Is Rent Stabilized income really lower?

David Goldsmith

All Powerful Moderator
Staff member

"Landlords who keep rent-stabilized units vacant could be forced to pay fees under a new bill introduced by a Manhattan lawmaker.

Under the rules, owners would have to pay a penalty of the last legal rent after a unit has been vacant for three months. They would then face a fee each month that works out to be 150% of the last legal rent. The money will be funneled into a fund set up by Homes and Community Renewal that will support homeless people. Landlords would be able to avoid the fee if they can show they are doing renovations on the units, and they aren’t able to rent them."

David Goldsmith

All Powerful Moderator
Staff member
Or are they just leaving out income from units being warehoused in anticipation of the 2019 changes being overturned in court?

It seems pretty obvious that there are thousands of units currently being kept vacant/not being renovated on purpose in the hope that they won't have to be rented at virtually no increase over the last registered rent.

Rent-stabilized housing income falls for the first time in 20 years: report
The Rent Guidelines Board to meet next week

For the first time in nearly two decades, the Rent Guidelines Board is reporting a decline in average net operating income among rent-stabilized properties in the city.

A report released Wednesday states that NOI declined slightly by .6 percent from 2017 to 2018. It’s the first drop reported since the board’s analysis of income and expenses from 2002 to 2003. Rental income increased by an average 3.7 percent and total income by 3.6 percent. Operating costs increase an average of 5.8 percent.

The board, tasked with determining rent increases on stabilized apartments, will be meeting remotely, starting next Thursday. Last week Mayor Bill de Blasio called on the board to freeze rents.

“The study makes it clear that an increase in rent is warranted,” said Rent Stabilization Association President Joseph Strasburg. “We don’t see how this mayor can ask for a zero increase in light of these numbers.”

The report doesn’t reflect the effect of the economic crisis brought on by the coronavirus pandemic, nor does it show how the Housing Stability and Tenant Protection Act of 2019 — which severely limited the ways that landlords can increase rents on stabilized properties — has impacted NOI

Both tenant and landlord groups have criticized the RGB’s analysis for relying on incomplete data. The analysis excludes buildings with fewer than 11 units, arguably excluding the most cash-strapped properties. Landlords have also pointed to the fact that the board’s analysis of costs doesn’t include debt service and certain maintenance bills.

The report also provides a separate analysis of NOI adjusted for inflation. Both this year and last year saw a decrease in NOI when taking inflation into account. From 1990 to 2018, after adjusting for inflation, NOI has increased 48.7 percent, according to the report.

Last year, the RGB approved a 1.5 percent increase for one-year leases and a 2.5 percent hike for two-year leases for both rent-stabilized apartments and lofts. In 2018, the board approved an increase of 1.5 percent, but that was preceded by two years of rent freezes.

The report acknowledges that its analysis depends on landlords supplying accurate costs and income to the city’s Department of Finance. While the board acknowledges potential misrepresentations, adjustments to the cost and income analysis relies on a 1992 audit of Real Property Income and Expense (RPIE) statements for 46 stabilized buildings. When taking into account the audit, which found that owners generally inflated costs by 8 percent, the average monthly cost per apartment drops from $1,034 to $949.7, according to the report.

Not only is the audit nearly 30 years old, but “results are somewhat inconclusive since several owners of large stabilized properties refused to cooperate,” according to the report.

During one of last year’s meetings, tenant attorney and former RGB executive director Tim Collins called on the board to conduct another audit. He noted that a more accurate picture of costs was needed, saying at the time, “For every owner who tells you they are losing money, well, put up or shut up.”

David Goldsmith

All Powerful Moderator
Staff member
CHIP, a landlord advocacy group, seems to be admitting it's members are keeping 20,000 units vacant on purpose. Apparently the claim is they can't be rented because they are not up to code, etc. I've seen some of these units and they could easily be rented with barely more than a paint job.

David Goldsmith

All Powerful Moderator
Staff member
Just to be clear what CHIP is asking for is a change to be even more lax that prior to the 2019 rule tightening, before which owners were limited to increases if 1/40th of the renovation costs. A major reason the legislature removed this provision was proof of widespread fraud in claims of renovation costs. The ask is now for owners to be able to "reset" rents to whatever the want regardless of renovation costs.

Landlords offer to re-open 20K warehoused apartments*

*If Albany allows a vacancy reset on rents​

Landlords have a deal for Albany.
They would fix up and return 20,000 rent-stabilized apartments to the market. In return, lawmakers would give them a way to pay for it — by allowing for a vacancy “reset” on rents.
The Community Housing Improvement Program, which made the pitch Tuesday, says the 20,000 units sit vacant because the 2019 rent law severely limited the rent increases needed to fix them up. An exodus of renters during the pandemic contributed to that total.

The Housing Stability and Tenant Protection Act nixed the 20 percent rent bump allowed when tenants vacate a rent-stabilized apartment, and curtailed rent increases to pay for renovations.
CHIP said because stabilized renters can cling to a below-market-rate unit for decades, by the time they leave it’s often in bad shape. A basic renovation can cost $75,000 or $100,000, owners said.

But under the 2019 law, only $15,000 in improvements to an apartment can be recovered via rent increases every 15 years, which works out to $89 per month on top of rent that is often around $1,000. Rather than make an investment guaranteed to lose money, landlords mothball the unit and wait for Albany to change the law.

CHIP said allowing landlords to set a new first rent after a tenant vacates would give owners the ability to fund renovations and put units back on the market. The group also wants to set a new initial rent for vacant units, rather than be limited to the 20 percent increase provided by the old rent law.
“We’re not asking to deregulate these units,” said Jay Martin, executive director of CHIP. “We’re simply asking for the ability of an owner to reset the rent to market rate after a vacancy.”

So-called vacancy bonuses are a common feature in rent control laws elsewhere because they are seen as necessary to maintain the housing stock. But in New York it led to some landlords harassing tenants into leaving, prompting lawmakers to eliminate it in 2019.
To draw lawmakers’ attention to the issue, CHIP launched the site Vacancy NYC and a cross-platform social media campaign to engage “a new type of audience that is increasingly savvy, politically engaged and among the most impacted when it comes to finding affordable housing in New York City.”
Tik Tok, one of the platforms CHIP will hit, has lately been rife with complaints from young renters about being priced out of New York’s rental market.
Two months ago, rising rents broke records as vacancies fell to their lowest level for any February since 2008. Brokers say workers’ expectation to be back at their desks this spring has driven the demand.

Meanwhile, tenants who snagged multi-month concessions a year ago have been hit with rent hikes as high as $1,000.

Daniel Mishin, CEO of short-term affordable rental company June Homes, said he has seen an influx of Gen Z tenants looking to stay in the city by snagging the firm’s short-stay deals. Mishkin sees the city’s warehoused inventory as an untapped market that would improve affordability.

“All those vacant units, it’s a black hole,” said Mishin. “This is housing that could really help New Yorkers, you know?”
A report by the Rent Guidelines Board last week revealed that in the year after the rent law passed, the city’s stabilized housing stock deteriorated. In 2020, distressed properties — meaning their operating and maintenance costs exceeded their gross income — made up 6.5 percent of the rent-stabilized housing stock, up 1 percentage point from the previous year.

CHIP estimates that, on average, an owner renting a unit for less than $1,500 a month is losing money on operating costs.
If the state gives owners reason to bring the 20,000 warehoused units back online, it would make a small dent in the city’s housing supply needs. A January report by the Real Estate Board of New York found the city needed at least 560,000 more apartments by 2030 to meet demand. Current pipelines will supply just 14 percent of that.

Albany has shown no interest in undoing the major provisions of the rent law, so CHIP’s effort is unlikely to lead to legislation passing before the legislature adjourns for the year in June. But it could start a conversation that gains traction over time. Some investors have purchased rent-stabilized buildings on the hunch that the legislative pendulum may swing the other way.

To date, lawmakers have favored a stick over carrot approach to bringing warehoused apartments online. Two years ago, Assembly member Linda Rosenthal introduced a bill that would penalize landlords who kept units vacant for more than three months. Owners could ask for fees to be waived for uninhabitable apartments.

David Goldsmith

All Powerful Moderator
Staff member

Rent board staff proposes increase of up to 4.5%​

Average hike was 1% under de Blasio​

After landlords’ operating costs jumped 4.2 percent last year, the Rent Guidelines Board staff released reports Thursday recommending rent increases of 2.7 to 4.5 percent on one-year leases for rent-stabilized units and 4.3 to 9 percent on two-year leases.
The ranges are considered starting points, and the board has often ignored the suggestions. In fact, the board froze rents in 2020 and approved a partial freeze on one-year leases last year, despite initial recommendations for higher increases.

The agency uses three formulas with different approaches to the goal of keeping landlords’ net operating income from rent-stabilized units constant.

The oldest of the formulas, which looks at both the increase in costs this year and the projected increases for next year, called for a 2.7 percent hike for one-year leases and 4.3 percent for two-year deals. A formula that inflates debt service resulted in the highest increases: 4.5 percent for one year-leases and 9 percent for two-year deals.

Landlords’ costs jumped across the board from April 2021 to March 2022 except for property taxes, which dropped 3.7 percent because buildings lost value. Fuel costs rose the most, 19.6 percent, followed by insurance at 10.9 percent and maintenance at 9.2 percent.
Christina Smyth, an owner representative on the board, cautioned that the drop in taxes is an “anomaly,” caused by the pandemic.

“It can’t be understated that across the board, expenses are up,” she said. “We’re not trying to hit home runs for either side. We’re just trying to cover expenses.”
Economy-wide inflation helped drive up costs this year, and a separate report found that average interest rates for new multifamily mortgages increased 15 basis points, to 3.91 percent — the first increase in four years.

Tenant advocates are worried that the board will approve increases this year, in part because Mayor Eric Adams appointed NYU finance professor Arpit Gupta as a new public representative on the board. Gupta, a fellow at the free-market think tank Manhattan Institute, expressed skepticism about rent control in a December article, leading some tenant leaders to question his fitness to deliberate on rent for regulated apartments.

Adams also appointed Legal Aid Society attorney Adán Soltren to fill the tenant representative vacancy on the board. In a statement Thursday cheering the selection, Legal Aid called on the board to approve an “indefinite” rent freeze.

“During this time of great uncertainty, it’s unconscionable to consider any rent increase on some of our most vulnerable neighbors,” the group said.
During the de Blasio administration, the board froze rents on one-year leases three times, and last year for the first six-months on such leases. Increases otherwise hovered below 2 percent for one-year leases, and below 3 percent for two-year leases.

Overall, the de Blasio-era increases were about 1 percent annually. The final vote during the Bloomberg administration hiked rents 4 percent on one-year leases, and 7.75 percent for two-year renewals. The city has about 966,000 rent-stabilized apartments.
Mayor Eric Adams has publicly stated that he would support a rent freeze if it were supported by analysis. He has also said, however, that he would not back a freeze because it would harm small property owners. It is unclear how much influence Adams has on board members appointed by his predecessor.

Landlords are expected to request higher increases than those laid out by the board staff Thursday. Vito Signorile, vice president of the Rent Stabilization Association, said the board’s analysis is flawed because it is seeking to keep net operating income at a constant, when it is at an historic low.
A separate report by the board’s staff found that net operating income, which does not include taxes or mortgage payments, plunged nearly 8 percent, the largest decrease in 17 years.

“We had no doubts that the message this year is: follow the data,” he said in an interview. “The board has no reason at all to shy away from this recommended data.”

David Goldsmith

All Powerful Moderator
Staff member

In housing-starved NYC, tens of thousands of affordable apartments sit empty​

Landlords blame the state’s rent law for making repairs a money-losing proposition; lawmakers don’t believe them.​

In a Washington Heights apartment building, vacant units are littered by the forsaken belongings of tenants. A wall decal in one reads “I love God” in bubble letters. In another, a dresser gathers dust beneath a boarded-up window. In a third, abandoned possessions poke holes through trash bags.
The abandoned items were left by tenants of rent-stabilized apartments that now sit unoccupied and unavailable in a city desperately in need of low-cost housing.

Landlord David Eshaghoff recalls a simpler time, before state lawmakers made renovating and renting these units out a money-losing proposition. Eshaghoff’s empty apartments — about a dozen of his 200-unit portfolio — need repairs. Collapsing ceilings, disintegrating plumbing and shoddy electrical work render them uninhabitable.
But he said that because of New York’s rent law, there is no economic rationale to fix them — even if he could afford to.

Landlords’ plight​

The Housing Stability and Tenant Protection Act, a sweeping rent reform passed by the state Legislature in 2019, dramatically limited landlords’ ability to increase rents on stabilized apartments. The measure ended the vacancy bonus that had allowed owners to raise rents 20 percent when stabilized units became unoccupied. It also reduced to $15,000 over 15 years the renovation costs that landlords can recover by hiking rents.
Eshaghoff estimates that it would cost anywhere from $70,000 to $120,000 to renovate one of his empty apartments — far more than the law allows him to recoup by renting them out afterward.
“Nobody really, in this day and age, wants to live in the product that currently exists,” he said. “You can only put so much lipstick on a pig. Eventually it’s gotta go for slaughter.”
Some advocates blame landlords for letting the units deteriorate, but many apartments were occupied for decades by tenants who did not want to leave temporarily to allow improvements that, under the old law, would raise their rent permanently.
Owners of stabilized apartments across the city say the renovation provisions — which also curtailed rent increases for building-wide improvements such as new roofs, boilers and elevators — and other changes in the 2019 rent law have not only worsened the housing shortage but jeopardized their business models.
Some have decided to cut their losses. Rosedale Management, a three-generation family business, unloaded 10 of its 13 buildings in the year and a half after the law passed. Two of the properties needed new elevators — a $600,000 job altogether. Unable to finance those repairs, Rosedale decided to sell in a down market.
“That was solely due to the changes in the rent laws,” a spokesperson for the firm told The Real Deal last summer. “There was absolutely no way to break even.”
Meanwhile, owners claim rising expenses such as maintenance, insurance, utilities and taxes have pushed the operating costs of some rent-stabilized buildings above what they can legally charge tenants.
The Community Housing Improvement Program, a landlord group, calculated that monthly operating costs now average $1,548 per unit. The median monthly rent for a stabilized apartment in the city, according to the Rent Guidelines Board, is $1,422.

Vacant but unavailable​

In April, CHIP launched a campaign to call attention to the city’s unrentable housing stock. The group estimated that 20,000 rent-stabilized apartments in the city were empty because renovations were not economically feasible.
In May, the city’s Department of Housing Preservation and Development released a more staggering number: nearly 43,000 vacant but unavailable units. It was a galling figure, given the city’s homelessness problem, soaring rents and dearth of affordable housing.
HPD’s survey found that the vacancy rate among affordable units, defined as renting for less than $1,500, fell to below 1 percent last year, the lowest in three decades. Between 2017 and 2021, the city lost 96,000 low-cost units but gained over 100,000 with monthly asking rents above $2,300.
As the market tightened in the past year, the median rent for market-rate apartments increased 21 percent. The median rent in Manhattan set an all-time record for the sixth consecutive month in May.
Meanwhile, the city’s homeless population is at a level not seen since the Great Depression, according to the advocacy group Coalition for the Homeless. Every night, about 60,000 New Yorkers — including more than 15,000 children — sleep in shelters. The city’s vacant rent-stabilized units could house them all.

These vacant units in David Eshaghoff’s buildings remain off the market because renovation and operating costs far exceed what the owner can legally recover in rent.operating costs far exceed what the owner can legally recover in rent.
The vacancy survey identified various reasons why those stabilized units sit vacant, but did not break down the total. Some are undergoing renovations or being kept off the market until an apartment next door becomes vacant, which allows landlords to combine them and set a new rent. Others may fit the narrative landlords describe: They’re uninhabitable and awaiting repairs.
“This is only going to keep getting worse,” said Jay Martin, CHIP’s executive director. “We’re talking about a very aged housing stock across the city.”

A losing game​

Helen Greenberg, a multigenerational owner of two buildings in Lower Manhattan comprising 45 units, including 10 that are rent-stabilized, understands the struggle to finance repairs when a long-standing tenant leaves.
Two of her residents died in the fall of 2019, three months after the rent law’s adoption.
One, a public school teacher who had been reluctant to let Greenberg into her railroad-style studio since moving in 40 years ago, was paying $737 a month.
“They’re generational apartments,” Greenberg said. “And I don’t blame the tenants because, you know, it’s like winning the lottery getting one of those apartments.”
Upon entering the late teacher’s unit, Greenberg quickly realized it needed a gut renovation. A contractor quoted her $52,800. The architect would cost another $5,000. Demolition might be $1,500, plus $500 for asbestos testing and city permits.
In total: nearly $60,000.
To offset that cost, the rent law allows Greenberg to add $89 to the monthly rent for 15 years (it’s $83 per month in buildings with more than 35 units). That would cover 27 percent of the renovation expense.
“We can’t afford to put close to $60,000 into an apartment and get, you know, $800 a month,” Greenberg said.
But keeping a dozen units vacant is also a losing game.
“I’d like to paint the halls; I’d like to put cameras in; I’d like to check the roof, to redo the sidewalks,” Greenberg said. “If you could potentially get an extra $2,200 a month, that’s impactful, times 12.”
Greenberg lost market-rate tenants when city dwellers fled in the early months of the pandemic. Like countless other landlords, she had to reduce asking rents to find new tenants. Meanwhile, her property taxes, utility bills and insurance have continued to rise.
Asking rents across the city have since rebounded, but Greenberg claims the losses she sustained during the pandemic, coupled with the failure of many of her tenants to apply for rental assistance, have set her back significantly.
“Whatever we make goes pretty much to the mortgage,” she said.

“Artificial scarcity”​

Tenant advocates and some Democratic lawmakers, however, are skeptical of landlords who say the law ties their hands.
Assembly member Linda Rosenthal, who in 2020 introduced a bill that would charge landlords a monthly “warehousing fee” for not leasing rent-stabilized apartments, doesn’t buy all their stories about untenable repair costs.
“In a couple of cases, the landlord claims the apartment needed too many repairs for the tenant to move in, and of course that wasn’t true. Because when they eventually did move in, the apartment was perfectly fine, habitable, comfortable,” Rosenthal said. “If an apartment needs that much repair and upgrades, it means the tenant who lived there before was living in squalor.”
Rosenthal said she’s entered apartments that owners claimed needed thousands of dollars of work, only to find that they just needed a new refrigerator, stove and paint.
“Perhaps the landlord intends to use gold paint,” she scoffed.
Rosenthal, whose district includes parts of the Upper West Side and Hell’s Kitchen, contends that owners are “willfully” keeping units vacant, creating “artificial scarcity” so they can ratchet up market-rate rents — exacerbating the homelessness crisis.
The Coalition to End Apartment Warehousing, a tenant group formed last year after members noticed an uptick in vacant units, argues that owners are keeping units vacant to work around the 2019 rent law and to bolster their case for changing it.
“They just have absolute, unequivocal hatred for HSTPA,” said Hui Cheng, a member of the coalition and the West Side Neighborhood Alliance, another tenant group.
Before the rent law passed, some owners did not re-rent low-rent units that became vacant, opting for flexibility over potential long-term tenancies under rules that were sure to be more tenant-friendly.
The law did leave owners a loophole: the ability to combine empty apartments and choose a new rent.
Some landlords may hold units vacant, the coalition claims, then harass tenants out of neighboring units to pursue that scheme.
“They’ll do really loud construction in the apartment that was vacated organically to frustrate the tenant next door and force them to move out,” Cheng said. Harassment is illegal, but the law is difficult to enforce.
Now, the group argues, owners are using warehousing as a bargaining chip to pressure the state to reverse some of the tenant protections passed three years ago.
It points to CHIP’s 20,000-vacant-unit campaign as evidence. The landlord group offered a deal: If state lawmakers allowed owners a one-time rent reset for vacant, stabilized units, owners would lease them.
“When you have landlords admitting what they’re doing and why, that’s just handing over their reason for warehousing on a silver platter,” said Cheng.
CHIP has countered that it is not seeking to reinstate vacancy decontrol: Before the 2019 law, owners could remove a vacant unit from regulation if the legal rent exceeded a certain threshold.
Owners say they just want a way to pay for renovations.
“That’s a way to do it,” said Greenberg, noting that a reset rent may not cover all of a renovation, but “it would definitely help.”
Rosenthal disagrees.
“That’s the definition of extortion,” she said. “Why should we pay them to do what they’re in the market to do? We’re not going to be hoodwinked.”

Long road ahead​

Rosenthal’s legislation, which is backed by the Coalition and but did not make it out of committee last session, favors a stick-over-carrot approach, fining owners who keep apartments vacant for more than three months. The initial penalty would be the unit’s last legal rent, then 1.5 times that amount each additional month a unit remained vacant.
The Assembly member could introduce her bill again next year, but vacancy surcharges, which have also been proposed for empty lots and storefronts, have not come close to passing at the city or state levels.
A push to pass a statewide good cause eviction measure also failed in this year’s legislative session, which ended last month. The bill would have guaranteed tenants lease renewals and forced landlords to justify a rent hike exceeding 3 percent or 1.5 times the regional inflation rate, whichever is higher, if a tenant refused to pay.
Cea Weaver, a tenant organizer with Housing Justice for All, which campaigned relentlessly for the bill, said the group will try a new strategy next year.
If Rosenthal’s anti-warehousing bill does somehow pass, it would take a two-pronged approach to boosting affordability: filling vacant units and using the fines to fund housing vouchers for the homeless.
But just as Rosenthal wonders why the city should give landlords anything to fill their units, owners question why they should subsidize vouchers, which they see as the government’s responsibility.
“Did our elected officials take any pay cuts during Covid? Did they have to offer a percentage of their salary back to the city to increase homeless shelter beds?” Greenberg asked. “What’s their big sacrifice?”


David Goldsmith

All Powerful Moderator
Staff member
When you hear owners complaining about how "unfair" the Housing Stability and Tenant Protection Act of 2019 is consider this type of behaviour which was going on:

Brooklyn landlord forced to return $300k to tenants​

Yeshaya Wasserman’s SGW Properties failed to comply with security deposit law​

Small security deposits are adding up to big trouble for a Brooklyn landlord.
New York Attorney General Letitia Jame on Thursday announced an agreement with SGW Properties to return nearly $300,000 of security deposits to tenants. James found the company, founded by Yeshaya Wasserman in 2008, didn’t comply with a 2019 change to the rental law that required a written, itemized list of reasons for a withheld security deposit.

SGW will return the security deposits to 129 tenants. The landlord will also train its staff to comply with the security deposit law and pay an additional $10,000 penalty.
James’ office launched an investigation into SGW in May 2021 following tenant complaints about the withholding of security deposits. Besides not giving an itemized reason for security deposit withholdings, the AG also found the landlord didn’t put the security deposits into a separate escrow account, required by law.

While the $10,000 penalty may not seem significant, it could be the start of more penalties for SGW if it commits future violations. James said the company will be subject to a $2,000 fine for each significant violation to occur in the future.

An attorney for SGW told the Commercial Observer it fully cooperated with the AG’s investigation and blamed Covid and short-staffing for its inability to comply with the updated law.

“SGW Properties is now compliant with the legal requirements and is committed to being in compliance with the law,” the attorney said in a statement.
The firm’s website doesn’t list buildings in its portfolio, but the tenants affected by James’ decision reside in Crown Heights, Bedford-Stuyvesant, Midwood, Stuyvesant Heights.

David Goldsmith

All Powerful Moderator
Staff member

Ruling could “open the floodgates” on apartment improvement fraud cases​

Tenants alleging landlord faked individual improvements get class-action status​

Landlords who raised rents by inflating apartment improvements before the rent law changed got some unwelcome news from a Manhattan judge.
Supreme Court Justice Sabrina Kraus granted class-action status last month to tenants of 11 rent-stabilized buildings in a suit against Big City Management and Magnolia Holdings. The ruling could “open the floodgates” for multi-building class actions, Aaron Carr, executive director of Housing Rights Initiative, told City Limits.

The nonprofit advocacy group and the law firm representing the tenants said it’s the first time such a case has been allowed to proceed as a class action.
“Individual apartment improvement fraud is by far and wide the most common type of fraud pervading the rent stabilization system,” Carr told City Limits. “The potential impact of this ruling on the lives of tenants cannot be overstated.”

The improvements, known as IAIs, were pervasive before rent increases allowed for them were limited to $83 a month by the 2019 Housing Stability and Tenant Protection Act. But past cases of fraud can be subject to lawsuits.
Allowing the 11 buildings’ past and present tenants to make their case as a class could expand the number of plaintiffs to roughly 2,000. They may be in line to receive damages or new stabilized leases. Kraus ordered the landlord to provide tenants’ attorneys with current rent rolls and information on residents dating back to 2012 so they can be added to the case. All 11 buildings are north of 129th Street.

The tenants allege their rents were increased after the landlord falsely claimed to have renovated their apartments, as well as failing to register units with the state and not providing rent-stabilized leases despite receiving tax breaks that require them.

Apartment improvements are typically made — or claimed, at least — during a vacancy, so a new tenant would not necessarily know that the rent had been raised proportionately. Housing Rights Initiative has helped tenants discover past rent increases, which are supposed to be filed with the state’s Division of Homes and Community Renewal. Carr tweeted that Big City threatened his group about contacting its tenants.
In her ruling, Kraus said the tenants documented in great detail a “methodical attempt to illegally inflate rents and evade the requirements of rent-stabilization” that amounts to a “systemic evasion of the rent regulations,” according to City Limits.
Homes Community and Renewal’s Tenant Protection Unit audited 1,100 cases in 2014 and found landlords couldn’t provide proof of apartment improvement costs in 40 percent of them, according to the New York Times. The city has nearly 1 million rent-stabilized units.

David Goldsmith

All Powerful Moderator
Staff member
Landlord's trade groups are now holding over 60,000 vacant Rent Stabilized apartments hostage. This article points out that their 2 main claims appear to be spurious.
1) That these units all need gut renovations costing 6 figures, and,
2) That the rents on these units are so low that landlords would lose money renting them ("The 2020 median monthly rent for vacant stabilized apartments is $1,912 — 49% higher than the overall median rent of $1,280 for rent-stabilized units that year. Apartments vacated after 2019 would bring in more revenue for landlords than the typical stabilized apartment, not less. ")


David Goldsmith

All Powerful Moderator
Staff member

David Goldsmith

All Powerful Moderator
Staff member

In Near-Daily Protests, Tenants Demand a Stop to Rent-Stabilized Apartment Vacancies​

[COLOR=var(--color-secondary-text)]Since THE CITY’s finding that last year some 89,000 rent-stabilized units were empty, tenants and elected officials have been taking to the streets.

Public Advocate Jumaane Willliams speaks out against warehousing apartments, Oct. 31, 2022.
Courtesy of Public Advocate’s Office
The pressure is on to open the city’s vacant apartments.

Since THE CITY reported that [COLOR=var(--color-primary-text)]nearly 89,000 rent-stabilized apartments[/COLOR] were vacant last year in New York City, tenant advocates and lawmakers have increased their calls for solutions as the city’s housing crisis deepens.
Within the last five days alone, tenant groups took to the streets three times, calling for an end to so-called “warehousing.”
In Crown Heights, tenants who have been on rent strike for a year at a violation-ridden building at 1392 Sterling Place say their landlord has kept 20% of the units vacant — some for a decade — and prevented anyone from moving into those empty apartments.
They say the owner, Iris Management, also ignored an elderly tenant’s request to move from a fourth-floor unit to a vacant second-floor unit because she has difficulty climbing stairs.
“Where has our rent money gone for years?” said Michelle Stamp, a tenant who joined the protest Sunday and whose family has lived in the building for six decades. “Clearly not to any upkeep in the building.”
The building currently has 16 unresolved housing code violations for water leaks, 13 for mice infestation, and eight for lead-based paint, according to property records.
On Halloween, Public Advocate Jumaane Williams joined tenants on E. 14th St. in Manhattan where they have been fighting Liberty Ventures, a landlord they believe is deliberately leaving apartments empty and in disrepair to circumvent existing rent laws.
Williams referred to these vacancies as “zombie units” and called for warehousing to end.
“New York faces the joint crisis of homelessness and affordability,” said Sue Susman, a tenant leader for the Coalition to End Apartment Warehousing, claiming that landlords are holding homes off the market “in a gamble that Albany would weaken tenant protections.”
Landlord groups have contended that rent reforms the state legislature passed in 2019 make renting out apartments a money-losing proposition and have sought to roll back changes, while also suing in federal court to abolish rent regulation entirely.

Warehouse No More​

On Thursday, the Coalition to End Apartment Warehousing, alongside City Council members including Carlina Rivera (D-Manhattan), Pierina Sanchez (D-The Bronx) and Gale Brewer (D-Manhattan), took the fight to City Hall’s steps in a rally.
Attended by about 100 tenant organizers and advocates, with speeches and chants in English and Spanish, the rally demanded action from lawmakers to open up vacant apartments.
“You can make money on rent-stabilized units, don’t tell me otherwise,” Brewer said at the rally, quoting THE CITY’s previous reporting on a [COLOR=var(--color-primary-text)]Rent Guidelines Board study[/COLOR]. That study showed the typical apartment in a rent-stabilized building still yielded a net income of $6,500 per year—[COLOR=var(--color-primary-text)]$5,300 in 100% stabilized buildings[/COLOR]—during the onset of the COVID-19 pandemic.
Advocates say apartments should not sit empty in the midst of a housing crisis. What’s the solution, in their view? They offered some options.
Rivera introduced the “Safe Housing, Strong Communities” legislative package in April. The package includes [COLOR=var(--color-primary-text)]Intro 195[/COLOR], a Council bill requiring annual registration of vacant apartments — including rent-stabilized ones — with a mandate to city agencies to inspect no fewer than 15% of all vacant units for potential violations of state and local laws.
Rivera also introduced a resolution Thursday in support of Assemblymember Linda Rosenthal’s bill, [COLOR=var(--color-primary-text)]A5988[/COLOR], which would revoke tax benefits for landlords who hold stabilized homes vacant and potentially attach a filing cost to any registration within a vacancy database.
A [COLOR=var(--color-primary-text)]1989 decision[/COLOR] from New York’s highest court may mean that landlords cannot be fined for vacancies in their buildings. However, according to Edward Amador, director of communications for Rivera, the bill is still being worked on and Rivera “supports the intent of a bill … that disincentivizes the practice” of warehousing.
State Sen. Zellnor Myrie (D-Brooklyn), who joined the weekend protest in Crown Heights, touted the Tenant Opportunity Purchase Act, a state bill he introduced that would give low-income tenants priority purchasing rights if their building is put on the market.
Tenants on Sterling Place in Crown Heights rally against apartment warehousing and unsafe building conditions, Oct. 30, 2022.
Courtesy of HOPE Tenants

Among those advocating for the bill is Yvette Stamp, Michelle’s sister and fellow tenant at 1392 Sterling Place. “We are human beings, and we deserve a say in our housing and control over where we live,” she said.
At the rally Monday, public advocate Williams pointed to a number of possible fixes. He said the city needs legislation to register and document vacancies, contends landlords should be penalized for holding empty apartments, and says the city should “explore options to acquire these units before more zombie units further terrorize our streets.”
Leaders of property owner groups say progress is not possible until Albany reworks the 2019 laws to make it worthwhile for landlords to renovate and market empty units. The 2019 changes to the rent laws abolished a 20% rent increase when rent-stabilized apartments become vacant and limited how much landlords could pass along the costs of renovations to tenants.
“Our proposal for a vacancy reset would bring tens of thousands of units back online within months,” said Jay Martin, executive director of the Community Housing Improvement Program. CHIP proposes again allowing a boost on rents in stabilized apartments once a tenant leaves.
Cea Weaver, campaign coordinator for the statewide tenant advocacy group Housing Justice for All, says that “there are enough tools to address the problem already out there” to financially assist landlords who need funds to repair old buildings. She cited the [COLOR=var(--color-primary-text)]Landlord Ambassador Program[/COLOR] — which provides vacant unit repair assistance and low-interest financing for free to landlords of multifamily buildings.
The actual number of stabilized homes in need of the kinds of renovations CHIP describes remains unknown.
Michael Johnson, a spokesperson for CHIP, is calling on the state agency that administers rent stabilization to provide more detailed numbers on vacancies — including how many are higher-rent apartments tied to a development tax abatement program known as 421-a.
“We want DHCR to come out and show us the data” on which apartments are vacant, said Johnson, “and the rents for these apartments.”
Meanwhile, the housing crisis continues to escalate.
Rents are going up. Compared to pre-pandemic prices, median rents for one-bedroom units [COLOR=var(--color-primary-text)]on the market rose[/COLOR] 20% to $3,267, and for two-bedroom units rose 27% to $3,804.
Last Friday, dozens of tenant activists protested outside Brooklyn Housing Court as eviction case filings reached their highest levels since 2020. Less than 10% of tenants facing an eviction [COLOR=var(--color-primary-text)]received the free legal representation[/COLOR] they’re entitled to last month, THE CITY previously reported.

David Goldsmith

All Powerful Moderator
Staff member

Apartments Vanish From New York’s Rent Regulation System and Questions Linger About How​

Three years after a 2019 overhaul was supposed to stop landlords from removing most apartments from rent stabilization, thousands are left unaccounted for.

Amid an ongoing housing affordability crisis, the number of apartments New York landlords register as rent stabilized has dropped significantly — even after a 2019 state law forbade deregulation in most cases.
Potentially thousands of tenants are now paying rent that exceeds formerly regulated amounts, without the rights rent-regulated tenants receive, such as guaranteed lease renewals and limited increases.
Figures THE CITY obtained from the state Division of Housing and Community Renewal (DHCR) show 858,000 apartments registered as rent-regulated as of November 2022, down from 974,000 in 2019, the year the state legislature passed the sweeping [COLOR=var(--color-primary-text)]Housing Stability and Tenant Protection Act[/COLOR], or HSTPA.
That law ended so-called vacancy decontrol, in which property owners could remove vacant apartments from regulation after rents reached $2,774 a month. Any decline in the number of rent-regulated apartments after the law took effect on June 14, 2019, raises questions.
Could these missing apartments that vanished from rent regulation be in buildings built or renovated in exchange for tax breaks, such as [COLOR=var(--color-primary-text)]421-a[/COLOR]? No, because the number of those rent-regulated apartments is growing, not shrinking.
Could landlords simply be late in filing their 2022 registrations? Surely some. Landlords can register their rent stabilized apartments with the state years after the deadline.

But previous years show declines too: the 927,000 registered as rent-regulated for 2021 was still 47,000 below the 2019 level and 26,000 below the 2020 level.
“There’s no reasonable explanation for why that should be happening within the law,” says Edward Josephson, supervising attorney in the Law Reform Unit at The Legal Aid Society, who trains lawyers on the rent laws.
Some landlord groups, however, see these numbers differently.
“The idea that tens of thousands of apartments have vanished from registration is absurd. This is simply the natural lag that we see in registering apartments each year,” said Jay Martin, executive director of the Community Housing Improvement Program, in a [COLOR=var(--color-primary-text)]statement the group posted after this article’s publication.[/COLOR] They noted that about 50,000 units unregistered in 2018 eventually got reported to DHCR.
How many of nearly 116,000 unregistered apartments will return to the rent stabilization system, and when, remains to be seen.
These apartments that have vanished from the rent regulation rolls are separate from the tens of thousands that, as THE CITY first reported, are still registered as [COLOR=var(--color-primary-text)]rent-stabilized but are vacant[/COLOR].

Missing in Action​

So what exactly is going on? THE CITY visited one building in Prospect Heights, Brooklyn, in the search for clues.
In the middle of a popular strip of shops and restaurants not far from the Brooklyn Museum, 750 Washington Ave. contains 16 apartments, all of which were rent regulated prior to 2019. HSTPA became law in June 2019, ending the possibility of high-rent deregulation. The building’s owner, Witnick Real Estate Partners, purchased the property in December 2018.
The building’s [COLOR=var(--color-primary-text)]June 2019 property tax bill[/COLOR] listed all 16 apartments as rent stabilized. But the owner documented just 10 stabilized apartments [COLOR=var(--color-primary-text)]in 2020[/COLOR] and then six apartments [COLOR=var(--color-primary-text)]each year after[/COLOR].
THE CITY talked to about half of the tenants currently living at 750 Washington. Many moved into the building within the past year, and almost all had been unaware when they signed their leases that their apartments had previously been rent-stabilized.
The tenants collectively requested anonymity out of concern for potential retaliation by their landlord.
Four of the recently arrived tenants — all living at 750 Washington under market-rate, non-regulated leases, paying as much as $4,000 monthly — requested their apartments’ rent histories from DHCR. These documents provide a year-by-year breakdown of each past rent increase and also show when landlords remove apartments past the high-rent threshold from the rent regulation system.
All four showed that their apartments had been in the rent regulation system, between 2018 and 2019, then removed by 2020.
One [COLOR=var(--color-primary-text)]rent history[/COLOR] a tenant shared with THE CITY showed a “high rent vacancy” on their apartment’s record, first recorded on Oct. 12, 2020. High rent vacancy decontrol had been abolished in June 2019, and prior to that, only applied to apartments whose legal rent was above $2,774. The last legal rent reported in this apartment, in April 2019, was $1,720.82.

A second tenant shared their nearly identical rent history with THE CITY, which also listed a “high rent vacancy” in 2020 despite the legal rent being at least $1,000 lower than the $2,774 threshold.
In both cases, to pass the $2,774 mark the property owner would have had to spend between $30,000 and $40,000 in renovations all at once — called an [COLOR=var(--color-primary-text)]Individual Apartment Improvement[/COLOR] — and then started a new lease with a new tenant sometime precisely between April and June 2019, just before the new rent laws took effect.
THE CITY tracked down the previous tenants in the first of these two apartments, who said that they’d lived in the apartment for several years before moving out in June 2019 — leaving no time for renovations or starting a new tenancy before the law changed.
Witnick, the landlord at 750 Washington Ave., owns 36 buildings across Brooklyn and Manhattan. According to the property lookup tool [COLOR=var(--color-primary-text)]Who Owns What[/COLOR], their buildings have lost 226 rent stabilized units since 2007 — or roughly 40% of their entire portfolio.
Witnick did not respond to several requests for comment from THE CITY.
Even the new tenants paying high rents say their building leaves much to be desired.
“They don’t repair anything, they don’t fix anything,” said one tenant regarding the building’s management company, Brighton Management.
The building has 78 unresolved housing violations, city Department of Housing Preservation and Development records show, including seven for mice and cockroach infestation and five for missing or defective smoke detectors, nearly five times higher than the typical per-apartment rate for New York City.
The tenant recounted that when they moved in, “there was a gas leak and nobody notified us,” which led them to rely more on their fellow tenants for support. “That’s when I started meeting my neighbors.”

Narrowed Exits​

If anything, New York City should have more rent regulated apartments now than it did before the 2019 law changed, not fewer.
According to []data compiled by the city Rent Guidelines Board, more apartments were added to the rent stabilized housing stock than removed from it since 2018 — 31,382 gained and 30,788 lost. Most of those gains came through tax break programs.


David Goldsmith

All Powerful Moderator
Staff member
Maybe they should rent out the tens of thousands of warehoused Rent Stabilized apartments they are currently holding hostage rather than continue with the farce of "We lose money if we rent them. "

No sympathy given for this failing cartel-like strong arm tactic. No one to blame but themselves. Hoist on their own petard.
#distresseddebt #RentStablization #vacancies #CHIP #cartel #antitrust

Signs of distress hit rent-stabilized buildings

Since October, Lev Mavashev has been fielding more and more calls from owners looking to unload rent-stabilized buildings with distressed debt.

Mavashev, the founder of investment sales brokerage Alpha Realty, said he’s sold “a bunch of stuff” for Sugar Hill Capital Partners, which faced foreclosure on a Washington Heights building’s $16 million mortgage in mid-November.

In South Brooklyn, he said, “I’m selling 104 units right now for basically below 10 times the rent roll. A similar package a few years ago would go for anything from 16 to 17 times the rent roll. We’re talking about a big drop.”

Mavashev thinks sellers are realizing current interest rates won’t drop before they have to refinance, but industry experts point to other factors causing distress in the rent-regulated market.

With their revenue starved by the 2019 rent law, the pandemic and a problematic rent-relief program, owners have been caught in a perfect storm.

“There is a huge amount of multifamily rent-stabilized going to market with a huge amount of debt,” said Jay Martin, executive director of landlord group the Community Housing Improvement Program. “Brokers say they haven’t seen this since 2008.”

Multifamily investors nationally will likely be squeezed by rising interest costs next year. Despite investors’ hope that the Federal Reserve would ease off its aggressive rate increases, Fed Chair Jay Powell in the fourth quarter cemented that they would continue until inflation improved.

Meanwhile, more than $18 billion worth of loans covering nearly 1,500 multifamily properties with dangerously low debt-service coverage ratios — a measure of an owner’s ability to repay — is set to come due in the next two years, according to Trepp, which provides data on commercial real estate loans and commercial mortgage-backed securities.

“Some see this as a leading indicator of broader distress finally playing out in the marketplace,” Trepp’s Lonnie Hendry wrote in an October blog post.

Banks in the mid-Atlantic region have already reported higher rates of criticized loans, according to the firm’s December report subtitled “Conditions Still Good, but For How Long?” A criticized loan is one in danger of defaulting, but not necessarily delinquent.

Over one-fifth of multifamily loans in the region carried a level 6 or criticized risk rating.

And in November, the rate of CMBS loans over 30 days past due for multifamily properties jumped by nearly a full percentage point, Trepp reported.

The uptick brought the market-wide delinquency rate to nearly 3 percent, even as every other sector saw delinquencies fall from the previous month. The report found properties in New York and California drove most of the multifamily delinquencies.

Amid those high-level pressures, many rent-stabilized owners claim they had already been forced to operate at a deficit since the Housing Stability and Tenant Protection Act of 2019 restricted nearly every avenue to raise the rent on regulated units.

Shimon Shkury, president and founder of commercial brokerage Ariel Property Advisors, said owners who have long borne that burden and have a loan coming due may opt for a cash-in refinancing.

That type of refinancing is common if the value of an asset has fallen, Shkury said. The lender will then reduce the loan’s value in the refinancing, forcing the owner to put up additional equity.

And in the rent-stabilized market, “the value of these buildings is virtually nil,” CHIP’s Martin said.

Among owners who opt for a cash-in refinancing over an immediate sale, Shkury expects those loans “will lead to some level of distress.”

Besides the 2019 rent reform, the industry blames ERAP for insolvencies.

The state’s emergency rental assistance program promised to repay owners whose tenants fell behind during the nearly two-year eviction moratorium. But the program prompted some tenants to stop paying in order to be eligible for rent aid. Then it ran out of funds — but continued to provide eviction protection.

The landlords of more than 176,000 applicants have been left high and dry, with little hope of being repaid by the state.

Landlords say more and more owners are buckling under the pressure.

“Brokers say they haven’t seen this since 2008.”
Jay Martin, Community Housing Improvement Program

“Many are getting to the point where they can’t pay their mortgages,” said Martin. “It’s gonna get real bad.”

A summer survey of over 200 New York landlords who had applied to ERAP found the average one had lost over $66,000 between lost rent, utilities, legal fees and property damage.

Two-thirds of respondents said they wanted out of the business or were unsure about staying in it.

Ann Korchak, a spokesperson for the Small Property Owners of New York, said she has seen more landlords consider selling as some have housed tenants for nearly three years without a rent payment.

“You have a perfect storm, which is forcing small providers out,” she said.

As it stands, though, brokers say they have yet to see lenders seize properties from insolvent owners.

“Banks are being patient to work things out — an extend-and-pretend type of thing,” said Mavashev.

“They’re not stupid; they know loans are coming due next year,” the broker added, pointing to the stress that lenders like Signature Bank would have to report on their balance sheets.

Rather, the properties that are carrying distressed debt are being traded to other investors. Brokers characterize interested parties as high-net-worth individuals or family offices that already hold rent-stabilized properties and are willing to buy more if they are heavily discounted.

Shkury said buyers are banking on being “cashflow positive” quickly because properties are selling so cheaply. “You’re going into a transaction and you predict that in the near future you can start distributing dividends to your investors,” he said.

Others are still betting that a rollback of the rent laws, such as the rent reset on vacant units proposed by CHIP, will give life to the withering assets.

“I’m a big believer that it has to,” Shkury said.


Well-known member
While I agree with you about the CHIP farce, I think it’s the rates that are really hitting them.

David Goldsmith

All Powerful Moderator
Staff member
Regarding rates:
Most of those having problems with rates fall into 2 categories:
1) Those which refinanced and pulled out all their equity and then some when rates were low, and
2) Those who bought with so called "Predatory Equity" where the Debt Service Coverage Ratio was deficient at to time the loan/purchase was made on the assumption they would be able to harass enough Rent Stabilized tenants out to make the building pencil.

My point isn't that there aren't buildings where the owners haven't mismanaged risk and put themselves into some sorts of trouble, but rather why should they be rewarded by being given an "entitlement"/handout (which they scream at anyone else getting) in the form of having a duly enacted law (HSTPA of 2019) thrown out (which I have pointed out in the past they abdicated playing a part in crafting) solely for their benefit.

They have been flat out lying about facts and believe actually illegally colluding on the vacancies. They LEAST they should be forced to do is fill the vacancies first before any "hardship" argument is heard. The head of CHIP once again tries to characterize these buildings as "worthless" yet every time I offer to buy them out at what they paid for the buildings they call me names and start screaming about being entitled to a profit. Some Capitalists! They want to be compensated for all their "risk taking" but if it doesn't go their way they expect the rules will be changed so they still win!


Well-known member
They made their levered bets to make money on a “sure thing” because they discounted some perfectly plausible possibilities, they lost, and now they’re throwing a temper tantrum.

I’m not really into hardship arguments for investors. It didn’t work too well for the taxi medallion bubble, I think it’ll work even less well here.

David Goldsmith

All Powerful Moderator
Staff member

New Yorkers Never Came ‘Flooding Back.’ Why Did Rents Go Up So Much?​

Getting to the bottom of a COVID-era real estate mystery.​

By Lane Brown
For a minute there, things looked grim for New York City landlords. The pandemic caused an exodus of such proportions that building owners were forced to cut rents to their lowest levels since the bad old days of 2011. But then a miracle happened. (Or at least one seemed to!) Not only did New York’s expats return; they came — in the eerily identical words of the real-estate industry and the credulous reporters who cover it — “flooding back.”
“What started as a trickle earlier last year has become like a geyser of demand,” exclaimed one broker in early 2022. Suddenly, there were lines around the block for open houses and bidding wars over unrenovated walk-ups. The vacancy rate in Manhattan fell below 2 percent, and median rent passed $4,000 for the first time. “I’m not exaggerating when I say that I’ve never seen the rental market as crazy as it is right now,” said another broker in July, right before prices went up again.
What could explain it? Even if all of New York’s deserters had soured on country living — like the publicist profiled by the New York Times who came crying back to Harlem after beavers flooded his yard in Saugerties — that still wouldn’t account for why there seemed to be fewer apartments available than before they’d left. Real-estate experts tried to identify factors that might be aggravating the shortage. Maybe the Fed was discouraging home sales with higher interest rates, so more people were renting. Or the couples that had split up during lockdown were separating and moving into all the one-bedrooms. Or single people had gotten claustrophobic and were spreading out into all the two-bedrooms. Or remote workers from other cities were coming to New York just because they felt like it.

Whatever the cause, the crunch left renters with two options: Pay through the nose or leave. Tenants who had scored pandemic discounts got renewal letters demanding double. Those seeking new places were advised to offer above asking price (i.e., “cuck money”) on apartments they hadn’t even seen in person but that nevertheless included outlandish broker fees and abased themselves accordingly. If they didn’t, they were told, plenty of other chumps would.
In other words, New York City — which in the first pandemic summer had been declared “dead forever” — was back! As long as you had not personally been ejected from your home, you might have even found it inspiring.
There was only one problem: None of it made any sense.
In late 2021 and early 2022, when demand for apartments was supposedly accelerating from trickle to geyser, New York was still besieged with COVID-related troubles. Return-to-office plans had been quashed by the Delta variant, then Omicron. Tourism was way down, and unemployment was twice the national rate. Crime was reportedly surging — people were getting shoved onto subway tracks — and outdoor dining had emboldened rats to live freely and openly among humans. Had all of the people who had presumably moved to escape these very concerns really come flooding back?

With every rise in the city’s median gross rents, my skepticism grew. I had lived happily in New York for more than two decades, through many disasters and rebounds, and I wanted to believe the story of its glorious post-COVID recovery. But why did it seem like all of the people telling it were also trying to lease me overpriced apartments?
I began to pick up faint dispatches from a distant, numbers-based reality, where a more plausible counternarrative was taking shape. “Manhattan Lost 6.9% of Its Population in 2021, the Most of Any Major U.S. County,” said a March 2022 headline. “NYC’s Population Plummeted During Peak COVID — And It’s Still Likely Shrinking,” said another from a couple months later. According to these stories, New Yorkers hadn’t come flooding back at all. In fact, they were probably still leaking out.
If that was the case, then the city’s rental frenzy defied not just laws of supply and demand but also conservation of mass. All of the people who fled the city over the past three years should have left behind a surplus of empty, habitable apartments. What happened to them? And why is it so difficult and expensive to lease one now?

The Exodus​

While I am not technically a statistician, I do pay $7 a month for Microsoft Excel, and over the past year I’ve become somewhat obsessed with the U.S. Postal Service’s database of change-of-address requests, which tracks — across massive, laptop-choking spreadsheets — the number of people who forward their mail to and from every U.S. Zip Code each month. (Extracting just the data I wanted was a weeklong chore that involved filtering out all non-city Zip Codes including, most annoyingly, Nassau County’s, which are intermixed with those from Queens. But I think I got all of them.)
As you’d expect, USPS stats show that lots of New Yorkers skipped town during the pandemic. Between March 2020 and December 2021, there was a net loss of 317,107 permanent movers from across the five boroughs. In July 2020 alone, when moving companies were reportedly so busy they had to turn away customers, a net 25,439 movers left the city. Outbound migration has slowed since then, but it hasn’t changed direction. By my count, the city lost another 97,794 in 2022, ranging between about 6,000 and 11,000 per month.

But that’s not all, because New Yorkers were leaving before COVID. Change-of-address stats show there have been more departures than arrivals in every month since at least June 2017, the earliest month for which I was able to find data. Between then and December 2022, USPS data says 2,878,212 came to the city and 3,548,982 bailed, for a total net loss of 670,770.
Admittedly, change-of-address data is not a perfect gauge. Some business moves are sprinkled in. It captures moves to other countries but misses those to the city from abroad. (The Census Bureau estimates the city gained 33,818 international movers in 2019 but probably less in 2020 and 2021 owing to COVID-related travel bans. Last year saw the arrival of 40,000 asylum seekers.) It doesn’t track deaths (there were over 44,000 from COVID alone) or births (negligible for my purposes, since babies can’t rent apartments, at least not without guarantors). It can’t tell us how many movers within the city took up with roommates or got their own places. It doesn’t distinguish between renters and owners, although elevated outflows in summer months seem to imply many are leaving when their leases expire. And obviously it only includes people who remember to forward their mail, but we can probably assume movers are forgetful in both directions.

But while USPS data can’t give an exact count of how many people are in the city right now, it’s still a solid indicator for broad migration trends. It agrees directionally with the Census Bureau’s estimates, which show that the city’s population has been shrinking since 2016. And it correlates with other metrics such as declines in public- and private-school enrollments (down 9.5 and 3.6 percent, respectively, since 2019), subway ridership, and restaurant patronage.
If there had been any drastic surge in return traffic to New York in 2021 and 2022 — if all of those real-estate experts were telling the truth — it should’ve registered at least a blip in the USPS stats. After all, if so many movers had remembered to change their addresses on their way out, surely most of them would’ve remembered to change them on the way back, right? Instead, USPS data merely shows a gradual return to 2019-size losses.

The Phantom Rebound​

Even so, there are many undercurrents to New York City migration, and it’s possible that the USPS data could’ve missed some rogue influx. So with an open mind, I looked far and wide for statistical evidence — besides soaring rent prices — of a rebound in 2021 and 2022.
In August 2021, the Census Bureau announced that its 2020 count had found more people living in New York (8.8 million) than in 2010 (8.2 million). A few tried to spin the results as a sign of the city’s COVID-era resilience, including Mayor de Blasio (“The Big Apple just got bigger!”), but, alas, the numbers had been tallied only a few weeks into the pandemic and all gains had come pre-2016. Then the bureau announced that New York City lost 305,000 residents between July 2020 and July 2021 (which is more than USPS stats show for the same period) and that the 2020 U.S. Census had overcounted the population of New York State by an estimated 695,000.
In November 2021, the New York City comptroller issued a widely circulated report on pandemic migration, which cheerfully asserted that “since July 2021, USPS data has shown an estimated net gain of 6,332 permanent movers, indicating a gradual return to New York City.” I checked and double-checked the USPS data and couldn’t find those movers, so I asked the comptroller’s office to explain. A spokesperson directed me to an updated chart, buried in the middle of an October 2022 newsletter, but it showed no bump in 2021, just continued bleeding.

In June 2022, ran a feel-good story headlined “More People Are Moving to Manhattan Than Before the Pandemic,” which cited a report by the data firm Melissa. Melissa’s rose-colored analysis appears to hinge on USPS stats showing more permanent movers entering the borough between March 2021 and February 2022 than had in the year leading up to the pandemic. But that obscures the fact that by December 2021, monthly move-ins fell back below pre-pandemic levels and stayed there for all of 2022. Most important, according to USPS data, Manhattan’s net migration was still negative for the entirety of 2021-22.
I was intrigued when a company called Placer.AI published a study this past summer that found Manhattan’s population had recovered its pandemic losses, then followed it up this month with a claim that the borough is now 3.9 percent more populous than it had been in 2018. But the start-up’s core business is analyzing mobile data to estimate foot traffic for retailers, not measuring who lives where. I asked Ethan Chernofsky, the company’s VP of marketing, how sure he was of his findings. He told me that because Placer.AI is mindful of privacy concerns relating to location data, “we very aggressively remove our ability to estimate residential well.”

I called more than a dozen New York moving companies, including tristate and national ones. They all told me they’re still moving more people out of the city than into it. And I spent a long time trying to make sense of data from the New York City Water Board, which shows that the amount of waste treated by the city’s processing plants jumped in 2021. (Maybe everybody had shit their pants when they found out how much their rent was going up?) But it turns out those plants treat not just human waste but stormwater too, and 2021 was rainier than usual. At least I think that’s the reason — the Water Board quit returning my emails after a while.
Actually, a lot of city employees stopped returning my calls and emails. I started to get the feeling that they were wary of acknowledging what seems like a pretty clear trend of negative migration. One source told me it might not be my imagination: “I think policy-makers do have an interest in downplaying the population-decline story. Federal resources are allocated based on U.S. Census numbers, and they want those resources to be as great as possible and deployed to their districts.”

The Inventory​

In 2017, I moved to a new rental tower in Downtown Brooklyn into what the leasing agent promised me was the very last available one-bedroom. But after living there a couple months, I began to get suspicious. I was the only person in the gym most mornings. And there was surprisingly little competition for washing machines in the laundry room. There were more than 500 units in my building — were all of my neighbors sedentary nudists?
One night, on my way home from work, I pushed the wrong elevator button and got out on the floor below mine without realizing it. My key wouldn’t fit the lock to what I had assumed was my door, so I turned the knob and stepped, to my astonishment, into a completely empty, totally untouched one-bedroom. I turned around and beelined to the elevator, worried that I’d get busted for trespassing, when I noticed strips of masking tape covering the door frames on all of the other (presumably empty) apartments on the floor.
This was how I became aware of “warehousing,” the practice by which landlords keep unrented apartments off the market to create artificial scarcity. Building owners have always done this, especially in new constructions with lots of virgin inventory, because why give renters the upper hand if they don’t have to?
But they really started doing it during the pandemic. On a 2022 episode of the real-estate-industry podcast Talking Manhattan, Gary Malin, COO of the Corcoran Group, made a surprising claim: “At one point during the downturn, the vacancy rate in the city was close to 25 percent,” he said. “You had owners who were sitting on hundreds if not thousands of empty apartments.”
Officially, during the peak of the COVID exodus, the vacancy rate in Manhattan was 4.3 percent, the highest in at least 14 years. But those “official” vacancy rates we hear so much about are sourced from market reports by brokerage firms like Corcoran and Douglas Elliman, and they only reflect the number of rentable apartments that landlords are advertising, not the number that actually sit empty. Given the incentives for underreporting, this is a little like calculating a city’s crime rate by asking criminals how many people they robbed and murdered last month.
I asked Malin to estimate the real vacancy rate post-rebound. “I think it’s close to 2 percent,” he told me, which would put it back in line with official rates. “Unless an owner is intentionally keeping units off the market for whatever their reasons — maybe they need to do renovations, maybe they plan to sell the building and think it’s better to sell it vacant — right now, if you have apartments available, you are renting them.”
Still, a 23-point drop in New York City’s vacancy rate would signal an inflow of hundreds of thousands of residents who haven’t yet appeared in any other data. Where are they? Or, perhaps more pertinently, if building owners were lying to us about the amount of their unused inventory as recently as a couple years ago, why should we believe them now?
We know that at least 20,000 rent-stabilized apartments are being warehoused because landlords have admitted as much. (A 2021 Census Bureau estimate puts the number at 42,860.) Owners blame a 2019 state law, the Housing Stability and Tenant Protection Act, which limits the amount they can raise rents to pay for renovations. They say their warehoused apartments are in such poor shape that it would be impossible to recoup the cost of necessary repairs at rent-stabilized prices, so they’re holding them vacant until Albany repeals the law.
“Some of these apartments had been occupied for 20 or 30 years,” says Jay Martin, executive director of the landlord group the Community Housing Improvement Program. “They need gut renovations. Some have asbestos in them, some have lead.” But Linda Rosenthal, chair of the New York State Assembly Committee on Housing, is dubious. “I went into one of those units,” she tells me. “Turns out it needs a coat of paint, maybe a new bathroom sink.” (Rosenthal has proposed the End Warehousing Act of 2021, which would impose penalties for holding apartments vacant for longer than three months.)
Whomever you believe, it reflects badly on just about everybody that there are tens of thousands of empty rent-stabilized apartments in a city where more than 100,000 people slept in homeless shelters last year. But this is only one factor in New York’s rent-affordability crisis, and mothballing these units probably isn’t what sent the price of market-rate Manhattan one-bedrooms spiraling toward infinity. “These stabilized units are a completely different product,” says Martin.

The Dark Towers​

I’m extremely curious about all the high-end rental buildings that have sprouted in Manhattan and rezoned neighborhoods like Downtown Brooklyn, Williamsburg, and Long Island City over the past decade. Many of these buildings went up around the same time — to take advantage of a popular tax break that expired in 2022 — creating an oversupply of so-called luxury units that were too expensive for most normal New Yorkers. For years, owners of these buildings were forced to offer concessions like rent-free months on their leases. (Although, to be fair, they were doing a bit less of this by February 2020, just before the pandemic.)
I spoke to one moving-company dispatcher who recalled making a deal with the management of a Downtown Brooklyn tower about becoming that building’s preferred service when it opened in 2017. “We were jazzed. They promised us all this work, and we hired more guys to cover it,” he said. “We jumped through all these hoops, but then we only got two or three jobs out of it. Nobody was moving in.”
It was the neighborhoods with these expensive high-rises that saw some of the city’s steepest peak-COVID population losses, and the people who fled were probably the types most likely to rent in them. According to IRS data, New York’s pandemic deserters had average incomes that were 28 percent higher than residents who stayed. One new rental tower in the Financial District reportedly saw occupancy drop 24 percent in 2020. And yet, somehow, by January 2022, the glut was gone as prices in luxury buildings reached all-time highs.
I have no proof that apartments in these towers are being warehoused and acknowledge that such a thing may seem counterintuitive in today’s allegedly red-hot market — or any market. But if demand for expensive units is softer than we’ve been led to believe, I wonder if landlords could be hiding supply to keep their rents up. Why not just list all of their vacant apartments, even if that depressed prices, since collecting some rent is better than collecting none at all? Maybe because owners take out large loans to develop these buildings, and their lender agreements often require that they charge minimum amounts. This is also the thinking behind the deliberately confusing “net effective rent” scheme whereby an apartment’s advertised price includes prorated rent-free months to soften the blow of its actual (potentially lender-mandated) asking price.
But here, I admit, is where my conspiracy theory falls apart: If all of these luxury buildings were hiding supply, wouldn’t one smart landlord undercut competitors by opening their whole stock and making a killing at today’s artificially inflated prices? Of course one would. And so I almost ended this column with a deeply felt apology for impugning the honest intentions of the New York City real-estate community.

The Algorithm​

But then, in October, ProPublica published what seemed like evidence of an actual conspiracy. It turns out that some landlords have been using the same software to do some very interesting things.
The app is RealPage Revenue Management Software, it’s made by the Texas-based company RealPage, and allegedly it works by collecting private pricing and inventory stats from competing building owners and then using that data to give them each recommendations for how to price their available apartments such that nobody undercuts the others.
Some argue — including the plaintiffs of over a dozen class-action lawsuits filed in the wake of ProPublica’s story — that RealPage’s software allows individual landlords to keep their hands clean while indirectly colluding to inflate prices. In 2021, a RealPage executive bragged at a conference that his company’s algorithm was responsible for rent increases nationwide. “I think it’s driving it, quite honestly,” he said, according to the article. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”
Landlords are allowed to reject RealPage’s pricing guidance, although former employees of the company told ProPublica that up to 90 percent of suggestions are followed. The software discourages negotiation with tenants and has even been known to tell owners to goose prices by holding back supply.
On a 2017 earnings call, RealPage CEO Steve Winn described how a property manager saw revenues go up when their buildings that had historically been 97 or 98 percent full cleared out to 95 percent, “an occupancy level that would have made management uncomfortable before.” According to one lawsuit, “This is a central mantra of RealPage, to sacrifice ‘physical’ occupancy in exchange for ‘economic’ occupancy, a manufactured term RealPage uses to refer to increasing prices and decreasing occupancy in the market.”
RealPage’s algorithm was designed by a guy named Jeffrey Roper, who was the director of revenue management at Alaska Airlines in the 1980s, when that airline and others developed software that led to a price-fixing settlement with the Department of Justice in 1994. (The DOJ is now reportedly investigating RealPage.) Compared to RealPage, human property managers have “way too much empathy,” Roper told ProPublica.
Based on their delightfully candid comments elsewhere, it’s probably no wonder that RealPage’s press department declined to let me speak to any of the company’s executives. But a spokesperson told me in a statement, “Rent prices are driven primarily by supply and demand, and in New York, vacancy is very low, causing rents to rise.” RealPage’s own website, though, touts its “proven, cycle-tested, disciplined analytics that balance supply and demand to maximize revenue growth.”
The spokesperson also tells me that RealPage software is only used by property managers of approximately 1.8 percent of New York City rental apartments, but given the city’s estimated total stock of 2,274,000, that might span 40,932 units. And depending on what types of apartments those are and where they’re located, coordinating to set their prices could scramble market dynamics beyond just directly comparable homes. RealPage-driven rent hikes on higher-end rentals could push prospective tenants of those units to seek more affordable options, raising prices on the middle end.
It’s hard to know who all of RealPage’s customers are, but Greystar, the biggest property manager in the U.S., reportedly uses the software to set the rents of 168,000 units nationwide. Greystar’s website lists 25 buildings across Manhattan, Brooklyn, and Queens, all of them full of apartments that are priced as reasonably as you’d expect. Know anybody looking for a $4,647 studio? (Greystar did not reply to repeated requests for comment.)
Look, it’s possible that my suspicions are baseless and all of these buildings are full. Maybe their tenants really did come flooding back to New York last year. Maybe some are former couples who broke up during the pandemic and needed twice as many apartments and others are remote workers from Milwaukee or Akron evading city taxes by claiming residency in their old states. Maybe they came without any furniture so they didn’t have to hire movers. Maybe they’re homeschooling their kids, taking Ubers instead of the subway, avoiding restaurants, and abstaining from all other activities that would expose them to public data collectors. Weirder things have happened here. But if you meet any of these people, give them a change-of-address form for me. They’re probably missing some good mail.

David Goldsmith

All Powerful Moderator
Staff member
The shared sources of funding between Open Plans and Open Streets/Streetsblog/Transportation Alternatives makes for an interesting rabbit hole to go down.

Hochul on the Housing Hot Seat as Tenant and Real Estate Groups Press for Opposite Actions​

[COLOR=var(--color-secondary-text)]The governor, with Mayor Eric Adams’ support, wants to help build hundreds of thousands more homes. Getting her controversial plans through the polarized state legislature will be a big test of her power.

Katz, NYC’s chief housing officer, expressed optimism about bridging the chasm between the competing demands of tenant groups that want to expand rent regulations and real estate interests seeking to roll them back.
“The narrative is shifting and it’s becoming clear across the system you can’t support tenants without housing supply, and you can’t increase housing supply without supporting tenants,” she said.
Case in point: A nonprofit group called Open New York, formed to counter not-in-my-backyard ([COLOR=var(--color-primary-text)]NIMBY[/COLOR]) opposition to housing development, also supports a tenant-backed [COLOR=var(--color-primary-text)]“good cause” anti-eviction bill[/COLOR] that would limit rent increases and require landlords to renew leases in most instances.
“We desperately need more housing and we need a lot of different ways of providing housing stability, and lots of places around the country have tied zoning reform to tenant protections,” Annemarie Gray, the group’s executive director, told [COLOR=var(--color-primary-text)]THE CITY’S FAQ podcast.[/COLOR]
Meanwhile, the Real Estate Board of New York (REBNY), which represents the city’s largest landlords and developers, signed on to a letter sent to Gov. Kathy Hochul last week supporting an expanded housing voucher subsidy program — another major objective of tenant groups and one the governor has yet to embrace.
Hochul is expected Wednesday to provide more details on the [COLOR=var(--color-primary-text)]housing agenda [/COLOR]she outlined earlier this month. It focuses on groundwork to create 800,000 new housing units statewide in the next decade, with half a million of those to be located within the five boroughs.
“Since becoming governor, housing has been front and center in my agenda,” Hochul said in her State of the State speech earlier this month, outlining what she called “a groundbreaking strategy to catalyze the housing development we need for our communities to thrive. For our economy to grow. And our state to prosper.”

Long Wish List​

Real estate interests, the mayor, pro-housing trade organizations and tenant groups are all [COLOR=var(--color-primary-text)]seeking allies[/COLOR] as they try to steer the governor to prioritize their preferred — and competing — [COLOR=var(--color-primary-text)]policies[/COLOR].
Among them:
Adams wants the legislature to increase allowed density in new residential construction, create a program to help homeowners finance improvements to bring basement apartments up to code, allow more flexibility to create housing units in low-rise residential neighborhoods, and make it easier to convert office buildings to residential use.
The governor has endorsed those proposals and put forward controversial measures that would force the suburbs around the city to increase their construction of new housing — especially around transit hubs — and give the state the ability to override local opposition to new projects in communities that aren’t building enough housing.
Both the mayor and the governor are on board with a series of tax breaks that only the state can legally implement. These include new tax abatements intended to spur residential construction and renovations in the city, replacing expired tax breaks known as 421-a and J-51.
They’re also both pushing what would be a new tax break to convert office space into apartments.
The most progressive groups have already denounced Hochul’s plan as “gutless” for not providing billions in direct state spending for new construction. More moderate tenant groups are focused on good cause eviction and ramping up a state voucher plan that within five years would provide $1 billion in subsidies to tenants, mostly those who do not qualify for federal aid programs because of immigration status or other factors.

Climate of Crisis​

By any measure, New York City is up against a dire housing crisis. Rents soared for apartments on the market in the last year, as the city recovered from the pandemic. One-third of New Yorkers spend half their income on rent, well above the recommended outlay of putting one-third of income toward housing. And the city is simply not building enough housing to keep up with population growth.
Costs are soaring in the suburbs around the city, too, and upstate is not producing enough new housing either.
The key question is whether the legislature has the appetite for tackling big issues with political risks of alienating either tenants or real estate — or, in the case of the suburbs, loud opposition to more housing in wealthy and mostly white towns.
Adams’ housing leader says she thinks the housing crisis is bad enough that the climate will be receptive.
“I know across the board that despite having housing supports in place, our legislators are saying that their constituents are having trouble finding an apartment,” Katz said. “We have to have big swings on housing and it seems our colleagues in the legislature are interested.”
She adds that one reason for optimism is that for the first time in decades, the governor and mayor are in lockstep on the reforms they want to see enacted.
Skeptics remain unconvinced the legislature is ready to make tough decisions — though none THE CITY interviewed agreed to speak on the record.
Neither the governor or mayor has yet to spell out the specifics of the tax breaks they are seeking, and the governor might not do so in her budget coming this week. They have apparently decided that putting forward a specific proposal will play into the hands of progressives in the legislature who opposed them last year, so they are waiting for Albany lawmakers to act first.
As the example of Open New York shows, some groups are trying to come up with a grand bargain that would combine the proposals for increased housing construction, tax breaks to accomplish it, and tenant protections like those in the “good cause” proposal.
It won’t be easy, since real estate interests remain adamantly opposed to “good cause.”
The current proposal would cap annual rent increases at 1.5 times the consumer price index — which is far lower than in states such as Oregon that have passed similar measures.
“It is odd to be for rent control when you want more supply,” said Jay Martin, executive director of the Community Housing Improvement Program (CHIP), which represents small- and medium-sized owners of rent-regulated apartments. His group is pushing a provision that would allow rents for vacant apartments to reset to market rates before becoming regulated again, which is regarded as a long shot.
Tenant groups say landlords aren’t interested in a compromise.
“Every time we talk to landlords, they say they just want to get bad tenants out,” said Ellen Davidson, an attorney at the The Legal Aid Society, which is one of the most active groups representing tenant interests in court proceedings and Albany. “We tell them we are happy to add those provisions and ask them what’s missing from the list, and the landlords say there is nothing, we just want the right to decide not to renew a lease.”
What is clear to everyone that getting significant housing proposals approved will be a test of the newly elected governor’s power.
“We will see a lot of push and pull about what is absolutely needed,” said Martin, of CHIP. “The governor will have to use a lot of political capital, especially if the legislators dig in their heels and do not work with her.[/COLOR]

David Goldsmith

All Powerful Moderator
Staff member
LMAO at all the landlords who got suckered by their attorneys into shelling out big $$$ for this pointless lawsuit. Forget that every time Rent Stabilization has been challenged they haven't come close to being successful. We'll take it to the Supreme Court!!!

These landlords are victims of their own hubris. Even when the writing was on the wall for reform in 2019 they refused to negotiate and adopted a "My way or the highway" stance and got their balls handed to them. They easily could have negotiated a better deal but they opted for Baseball Arbitration style with a ridiculous ask. Surprise, surprise, surprise.

And now they think it's believable to state they lose money by renting out vacant units. And of course when I point out facts, rather than making logical counterarguments I get called names (including anti-Semitic slurs) and have lies told about my professional qualifications - because that's what these type of people do.

#supremecourt #landlords #CHIP #rentstabilization #court #lawsuit #money