Is Rent Stabilized income really lower?

[David Goldsmith]

NYC Landlords Rebrand Rent-Reset Bill for Vacant Apartments

CHIP gave its vacancy reset proposal an ambiguous name to sell it as part of the solution to the state’s affordability crisis.

preview.therealdeal.com

Landlords rebrand rent-reset bill. Will legislators buy it?​

Measure offers solution for vacant, rent-stabilized units needing repairs

While New York landlords ask the Supreme Court to dismantle rent stabilization, they are asking Albany to tweak it.
The Community Housing Improvement Program on Wednesday rebranded a proposal that’s been brewing for more than a year: a rent reset for stabilized units when a tenant vacates.

Since the Housing Stability and Tenant Protection Act of 2019 limited rent hikes, owners claim they can’t repair and re-rent tens of thousands of apartments left vacant after long tenancies. The rents are too low to justify the cost.
CHIP had described the change as a “vacancy reset.” But a policy agenda released this week recast it as the Local Regulated Housing Restoration Adjustment or LRHRA.

Rebranding the policy with a jargonny, non-threatening name was probably not an accident. But it will take more than that to get it past legislators who oppose any rent hikes beyond the meager ones allowed by the 2019 law.
Market-rate rents are near record highs in New York City and national rent increases have prompted the White House to push for more state regulation of the market.
Given the climate, the last thing many Democrats in Albany want to be seen supporting is a policy that raises rents.
When asked about the proposal last week, Linda Rosenthal, who chairs the Assembly’s housing committee, said a rent-reset bill would be “a non-starter.”
The Manhattan Assembly member sees CHIP’s proposal as an erosion of the tenant protections Albany enacted in 2019 and a step toward vacancy decontrol, which lawmakers banned in that overhaul. Previously, the regulated rent could be hiked 20 percent at vacancy and if it exceeded a certain dollar amount, owners could permanently deregulate the unit.

“We’re not about to take units out of rent stabilization,” Rosenthal said.
CHIP’s proposal does not do that. After the one-time increase, rent hikes would remain limited by the 2019 law.
Regardless, Rosenthal doesn’t believe landlords need the rent hikes they’re asking for.
The lawmaker, who in 2020 introduced a bill that would fine owners for keeping units vacant, said they are exaggerating the cost of the work that needs to be done.

“Perhaps the landlords intend to use gold paint,” she quipped to The Real Deal last summer.

​

To undermine that argument, CHIP on Wednesday released case studies of vacant apartments whose owners cannot afford needed repairs.
A vacant one-bedroom on Central Park West, for example, has a legal rent of $972. Photos show a hoarder-like degree of clutter.
“This is a common condition that property managers find when low-rent apartments are left after long-term tenants have lived there,” CHIP’s report reads. “It needs a large clean-up as well as extensive renovations.”

Critics blame landlords for not fixing units when the old law allowed them to recover improvement costs from tenants, but significant renovations are often impossible until a tenant leaves. Between the rent law’s renewal and succession rights, that can be half a century or longer.
The report estimates repairs to the Central Park West unit would run $110,000. Under the 2019 law, the rent can be raised just $83, resulting in a loss of $89,120 over 30 years.
Without Rosenthal’s support as housing chair, CHIP’s Jay Martin admitted it would be difficult to get the group’s proposal approved.
“But nothing is impossible,” he said on a call while heading back from Albany.
Martin spent the past three days chatting with elected officials about the measure and found a “universal consensus” that landlords’ inability to invest in their units was a growing problem. The bill’s proposed language has yet to be made public.

The executive director added that he was open to other ideas, including ones that don’t involve rent increases.
“It’s hard to spend $100,000 on repairs without raising rents,” he said. “But we look forward to those discussions.”
Rosenthal indicated that her opposition would not doom Martin’s proposal if the bill had enough support in the chamber.
“Generally none of us are dictators,” she said. “No matter our title, we work in consensus.”
However, the lawmaker immediately emphasized her colleagues’ concern about affordability. “That has to be at the very top of every conversation,” she said.

 

[David Goldsmith]

Signature Bank was a big player in the Predatory Equity game, lending to many of the vultures who were buying Rent Stabilized buildings and then harassing out tenants. I've been warming for years about the potential issues. Now that Signature Bank had collapsed it looks like some are listening since even the saviour doesn't want these loans.
https://therealdeal.com/new-york/2023/03/20/really-concerning-nycb-snubs-signatures-cre-loans/
“Really concerning”: NYCB snubs Signature’s CRE loans
New York Community Bank’s decision could signal problems with multifamily debt

New York Community Bank’s deal to buy loans from the Signature Bank excludes the failed institution’s multifamily mortgages.

The snub could signal problems with those loans, which primarily cover the troubled rent-stabilized sector, or simply that NYCB didn’t want to be overweighted in that area.
Either way, it may diminish hope for workouts among the many rent-stabilized building owners facing distress.

NYCB, through its recently acquired subsidiary Flagstar Bank, picked up $12.9 billion worth of Signature’s total $74 billion loan portfolio Sunday in a deal with regulators who seized the major multifamily lender a week before.
NYCB, which had been Signature’s primary competitor, said the deal included none of Signature’s commercial real estate portfolio, which totaled $35 billion at the end of 2022, or its $19.5 billion multifamily loan book.
“We did not acquire any multifamily or commercial real estate loans,” said spokesperson Salvatore DiMartino. “Zero.”
Jay Martin, executive director of landlord group the Community Housing Improvement Program, called that lack of interest “really concerning.”
“And it may speak to broader problems within the multifamily industry,” Martin said.

The majority of Signature’s multifamily lending was to rent-stabilized properties, which have seen values sink between 20 to 65 percent since a 2019 state law severely limited rent increases, according to an analysis by Maverick Real Estate Partners.
With revenue streams capped, owners faced with inflated operating costs and billions in pandemic arrears have struggled to keep buildings above water. Meanwhile, interest rates have risen 4 percentage points in the past year, making refinancing more expensive. Lending standards had also tightened even before this month’s bank failures.
Before Signature collapsed, filings with the Federal Deposit Insurance Corporation showed hardly any distress in its apartment building loans. Just 0.42 percent of its $19.5 multifamily portfolio was marked as past due.
But insiders say there are many ways for borrowers to stave off delinquency and for lenders to keep signs of it off their balance sheets.
Owners can pull revenue from performing buildings to cover troubled properties or delay maintenance to scrape together money in the short term. Banks can get creative with accounting to keep delinquencies off their books.

Typically, loans won’t show as troubled until the owner faces a mortgage reset — at which point the landlord must accept a higher interest rate or refinance — or when the loan comes due.

​

Commercial brokers expect the fallout from resets and maturities to crop up later this year, when loans issued before the 2019 rent law start to come up.
“This is like a train wreck in slow motion,” said Billy Schur, president of owner group the Bronx Realty Advisory Board said of the rent-stabilized sector. “Once someone starts with the default, I don’t see how they’re getting out of trouble.”
As the city’s largest rent-stabilized lender, NYCB understood the risks and chose not to add more such loans to its books.

Even if the bank were optimistic about that debt, adding it would have run counter to its diversification efforts. Signature’s acquisition of Flagstar last year diversified its loan portfolio by adding a sizable chunk of residential mortgages. “We have to acknowledge how concentrated we are,” CEO Tom Cangemi said in a call with analysts Monday, according to Crain’s.
It is also possible that NYCB didn’t want to buy the low-rate loans issued before the Fed began raising rates last March.
“The rates on those loans may not have been attractive if they weren’t getting a good enough discount on the portfolio,” said Eric Orenstein, a commercial real estate attorney at Rosenberg & Estis.
Either way, Martin said, the delayed sale doesn’t bode well for potential buyers’ perception of the multifamily loan book.
“As long as the loans are out there, they grow hair on them,” Martin said. “The longer they sit, the larger the concern will be that there’s something wrong with those loans.”

For stabilized borrowers facing distress, NYCB’s pass on Signature’s commercial real estate portfolio could spell tougher times ahead.
Regulators are still overseeing more than $61 billion worth of Signature loans, which they may sell in full to another bank or piecemeal to several buyers.
For borrowers who are current on their mortgages, the selloff will have minimal impact, Orenstein said.
For delinquent borrowers, though, it could mean a faster fall into foreclosure, should buyers emerge for their loans. Signature and NYCB did far more banking for the city’s multifamily owners than other lenders did. Institutions unfamiliar with the rent-stabilized market or its players are less likely to pursue workouts.

​

 

[David Goldsmith]

Sugar Hill Stops Mortgage Payments on Rent-Stabilized Buildings

Sugar Hill acquired the portfolio in 2018 for $250 million, before a time of high interest rates and changed rent laws.

therealdeal.com

https://therealdeal.com/

Sugar Hill stops mortgage payments on rent-stabilized buildings​

Tenants demand repairs as foreclosures loom
MAR 8, 2023, 5:03 PM
By

• TRD Staff

Sugar Hill Capital Partners is in danger of losing rent-stabilized buildings in Harlem only years after acquiring them.
The landlord stopped making mortgage payments on some of its Upper Manhattan properties, Gothamist reported. The firm is already facing foreclosure on some of those properties and more could come.

Sugar Hill owns at least 50 rent-stabilized buildings in Upper Manhattan. Local officials recently told residents that a nonprofit may take over some of the buildings in the future, news that surprised some renters.
In 2018, Sugar Hill acquired 53 Harlem apartment buildings owned from Irving Langer’s E&M Management for $250 million. At the time, the multifamily market was booming and Sugar Hill likely didn’t anticipate the forthcoming change to state rent laws, which limited the ability of landlords to raise rents on stabilized apartments.

The change to the rent law and high interest rates have since put owners of stabilized apartments in distress as billions of dollars in debt on multifamily properties comes due in the next couple of years.
Two of Sugar Hill’s foreclosures have already made waves in recent months.

​

U.S. Bank — as a trustee for CMBS bondholders — filed in January to foreclose on the six-story, 23-unit property at 121 West 116th Street. The trustee alleged Sugar Hill was in default on a $4.9 million loan after failing to make payments since June.
Months ealier, Sugar Hill was faced with a similar action on a 54-unit property at 4300 Broadway in Washington Heights. It allegedly fell behind on a mortgage to the tune of $16 million, failing to make payments since August.
https://therealdeal.com/new-york/20...sugar-hill-capital-faces-another-foreclosure/
When Sugar Hill acquired the portfolio, executive Jay Solomon told The Real Deal the firm felt “a responsibility to our neighbors and the local community to steward these buildings with great care for years to come.”
Five years later, the landlord has become absent in the eyes of its tenants, many of whom can’t get repairs for their properties, including one the resident leader told Gothamist has been without gas for nearly eight years.
—

 

[David Goldsmith]

I wonder what the numbers would look like if they added back in the rent which should be being collected on over 40,000 vacant apartments being held hostage?

Rent-Stabilized Landlords’ Profits Plummet By Most On Record

Landlords profits dropped by 9.1 percent in 2021 as distress ticked up to represent nearly 9 percent of the rent-stabilized market.

therealdeal.com

Rent-stabilized buildings’ profits dive a record 9.1%​

A Rent Guidelines Board report Thursday shows owners’ net operating income plummeted 9.1 percent in 2021 from the previous year, the steepest decline since the Rent Guidelines Board began tracking it in 1990.

Net operating income is a proxy for profits, but excludes debt service and capital expenditures, so a positive figure from the rent board doesn’t mean a building’s revenue is covering its costs.
Landlords’ previous worst year was 2002, when NOI fell by 8.7 percent.

Landlord groups such as the Community Housing Improvement Program have continuously sounded the alarm that the rent law, which severely restricted owners’ ability to increase revenue, coupled with rising operating expenses and a drop in rent collection was undermining buildings’ finances.
Ahead of last year’s rent guidelines board vote, tenant advocates dismissed those claims, saying 2020’s 8 percent drop in net operating income was only the fourth decline in 26 years.
But the latest report indicates it was not a blip. It found rental income fell by 1.2 percent citywide after the rent board extended its 2020 rent freeze. Meanwhile, operating costs jumped by 5.2 percent in 2021. (The 2020 report showed income down 3.8 percent and operating costs down 2.8 percent.)
“This report is proof positive that the disinvestment and defunding of New York’s rent-stabilized housing stock needs to stop,” said Jay Martin, CHIP’s executive director, said in a statement.
Martin called on the board to use the data “to set a sustainable rent adjustment that will keep this critical housing stock on the market.” The board vote in June will affect leases signed or renewed beginning Oct. 1.

Last year, the board ignored its own staff’s recommendation of a 4.2 percent hike (and owners’ requested 6.5 percent) to approve a 3.25 percent bump on one-year leases. Tenant advocates had called for a rent freeze or rollback.

​

Absent a rent increase that keeps pace with costs, owners fear the distress already hitting rent-stabilized housing will spread.
The market share of distressed properties rose 2.3 percentage points in 2021 to 8.8 percent, according to the rent board’s report.
That’s the fifth straight annual increase and the highest level of distress since 2009, the final year of the Great Recession.

“[The report] checks all the boxes of an impending collapse of New York City’s affordable housing stock,” said the Rent Stabilization Association’s Vito Signorile.
“This alarming trend should be a wake-up call to Albany and City Hall lawmakers who have taken no initiative in the past four years to aid financially struggling building owners,” Signorile added.
CHIP has pushed for a change in the rent law that would allow owners to reset rents in stabilized apartments that become vacant. A bill is likely to be introduced next month in the likely event that the measure is not included in the state budget.
Martin said discussions are ongoing. “We’re getting there, but the budget conversation has been dominated by the want to add supply, which includes 421a and [office] conversions,” Martin said.

​

 

[David Goldsmith]

Tahl Propp Sells Rent-Stabilized, Fifth Ave Condos at Discount

Investor Tahl Propp unloaded 87 rent-stabilized condo units at a 70 percent discount to Manhattan-based MD Squared.

therealdeal.com

Tahl Propp lets rent-stabilized condos go at 70% discount​

Owner attributes low price to wait-time to clear units in Fifth Ave building
Before a 2019 law decimated the value of rent-stabilized buildings, owners who saw the writing on the wall raced to convert them into condos.
But even some who had the foresight to get ahead of the law have had to take a haircut.

Tahl Propp just unloaded 87 units at its twin condo conversion of 1330 and 1325 Fifth Avenue for $22.5 million — an average of just $258,000 per unit — to MD Squared Property Group.
Five years back, the firm estimated the 150-unit rent-stabilized conversion would yield an average price of just over $1 million per apartment.

The firm was able to sell 63 units to individual buyers for $56 million, or more than $888,000 per apartment, said its president and co-founder Joseph Tahl, meaning the recent bulk purchase represented a 70 percent markdown.
As with any bulk transaction, multi-unit condo deals typically sell at a discount. But Tahl attributes the price cut to the restrictions baked into the rent law.
“A good portion of that discount is the amount of time you have to wait to get control of the units so you can sell them,” the executive said.
In conversions of rent-stabilized buildings, units remain rent-regulated until the tenant vacates — usually by choice or death — or agrees to a buyout. Once the tenant leaves, the unit becomes destabilized and can either be rented at market price or sold as a condo.

​

“But it could take 20 to 30 years to get these apartments back to be able to sell them,” Tahl said. Rent-stabilized apartments carry a right to renewal, and their leases can be passed down to family members like an heirloom.

In the meantime, the 2019 law blocks owners from raising rents beyond the minimal increases approved by the Rent Guidelines Board each year. The legislation has capped revenue growth as operating costs have surged and Covid arrears have persisted, forcing some owners to operate at a loss.

​

Rental-to-condo conversions drop 80% after 2019 rent law: report
Given the wait time, potential revenue loss and a condo market that slumped when interest rates spiked halfway through last year, Tahl priced the units to move in one sweeping sale.
As for the buyer, Tahl said some would-be owners have the patience to wait for the profit a vacancy can bring.
“There definitely are good, capable buyers who like these occupied packages of rental units,” Tahl said. “They manage them, and when the apartments become vacant, they renovate them and sell them.”

MD Squared, led by CEO Michael Mintz and based in Manhattan, did not respond to a request for comment.

​

 

[David Goldsmith]

Park Slope Hero’s Progeny Landlords Ruin Tenants Lives, They Say

One tenant began pulling her hair out. Literally.

patch.com

Park Slope Hero's Progeny Landlords Ruin Tenants Lives, They Say​

One tenant began pulling her hair out. Literally.​

Peter Senzamici,Patch Staff

Posted Sun, Apr 2, 2023 at 10:44 am ET
Replies (3)

Part of the iconic blue buildings on Park Slope's Fifth Avenue owned by the Cabbad family, prior to the city erecting an emergency sidewalk shed to protect pedestrians from a crumbling facade. (Peter Senzamici/Patch)
PARK SLOPE, BROOKLYN — A beloved Park Slope landlord once known as the "Mayor of Fifth Avenue" bequeathed his buildings to children who enrage, terrify and possibly endanger their tenants, a Patch investigation has found.

Tenants of the Cabbad buildings — about a dozen Fifth Avenue multi-uses, some painted powder blue in honor of the family matriarch's eyes — tell Patch roaches fall from the ceiling, a super threatens violence, heating conks out for months and unpermitted construction makes the building shake.
One tenant began pulling her hair out. Literally.

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Let's go!
“[I had] a roach falling on my head,” said another. “Yet I have the landlord telling me there's not an infestation.”

Most of the Cabbad's properties are on Fifth Avenue, between Prospect and Sterling Places. (Peter Senzamici/Patch)
City records confirm deteriorating conditions in the 13 buildings in the form of hundreds of housing violations, a stop work order and a $10 million civil lawsuit filed by one sibling against the others over an alleged attempted coup.

"[Debra Cabbad] commenced a lawsuit to…ensure that the buildings would be managed in a competent manner," attorney Robert Abrams said, "to ensure the safety and well being of the tenants."
Meanwhile Philip Cabbad, the brother she accuses of funneling cash out of the family business to fund luxury bike shops in New York and California, replied to Patch's request to comment on tenants' concerns with language for which he apologized.

“That’s the jackass in 95,” Philip said. "He’s a little prick — sorry for the English.”

A Fifth Avenue Dynasty​

Park Slope loved Albert Cabbad because Albert Cabbad loved his wife, Fifth Avenue and Park Slope.

The Syrian immigrant arrived in Park Slope in 1958, when Fifth Avenue wasn't much more than a "ghost town," as his son put it in an interview with Bklyner.
Cabbad went to work.

The former R&A Discount Store, named for Ramona and Albert, at 106 Fifth Ave. (Peter Senzamici/Patch)
He created a bridge between the 78th Precinct and the community, befriending cops, attending meetings and engaging fellow business owners.
He joined Community Board 6, founded the Arab-American Parade Committee, and launched two businesses whose names also honor his wife Ramona: R&A Discount and R&A Cycles.
Cabbad also bought 13 buildings, 11 on Fifth Avenue between Sterling and Prospect places and two around the corner on Baltic Street, court records show.

The so-called Mayor of Park Slope spent decades revitalizing Fifth Avenue and in 2014, three weeks after Ramona's death, he passed away.
“He felt that businesses should be able to live in their own communities and be proud of them," former district manager Craig Hammerman (more on him here) told Bklyner at the time.
"Al wanted justice and equity for all."
Seven years later, Cabbad tenant Johnn Fedor said he reported potentially dangerous building problems to city officials only to receive surprise visits from the super, who once threatened to punch him in the face.
Ironically, it was Albert's legacy of civic engagement that first drew Fedor and his girlfriend to the building.

“We kind of banked on the fact that [Albert Cabbad] was still kind of present in the family — those values," Fedor said. "We were very wrong."

A Fifth Avenue Dynasty Lawsuit​

Philip Cabbad stopped paying rent on his luxury bike shops less than one month after his father died, his sister Debra said in a 2021 lawsuit filed against her family.
In his response, Philip accused Debra of illegally paying herself and her son Steven Cordero $500,000 and lost the company $5 million more through incompetence, court records show.
Debra, executor of Albert Cabbad's estate and majority-shareholder in the family business, accused her siblings of a "corrupt take-over" and demanded $8.9 million in a lawsuit filed in New York City Supreme Court.
The lawsuit claims Debra's brothers tried to oust her as estate manager without proper authority (as they owned only 30 percent share in the company) by writing banks and telling them on Cabbad LLC paper that Debra was out.

Once the brothers had control of Cabbad LLC, they had agreed not to charge themselves the rent owed to the family business, the lawsuit said.

A ceiling in the entrance to one of the Cabbad's blue buildings collapsed after months of complaining about a leak last summer. Debris narrowly missed the head of a tenant when it happened. (Courtesy photo)
"[They] have engaged in self-dealing and diversion of corporate assets to benefit themselves financially," the suit states. "[They] have wasted corporate assets and refused to pursue the repayments of debts."
But in a counterclaim filed in February, the Cabbad brothers say they voted their sister out in 2019.
They say her incompetent management has seen eleven profitable storefronts, which could have earned an estimated $3 million in rent, stand empty and incurred $2 million in estate tax arrears.
"DEBRA CABBAD has caused the looting and wasting of CABBAD LLC's corporate assets for their non-corporate purposes," the counterclaim contends ."[Defendants] have been, and will be, damaged."

Both parties are slated to conference in May, court records show.
Philip declined to comment on his sister's allegations but he had lots to say about the tenants who told Patch about how their living conditions changed after the lawsuit was filed.

“The Jackass At 95”​

Johnn Fedor's girlfriend Anissa Garcia stopped living with him in the summer of 2022 for the sake of her sanity.
“There are people out there that really have no decency and don't care what they do to other people,” Garcia said. “They're so completely selfish.”
Of course, Garcia was not talking about Fedor — who remains her boyfriend — she's talking about the building owners she blames for her chronic bronchitis and trichotillomania, a condition that causes a person to pull out her hair.

The couple moved into their apartment at 95 Fifth Ave. in January 2021, about nine months before Debra filed her lawsuit. They say the building was never without problems.
Promised repairs to the apartment's broken floors, countertop, buzzer and smoke detectors were never made. The super tried to squeeze cash out of Fedor after a quick radiator repair, arrived uninvited at odd hours and refused to hand over the mailbox key, they said.

Johnn Fedor thought that the Cabbad family legacy was a good sign when he moved in to one of their buildings in 2021. Now he says he was wrong. (Peter Senzamici/Patch)
But the breaking point came in early January 2022 when the late-night, building-shaking construction began in the vacant storefront two floors below, Garcia said.
The couple called the cops when the noise got bad one night, said Garcia, and they began wearing masks at home as dust filled their apartment.
Philip Cabbad initially apologized for the dust in emails shared with Patch, but two days later he told Fedor to "worry about other things."

“You are on the top floor," the January 2022 email reads. "So what is the issue?”
The Health department's issue was a “moderate to heavy accumulation of construction dust” in the third floor apartment, heavy amounts of dust in the hallways and insufficient dust control, according to an official report shared with Patch.

A collection of inspections and violations from city agencies and a gas utility for 102 and 95 Fifth Ave. (Peter Senzamici/Patch)
Patch asked Philip about the dust issues, but he accused Fedor of living in the building "illegally" and of calling the city too much.
“His lease was up nine months ago," Philip said. “He automatically calls DOB, Health department, and we didn’t know anything about it."
As tension mounted between tenants and owners, Garcia became afraid someone was going to force himself into her home, she told Patch

Her fears were not unfounded.
One day the super showed up swearing into his cellphone on the other side of their apartment door.
“He’s shouting, talking about me, saying: ‘motherf---er, f---ing f--- him, f--- that guy,’” Fedor told Patch. “We hear him coming up and we’re like: ‘what the hell is going to happen?
“He says something to the effect of: ‘I'm going up there, and I'm gonna punch him in his face.'"

“I Don’t Want To Blow Up In This F---ing Apartment”​

In another Cabbad building across Fifth Avenue, tenant Paige told Patch her biggest gripe was not the construction site she found in her bathroom, the water leaks that left her walls soft to the touch, the bugs, the decaying tin ceiling or the kitchen that had no cabinets (until her boyfriend spent $400 to install some himself). It was the gas.

“I don’t want to blow up in this f---ing apartment,” Paige told Patch.
Paige, standing in her hallway at 102 Fifth Ave. covered by patch-jobs and a bannister seemingly ready to collapse. (Peter Senzamici/Patch)
Paige's fears circle around an ongoing battle between the Cabbads and National Grid, the public utility that supplies gas to 102 Fifth Ave., which came to a head when the gas and hot water went out for four weeks last August.
As Paige's handy boyfriend cooked meals in a hot pot and the pair relied on a handful of very cold showers, Paige went looking for answers.
While the Cabbads said National Grid was to blame for the outage, an inspector told Paige owners had ignored two years worth of safety compliance notices, forcing the utility to shut off the gas for the tenants' safety.
Paige asked Philip Cabbad for help and the gas suddenly turned back on, but the next day National Grid issued a major violation for “unauthorized work on the house line," according to records shared with Patch.

A subsequent Buildings department inspection found no violations on the gas line, but they did issue a violation, since resolved, for a 50-gallon electric water heater installed without a permit.
Philip Cabbad dismissed the violation as city bureaucracy as usual.
“DOB has to look for something wrong," Philip told Patch. "And they couldn’t find anything wrong.”
But Paige felt something wrong in her home on Dec. 2 when a Housing Preservation and Development inspector recorded it was just 57 degrees in her apartment, she told Patch.
Philip once again pointed the blame at National Grid, saying the utility shut off the heat for the sake of the pipes and that he was waiting on boiler parts to complete repairs.

“It’s not my fault," he said. “There’s a plumber taking care of it already — so what is the issue now?”
But Paige said when the heat finally was restored on Dec. 21, it was the first time that season.

"Stop Calling The Inspectors”​

Cabbad tenants decided to organize about one year after the Cabbad's Shakespearean lawsuit hit the courts, when residents received warnings that their buildings had been sold and they had one month to move out.
But according to public property records, no recorded sale took place.
One vacated apartment was quickly listed for $700 more per month, and another appeared with a $1,300 increase, tenants told Patch. Paige pleaded to stay, but the Cabbads told her she needed to start paying double the rent, or $6,000 a month.

Philip Cabbad told Patch the deal fell through and blamed "stupid people" who didn't want to move out.
“They have issues," Philip said.
“They were disgusted by our hallways and lack of heat," Paige told Patch. "And [our] floors.” (Peter Senzamici/Patch)
The flipped apartments, strange messaging from the Cabbads over who exactly managed the building, and worsening conditions spurred 11 tenants to organize, they said.
The group even reached out to the Fifth Avenue Committee, which the late Cabbad patriarch Albert helped form.
Tenant organizer Jeffrey Aronowitz toured the buildings and confirmed their suspicions that they were living with serious problems.

Aronowitz found mold, water damage, cracked facades, broken buzzers at every building he visited, he said.
“[It was] a very, very clear case of building neglect,” Aronowitz said.
Their tenant action have since led to a slew of inspections.
Housing Preservation and Development inspectors issued on Nov. 21 more than 100 violations across five Cabbad buildings, including 33 deemed immediately hazardous, city records show.
The 106 violations include roaches, mice, piles of garbage, defective smoke alarms and several broken self-closing doors — a problem that officials say fueled last year's Twin Parks fire in The Bronx, which killed 17 residents.

One day of HPD inspections found over 100 violations at the Cabbad's buildings. (Peter Senzamici/Patch)
Paige’s building had the most violations at 35, among them roaches, broken floors and banisters, peeling paint in the hallways, broken smoke detectors and those missing kitchen cabinets.
“They were disgusted by our hallways and lack of heat," Paige told Patch. "And [our] floors.”
Building inspectors who visited on Nov. 9 found missing fireproofing in commercial storefront unit at 95 Fifth Ave. and cracked facades at Philip's bike shop and his uncle's hardware shop, records show.
“The facades of these four buildings were posing a hazard to pedestrians," a Department of Buildings spokesperson said.
"Our inspectors found that the facades of 101, 103, 105 & 107 5th Avenue were all in a state of disrepair, with loose masonry and cracked lintels throughout."

The Buildings department demanded the fireproofing be replaced and sidewalk sheds installed. As of March 31, the sheds still stand.
The sheds installed to protect pedestrians from a decaying Cabbad building facade as observed by a Patch reporter on March 31. (Matt Troutman/Patch)

Progress didn't come quickly enough for Fedor, who ultimately decided to move out in February when he was given an official notice that the Cabbad's wouldn't renew his lease. Paige left at the start of the year, just days after the heat returned.
But at least one representative of the Cabbads took immediate action, video shared with Patch shows.
Minutes after the building inspector left, the super climbed the creaky stairs to Fedor’s apartment, banged on his door and walls and demanded he open up.

“You call too much the inspectors," he screamed. "Stop calling the inspectors.”

 

[David Goldsmith]

A $25k per apartment gift still "isn't enough."

NYC to Fund Repairs at 400 Vacant, Rent-Stabilized Apartments

Mayor Eric Adams announced “Unlocking Doors,” which will reimburse owners for repairs on about 400 vacant rent-stabilized apartments.

therealdeal.com

City to fund repairs to vacant rent-stabilized apartments​

Landlord groups say $25K-per-unit pilot program falls short

The city is launching a $10 million pilot program to help landlords repair vacant, rent-stabilized apartments, but some owner groups say it won’t be enough.
The “Unlocking Doors” initiative will provide up to $25,000 per unit to owners of vacant, rent-stabilized apartments that need work to be re-rented, Mayor Eric Adams announced Wednesday.

There are some strings attached.
The renovated apartments would be dedicated to formerly homeless tenants through the city’s voucher program, known as the City Fighting Homelessness and Eviction Prevention Supplement, or CityFHEPS.

The pilot program is expected to include 400 apartments, a fraction of the tens of thousands of vacant, rent-stabilized apartments in the city. The effort will test whether the funding level is sufficient to bring back properties that landlords say they keep vacant because the state’s 2019 rent law does not allow them to recover enough renovation costs.
The city program will not provide funds upfront, but rather reimburse landlords for qualifying expenses after repairs are done and have been reviewed by the Department of Housing Preservation and Development.
The Real Estate Board of New York commended the Adams administration for “putting forth creative solutions that seek to address the need for renovating and maintaining much-needed housing stock for voucher holders.”
But the program was immediately criticized by other landlord groups. In a joint statement, the Community Housing Improvement Program and the Rent Stabilization Association said $25,000 is insufficient for the repairs needed in stabilized buildings.
The groups also criticized the administration for not consulting “with organizations that represent the majority of rent-stabilized apartment building owners in New York City before announcing this pilot program” — that is, CHIP and RSA.

“Even if this pilot program was successful, it cannot be scaled up to address the growing problem of naturally occurring, empty, rent-stabilized apartments,” the groups said. “We need to be advancing bigger and bolder solutions to this problem, instead of suggesting it doesn’t exist or that it can be solved by a small incentive.”
Jay Martin, executive director of CHIP, said in an interview the program “solves zero problems” for rent-stabilized owners, noting that much of the grant money would be paid back to the city in the form of building permit fees.
“It is indicative, unfortunately, of folks who do not understand housing policy,” he said.
CHIP has been pushing for the state to pass a law allowing landlords a one-time rent reset for vacant, rent-stabilized units. The group is pushing for the policy’s inclusion in the state budget and expects a standalone bill to be introduced if that does not happen.

Landlords have argued that the rent stabilization law’s severe restrictions on their ability to increase rents left them unable to profitably bring units up to code after longtime tenancies ended. A recent report by the city’s Rent Guidelines Board showed that owners’ net operating income dropped a record 9.1 percent in 2021.
The pilot will prioritize apartments with the lowest rent, that are “chronically vacant” and require “significant repairs to become safe and habitable.” CHIP has said such apartments commonly require $75,000 and sometimes well over $100,000 worth of work, including lead and asbestos abatement, yet can only be rented for around $1,000 a month or much less.
The city will begin accepting applications for the program this summer.

​

 

[David Goldsmith]

I'm willing to take bets that the actual increases on to year leases won't be 16%.

New York City Rent Guidelines Board suggests nearly 16% hikes for 2-year leases at rent-stabilized apartments

The board says expenses for buildings with stabilized units have increased by more than 8% in the past year.

www.cbsnews.com

New York City Rent Guidelines Board suggests nearly 16% hikes for 2-year leases at rent-stabilized apartments​

BY CBS NEW YORK TEAM
UPDATED ON: APRIL 20, 2023 / 11:18 PM / CBS NEW YORK

NEW YORK -- The Rent Guidelines Board is suggesting double-digit hikes for some of New York City's rent-stabilized apartments.
At a meeting Thursday, the panel appointed by the mayor suggested 8.25% increases for one-year leases and nearly 16% hikes for two-year leases.
The staggering numbers are based on rising operating costs, revenues and inflation.

The board says expenses for buildings with stabilized units have increased by more than 8% in the past year.
The number is not final, as it needs to be approved.

 

[David Goldsmith]

Empty NYC-owned apartments could help solve housing crisis, policy group says

The empty apartments in boarded-up buildings are hiding in plain sight and ripe for renovation to house people in need, according to the group Open New York.

gothamist.com

Empty NYC-owned apartments could help solve housing crisis, policy group says​

David Brand/Gothamist

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Published May 10, 2023

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Hundreds of apartments in boarded-up buildings owned by New York City are sitting empty despite a deepening housing shortage, fueling calls to fund renovations.
Open New York, a group that advocates for development and renter protections, identified more than 200 rent-stabilized apartments in vacant buildings controlled or funded by the city as part of a crowdsourced survey on empty units. That’s likely a fraction of the total, said Andrew Fine, the group's policy director.
Fine, a former official at the city’s Department of Housing Preservation and Development, called for “a public reckoning” to revamp the city-owned units that are sitting empty, pitching a proposal to expedite repair deadlines and a push to rent apartments sooner.
“This shows that there’s a lot of low-hanging fruit out there," Fine said. “When we talk about government being a meaningful player in solving the affordable housing crisis, we need to think about the things that are just staring at us already.”

'Unfinished business'​

Open New York and other advocates hope the city can streamline the process of getting apartments like that back on the market, especially as shelters are stretched to capacity and tens of thousands of newly arriving immigrants are also in need of places to stay.

The group issued its call to identify empty apartments as the city is mired in a decadeslong housing shortage with tenants, landlords and policymakers locked in broader policy debate over long-term vacancies.
The organization is urging the city to restore more than $500 million in the housing budget that went unspent last year, fund the creation of a tool to track the state of rent-regulated buildings and restore 37 open positions at HPD that Mayor Eric Adams ordered eliminated in a recent cost-cutting measure.
The city’s most recent housing survey found that just 4.5% of apartments were empty and available to rent, with the vacancy rate lower than 1% for units priced below $1,500 — figures that represent a “housing emergency” under state law. Tens of thousands of rent-stabilized apartments are also being held off the market for a variety of reasons, though estimates of the actual number vary depending on the year and data source.
Those vacant rent-stabilized apartments have become a flashpoint in a broader debate over the affordable housing crisis, with tenant groups and some elected officials urging owners to rent out their empty apartments and landlords calling for changes to state laws that cap monthly rents and allowable increases. Landlords say the restrictions make leasing the empty units less profitable or, at times, simply infeasible.
But unlike with vacant apartments owned by private landlords, the city can take direct action at properties they own or heavily subsidize, Fine said. The needed renovations garner less attention than flashier plans to convert unused hotels and offices to apartments but would provide vital housing in buildings already configured for residential use.
“There is still a lot of unfinished business from past decades that get less attention and would serve tenants just as well if completed,” he said.

A pathway to ownership​

The city owns 147 buildings outside the public housing system where renovations are underway or planned, according to HPD. About 40% of the 1,740 units in those buildings are vacant, the agency said. Those numbers do not account for the total number of city-owned residential buildings without a current renovation plan, or empty buildings turned over to nonprofits for redevelopment.
Many of the buildings are in dire condition and require “time-intensive” rehabs, while others are awaiting tenants through the city’s housing lottery, said HPD spokesperson Ilana Maier.
“HPD is working tirelessly to get these buildings, which are in very bad shape, back into safe, affordable and livable conditions,” Maier said. “The renovation needs in these buildings are often so substantial that it requires relocation of existing tenants out of concern for their safety and wellbeing.”
She cited multiple city programs that create a pathway to ownership for existing tenants or provide low-interest loans for owners to complete renovations.
In recent years, several housing experts have urged the city to increase funding and staff at HPD to clear bottlenecks and create or reopen apartments.

“I would see this as a huge opportunity and a case for not understaffing the government,” said Sam Stein, a housing policy analyst with the Community Service Society of New York.

Programs in progress​

The city is beginning to introduce some new programs to fill some of the empty apartments it owns.
The city’s housing stock includes six dorm-style apartment buildings run as supportive housing for formerly homeless New Yorkers with mental illness and other special needs. An ongoing city pilot program intends to place around 80 people into those empty apartments, Gothamist reported last month.
The vacant buildings identified by Open New York range from a boarded-up, six-story property owned by the city on West 141st Street to an 80-unit complex on Pacific Street in Brooklyn, purchased by the nonprofit housing and shelter provider Acacia Networks in 2015.
Acacia spokesperson Gabriela Gonzalez said the building was a homeless shelter when they took it over with a plan to turn it into affordable housing, with financing from the city.

“Our plans are to preserve this community asset and redevelop it to provide much-needed affordable housing for low-income families and formerly homeless individuals, as soon as we receive appropriate approvals and funding,” Gonzalez said.
At a city-owned building at 220 Lenox Ave. the main entrance and first-floor windows are covered in painted plywood. A window air conditioning box and sheets hanging from curtain rods suggest some of the apartments recently housed tenants.
Property records show the city took over the property in 1976, making it one of thousands of buildings the city acquired after owners abandoned them or failed to make property tax payments. HPD said they relocated the building’s tenants due to dangerous conditions and plans to finance the needed renovations.
The building’s wood-covered windows are not out of place along the stretch of Lenox Avenue between West 125th and 116th streets, where at least four other buildings are sealed and empty, including an imposing six-story complex at 110 Lenox Ave., which the city took over in 1980 with plans to transfer it to a tenant association.
New York City stopped taking over abandoned and foreclosed properties in the mid-1990s, when then-Mayor Rudolph Giuliani implemented the controversial tax lien sale to recover a portion of the debts and the Third Party Transfer program to turn over deteriorating properties to nonprofit groups without the city taking possession.
The organization Neighborhood Restore has fixed up around 500 properties under the initiative, before shifting ownership to other nonprofits or to tenant purchasers. But that process is expensive and time-consuming, with the buildings often in poor condition, said Salvatore D'Avola, Neighborhood Restore's executive director.

”All of the buildings that come to Neighborhood Restore have a plan for their renovation and are not sitting idle,” D’Avola said. “They come to us in physical and financial distress with most having a slew of housing code and DOB violations. “
Neighborhood Restore has owned two of the buildings on the Open New York vacancy list, including a complex located on Mott Avenue in Far Rockaway. D’Avola and HPD said the empty apartments there will soon hit the city’s affordable housing lottery.

By the numbers​

All told, Open New York tallied 1,442 vacant apartments based on crowd-sourced submissions that they attempted to verify through visits, photos, court records and housing documents. About half were located in Manhattan.
The effort received praise from the End Warehousing Coalition, which conducted its own research and called out property owners that they say intentionally keep apartments off the market. They have urged the city and state to conduct a rigorous review of the city’s rent-stabilized apartments.
“We can count every tree in NYC, so we should know how much of our precious housing stock is being warehoused, especially in a housing crisis of historic proportions,” the group said in a statement.

The organization Community Housing Improvement Program, which represents owners of rent-stabilized properties, also said the study could spur a deeper understanding of the vacancy issue.
“Understanding why apartments are sitting empty in a city with such high demand for housing is important and will lead to better policy,” said Jay Martin, CHIP's executive director. “We should have an open and honest conversation about why the current housing policies are not encouraging apartments and buildings to be renovated and made available to New Yorkers.”

 

[David Goldsmith]

Why Are NYC Democrats Endorsing This Landlord-Backed Bill That Would Be a 'Total Disaster for Rent-Stabilized Housing'? - Hell Gate

One lawmaker dropped their support after Hell Gate asked them about it.

hellgatenyc.com

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Why Are NYC Democrats Endorsing This Landlord-Backed Bill That Would Be a ‘Total Disaster for Rent-Stabilized Housing’?​

One lawmaker dropped their support after Hell Gate asked them about it.
11:34 AM EDT on May 12, 2023

As New Yorkers struggle under a statewide housing crisis and record-high rents, a group of Democratic lawmakers in Albany have quietly backed legislation that would create a process allowing landlords to significantly raise rents on the city's rent-stabilized apartments.
Since the 2019 rent reform laws, the real estate lobby has thrown their resources into rolling back some of those reforms and stopping further rent protections. But housing advocates and analysts told Hell Gate that this bill represents the industry going on the offensive, and that if passed, would have a cataclysmic effect on the millions of New Yorkers living in rent-stabilized housing.
"This is not about going back to pre-2019 rent regulation. This is about ending rent regulation for half of regulated households," Ellen Davidson, a staff attorney for the Legal Aid Society, said of the proposed legislation.
After the state passed 2019's Housing Stability and Tenant Protection Act, owners of rent-stabilized apartments were no longer able to score 20 percent rent increases on vacant apartments, or take units out of stabilization once a certain amount of repairs were done. Landlord groups like the Community Housing Improvement Program (CHIP) have argued that these changes have made it prohibitively expensive for their members to renovate apartments that have been lived in for decades, and blame the 2019 law for a glut of empty rent-stabilized apartments.
This narrative does not quite comport with reality: According to a City Limits report using the most recent figures from the state's housing agency, around 40,000 of the city's one million rent-stabilized apartments have been registered by their owners as vacant, which is the same vacancy rate that existed before the 2019 laws took effect. (CHIP and another group, the Rent Stabilization Association, have also filed a lawsuit claiming that New York's entire system of rent control is unconstitutional; the U.S. Supreme Court is now weighing whether to take the case.)
Nevertheless, CHIP and its industry partners insist that landlords need to be unshackled from regulations so they can raise rents. "Rent stabilized owners can't pay for 2023 costs with 1979 rents," CHIP wrote in a TikTok featuring a Chinatown apartment that had recently been vacated. This bill specifically answers CHIP's calls to give landlords more power.
The legislation would allow owners to reset the rent on newly vacant rent-stabilized apartments that have previously been occupied for 10 years or more. While the bill states that the new rent would need to be in line with comparable rent-regulated units in the same neighborhood, if the tenant challenges it, the state would deem any rent that does not exceed the region's "fair market value," or FMR, set by the U.S. Housing and Urban Development to be "fair." Since HUD's numbers take into account rents across the whole region, the FMR tends to be higher than the rent of many stabilized apartments.
For instance, according to a state housing memo obtained by the CITY, the average rent stabilized tenant in the Bronx in 2021 paid $1,290/month. HUD's fair market rent for New York City in 2023: $2,123 for a studio. In neighborhoods where the rents are higher than HUD's—as it is across huge swaths of Manhattan—landlords could charge even more, according to Davidson.
"As I read the bill, if an area's rents are below the FMR, this bill would allow landlords to increase rents to the FMR," Davidson told Hell Gate. "If, however, the rents in a neighborhood are above the FMR, the landlord would be able to increase the rents higher than the FMR."
Sam Stein, a housing policy analyst at the Community Service Society, said that the bill would also "put a target on the backs of any rent-stabilized tenant who has been there a long time." According to the most recent U.S. Census data, 60 percent of all New York renters moved into their apartments in or before 2014.
"Because if the landlord can get them out, they now have a huge incentive to raise the rent. And that's why we made the changes that we made in 2019," Stein said. "This would not only reverse that, but roll it back—like, back to before rent-stabilized times."
Stein added, "It would be a total disaster for rent-stabilized housing."
And despite being called the "Local Regulated Housing Restoration Act" and using the word "restoration" dozens of times in the text, the bill does not specifically require landlords to make any repairs or bring their units up to code, beyond requiring them to pass a lead paint test.
"CHIP has spent the last two years publicly advocating for a legislative solution to address the growing number of empty rent-stabilized apartments," CHIP's executive director, Jay Martin, said in a statement to Hell Gate. "We support this legislation and are pleased that the bill has been introduced."
Asked to respond to critiques of the bill, Martin responded that "it does not raise the rent on a single rent-stabilized tenant." That's true—for current tenants. It's certainly not true for future ones.

Why would Democrats in New York City, where rent-stabilized apartments represent nearly half of the rental housing stock, sign on to this bill?
Bronx Democrat Kenny Burgos, the bill's main sponsor in the State Assembly, told Hell Gate in a statement that CHIP was among several parties consulted in drafting the bill, that he supported the 2019 reforms, and that he believed that the legislation would put vacant units back on the market.
"My bill would bring thousands of available rent-stabilized apartments back online, restore them, and ultimately keep them preserved under NYS rent-stabilized guidelines," said Burgos, whose district includes some 14,000 rent-stabilized units in Soundview and Longwood in the Bronx, representing nearly 40 percent of the district's housing stock.
"The HUD FMR component only comes into play if the landlord wants to rent to a voucher holder," Burgos said. "These are also vacant apartments that stay rent-stabilized, so the underlying premise that this bill could destroy rent stabilization is simply false."
The language of the bill makes no reference to vouchers at all. We've asked Burgos's office to clarify, and will update if they respond.
Queens Democrat Leroy Comrie is the bill's main sponsor in the State Senate. Comrie's district has 12,200 rent stabilized units, representing more than a quarter of the rental housing stock there. Comrie's office did not respond to our request for comment.
Hell Gate asked the other seven Assembly co-sponsors, all Democrats from New York City—George Alvarez, Brian Cunningham, Edward Gibbs, Charles Fall, Alicia Hyndman, Michael Benedetto, and Yudelka Tapia—and nine State Senate co-sponsors, all but three Democrats from the city—Nathalia Fernandez, Luis Sepúlveda, Joseph Addabbo, John Mannion, Monica Martinez, Kevin Parker, Roxanne Persaud, Jessica Scarcella-Spanton, and James Skoufis—to comment on it. Just one has responded so far: Bronx Assemblymember George Alvarez.
"After further review, I decided it would be best to withdraw my name," Alvarez told us in a statement. "I am no longer on Bill A06772. Thank you for your inquiry."
Manhattan Democrat Linda Rosenthal, who chairs the Assembly's housing committee, insisted that the bill is a "non-starter."
"It has no chances this year," Rosenthal told Hell Gate. "And I would say it has no chances in the future because its goal is to undo the rent stabilization system. And we see that and we know that that's not going to happen."
Rosenthal declined to say why some of her Democratic colleagues didn't share her view, but offered that "the way it's being sold is very skewed, very distant from the truth."
"Jay Martin, he tried to sell me this bill of goods," Rosenthal said, referring to CHIP's leader.
Rosenthal, who is a co-sponsor of Good Cause Eviction legislation in the Assembly, said her priority was trying to get these tenant protections passed before this year's session ended in June. Housing legislation was cut out of the budget process this year, though Rosenthal said this was not altogether a bad sign for tenants rights supporters.
"In the past, what would have happened is everything developers and landlords wanted would be accommodated. And in 2023, that didn't happen," she said.
Is this bill a sign that the real estate industry is concerned that Good Cause Eviction is about to pass?
"I can't read their minds, but I know they put all their efforts into opposing what tenants want most," Rosenthal said. "And so this is probably just part of that."
She added, "Jay Martin has hired up many lobbyists, and I know he's going to be unsuccessful. And if he wants to waste his money, that's his choice."
[Update / 12:42 p.m.] Bronx Assemblymember Yudelka Tapia's name is no longer on the legislation.

 

[David Goldsmith]

New York Rent Control Activists Ignore the Real Drama

While activists were disrupting a meeting, lawyers were penning an appeal that could move the Supreme Court to end rent stabilization.

therealdeal.com

Rent control theater could become true drama​

Activists jumped on stage, but Supreme Court could steal the show

Except for better costumes and singing voices, Broadway doesn’t have much on Rent Guidelines Board meetings.
Theatrics at board gatherings are standard fare, but this year activists and City Council members stepped up their quest for a Tony by climbing on the stage, chanting “rent rollback,” and marching around with raised fists and banners to intimidate board members.

With all the histrionics, it’s easy to miss the forest for the trees. Maybe that is the point.
The forest, in this case, is the very concept of rent stabilization in New York, which on Monday was brought to the Supreme Court of the United States. If at least four of the six conservative justices vote to hear landlords’ challenge to the system — there is no chance that any of the three liberal justices will — rent control as we know it would be in jeopardy.

The system’s fans don’t admit to being worried. They note that lower courts have unanimously rejected the landlords’ case and that the Supreme Court has declined to hear similar cases in the past. The court only hears 100 to 150 of the 7,000 or so cases brought before it each year.
But landlord advocates the Rent Stabilization Association and the Community Housing Improvement Program crafted their challenge specifically to appeal to the high court’s conservatives, signaling that the justices could take down rent control not just in New York but elsewhere. The message was, essentially, “This is worth your time.”
Two other challenges brought by landlords target New York’s 2019 rent law, which reduced the financial upside of rent-stabilized buildings — eroding their value and rendering some unprofitable in the short or long term. Those cases could reach the Supreme Court as well.
The question before the court is whether rent control in New York is constitutional or amounts to a “taking” of private property. There’s a lot to unpack, but here are some of the issues:
Owners of rent-stabilized apartments knew they were buying a heavily regulated asset that was subject to laws the state had changed every few years. Landlords cannot expect to have the same control of those units as they would free-market ones.

But must the law offer them the opportunity to achieve a reasonable rate of return? If so, does it offer that? And what is a reasonable return?
What about tenants’ ability to pay? Should that get priority over landlords’ profits? How should the state law and the city’s Rent Guidelines Board balance landlords’ and tenants’ interests?
One problem with rent control is that even if everyone agreed on those answers — which they never will — lawmakers and regulators could still never achieve them. So, two impossible things must happen for this policy to work.

​

What makes a balance between landlords’ and tenants’ rights unachievable is that the law and the rent board apply uniform rules to a diverse range of properties and tenants. A 4 percent rent increase is unaffordable for some tenants and a rounding error to others. It is enough to sustain some buildings but forces others into an irreversible decline.

No policy is perfect. But you’d be hard-pressed to find another affordable housing program where residents can range from penniless to wealthy and buildings can range from 1 percent to 100 percent affordable.
This happened because rent control didn’t start as an affordable housing program. It was supposed to be a temporary ceiling on rents until the market could absorb all the soldiers returning from World War II. Well, they returned 78 years ago. The rent law is now permanent.
The 2019 version of rent control in New York does have a certain logic to it, however. Rather than limit tenants’ income to ensure the wealthy don’t benefit, it limits rent increases to ensure that landlords won’t invest in their buildings. Consequently, the properties will deteriorate to the point that only impoverished people will be willing to live in them.
Supporters of rent control argue that the government can just enforce the building code to guarantee all apartments remain livable. But passing a code requiring water to flow uphill won’t make it happen. If landlords can only make a profit by neglecting their buildings, that’s what they will do.
This slow-motion train wreck has been playing out for nearly four years.

Low quality of life has, unfortunately, been the city’s de facto affordable housing program throughout its history. The more crime, litter, air pollution, noise, vermin, fast food, run-down stores and low-performing schools a neighborhood has, the cheaper the housing will be.
Any development seen as attracting higher-income residents and fancier restaurants is opposed as gentrifying — even if the vast majority of low-income residents live in rent-stabilized housing, which comes with guaranteed lease renewals that protect them from displacement. This played out in the rezoning of Inwood and failed efforts to rezone Bushwick and the South Bronx.
Housing policy is complex. Laws to prevent displacement, such as good cause eviction, come with their own unintended consequences, and don’t stop the anti-gentrification crowd from opposing new, market-rate housing anyway.
But rent control is not a carefully crafted housing policy. It was a byproduct of world war, gained a political constituency and hardened into permanence. Since then, elected officials have been hammering it into different shapes, trying to achieve a perfect blend of quality and affordability.
Their failure, which was inevitable, could now lead to five Supreme Court justices dismantling some or all of the system. Chanting on a stage is not likely to deter them.

​

 

[David Goldsmith]

I have to say I'm happy to see that logic is prevailing over the extremely active disinformation campaign being pushed by CHIP. The number one complaint o have is the 100% bullshit claim that landlords would LOSE money by renting out vacant units. The driver behind this is the red herring that the would only collect the maximum amount of $89 a month after renovation. They totally leave out that on vacant units they currently collect $0 so after renovation they would collect the base rent PLUS $89. So with an average base rent on vacant units over $1,500 adding $89 would yield almost $20,000 per year on a $75,000 renovation.

I don't know anyone aside from this group who turns down North of 25% return on investment and cries how unfair that is and gets away with it.

Tenants Scare Sponsors Off Rent-Reset Bill - The Real Deal

Landlords got a state bill introduced to raise rents on vacant, rent-stabilized apartments. Tenants scared off a few sponsors.

therealdeal.com

Landlords get rent bill; tenants scare off some sponsors​

CHIP’s Jay Martin calls withdrawals “not really that big of a deal”
A little over a year after landlords charted a route to charge more for vacant, rent-stabilized apartments, state electeds acted on that plan.
Last week, the Legislature introduced a bill that would let owners hike rents after renovating vacant units, allowing for the repairs required to bring those much-needed apartments back online.

It took only days for tenant advocates to start unraveling that work.
Since the legislation surfaced May 8, the advocates claim, they have persuaded a handful of legislators to withdraw their sponsorship of the bill.

Housing Justice For All’s Cea Weaver touted the tenant-side progress in a tweet this weekend.
“Within 48 hrs of @HellGateNY @ChristRobbins publishing this piece abt a bill to gut rent stabilization/ super-charge rent hikes we’ve gotten 5 electeds to drop sponsorship,” Weaver wrote, citing a Hell Gate article that questioned why 15 state Democrats had backed the bill.
“Lesson: don’t f*** with organized, rent stabilized tenants. HSTPA is here to stay,” Weaver added, referring to the 2019 law that ended the 20 percent rent increase for vacant units and substantial hikes to pay for renovations.
Weaver told The Real Deal that number had grown to six as of Tuesday morning: Assembly members George Alvarez, Brian Cunningham, Charles Fall and Yudelka Tapia, and state Senators Iwen Chu and Sean Ryan.
The tenant organizer said she expects more to follow.

Community Housing Improvement Program’s Jay Martin, the lobbyist who kicked off the campaign that inspired the bill, said he’d only heard of four drop-outs. He characterized them as “not really that big of a deal.”
“Some of the sponsors who have pulled their names haven’t told me they don’t support the bill,” Martin said. “They just don’t want their name on the bill.”
Alvarez pulled out by mistake, Martin claimed. Confusion among the legislator’s staff led him to believe he was abandoning a different bill.
“My understanding is he’s back on the bill,” Martin said. A spokesperson for Alvarez said he “has been removed from the bill.”
Martin had not heard that Fall, who did not return a request for comment, had dropped off the bill.

As it stands, no co-sponsors who tied their names to the legislation have publicly renounced it.
Those include primary sponsor Kenny Burgos and co-sponsors Edward Gibbs, Alicia Hyndman and Michael Benedetto in the Assembly, and sponsor Leroy Comrie in the state Senate, alongside co-sponsors Nathalia Fernandez, Luis Sepúlveda, Joseph Addabbo, John Mannion, Monica Martinez, Kevin Parker, Roxanne Persaud, Jessica Scarcella-Spanton and James Skoufis.

​

All failed to return requests for comment.
Martin, speaking on a drive back from Albany, said pressure from tenant advocates hasn’t stymied the bill’s momentum.

“As early as this week, just yesterday, we’ve had conversations with other folks who are going to put their names on this bill,” the landlord advocate said.
What Martin and landlord advocates on Twitter take greater issue with is the misinformation surrounding the legislation.
The bill would let owners raise rents in vacant apartments in which the previous tenant had lived for at least 10 years. To qualify, owners would need to renovate the unit, then send before-and-after photos, contractor licenses, lists of new appliances, and lead test results to the state housing agency.
Increases would bring an apartment’s rent in line with comparable stabilized units in the area, but not to market rate — a change from CHIP’s initial proposal.
Under the bill, tenants could challenge a hike. In that case, the state would tie the increase to the area’s fair market value as determined by the U.S. Department of Housing and Urban Development, or the rent of a similar property in the neighborhood, whichever is higher.

Some policy wonks have suggested the bill would create an incentive to illegally push tenants out, a practice the 2019 rent law sought to eradicate.
“This would not only reverse [the rent law], but roll it back—like, back to before rent-stabilized times,” the Community Service Society’s Sam Stein, told Hell Gate.
The bill has guardrails to prevent predatory actions. Landlords flagged for harassment or illegal evictions would be barred from adjusting rents on the associated apartment for three years.
Martin noted that the owners who can’t finance repairs in empty units — those the bill seeks to help — didn’t end up with vacancies by driving out tenants.

​

“Those vacancies occurred over the past three years when housing court was closed, when pandemic protections prevented evictions from even happening,” he said.

“If the bill did what tenant advocates say it does, they would be well within their right to be upset,” Martin said. “But it doesn’t.”