Is Rent Stabilized income really lower?

[David Goldsmith]

According to Jay "Failure" Martin the MINIMUM number of vacant Rent Stabilized units being held hostage is 26,000. Sherwin "Shilley" Belkin chimes in with his usual Red Herring of "The 2019 law has made it impossible to bring those apartments back to market. They generally need lots of work to bring them up to building standard, rentability and the 2019 law provides that no matter how much an owner puts into an apartment the maximum return is $83 [a month], and only for 15 years.” Which we all know as horse hockey because since the units are currently vacant the return is THE BASE RENT PLUS $83. But they figure if the keep telling The Big Lie long enough people are going to believe it BECAUSE THEY THINK YOU ARE STUPID.

Of course you also have to remember that according to these 2 the Supreme Court was already guaranteed to have outlawed Rent Stabilization entirely already.

Tens of Thousands of Rent-Stabilized Apartments Remain Off the Market During Record Housing Shortage

Landlords kept an estimated 26,000 regulated units offline last year — rekindling a debate about the role of New York’s strict rent laws.

www.thecity.nyc

Tens of Thousands of Rent-Stabilized Apartments Remain Off the Market During Record Housing Shortage​

Landlords kept an estimated 26,000 regulated units offline last year — rekindling a debate about the role of New York’s strict rent laws.
BY GREG DAVID FEB. 14, 2024, 5:00 A.M.

The official U.S. Census report that found New York City’s apartment vacancy rate is a record-low 1.4%. It also shows in the fine print that that number doesn’t count tens of thousands more units that are offline entirely — and the source of heated debate about why.
The latest New York City Housing and Vacancy survey estimates that last year 26,310 rent-stabilized apartments were “vacant but unavailable for rent,” down from about 43,000 in the same survey two years ago.
Even with that post-pandemic decline, that’s nearly as many rent stabilized units held off the market as the 33,210 units of any type of housing that the Census Bureau estimated to be available for rent between January and July 2023, when it last conducted the survey.

The new numbers won’t put to rest an ongoing debate between tenant advocates and landlords about why so many rent stabilized apartments remain vacant.
Landlords say that many units are off the market because they need substantial renovation after being vacated by long-term tenants — repairs that are cost-prohibitive because of 2019 changes to state rent regulations that make it impossible to recoup the investment needed. The reforms sharply limited the ways landlords could raise rents on vacant apartments and prohibited the removal of apartments from regulation in most cases.

​

Tenant advocates and allied politicians have charged that landlords deliberately held apartments off the market in order to find ways out of rent regulation, furthering New York City’s housing shortage.
The 2019 law has made it impossible to bring those apartments back to market,” said Sherwin Belkin,” an attorney representing landlords at Belkin, Burden Goldman. “They generally need lots of work to bring them up to building standard, rentability and the 2019 law provides that no matter how much an owner puts into an apartment the maximum return is $83 [a month], and only for 15 years.”

‘There Are Probably More’​

The Housing and Vacancy Survey is usually conducted every three years by the U.S. Census Bureau at the request of the City of New York. The survey’s findings have big implications for tenants. By law, New York City can only renew rent regulations if the City Council votes to find a “rent emergency,” defined as a vacancy rate of under 5%.
In between the 2021 survey and the new findings, THE CITY and others sought other measures of apartment vacancies amid widespread reports of empty housing during the pandemic.
Using figures reported directly by landlords to the state, THE CITY counted about 61,000 vacant apartments in 2021. The city housing agency, counting both apartments listed as “available” and “unavailable” for rent, said the number of potential vacancies was even higher, at nearly 89,000.

Seeking a picture of long-term warehousing of apartments, last summer, the city Independent Budget Office counted how many apartments landlords reported to the state as vacant for two years in a row, and came up with a figure a little over 13,000.
The latest number from the Housing and Vacancy Survey is based on interviews with 10,000 occupants and the findings are then extrapolated.
“It’s a snapshot,” said Jay Martin, Executive Director of the Community Housing Improvement Program, which represents owners of small and medium-sized rent regulated buildings. “It’s like a political poll.”
The decline could mean that landlords are putting units back into the market. It could also be that many of the unavailable units in 2021 were pieds-a-terre or short term rentals which were vacant because of the pandemic, said Oksana Mironova, a housing specialist at the Community Service Society, an antipoverty research organization.
“This is a very good sign, showing that rent stabilization is doing what it is supposed to do– balancing the scales between tenants and landlords in a tight housing market,” she said.
Others aren’t so sure.
Housing numbers reported for 2021 may not have been accurate because of the effects of the pandemic, said Howard Slatkin, executive director at Citizens Housing and Planning Council.
The best guess on the bottom line may come from Martin at CHIP.
“The 26,000 figure is the minimum number of rent regulated units off the market,” he said, “there are probably more.”

 

[David Goldsmith]

Think about this:
Since 2019 Rent Stabilized landlords have lost about $2 billion holding vacant units hostage and have absolutely nothing to show for it. They were absolutely convinced by a bunch of shysters that the Supreme Court was going to strike down Rent Stabilization. But the Shoes refused to even hear the case. Those same shysters are getting desperate and lying about the possibility of either of the 2 cases being heard. The landlords just keep throwing good money after bad.

I've seen this same behaviour before - in gambling addiction.

 

[David Goldsmith]

https://www.cnn.com/2024/02/20/politics/supreme-court-declines-to-hear-challenges-to-new-yorks-rent-stabilization-laws/index.html

New York’s rent stabilization laws will stand after Supreme Court declines to hear challenges building is seen in Washington, U.S., August 31, 2023.​

WashingtonCNN —
The Supreme Court declined Tuesday to hear challenges to New York’s rent stabilization laws, which impose strict rules on how landlords can lease some units in the Empire State.
This means the New York rent laws will stand.
The pair of cases were brought by owners of apartment buildings or individual units that are subject to the laws. The challengers had asked the justices to overturn the rent regime that has governed more than one million units in the city for decades and provided some of the nation’s most tenant-friendly rules.

Conservative Justice Clarence Thomas said the high court should consider the questions that were raised in this appeal in a future case.

One group of petitioners told the justices that the 1969 law and its related regulations “amount to the most onerous rent control provisions the United States has ever seen” and that they lead to “an unconstitutional taking without just compensation.”

As they currently stand, the rent stabilization laws, or RSL, apply to buildings containing six or more units that were built before 1974. The regulations limit how much a landlord can charge in rent and how much they can raise their rates each year. They also make it difficult for landlords to refuse to renew leases, grant tenants the ability to make family members their successors to the use of the property and make it harder for landlords to convert rental units into condominiums.

“These provisions, when combined with the RSL’s ceiling on the rents that landlords can collect, have ensured that Petitioners cannot earn a just and reasonable rate of return,” attorneys for the landlords told the justices in court papers. “The RSL has dramatically reduced the economic value of Petitioners’ property beyond any reasonable expectation.”

Lower courts ruled against the landlords, who had argued that the RSL violated the US Constitution’s Takings Clause and Due Process Clause.

Lawyers for the city told the justices that the RSL “has formed a key part of the fabric of New York City for more than five decades” and argued that the law shields “tenants from dislocation and limits the disruption to communities that would result from dramatic changes in rental rates and rapid turnover of tenants.”

“There is no reason to grant review on any of petitioners’ questions, as none identifies issues of national importance or splits in authority requiring this Court’s intervention,” they told the justices in court papers in one of the cases. “Petitioners’ case would needlessly disrupt the residential rental market, and countless lives, throughout the City.”

Earlier this term, the justices declined to take up a similar challenge to the rules that was brought by a pair of associations whose members include owners of apartments subject to the rules, as well as a few individual apartment owners.


New York’s rent stabilization laws will stand after Supreme Court declines to hear challenges
By Devan Cole, CNN

The Supreme Court declined Tuesday to hear challenges to New York’s rent stabilization laws, which impose strict rules on how landlords can lease some units in the Empire State.

This means the New York rent laws will stand.

The pair of cases were brought by owners of apartment buildings or individual units that are subject to the laws. The challengers had asked the justices to overturn the rent regime that has governed more than one million units in the city for decades and provided some of the nation’s most tenant-friendly rules.

Conservative Justice Clarence Thomas said the high court should consider the questions that were raised in this appeal in a future case.

Supreme Court declines to hear challenge to Virginia high school’s ‘race-neutral’ admissions policy
One group of petitioners told the justices that the 1969 law and its related regulations “amount to the most onerous rent control provisions the United States has ever seen” and that they lead to “an unconstitutional taking without just compensation.”

As they currently stand, the rent stabilization laws, or RSL, apply to buildings containing six or more units that were built before 1974. The regulations limit how much a landlord can charge in rent and how much they can raise their rates each year. They also make it difficult for landlords to refuse to renew leases, grant tenants the ability to make family members their successors to the use of the property and make it harder for landlords to convert rental units into condominiums.

“These provisions, when combined with the RSL’s ceiling on the rents that landlords can collect, have ensured that Petitioners cannot earn a just and reasonable rate of return,” attorneys for the landlords told the justices in court papers. “The RSL has dramatically reduced the economic value of Petitioners’ property beyond any reasonable expectation.”

Lower courts ruled against the landlords, who had argued that the RSL violated the US Constitution’s Takings Clause and Due Process Clause.

Lawyers for the city told the justices that the RSL “has formed a key part of the fabric of New York City for more than five decades” and argued that the law shields “tenants from dislocation and limits the disruption to communities that would result from dramatic changes in rental rates and rapid turnover of tenants.”

“There is no reason to grant review on any of petitioners’ questions, as none identifies issues of national importance or splits in authority requiring this Court’s intervention,” they told the justices in court papers in one of the cases. “Petitioners’ case would needlessly disrupt the residential rental market, and countless lives, throughout the City.”

Earlier this term, the justices declined to take up a similar challenge to the rules that was brought by a pair of associations whose members include owners of apartments subject to the rules, as well as a few individual apartment owners.

 

[David Goldsmith]

Prediction: if he responds at all,
Sherwin Belkin will respond to this post

David Goldsmith on LinkedIn: Tens of Thousands of Rent-Stabilized Apartments Remain Off the Market…

According to Jay "Failure" Martin the MINIMUM number of vacant Rent Stabilized units being held hostage is 26,000. Sherwin "Shilley" Belkin chimes in with his…

www.linkedin.com

in a manner which i wil characteridas

 

[David Goldsmith]

Jay Martin of CHIP is always talking about the poor Mom-and-Pop landlords who he supports. This is how small landlords feel about being represented by CHIP.

Some Landlords Unhappy About RSA-CHIP Merger

The Rent Stabilization Association’s board is preparing to vote on its proposed merger with the Community Housing Improvement Program.

therealdeal.com

Landlords push back against RSA and CHIP merger​

“Small owners need to feel like they are part of the conversation”

Two landlord groups plan to merge, but not all members are on board with it.
The Rent Stabilization Association’s board is preparing to vote on its proposed merger with the Community Housing Improvement Program. From there, general membership gets to weigh in.

But ahead of the vote, some RSA members are worried about CHIP’s finances and feel that RSA brings more to the table in terms of assets and membership. An internal report analyzing the potential merger indicated that CHIP was teetering on insolvency before RSA provided an infusion of cash last year.
Members who spoke to The Real Deal expressed frustration with the merger process and concern that the priorities of small landlords will be lost in the newly formed organization.

“We feel like we are being marginalized and put on the fringe,” one member said on the condition of anonymity.
Helen Daniels, a board member of RSA, said she supports the merger as a concept, but feels the combination of the groups was presented to membership as a foregone conclusion, rather than a subject for discussion.
“There needs to be transparency. Small owners need to feel like they are part of the conversation,” Daniels said in an interview. “We need to feel that the people who are sitting at the table are speaking for RSA and not just CHIP.”
“Don’t ignore us,” she later added. “Don’t pretend we’re not at the table.”
The groups have not publicly disclosed the prospective leadership structure of the combined organization, though names of potential new leaders have been floated.

“There is a sense that everything is being rushed, and there’s no opportunity for the airing of implications,” one member said on the condition of anonymity.
Jay Martin, executive director of CHIP, said the process has been going on for a year and half, and that “all regulatory and legal requirements have been followed to a T.”

​

“The suggestion,” he said, “that proper notification has not been followed is not only not true but offensive.”
RSA and CHIP share many members and priorities: They worked together to challenge New York’s rent stabilization law, eventually petitioning the U.S. Supreme Court to hear the case. In October, the court declined to do so.

The groups have different leadership styles, with CHIP’s Martin taking on a more public-facing role than RSA President Joseph Strasburg, though both have been publicly supportive of the merger.
Ann Korchak, who heads the Small Property Owners of New York, said small property owners have long turned to RSA for guidance on regulatory compliance, lobbying and other needs.
“When this merger is complete and the industry speaks with one voice, it’s incumbent that these small buildings, which are housing tens of thousands of New Yorkers, are recognized as vitally important to the stability of the rent-stabilized housing market,” she said in a statement.
This legislative session could prove especially important for residential landlords. Democrats in the legislature are pushing for the passage of good cause eviction as part of any housing package that includes a replacement for the tax break 421a.
Fred Wiener, an RSA member, expressed concern that the merged group would focus on a CHIP policy priority, a bill that would allow owners of rent-stabilized housing to reset rents in long-occupied apartments that have become vacant, instead of focusing on the group’s fight against the passage of good cause. Martin dismissed this idea.

“My organization has never publicly said that it supports good cause in its current version and any insinuation that it does is simply a lie,” Martin said.
Gov. Kathy Hochul’s executive budget, unveiled this month, included a framework for a new 421a program, but made no mention of good cause eviction. The budget included a proposal to bar insurance companies from denying coverage of a building based on tenants’ source of income.
CHIP has also been advocating for legislation that would create a government-backed insurance program for affordable housing providers amid soaring premiums.

​

 

[David Goldsmith]

Blackstone Ends Rent Stabilization Fight at Stuy Town

Blackstone challenged rent stabilization of apartments at the Stuyvesant Town-Peter Cooper Village complex.

therealdeal.com

Blackstone ends Stuy Town rent stabilization fight​

More than 6K units to stay affordable in perpetuity

Blackstone is bringing an end to its efforts to lift rent stabilization ordinances at Manhattan’s largest apartment complex Stuyvesant Town-Peter Cooper Village.
The private equity firm ended its attempts to challenge a court ruling on the status of the property, Gothamist reported. The decision ensures the approximately 11,200 apartments in the complex will remain rent-stabilized, meaning the landlord can only raise rents by a limited percentage each year, determined by a city panel.

The firm has owned the complex since 2015, when it purchased Stuy Town for $5.4 billion. At the time, Stephen Schwarzman’s firm planned to lift more than half of the apartments out of stabilization in a deal brokered by the city.
That became more difficult after the passage of the 2019 rent laws. Stuy Town’s apartments were slated to become unstabilized by June 2020, but tenants sued Blackstone under the protections afforded to them by the recent changes to the rent laws.

Early last year, a state court judge ruled in favor of the complex’s tenants, arguing the changes in the rent law meant Blackstone couldn’t deregulate some 6,200 apartments in a decision with sweeping implications for other properties that received J-51 tax benefits.
Blackstone appealed the decision, before ultimately ending the challenge this weekend.
A spokesperson for the firm said the legal battle was a way of “preserving our options” for the future and that it “did not ever have plans to change how we treat rent-stabilized apartments at Stuy-Town.”

​

“Blackstone has consistently displayed an unwavering commitment to the Stuy Town community,” a spokesperson for the firm said in a statement. “In 2015, we voluntarily preserved 5,000 units as affordable housing, and since then have invested more than $375 million into the property and materially improved resident satisfaction.”

Blackstone’s decision came after the Supreme Court last week rejected two petitions to review New York’s rent stabilization law, months after it declined to consider another challenge from the Rent Stabilization Association and Community Housing Improvement Program.
Gov. Kathy Hochul said she was “relieved” by the court’s rejection of the three rent law challenges, vowing to protect the laws and likely thwarting CHIP’s renewed focus on getting legislative relief for landlords from the rent law.

 

[David Goldsmith]

TikToks Sharing NYC Rent Overcharge Stories Drive Surge of Tenant Records Requests

One post from a Lower East Sider who got $6,000 in back rent has racked up more than four million views. The state housing agency says it’s now getting 2,000 inquiries a week, double the usual rate.

www.thecity.nyc

TikToks Sharing NYC Rent Overcharge Stories Drive Surge of Tenant Records Requests​

One post from a Lower East Sider who got $6,000 in back rent has racked up more than four million views. The state housing agency says it’s now getting 2,000 inquiries a week, double the usual rate.

Every city renter’s dream came true for Carla Badami when she found out this winter she had a legal right to a much lower rent than she had been paying on her regulated apartment and was entitled to thousands of dollars from her landlord .
Encouraged by her aunt in Queens who had once dealt with a tough landlord, Badami got her hands on a key document from the state’s housing agency: her apartment’s rent history.
It showed her Lower East Side landlord reported her rent as $1,295, but was charging her $1,850. As the social media strategist said in a now-viral video, “the math is not mathing.”

“Once I had the paperwork and was like, ‘Okay, I’m ready.’ That’s when I contacted him,” she told THE CITY.
In a short time, her Lower East Side landlord paid her back about $6,000 in owed rent overcharges, she said, and offered a new two-year lease at a lower, stabilized rate of $1,468 per month.

​

But she didn’t want to stop there, she told THE CITY. She took to TikTok to share her story, urging other tenants in rent stabilized apartments to request their rent histories, too.
“Even if one person realizes like, ‘Oh my God, I’m rent stabilized’…and ‘I’m getting overcharged’ — if that’s able to change their life in some way, then I feel really, really good about that, especially in this economic climate,” she said.
Her post, published four weeks ago, has since racked up at least four million views.
And it’s just one of many that built on an earlier post by a real estate review company, which spurred a wave of tenant advice on the social media platform the TikToks dig into questions THE CITY answered in 2022: how to request your rent history, why you may be overcharged by your landlord and how to deal with it if you are.

‘A System That Needs a Lot More Support’​

The office in charge of fulfilling those rent history requests — an obscure and understaffed state agency, the Division of Housing and Community Renewal — has seen a major shift in the past month.
Typically, the office receives about 750 rent history requests every week, according to DHCR spokesperson Brian Butry. But recently, staff has received 2,000 requests each week, nearly doubling the inflow. That translates to a current processing time of about 10 days, up from the typical one to three days.
“DHCR is committed to fulfilling these requests as quickly as possible so tenants have the information they are legally entitled to,” Butry said.
Tenant attorney Jenny Akchin with the group Take Root Justice frequently helps clients file rent history requests, and was surprised when one got an automatic reply from DHCR this week warning about a backlog due to “social media activity.”
Dated Feb. 1, the email read: “Due to increased volume as a result of social media activity, the response time to your inquiry has increased to approximately 20 business days.”
When she learned about the flood of TikTok posts about rent history and overcharges, it cheered her, despite the wait her clients may have.
“The reality is, the more people who are getting information about the rent histories of their rent stabilized apartments, the better. If social media is the medium that’s communicating that message to a wider audience of tenants, I think that’s unequivocally a good thing,” she said.
She stressed, however, that DHCR needs more funding from the state budget to be able to handle rent history requests and many other responsibilities.
“Everyone’s doing the best they can and this is just a system that needs a lot more support,” Akchin said.
Rent stabilized apartments are not as rare as New Yorkers may think. According to the Rent Guidelines Board’s annual report, just over one million apartments in the city are stabilized, which make up 44% of all rental apartments in the city.
But stabilization should not be confused with rent controlled apartments, which hail from now-defunct, decades-old law and are vanishingly rare: Only 16,400 of them remain in the five boroughs, the RGB’s data shows, which equals about 1% of the rental housing stock.
Akchin warned that tenants should know that just because they find overcharges in their rent history documents, that doesn’t automatically mean they’ll see cash in their pocket, or a new lease with a lower rent price. Often, unlike in Badami’s case, landlords are obstinate about giving tenants what they are legally owed.
Akchin points out that overcharge investigations by DHCR are chronically backlogged and can take multiple years. Previous reporting by THE CITY showed it took two years for an examiner to be assigned to an overcharge case.
Still, she’s glad tenants are finding out about the first step in that process. Badami, too, felt good that she could use her modest platform to get the word out, especially in a historically tough rental market. New York’s apartment vacancy rate of just 1.4% is lower than it has been since the advent of rent stabilization in the late 1960s, a recent survey by the Census and city housing department found.
“I had to figure all of this out by myself, more or less,” Badami said. “So it was like, I have this information and it should be shared with everybody, especially with the housing prices in New York City right now. The price gouging when it comes to rent is bananas and it’s becoming increasingly harder to live here.”

 

[David Goldsmith]

I find the premise of this article to be preposterous. If income is lower because owners are holding vacant units hostage hoping to force a change in the law, they can't then claim this proves the law is harming them:
It's a self inflicted wound. By my estimating RS landlords haven't collected about $2 billion in rents in these vacant units. I think it stretches credibility for a group which decides it can forego $2 billion in income to force a change in the law to benefit itself to then turn around and cry poverty claiming the law did it to them. It's also disingenuous.

And don't be fooled by the claim thvalid se money if they rent units. None of their arguments are valid in that they use fuzzy accounting to come up with their numbers.

2019 Rent Law “Wrecked” Rent-stabilized Buildings: Report

A REBNY/RSA report shows rent-stabilized buildings have more long-term vacancies and physical problems since the 2019 rent law.

therealdeal.com

Industry says report proves the 2019 rent law was “disastrous”​

Long-term vacancies are up and city is forecast to lose billions in tax revenue

How bad has the 2019 rent law been for rent-stabilized buildings?
Before this week, the industry could only point to estimates of vacant apartments and anecdotes of building decay as evidence of the legislation’s impact.

Now, a real estate–commissioned report puts data to the effects, as the industry calls for amendments to the law, which effectively capped revenues in rent-regulated buildings.
Its findings: The law has “wrecked the ability of property owners to pay for the upkeep of their property,” forcing them to hold more units off-market. That lack of income poses a growing threat to the city’s property tax revenue, the report argues.

Long-term vacancies have trended up since 2018, according to the analysis, which was done by HR&A Advisors for the Real Estate Board of New York and the Rent Stabilization Association.
Three-year vacancies surged by 125 percent, four-year vacancies by 97 percent and two-year vacancies by 65 percent during the period. Those metrics stem from annual rent registrations filed with the state housing agency and provided by RSA, which represent about 10 percent of the city’s approximately 1 million rent-stabilized units.
The report goes on to cite findings from a 2023 survey of city landlords. HR&A collected 781 responses from landlords and managers that operate 242,000 units, or 11 percent of the city’s total rental stock.
The cause of lasting vacancies, according to over a quarter of respondents, was “economic infeasibility of unit improvements” after a long-term tenant left. Vacancies are more prevalent in buildings where more than 75 percent of units are rent-stabilized.
Owners of those majority rent-stabilized buildings have fewer market-rate units to offset the lower revenues from regulated units, and thus less free cash to fund repairs.

The liquidity issue is further compounded for landlords with smaller portfolios, the report shows.
According to the survey, 99 percent of units in primarily rent-stabilized portfolios with no more than 10 units needed major capital improvements, such as a new boiler or roof.
Before the rent law, owners could permanently raise rents by up to 6 percent to offset the cost of repairs. Now, the cap is 2 percent and the hikes are doled out over 12 or 12.5 years, depending on building size, after which they are rolled back.
The number of major capital improvements filed with the state housing agency has dropped by 37 percent since 2019, according to HR&A’s review of RSA member filings.
Meanwhile, individual apartment improvements, on which owners could previously spend as much as they wanted and permanently add 1/40 of the cost to a tenant’s rent, have decreased even more dramatically.

Those improvements, such as a new stove or refrigerator, have declined by 77 percent since 2019, according to the RSA-provided data. As with major capital improvements, the increases are now extremely limited and temporary.

​

The decline in filings was not for lack of necessity, as 78 percent of units in small portfolios of overwhelmingly rent-stabilized buildings needed individual improvements. Only half of landlords who answered the survey provided that information.
With fewer rent increases for improvements, net operating income fell. Meanwhile, expenses — including property taxes, energy costs and insurance — have climbed each year, according to the Rent Guidelines Board.
Last year, costs jumped by 8 percent, pushing net operating income down by 9 percent — the steepest decline since the board began tracking that data in 1990.

Property taxes are based on net operating income. For every 1 percent that NOI slips, the report estimates, rent-stabilized apartments generate $67 million less in property taxes.
That’s a small fraction of the $31 billion in property taxes the city collected in 2023, according to the city comptroller’s December’s report. Office properties typically carry that load.
But the study estimates that NOI could plunge by 40 percent to 60 percent by the early 2030s. Should that pan out, property taxes generated by the city’s rent-stabilized housing stock could fall by $1.3 billion to $2 billion annually, according to the HR&A report.
REBNY President Jim Whelan, RSA head Joseph Strasburg and Ann Korchak, board president for the Small Property Owners of New York, said the study shows the 2019 rent law must be changed.
“The situation won’t get any better for small owners and tenants until state lawmakers fix this law and make it possible to invest in the maintenance and improvements needed in rent-stabilized apartments,” Korchak said.

One bill introduced in the state Legislature last year and backed by the landlord group Community Housing Improvement Program offers a remedy: Allow owners to hike rents after renovating vacant units coming off long tenancies. Thousands of such units are being held off the market.
After Assembly member Kenny Burgos introduced the bill in May, tenant advocates pounced, persuading at least six legislators to withdraw as sponsors.

​

The Assembly member recently told Politico she doubts the bill, which would “turn the rent-regulation system on its head,” will have legs.
“Many of my colleagues oppose that vehemently, so I don’t think it will gain much traction, and it shouldn’t,” Rosenthal said. “This is not the time to be trying to undo tenant protections.”

​

 

[David Goldsmith]

Big Spenders: Real Estate Tops City Lobbying List

Homeowners for an Affordable New York paid Fontas Advisors $1.1 million to lobby good cause eviction.

therealdeal.com

Real estate dominates spending on city lobbying​

Group opposing “good cause eviction” doled out $1.1M
Real estate groups spent heavily again last year on lobbying, in particular to stop good cause eviction.
Homeowners for an Affordable New York paid Fontas Advisors $1.1 million to lobby against the controversial legislation, making the industry-backed group the city’s top individual spender of 2023, according to the City Clerk’s annual lobbying report.

At the city level, the group listed the mayor’s office as its lobbying target, but the $1.1 million reflects the full value of Fontas’ contract for both state and city lobbying, records show. (The extent of overlap between spending on state- and city-level lobbying for entities in the report was not immediately clear.)
Mayor Eric Adams has no official say in the legislation, but has called for Albany to approve a comprehensive housing package. He told Crain’s in December that he would support a deal that included a 421a replacement and good cause eviction. He has since walked that back, saying he supports some form of tenant protections as part of a broader package.

The legislature’s stalled good cause bill would allow tenants to challenge evictions resulting from rent increases of 3 percent or 1.5 times the regional inflation rate, whichever is greater. Homeowners for an Affordable New York, which includes the Real Estate Board of New York, the Rent Stabilization Association, the Community Housing Improvement Program and others, spent $1.4 million opposing the bill in 2022, according to a state lobbying report.
A spokesperson for the group indicated that most of the group’s budget was spent on “educating New Yorkers about the unintended consequences” of good cause eviction.
As in previous years, real estate interests easily led the way in hiring lobbyists, according to the report. Thirty-two percent of clients that registered in 2023 listed real estate as their primary industry.
Companies vying for three casino licenses downstate were among the year’s biggest spenders on lobbying.

​

Entities tied to Mets owner Steve Cohen, who has pitched an $8 billion casino next to Citi Field in Flushing, Queens, spent more than $2 million. New Green Willets LLC, spent $946,809. Queens Future, another Cohen entity, shelled out another $450,500 on lobbying, according to city records. Seminole Hard Rock Entertainment, which is partnering with Cohen on the casino bid, laid out $660,000.

CFG Stadium Group, which hopes to build a soccer stadium for the New York City Football Club in Willets Point, spent $540,000.

​

Madison Square Garden spent nearly $600,000 on lobbying, largely for a permanent extension of its special permit. But the City Council extended the arena’s permit by only five years in September.
Vornado Realty Trust paid lobbyists $544,557 to focus on various topics, including the production studio planned for Pier 94, zoning changes to expand the Otis Elevator Building at 260 11th Avenue and redevelopment of the Penn District.
The Real Estate Board of New York was the second highest spender among entities whose employees lobby directly on behalf of their employer. In this capacity, REBNY spent $230,560.

Filings with the city indicate that REBNY lobbied City Council members, the Department of City Planning, the Department of Buildings and the mayor on various topics, including office-to-residential conversions, extending the property tax break 421a and lifting the floor area ratio on residential space.

​

 

[David Goldsmith]

Proof that it's not Rent Stabilization which is causing the problems.

New York Landlord Defaults on Market-Rate Multifamily Debt

Abe Cohen is behind on payments for three market-rate, fully occupied rental buildings in prime areas of Brooklyn. What went wrong?

therealdeal.com

Abe Cohen did nearly everything right, yet multifamily deals still went bad​

Defaults on debt at renovated, fully occupied, market-rate properties in Brownstone Brooklyn

As tales of multifamily distress rattle investors, one corner of the market has been largely unscathed: market-rate buildings in New York City. Rents are near record highs, lease signings are up and the vacancy rate is at a 56-year low.
And yet, the debt on a mostly free-market portfolio owned by Abe Cohen went to special servicing last month after he fell 60 days behind on payments, according to Trepp.

Two of the properties, 566 Seventh Street and 350 Fifth Street are in prime Park Slope; the other, 372 Baltic, is on a tree-lined street in nearby Boerum Hill. All are freshly renovated and some units in 2023 rented for 80 percent more than two years earlier.
What gives?

Cohen, who heads Conway Capital, did not comment. His attorneys, Terrence Oved, and Darren Oved. noted the properties are “only a minor fraction” of Cohen’s 50-building portfolio, which spans Manhattan, Brooklyn and Philadelphia.
The “challenges,” the attorneys said, stem from interest rates and market volatility.
Rising rates have been a problem for floating-rate loans. But Cohen borrowed at a fixed rate.
Nor has occupancy been an issue. The three buildings with the troubled debt were full as of September.
It does appear, however, that Cohen was overleveraged.

Conway bought the portfolio in 2022. He financed the $6.8 million purchase of 566 Seventh Street with a $5.9 million loan from Derby Copeland Capital. The landlord tapped Seth Weissman’s Urban Standard Capital, one of his regular lenders, for $4.5 million in debt to pick up the Fifth and Baltic Street rentals for $6.9 million.
Less than a year later, Cohen refinanced the properties with about $12 million in CMBS debt spread across two loans with fixed rates of 6.85 and 7 percent. Cohen knew what he was getting, unlike the floating-rate borrowers blindsided by rapid rate hikes.

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The debt service coverage ratios on the deals averaged 1.25 at issuance, according to Morningstar. A DSCR of 1 means a property is just enough cash flow to cover loan payments; 1.25 is often the minimum required on multifamily deals. The lower the ratio, the higher the risk of default.

A report by S&P Global shows Cohen had even less wiggle room. Cash flow barely covered debt payments at 350 Fifth and 372 Baltic when the loans were issued; at 566 Seventh Street the DSCR was 1.17. S&P also noted Cohen had reported higher net cash flow — 14 percent and 11 percent, respectively, for the two deals — than what the ratings agency had found soon after, when the CMBS bonds were sold.
Both deals were highly leveraged. A loan-to-value ratio of 70 percent is average for multifamily; Cohen’s properties averaged 93 percent, according to S&P’s evaluation.
By November, Cohen was delinquent on both loans, according to Morningstar. Last month they were flagged for monetary default, Trepp reported.
Cohen’s attorneys said Conway Capital is talking with its servicers and “is confident these isolated delinquencies will be resolved soon.”
It’s possible Cohen stopped making payments to secure a loan modification. Struggling borrowers sometimes become delinquent to force a workout, even if special servicers, who work on behalf of CMBS bondholders, don’t like to be strong-armed. In other instances, investors will stop making payments if they expect to sell the properties.

Cohen may have needed money to handle an earlier default. A few months before buying the Park Slope and Boerum Hill properties, he fell delinquent on a $15.5 million CMBS loan backed by three recently renovated mixed-use buildings: 155 and 162 Montague Street in Brooklyn Heights and 6 Stone Street in FiDi.
Cohen had borrowed from Argentic, agreeing to terms that allowed the lender to go after his personal assets in an event of default. In August 2023, Cohen faced foreclosure on the property. The suit is ongoing, but his attorneys said the loan has been in good standing since August.

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