Is Rent Stabilized income really lower?

David Goldsmith

All Powerful Moderator
Staff member

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

All Powerful Moderator
Staff member
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

All Powerful Moderator
Staff member
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
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

All Powerful Moderator
Staff member
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 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

All Powerful Moderator
Staff member

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

All Powerful Moderator
Staff member


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

One tenant began pulling her hair out. Literally.​

Peter Senzamici's profile picture

Peter Senzamici,Patch Staff
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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.
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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“[I had] a roach falling on my head,” said another. “Yet I have the landlord telling me there's not an infestation.”
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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.
L1000840.jpg
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.
IMG_4660%20(1).jpeg
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.
L1000890.jpg
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.
cabbad%20inspections.jpg
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

All Powerful Moderator
Staff member
A $25k per apartment gift still "isn't enough."

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

All Powerful Moderator
Staff member
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​

newyork
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

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

110 Lenox Ave. in Harlem has a closed retail space on the ground level, with boarded up apartment windows on the remaining five floors above.


David Brand/Gothamist


By
David Brand
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

All Powerful Moderator
Staff member
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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

All Powerful Moderator
Staff member

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

All Powerful Moderator
Staff member
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.

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.”
 

David Goldsmith

All Powerful Moderator
Staff member
Of course CHIP's boot licking toadie - Eric Engquist - toes the line and continues the disinformation campaign about vacant Rent Stabilized apartments. Event with this cherry picked example with a below average base rent, let's look at the actual numbers:
Current rent collected = $0
Rent after renovation = $773

So annual rent = $9,276
Almost 10% return.

Pols weakened landlords’ vacant-unit bill. Did they go too far?​

Pro-tenant provisions leave CHIP with half a loaf, yet scrambling to save it

There’s a vacant, one-bedroom apartment in Morningside Heights that would make a nice home for a struggling New Yorker, or a young artist, or someone just out of prison who needs a fresh start: The legal rent is only $684 a month.
“Bless day,” Shakema Smith wrote when she saw the unit on Twitter. “Is it available for rent?”

Nobody replied.
Perhaps no one wanted to deliver the bad news: It is not available, because it is not up to code. And perhaps never will be.

The unit is among tens of thousands trapped in a backwater of the 2019 rent law, which created new problems as it solved old ones. By limiting to $15,000 (over 15 years) the amount landlords can recover from tenants to pay for upgrades, the law kept rents down but also removed from the market apartments like the one Shakema Smith wanted.
The Upper Manhattan unit needs about $95,000 worth of work to be rentable, but the landlord can only raise the rent by $89 a month. It would take 90 years for that increase to pay for the renovations, so the apartment sits empty. What good is a bargain if no one can get it?
To fix this problem, which affects 30,000 or 40,000 rentals in New York City, the landlord group Community Housing Improvement Program last year proposed that landlords be allowed a one-time rent hike to whatever amount they wanted, after which the incremental increases allowed by rent stabilization would resume.
The proposal was a non-starter: This state legislature would never give landlords carte blanche to jack up regulated rents. So CHIP asked Democrats to come up with something that could actually pass in the pro-tenant Assembly and Senate.
Sen. Leroy Comrie of Queens and Assembly member Kenny Burgos of the Bronx did just that. In their bill, the one-time rent increase would be determined by a similar process — but stricter and more transparent — than the one used when rent-controlled units become rent-stabilized. That process is not controversial and has been state law for 50 years.

Landlords could not use it for every vacancy. Instead, the bill would apply to units like the one Shakema Smith coveted: those needing extensive repairs after long tenancies ended. And the new rent would be based on comparable rent-stabilized units, not market-rate ones.

Who could possibly object to that? Believe it or not, the tenant advocacy movement did. The advocates immediately began spreading false information about the bill and chased away half a dozen of its sponsors.
They convinced a Hellgate reporter that it “would have a cataclysmic effect on the millions of New Yorkers living in rent-stabilized housing.” In reality, it affects none of them, because it applies only to apartments left vacant after a long tenancy. The bill affects people looking for rent-stabilized apartments — people like Shakema Smith.
One of Hellgate’s sources, Legal Aid’s Ellen Davidson, perhaps auditioning for a job on Tucker Carlson’s new show, came up with this whopper: “This is about ending rent regulation for half of regulated households.”

The bill wouldn’t deregulate a single unit. Rather, it would add thousands of rentable units to the rent-stabilized housing stock.
The legislation’s biggest flaw, from a policy perspective, is that it’s not nearly flexible enough to rescue all mothballed units. For example, unlike the law governing rent-controlled units being moved into rent stabilization, it requires landlords to remove nearly every molecule of lead, rather than just make the apartment safe. In most cases, that demands a gut renovation.
Also, as noted, the new rents will be on par with other rent-stabilized units. In many cases, that might not be enough to justify a renovation. Would it make sense to spend $100,000 to collect $1,350 a month rent? A good number of landlords would not bother.
CHIP is well aware of the bill’s limitations. But it also recognizes the limitations of New York politics. Legislators are afraid to vote for anything — even a bill that puts vacant units back on the market and keeps them affordable — that could be portrayed as rolling back the 2019 rent law.

That’s why the bill was written with so many pro-tenant provisions, so even the most zealous backers of the 2019 law would accept or even embrace it. But they have shown themselves to be incapable of that.

So, no, Shakema, the one-bedroom is not available at any price. Good luck with your apartment search.

 

David Goldsmith

All Powerful Moderator
Staff member

Landlords say Council “wasting its time” with warehousing bill​

City bill to let tenants report hazards in vacant units gets hearing
City Council members are advancing their own solution for the tens of thousands of vacant, rent-stabilized units: let tenants report hazardous conditions in them.
Their bill, they say, would help reveal the extent of the problem and how much financial aid landlords need to fix up and re-list the units.

Owners say it won’t do a thing to bring apartments online. They call it redundant legislation that would waste city resources.
The bill, introduced last spring, finally got a hearing Tuesday — a necessary step for it to have a shot at passing.

A tenant’s complaint would trigger an inspection by the city’s Department of Housing Preservation and Development. If the city finds hazards such as mold or vermin, the owner would need to schedule a second check-in to show the issue has been cured.
Landlords may also be on the hook for inspection fees.
On its face, the bill offers tenants a direct line to report safety issues in neighboring vacant apartments, which advocates claim are shielded from city inspectors.
“There are no clear pathways — barring a warrant for access — to be in a vacant apartment to inspect it,” said Colin Kent-Daggett of the Coalition to End Apartment Warehousing, the tenant group backing the bill.

That means tenants with rats visiting from a neighboring unit have little hope of relief if their landlord won’t address the root of the problem, he said.

Not true, claimed the Rent Stabilization Association, a landlord group.
“HPD already has the power to write violations … if conditions in a vacant unit are impacting occupied units and causing the residents to suffer,” said Michael Tobman, director of membership and communication at RSA.
The agency can also bring owners to court for failure to cure those violations, he said.
“To create a second violation to be written against the vacant unit is a way to create additional violations for no real purpose other than to be punitive,” Tobman said.
Behind the bill is a theory that landlords are unnecessarily keeping rent-stabilized units vacant — which critics call “warehousing” — by claiming it would cost too much to make them rentable again.

Elected officials supporting the legislation say it would allow the city to better count vacant, rent-stabilized apartments and would offer a look inside units that landlords deem uninhabitable.
Official estimates of vacant unit counts have ranged from 20,000 to 60,000.
“I hear about warehoused apartments all the time but I don’t know how many there are,” said Council member Gale Brewer, a co-sponsor of the bill. “This is about data, data, data.”
The Community Housing Improvement Program, a landlord group campaigning for a one-time rent increase to return vacant units to the market, said the state housing agency already has data on registered stabilized units, and the city’s Department of Finance has counts of vacant units in buildings with 10 or more units.

Inspections triggered by the bill, the group argued, wouldn’t offer much more clarity — individual complaints do not produce a comprehensive tally of units or estimate repair costs — and would do nothing to bring apartments online.
“We need real solutions and housing policies that work.” executive director Jay Martin said. “Hopefully, the City Council will support solutions instead of wasting their time collecting more data that will likely be ignored.”
The Council’s ability to address the vacancy issue is limited. The state’s Division of Homes and Community Renewal oversees rent-stabilization and the state Legislature would need to be tapped to affect the 2019 rent law that blocked most pathways for owners to raise rents in stabilized apartments.
“We can’t do anything on the city level like they can on the state level,” Brewer conceded.
Another Manhattan Council member, Carlina Rivera, positioned the bill as a potential benefit to owners, saying transparency on vacant units would allow the city to “target landlords who may be in need of assistance so it can support landlords to make those repairs.”

The Council member pointed to the mayor’s $10 million Unlocking Doors pilot program that will offer landlords $25,000 per unit to repair vacant, rent-stabilized apartments. Owners have said that one-time infusion wouldn’t be enough.
In a press release Tuesday, CHIP asked the Council to draft a resolution in support of its state legislation.
Rivera said she’s not opposed to the idea but would need to look at the bill language, citing the importance of curbing gentrification that pushes out long-term and low-income tenants.
“I’m willing to work with anyone who wants to make housing more available to New Yorkers and increase affordability over all,” Rivera said.

 

David Goldsmith

All Powerful Moderator
Staff member

Legislators approve controversial rent-overcharge bills​

Landlords say measures will lead to pile of cases, costs

In the final hours of the legislative session, lawmakers approved a pair of bills that landlords say will have “devastating” consequences.
The state Assembly on Tuesday approved measures that will make it easier for tenants to prove fraud in rent-overcharge cases and allow them to consult long-ago rent histories to maximize landlords’ liability. The Senate already passed the bills June 9.

The Community Housing Improvement Program claimed the bills are aimed at “punishing property owners” and unraveling a key 2020 court decision, known as Regina Metro v. DHCR, and subsequent decisions that found that the 2019 rent law could not be applied retroactively to overcharge cases.
“They are clearly an attempt to roll back appeals court decisions and will have a devastating effect on the financial stability of New York housing if they are allowed to become law,” Jay Martin, executive director of CHIP, said in a statement.

One of the bills defines fraud as “a material breach of any duty… to disclose truthfully…the rent, regulatory status, or lease information,” which includes failing to register an apartment in a building receiving J-51 or 421a after Oct. 1, 2011. Landlord attorneys argue that the newly passed measure dangerously broadens the definition of fraud.
A “fraud” designation is critical to calculating rent owed to tenants in overcharge cases. For allegations that predate the 2019 law, rent must be calculated based on a four-year lookback unless the landlord schemed to illegally deregulate units.
Tenants can consult rental history beyond the usual four years if they can prove fraud. In that case, the overcharge is calculated based on the lowest stabilized rent recorded for comparable apartments, which can lead to large awards.
The bill’s lead sponsors, Assembly member Linda Rosenthal and Sen. Brian Kavanagh, maintain that the bill does not have a retroactive aim, but instead seeks to clarify existing law. Kavanagh told The Real Deal that the measure simply codifies “what we think the standard for fraud has been.”
“A legislature being clear about what the law is, is a positive thing,” he said. But supporters have acknowledged that the bill is a response to judicial rulings that past rent overcharges were not fraud under the 2019 law.

The new measure also creates rules for setting rents for newly combined rent-stabilized units, similar to regulations proposed but not implemented by the state’s housing regulator last year. Under current law, landlords can set a new first rent upon combining vacant apartments.
The Assembly on Tuesday approved a separate bill that allows tenants to consult rent histories beyond the four-year lookback when seeking to calculate their legal rent after June 14, 2019. The Housing Stability and Tenant Protection Act of 2019 expanded the lookback window to six years when determining rent overcharges, while allowing courts to use any evidence found to be “reasonably necessary” to determine the legal rent.
The new measure clarifies that the broader window shall be used to calculate legal rent post-June 2019, even in cases where a court or agency has determined the rent prior to that date.
Assembly member Jeffrey Dinowitz said the measure “does not attempt to do an end run around the Regina case,” and compared investigating rent overcharges to medical malpractice, in that deeper probes are sometimes needed to show wrongdoing.

“That’s the thing about deception, you don’t always easily discover it,” he said.
The approval of these measures caps a mostly disappointing legislative session for the real estate industry. Lawmakers spurned the governor’s proposal to set housing mandates throughout the state, and fell short of reaching a deal that would have extended the 421a construction deadline and enacted a weaker version of good cause eviction than tenant advocates have demanded.

 

David Goldsmith

All Powerful Moderator
Staff member
Landlords and their henchmen are under the delusions that they are going to eradicate Rent Stabilization by either holding 60,000 Rent Stabilized apartments hostage and throwing a Hail Mary at the Supreme Court. Meanwhile this is what's actually going on
The housing session that wasn’t

End of NY legislative session becomes nightmare for real est
After a promising start for the real estate industry, the final hours of the state legislative session proved harrowing.
A series of housing bills championed by the industry and the governor failed to move forward, but lawmakers advanced other measures that landlords say will throw New York City’s rent-stabilization system into disarray.

The Senate and Assembly passed two bills that limit initial rents when stabilized units are combined and give tenants more opportunities to challenge their rent. Landlord groups have called the measures unconstitutional and warned that they will lead to a flood of rent-overcharge cases.
“The state legislature continues to show they are more interested in being retroactively punitive than proactively advancing pro-housing solutions,” said Jay Martin, executive director of the landlord group Community Housing Improvement Program, in a statement.

These policies quietly progressed while other housing initiatives failed with considerable fanfare. Gov. Kathy Hochul’s New York Housing Compact, a proposal to build 800,000 new homes over the next 10 years by setting housing mandates throughout the state, stalled during budget talks. A potential deal to both extend a deadline for the 421a tax break and pass a version of good cause eviction also fell apart, with the governor and legislative leaders exchanging blame for its death.
Barring a special session or executive-level stopgap measures, addressing these and other policies will have to wait until next year. In the meantime, housing groups are trying to figure out who will carry them forward.
“The governor was not someone who was able to pass one of her main pieces of policy this year,” said Annemarie Gray, executive director of the pro-housing group Open New York. “We clearly need to build a more distributed set of political champions.”

Blame game

Even some recent real estate victories were dampened by this year’s legislative session. Consider the Howard Hughes Corporation’s 250 Water Street: A state appellate court ruled in favor of the project, paving the way for a 399-apartment building after lower courts had nullified its approval.

Yet the project may not move forward anyway without an extension to the 421a construction deadline. The developer had foundation footings in place by June 15, 2022, meaning it could still qualify for the now-expired tax break. But in order to receive the crucial benefit, the project must be completed by June 15, 2026. State officials are considering a way to allow those projects to secure tax breaks through a separate model, potentially using payments in lieu of taxes, but no such stopgap was formalized.
The Real Estate Board of New York estimates that 32,000 housing units may not get built without the extension, as developers scramble to secure construction financing. Massive projects, including Halletts North in Astoria, where 1,340 apartments are planned, are among the developments in jeopardy. At least eight projects totaling 3,500-plus apartments in Gowanus, made possible by the neighborhood’s rezoning, may not move forward, according to a list provided to TRD.

“We clearly need to build a more distributed set of political champions.”
ANNEMARIE GRAY, OPEN NEW YORK
Some projects may be able to wait out the uncertainty. Two Trees’ David Lombino said River Ring, a 1,000-unit project in Williamsburg, and site B at the company’s Domino Sugar development both rely on 421a, but construction is not expected to begin for another year or two. Not every developer has that kind of buffer.
“There are some projects that are dead in the water, and the banks are going to come calling,” Lombino said.

Lawmakers came tantalizingly close to extending the 421a deadline. Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins said on June 8 that they were working toward an agreement to push back the deadline, approve a version of good cause eviction, create a state-based housing voucher program and allow more office-to-residential conversions. But they said the governor would not sign off.
Gov. Kathy Hochul countered that the lawmakers were simply trying to shift the blame for “their own failure to act.”
It is unclear whether lawmakers ever had enough votes to approve the agreement and dare Hochul to veto it.
“I think Albany has a tremendous culture of finger-pointing,” said Cea Weaver, coordinator of the Housing Justice for All coalition. “It is easier to do nothing than to do something. They wanted to be able to say they tried.”
“REBNY was up there with one goal: to block good cause,” she added. “They were not up there for anything else.”

REBNY President James Whelan said his organization relies on facts and data, while Housing Justice for All relies on “intimidation and bullying.”
It is difficult to gauge the strength of the potential deal, given that no bill language was ever released.
Lawmakers acknowledged that they were contemplating a version of good cause akin to rent control in California, where annual increases are capped at 10 percent or 5 percent plus inflation, whichever is lower. While tenant advocates appeared amenable to adjusting the rent increase thresholds, they pushed back against another proposal that would have exempted buildings of a certain size. Sen. Julia Salazar, a prime sponsor of the original good cause legislation, called the potential exemption “absurd” in a June 12 tweet.
Other policies discussed as part of that deal — including lifting the city’s restriction on residential density and changes that would make it easier to convert commercial space into housing — came with a catch. Whelan said they mirrored the state’s Housing Our Neighbors With Dignity Act, which created a commercial conversion program that has seen very few participants. The program requires at least half of all converted units to be set aside for homeless residents. For many developers, that is a nonstarter.
“It sounds really nice, but it does nothing,” Whelan said.

Retooling the rent law

Republican lawmakers tried to use fear of a statewide housing crisis — the existence of which they dismissed — against the two rent-stabilization bills.

One exchange between lawmakers at a June 20 hearing reflected a perennial refrain from owners of rent-stabilized apartments: Elected officials lament the lack of affordable housing while hurting the operators of existing and deteriorating affordable housing stock.
Assembly member Andy Goodell, a Republican who represents Chautauqua County in Western New York, asked if giving a tenant more opportunities to challenge their rent after they’ve signed a lease would “somehow encourage more housing, or is that completely irrelevant?”

Democratic Assembly member Jeffrey Dinowitz of the Bronx agreed it was irrelevant because his bill — to allow tenants to consult rental histories to calculate rent post-2019 — had a narrow application.
One of the measures that was passed establishes rules for setting the initial rent for apartments created by combining vacant stabilized units, a practice referred to as “Frankensteining.” The new rent must equal the sum of the units’ most recent rents, and the combined unit must then abide by rent increases permitted by the city’s Rent Guidelines Board.

The rules closely followed those proposed, but not implemented, by the state’s housing regulator last year. The Legal Aid Society praised the bill, saying it “closes a dangerous loophole” that encourages landlords to warehouse vacant apartments in hopes of jacking up rent.
But it was another aspect of the bill that drew even more ire from the industry. The measure departs from recent Appeals court decisions, which have generally found that fraud is the result of intentional schemes to overcharge rent-stabilized tenants — and not simply a failure to register a regulated apartment. But the bill defines “fraud” as “a material breach of any duty … to disclose truthfully … the rent, regulatory status, or lease information.”

The presence of fraud in rent-overcharge cases allows tenants to consult earlier rent histories and creates a larger payout — the overcharge is calculated using a “default formula,” which relies on the lowest stabilized rent recorded for comparable apartments, rather than determining the base rent on a four-year lookback.
The other measure allows tenants to consult rent histories beyond the four-year lookback when seeking to calculate their legal rent after June 14, 2019. The Housing Stability and Tenant Protection Act of 2019 expanded the lookback window to six years when determining rent overcharges, while allowing courts to use any evidence found to be “reasonably necessary” to determine the legal rent.
The bills’ sponsors argue that the measures simply codify the state’s understanding of fraud and the intent of the 2019 rent law, given recent court decisions.
But real estate attorneys counter that the 2020 decision in Regina Metro v. DHCR — which found that the 2019 rent law could not be applied retroactively to overcharge cases — and subsequent decisions were already clear about fraud. Landlord attorney Nativ Winiarsky, a partner at Kucker Marino Winiarsky & Bittens, pointed to the court’s reliance on “common law fraud,” which requires intent on the part of the landlord to misrepresent the legal rent.
“Regina has not needed clarification,” he said.

CHIP warns that if the measure becomes law, building owners who purchased their property five years ago could be on the hook for incorrect registration information filed decades earlier. The group argues that the bills will have a “chilling effect on investment in rent-stabilized buildings in New York City and drive away future investment in affordable housing.”

Looking ahead

While many have lamented the lack of action on major housing legislation this session, some are encouraged that the last-minute housing deal would have included a 421a extension.
“The good news is, there is some acknowledgment on the part of the legislature that they have to do something,” Lombino said.
Some lawmakers believe the path forward for 421a and good cause likely lies in a broader housing package, given how contentious these policies are on their own.

“REBNY was up there with one goal: to block good cause.”
CEA WEAVER, HOUSING JUSTICE FOR ALL
“The bad joke is, if there is something for everyone to love and everyone to hate, you’ve probably got a good deal going there,” said Manhattan Sen. Liz Krueger. “There is a deal to be made with a number of these different issues tied together, but only if the governor is willing to come to the table.”
Lawmakers managed to pass a few other housing-related measures, including a replacement to the tax break for multifamily renovations formerly known as J-51, along with a bill that expands the city housing agency’s loan authority and another aimed at ramping up protections against deed theft.
Suburban lawmakers had pushed back against Hochul’s housing targets, decrying the mandates as a seizure of local control over land-use decisions. But Open New York’s Gray said there were other lines of opposition that will need to be breached if these policies are to move forward. She said some real estate groups did not come out in force to support the Housing Compact, and some even actively opposed it.
“I think it’s easy to forget that there are a lot of people who benefit from a housing shortage,” she said.

Howard Slatkin, executive director at Citizens Housing and Planning Council, said that while housing enjoyed an unprecedented amount of attention this year at the state level, he is not sure lawmakers are committed to building the amount of housing needed throughout New York.
“One of things that remains unclear to me is the extent to which legislators agree that we have a housing supply problem,” he said. “In the end, the list of housing proposals that the majority leader and speaker put in their statement didn’t have anything in it that was oriented toward building new buildings.”
 

David Goldsmith

All Powerful Moderator
Staff member
Shills for Big Real Estate in New York like Sherwin Belkin think that fudging numbers and whining letters complaining about the plight of the "poor" landlords who can afford to leave $30 billion worth of Rent Stabilized apartments stay vacant on purpose will lead to the contraction or outright Rent Stabilization protections.

Meanwhile this is what is actually going on.

Bill guts one of last remaining rent regulation escape routes​

Measure takes aim at substantial rehabs

Changes to New York’s rent law in 2019 closed off most avenues for landlords to deregulate their buildings. Now, a pair of bills awaiting the governor’s pen seek to hamstring owners’ remaining options to escape rent stabilization.
The bills have garnered a lot of attention for how they will affect rent overcharge cases, in particular the proposed changes to fraud claims, as well as the new rules around setting rents for vacant, rent-stabilized units that have been combined. The new rules for so-called “Frankenstein” units cap initial rents on combined units, and prevent the apartments from being deregulated.

But a less discussed aspect of one of the measures is its changes to buildings exempt from rent regulation through “substantial rehabilitation.”
Landlords can deregulate units if they gut renovate “substandard or seriously deteriorated” buildings, replacing at least 75 percent of the building-wide and individual apartment systems.

Last month, the Senate and Assembly approved bills that make several major changes to substantial-rehabilitation rules. One is that all buildings that have undergone substantial rehabilitation must submit applications to the state’s housing regulator within six months of the bill passing.
This means buildings that have been exempt for decades — many of which have traded hands multiple times — would need to apply for an exemption to rent regulation. Newly rehabilitated buildings would need to submit an application within one year of completing work.
“We’re probably talking about hundreds of buildings, going back 40 years,” said real estate attorney Sherwin Belkin.
Last year, 322 apartments were deregulated through substantial rehabilitation, according to the Rent Guidelines Board. That was more than double the number seen in 2021, and the highest since 2012, when 481 units were taken out of rent regulation. Since 1994, 10,602 units were deregulated through these building overhauls, a blip compared to the 170,386 lost through vacancy decontrol, which is no longer permitted. These numbers, however, do not include properties where every unit was deregulated because they would not be registered with HCR.

Owners can ask the state Division of Homes and Community Renewal to issue an opinion before they begin such a project to ensure the agency believes the work qualifies for an exemption, lest they be challenged later in court. They can also ask the agency to issue an order approving the exemption after the work is completed. Neither are currently required.

Edward Josephson, a supervising attorney at Legal Aid, said the measure is a “clean-up bill,” that could provide more certainty to landlords and more consistency in terms of the projects approved. Rather than relying on dozens of judges to issue potentially conflicting opinions about what qualifies as a substantial rehabilitation, HCR will be making such determinations. Currently, a building owner can perform work, deregulate apartments and then be challenged by a tenant 30 years later in court. Or a property can trade hands, and the new owner can try to prove that the building shouldn’t have been regulated for the past 20 years.
“That’s a little bit crazy,” Josephson said. For landlords who do not have easy access to decades-old documentation and already faced the possibility of a tenant challenge, the bill means they will need to confront a possible rejection of their exemption sooner rather than later — within six months, to be exact. And for newer rehabs, the measure should create less uncertainty for landlords, according to Josephson.
The state’s housing regulator proposed guidance last year that would have limited what is considered proof that a building was seriously deteriorated and in need of major rehabilitation. As things stand, the state considers a building that was 80 percent vacant to qualify. But the 2022 proposed guidance eliminated that provision and required the full demolition of a building — not just a gut renovation — to reset rents to market-rate. HCR said the guidance, which did not move forward, is still under consideration.
Rosenberg & Estis’ Deborah Riegel said the bill could freeze nonpayment of rent cases in housing court and scare lenders until HCR had signed off on a building’s renovation.
“It is a pretty big sea change,” she said. “Practically speaking, it will have a huge impact on the market.”

 

David Goldsmith

All Powerful Moderator
Staff member
This gives some insight into the realities of the tens of thousands of Rent Stabilized apartments being held hostage. They don't have $500 rents and need $75,000 in work. They are just below market and need a touch-up.

Inside the Clipper Equity rental that went viral​

Upper West Side listing mysteriously removed from StreetEasy

JUL 20, 2023, 7:00 AM
Courtney Eubank jumped at the opportunity when she saw a StreetEasy listing for an Upper West Side apartment for $2,800 last month.
Located just steps away from Central Park in the purportedly newly renovated Brewster building on West 86th Street, unit 12F promised “luxurious” finishes and appliances, a doorman, an elevator and a roof deck at a steep discount from the building’s usual rents of $4,000 or more.

The one-bedroom seemed too good to be true. And it was.
The unit Eubank toured June 28 was completely unrecognizable from digital renderings shown online, she said in a TikTok video that has amassed nearly 60,000 views.

Unlike renovated units in the building, 12F did not have granite countertops, shiny new floors and a fresh coat of paint. Instead there were worn cabinets and appliances, cracked walls, dead roaches on the floor and a toilet covered in brown grime.
“The flies were buzzing in a circle,” Eubank said in the viral video.
“I don’t think it’s right that they’re even allowed to post that [listing] having zero resemblance at all,” Eubank told The Real Deal.
Though it’s unclear whether the unit was slated to be rented as-is, the StreetEasy listing was taken down days after the video was posted. The record of the listing was also erased. The site now shows that the apartment was last rented in January.

Multiple requests for comment from the building’s developer, David Bistricer’s Clipper Equity, were not returned. An agent for Arwell Realty, who was showing other units in the building but not 12F, told The Real Deal he didn’t know why the StreetEasy rental history was erased.
“I don’t know much, but all I could tell you is that it was being priced at a highly unusual discount,” the agent said. “Any normal person would assume there’s a catch … The rent was a certain price for a reason.”

A likely factor is that the apartment was rent-regulated, as some units in the building are. The state’s Division of Homes and Community Renewal would not divulge the status of 12F, citing privacy laws, but the 2019 rent reform limited rent hikes to pay for renovations to $83 or $89 a month, depending on the size of the building.
The increase is far too little to pay for a gut renovation, but that still would not explain why Clipper would not have at least applied a fresh coat of paint and removed the brown slime from the toilet. One possibility is that 12F is among the thousands of rent-stabilized apartments not being rented at all because it would be too costly to bring them up to code after long-term tenancies ended. But those units are typically about $1,000 a month or less.

Corcoran rented another $2,800 one-bedroom unit in The Brewster, according to its website, but it was unclear when or if it was in shape similar to 12F. Another one-bedroom listed by the same company in the same building was asking $5,395, a price indicating it was deregulated before the 2019 rent law passed.
Other available units, such as 2F and 7B (listed for $6,775 and $10,199, respectively) appeared renovated and cleaned, save for the occasional cockroach carcass, when visited by The Real Deal. It was not immediately clear why 12F was so dilapidated, given its January 2023 leasing and Clipper Equity’s Facebook post in 2016 touting a recent renovation of the building.
That same year, Bistricer’s firm had purchased the Brewster — a 16-story, 107-unit building developed in 1927 — for $172.5 million.
Eubank said she is concerned that out-of-state applicants who don’t view listings in-person and instead rely on digital renderings may wind up with an apartment like 12F.
“If it had been rented, it would have to be someone that didn’t see it,” Eubank said.

Clipper Equity owns 60 buildings in New York and New Jersey, including the Sony Building at 550 Madison Avenue and Flatbush Gardens, where tens of thousands of violations landed Clipper on the “worst landlords” list. Bistricer told TRD in 2016 that an “enormous” amount of capital — some $20 million — was put into Flatbush Gardens to remedy those issues.
The Brewster has accrued a modest 30 building violations over seven years, including for not filing boiler inspection reports from 2018 to 2020. In 2021, an inspector noted horizontal cracks on concrete beams in unit 15D.

 

David Goldsmith

All Powerful Moderator
Staff member

Deference to REBNY irks smaller landlord group​

Industry leaders’ differing agendas and access to power came into view during a tense lobbying season in New York

When the Real Estate Board of New York cheered a new $10 million program for rent-stabilized buildings, Jay Martin took to Twitter — to vent.
“REBNY does not represent rent-stabilized owners,” huffed Martin, whose Community Housing Improvement Program does. “REBNY represents developers and brokers.”

“If you want to know about developing brand new buildings, call REBNY,” he continued. “If you want to know how much it costs to renovate, de-lead, and electrify an apartment that’s 90 years old and been occupied for 40 years … call a rent-stabilized owner.”
In the tweet, Martin noted that he was not being critical, just pointing out the organizations’ different constituencies. But it was nonetheless a rare public surfacing of tension between the real estate groups, their sometimes conflicting interests and their differing levels of access to government.

CHIP and the Rent Stabilization Association primarily represent rent-stabilized landlords, while the Real Estate Board of New York’s members span a broader spectrum of the industry, including development, brokerage and property management.
RSA and CHIP viewed the city’s program — which provides no more than $25,000 per apartment for renovations — as another sign that elected officials do not understand the extent of distress in older rental housing. REBNY praised it as a “creative solution” to ease the city’s housing crisis.
Long the industry’s standard-bearer, REBNY is often invoked by lawmakers and advocacy groups to refer to landlords or real estate at large. As a result, it is both blamed for and consulted on housing policy more than its counterparts.
But the most recent state legislative session was a reminder that the industry is not a monolith, and highlighted how these groups’ agendas sometimes run on parallel tracks — and other times on a collision course.

Developers v. landlords

Historically, the rent stabilization law and developers’ 421a tax break would expire around the same time, meaning that state lawmakers would consider these polarizing issues simultaneously. Groups that represent stabilized apartments felt these negotiations were aimed solely at satisfying developers and tenant advocates.

“I think the rent-stabilized community has felt, for a long time, like a bargaining chip,” Martin said.
“The rent-stabilized community has felt that their interests have been traded for the biggest fish, which is the billionaire developers.”
The issues were decoupled when the tax break was renewed in 2017 and the rent law was made permanent in 2019. Without the leverage of an expiring rent law, the industry lost 421a when it lapsed last year.
Then, another bargaining chip emerged: good cause eviction, which would end landlords’ power to not renew leases of paying tenants. It would also allow tenants to challenge rent increases above a certain percentage. Landlords derided the proposal as universal rent control.
In the early days of this year’s session, RSA President Joseph Strasburg and REBNY President Jim Whelan discussed how the two policies would play off each other. Strasburg said they agreed that preventing good cause was a priority, and that REBNY would not accept good cause as a condition of restoring 421a.

“The rent-stabilized community has felt, for a long time, like a bargaining chip.”
JAY MARTIN, COMMUNITY HOUSING IMPROVEMENT PROGRAM
“He made it very clear that 421a was not on the table for tradeoffs,” he said.
RSA, REBNY and CHIP were part of a broader coalition of landlord and building groups, dubbed Homeowners for an Affordable New York, that launched a lobbying campaign against good cause. Gov. Kathy Hochul did not support the bill, but some influential legislators did.
CHIP also focused on a measure that would allow landlords to reset rents on vacant stabilized apartments needing major renovations.
“CHIP was pushing reset. We support reset, but that was not REBNY’s or RSA’s issue,” Strasburg said. “We let CHIP run with it.”

Trading or traitors?

There was, however, distrust and finger-pointing behind the scenes.
CHIP’s Martin said REBNY accused him of trying to swap good cause eviction for the rent reset bill. He said he was not going rogue, but had approached his members about the possibility that good cause could happen.

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“I was preparing for the call four days before the budget that the governor is not holding the line anymore on good cause,” he said.

There was reason to worry: Four years before, a drastic rent reform had caught the industry by surprise, and then-Gov. Andrew Cuomo ignored its last-minute plea to stop it.
This year, Hochul’s office solicited advice from REBNY about how to approach tenant protections, as reported by New York Focus. The trade group reportedly pitched a 10 percent cap on annual rent increases, with caveats, as an alternative to good cause. In the end, nothing passed.
Martin cited Hochul’s outreach as an example of lawmakers’ wrongly defaulting to the group on industry issues, though he said he did not intend that as a criticism of REBNY.
“If that’s going to be proposed, we need to be part of the conversion,” he said. “They do not speak for our industry, carte blanche.”

Different playbooks

REBNY is by far the most influential of the three groups, boasting the most spending power and a membership that includes the most powerful players in New York real estate. The most recent public tax filings show annual revenue of $14 million for REBNY, $7 million for RSA and $1.5 million for CHIP. Those numbers do not account for political action committees through which individual REBNY and RSA members spend millions of dollars.

Whelan agreed that REBNY is looked to as the voice of the industry. “I think that is often the case,” he said. “I think that is reflective of the broad membership we have.”
RSA’s members include large rent-stabilized owners, condo and co-op boards, while CHIP represents midsized owners. REBNY’s members also include rent-stabilized landlords.
REBNY tends to back moderate Democrats, including Hochul, who has pushed for industry priorities such as the replacement of 421a and easing office-to-residential conversions. RSA, meanwhile, has aligned with Republican and Democratic lawmakers.
Myriad other groups represent pockets of the industry. Small Property Owners of New York, for example, advocates for landlords who typically own two to five units.
SPONY’s president, Ann Korchak, pointed out that her organization is run by volunteers, not paid staffers. That comes with some advantages: Korchak said it is more difficult for lawmakers to ignore pleas from small property owners who are experiencing the consequences of policies firsthand.

The group does sometimes team up with larger organizations, as it did this session as part of the effort to stop good cause eviction.
“Our interests are sometimes different than the bigger guys’, but the Venn diagram of what we agree on is quite a few things,” she said.
The New York Building Congress, whose members include developers, architects, construction unions, universities and hospitals, tends to stay out of debates where its constituencies do not see eye to eye. It focuses on policies that encourage construction, including 421a and lifting the cap on residential floor area ratio in New York City.
“You don’t have to fight every battle in life,” said its president, Carlo Scissura.
REBNY in recent years has engaged more in coalition-building, aiming to shed a Big Real Estate label that had become a headwind in New York City’s increasingly progressive politics. One industry source said it takes a data-focused approach to lobbying and isn’t “into bomb-throwing, and tactics that are potentially more politically toxic.”

Tactics, as it happens, are yet another differentiator among the groups.
Martin, a prolific Twitter user, thinks the industry should take notes from tenant advocates and adopt some of their strategies, such as door-knocking and flooding social media.
“I think this industry for too long has tried to run their lobbying strategy as a boardroom,” he said.
Strasburg, though, wants nothing to do with social media.
“It does come back to haunt you,” he said. “There’s a positive and negative to being old-school.”

 

David Goldsmith

All Powerful Moderator
Staff member
The proposed post merger name is Axis Of Evil

Rent Stabilization Association, CHIP discussing merger​

Landlord groups have similar members, vastly different styles

Two landlord groups with different lobbying strategies but similar members may join forces.
The Community Housing Improvement Program and the Rent Stabilization Association are in talks to potentially combine, according to industry sources. It is not clear what a merger would mean for the groups’ leaders, names and members.

CHIP and RSA declined to comment.
In some ways, a merger is eminently logical: The groups both represent rent-stabilized landlords in New York and have teamed up to challenge New York’s rent law; they recently filed a petition with the U.S. Supreme Court. They sometimes release joint statements.
Combining the groups would mean members would not need to choose between the two or pay two sets of dues.
But the groups also have different leadership styles and approaches to city and state politics.
The RSA is inexorably linked to rent stabilization in the city: When the state’s rent stabilization law was enacted in 1969, rent-stabilized building owners were required to join the RSA.
The trade organization was also charged with creating codes to govern these properties, which were then approved by a city housing agency. Self-governance ended in 1985.
RSA represents large rent-stabilized owners, as well as condo and co-op boards, while CHIP’s members include midsized owners.

This legislative session, CHIP executive director Jay Martin lobbied for passage of a bill that would allow landlords to reset rents on vacant rent-stabilized apartments after long-term tenancies. RSA and the Real Estate Board of New York were more focused on preventing the passage of good cause eviction.
Martin has also called for the real estate industry to change its lobbying approach, advocating for more grassroots efforts and social media literacy. The group launched a TikTok campaign showcasing apartments in dire need of repair, and Martin is ubiquitous on Twitter.
RSA’s longtime president, Joseph Strasburg, wants nothing to do with TikTok. In a recent interview, he told TRD that he much prefers a face-to-face meeting or phone call. (The group does have a Twitter account, but a search for a Strasburg account came up empty.)
RSA has more spending power than CHIP and has poured money into the election campaigns of elected officials on both sides of the aisle. But it operates largely behind the scenes, unlike Martin’s more public-facing group.

Neither group was particularly successful during the state legislative session that ended in June. RSA did get through without good cause eviction passing, but has made little progress reversing the severe restrictions on rent increases passed in 2019 for the state’s 1 million rent-stabilized units. CHIP got its rent-reset measure introduced, but it gained little traction. In fact, tenant groups chased some sponsors off the bill.
Both sides failed to prevent the legislature from passing bills that would subject some owners of rent-stabilized buildings to large court judgments for past rent overcharges. They are hoping Gov. Kathy Hochul vetoes the bills when they arrive at her desk.
In an interview last month, Strasburg indicated that members of a coalition opposing good cause eviction were planning to meet in the fall to discuss the upcoming legislative session.
“From my perspective, we work when we agree on priorities,” he said. “The real fighting has to be against those who are hurting housing in the state of New York.”

 
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