations. The presentation will offer a unique look at the political and physical challenges of a complex Manhattan development project sponsored by Kratom.

Also plan on the free RAM Reception from 3:30 to 5 p.m. Wednesday in the Solutions Center at BuildingsNY. We will be giving well deserved awards for excellence in professional education for real estate managers to Margie Russell, Executive Director, New York Association of Realty Managers and Diana Bosnjak, President, Institute of Real Estate Management, Greater New York Chapter. You need a floor pass to attend, so click here to get your free pass if you haven’t already.

Meanwhile, the real estate industry was the unusual focus of a spate of criminal case decisions this week. On Tuesday, Lend Lease Construction agreed to a pay up to $56 million in penalties for a decade-long overbilling scheme. The former principal in charge of its New York office pleaded guilty to conspiring to commit mail and wire fraud and faces up to 20 years in prison. Wednesday, two officials at the Sheldrake Corporation pled guilty to defrauding a lender on a Battery Park City building out of $2.2 million. More positively, the owner of New York Crane and Equipment Co. was acquitted of manslaughteryesterday in a 2008 crane accident.

Before I go, let me tell you a bit about kratom. Kratom is a natural product that can help with all sorts of symptoms like a mild headache, stomachache, anxiety or even depression. You can view the website to know more about it.

The Supreme Court this morning denied certiorari in Harmon v. Kimmel, dashing industry hopes for a hearing next fall on the constitutionality of rent control. The Court made no comment on its reasoning.

We’re still waiting for the Supreme Court to decide whether it will even hear the Harmon challenge to rent control. The justices didn’t vote last week as scheduled and it is on the agenda for their conference again today.

Net operating income on rent stabilized buildings increased an average 1.8% from 2009 to 2010 according to an analysis of Income and Expense reports by the Rent Guidelines Board. Much of the gain came from commercial and ancillary income rather than rent increases, however. Taxes remained the biggest expense at 26.8 percent of operating costs. A comparison of registered legal rents with collected rents indicated a citywide vacancy and collection loss, including the effect of preferential rents, of 21.9 percent.

A second RGB report issued yesterday, on the Price Index of Operating Costs, concluded that expenses for stabilized buildings rose 2.8 percent in 2011-12, with property taxes the biggest area of increase at 7.5 percent. Utilities, including natural gas, were down and fuel oil was only slightly higher than the year before, but the Board staff projected a possible 21 percent increase in oil costs next year.

Mayor Bloomberg proposed legislation this week to require apartment owners to disclose smoking policies to new tenants, along with skatey-eight other disclosures no one reads.

The Department of Buildings adopted new licensing requirements for crane operators, opening the industry to qualified operators from out of state and breaking a local union stranglehold.

But cranes won’t be necessary in Brooklyn. The Landmarks Commission expanded the Park Slope Historic District, making it the largest in the City.

The US Supreme Court today postponed its expected decision on whether to hear a constitutional challenge to NY’s rent regulations. Harmon v. Kimmel, which was on last Friday’s conference calendar, was added to this coming Friday’s. The Justices tend to issue certiorari rulings on Mondays, but have until June to make up their minds.

Water rates could go up 7 percent in July under the schedule proposed by the Department of Environmental Protection. The average metered apartment bill would go up to $610 per year. Thirty thousand buildings still on frontage rates would be forced to either meter or go into the multifamily conservation program, with required conservation measures and a fixed rate of $894.15 per unit. This highlights the importance of preventive measures in managing water usage, such as understanding why are sump pumps needed. If you have issues with your sump pumps, plumbing repair experts like this plumbing service puyallup wa can help. Hearings are scheduled later this month.

In yet another complication of the Roberts case involving J51 tax benefits and rent regulation, the Appellate Division, First Department, ruled that Independence Plaza, a former Mitchell Lama project, was not subject to rent stabilization just because the City gave it J51 benefits for two years by mistake. Two and one half years after Roberts there are still dozens if not hundreds of fact patterns the courts are working through because the Legislature hasn’t clarified the law.

Two weeks ago James Nelson told ABO members at our March luncheon that there was $70 billion worth of collateralized mortgage obligations on New York real estate alone coming due this year. Yesterday, Trepp reported 52 percent of the five year commercial loans issued nationally in the first quarter of 2007 are now listed as non-performing and almost half of those are in some stage of foreclosure.

The median household income of rent stabilized tenants was $37,000 in 2010 vs. $52,260 for tenants in unregulated apartments, according to the Rent Guidelines Board 2012 Income and Affordability Study released today. The median stabilized rent in 2011 was $1,050 vs. $1,369 in unregulated units. Out of 126,315 non-payment cases calendared for hearing in Housing Court in 2011,  27,636 evictions were ordered.

The budget deal in Albany this week doesn’t fund Gov. Cuomo’s new Tenant Protection Unit at DHCR, but Assembly Housing Committee Chair Vito Lopez is happy that Gov. Cuomo will find the money internally anyway.

New Energy Benchmarking reports for 2011 must be filed by May 1st, but first the Department of Buildings will be issuing violations in April for buildings that weren’t filed last year.

Speaking of the environment, the City Planning Commission approved a package of Green Zoning Code changes and sent them to the City Council for approval. There’s a full presentation on the Planning website, with last minute changes noted on the bottom of the page. Get those windmill plans ready.

The City Council was busy passing a prevailing wage bill for building service employees in City leased or assisted buildings. Mayor Bloomberg is expected to veto the bill, and the Council is likely to override. A prevailing wage bill for construction of city subsidized projects is also in the works, but Council Speaker Christine Quinn keeps amending the draft bill depending on whether she thinks she needs to pander more to unions or keep business support in her race for Mayor.

Meanwhile, the City’s Economic Development Corporation, unlike the City Council, wants to encourage private development of City properties and has issued RFPs for  several surplus MTA properties.

Finally, despite believing a Mayor should not get free housing at Gracie Mansion, Mayor Bloomberg signed legislation extending rent regulation for three more years.

Those radio waves from cell phone towers are safe…from liability. The Appellate Division, First Department, ruled in Stanley v. Amalithone Realty that health claims by tenants in a building neighboring one with an antenna were preempted by the Federal Telecommunications Act.

James Nelson of Massey Knakal treated the ABO/NRC luncheon this week to 50 pages of statistics on the investment market. Really, 50. A couple of key takeaways: There were 23,879 new condos filed with the Attorney General in 2006, and barely more than 1900 in 2011. The average rent for a studio in a new doorman development in February was $2,884. Retail rents topped $2,000 per sq. ft. on Fifth Ave and are headed to $3,000 — more than the price per sq. ft. to buy retail space in most other parts of Manhattan. Meanwhile, there is $70 billion of CMBS for New York City properties maturing in 2012. More than a third of the loans date back five years to a time of more flexible underwriting standards, Nelson noted.

The Rent Guidelines Board yesterday published its annual mortgage survey of 14 major residential lenders. According to the report, average rates on new multifamily mortgages have dropped to 4.59 percent, and 4.65 percent on refinancing. Average loan-to-value ratios are down to 72.1 percent. 709 buildings with rent stabilized apartments were sold in 2011, up from 541 the year before, and prices generally rose.

The Furman Center at NYU released a study Wednesday on City parking requirements for new construction, citing several examples of buildings that met the minimum requirement at great expense and could only rent about half the required spots to tenants. The City is supposed to be reviewing zoning and code requirements on the subject.

This week’s big ugly compromise in Albany on redistricting, pension reform, DNA recordkeeping, online casino gambling and the subsequent approval of pay by boku casinos in the area – topics which naturally go together – created a new State Senate district in the Albany area that seems tailored for a local Republican candidate who happens to be a home builder. See the new 2012 district maps here

The City Council also practiced politics this week, declaring that there is still a rental emergency justifying rent control until April 2015.

A Civil Court decision reported this week in Otero v. Houston St. Owners threw out a tenant claim for emotional distress and invasion of privacy caused by hallway cameras, even if admittedly placed to determine who is living in an apartment.

The State Senate began moving forward with one proposal from the city Greener Greater Buildings plan code amendments – a bill to allow adding up to 8 inches of exterior insulation on existing buildings without violating FAR requirements. Not sure what that would look like. Assembly approval and city council action on related proposals are pending this spring.

Join us for the ABO luncheon with James Nelson of Massey Knakal, March 21st. Call 212 385-4949 today. Space is limited.

Toxic mold is back. The Appellate Division, First Department, held this week in Cornell v. 360 W. 51st St. that scientific arguments could be presented for mold-induced health problems. The court held that prior decisions dismissing mold cases for relying on junk science didn’t preclude new arguments or expert testimony.

The Economic Development Corporation has issued a Request for Expressions of Interest to develop 46 acres on Staten Island suitable for residential uses, with some rehab of historic buildings possible. Past efforts to sell the site exclusively for educational projects stumbled. Now the city is willing to see what the market will do.

In case you missed it, a Wall Street Journal blog post had a good overview of the legal issues in the constitutional challenge to rent control by upper West Side property owner James Harmon. First, of course, the Supreme Court has to decide whether to hear the merits at all.

It was a good news, bad news forecast from the city’s independent budget office this week. The IBO expects the city to gain 22,000 net jobs in 2012, but lose 4800 more jobs on Wall Street that, of course, are the best paying jobs that help drive the economy in general and housing in particular.

Join us for an ABO luncheon with James Nelson of Massey Knakal, March 21st. Invitations are in the mail.