The Real Deal New York

To renew or not to renew: Albany faces key real estate votes

Rent regulation, tax cap and tax credit laws all on the agenda of state legislators
January 07, 2015 05:40PM

As state lawmakers have returned to work and Governor Andrew Cuomo has been inaugurated for his second term, one of the most important issues on the agenda in Albany will be housing related.

At the top of the agenda this year is the expiration of rent control on June 15. Legislators will also address the tax cap — the 421-a program that offers a tax exemption for newly constructed housing in return for designating a minimum of 20 percent of the units as non-market rate. In addition, lawmakers will consider the J-51 tax credit, which exempts certain landlords from an increase in property taxes when rehabilitating multiple-dwelling buildings. Both the tax cap and tax credit are set to expire about the same time as the rent control provision, according to Capital New York.

Tenant activists are pushing to repeal vacancy de-control — in which affordable units become market-rate — while landlords are looking toward the Republican-held Senate to quash efforts to strengthen rent control, the website reported.

The Real Estate Board of New York’s political action committee raised roughly $1.9 million this election cycle, most of which went to Republican candidates for state senate.

Steven Spinola, the outgoing president of REBNY, called the current political climate “pretty decent,” in an interview with the website.

“I think it is good for the Legislature to be able to have the ability to debate all of the sides of the issue, and I think having the Democrats well-represented in the Assembly and significant numbers in the State Senate, and the Republicans with a majority in the Senate means that the leadership and the members have to recognize that they’ve got to make a deal with each other,” Spinola told Capital. “The pendulum swings back and forth.” [Capital NY] — Claire Moses

  • So the real question is whether the Ds and the Rs sell out market rate tenants, and continue to protect those who have insanely good deals…

    • noclist

      Same old same old. Rent Control is here to stay. How it gets tweaked will be the only end result.

    • Marc

      Why would government ever do anything right? Politicians only care about being re-elected so they can pad their pensions and set up friends and family with riches. Just ask Biden, Pelosi, Feinstein, Harry Reid, John Boner…………I’d have to write more than 400 more names to just partially make my point.

    • You are totally right. Market rate tenants should write to Albany and ask them to expand rent stabilization protection to all units, not just a select few.

      • Then you get the problems that SF has — very high initial rents, and a complete inability to move closer to your job or to move in/out with your significant other.

        The best solution towards cheap and plentiful housing is more apartments via upzoning and rethinking the multiple dwelling law, followed by freeing up some of under-used apartments covered under rent stabilization.

        • Even in the best case scenario where all land use and zoning is eliminated and developers could go as tall and as dense as they wanted, it would still take years before new construction could catch up to meet existing demand and cause prices to fall. New legislation limiting rent increases on the other hand could take effect immediately.

          • The prospect of unlimited building would actually cause a repricing of land prices, and would accelerate development significantly, as right now, there’s quite a bit of a speculative premium in land prices, as the assumption is that you’ll be able to get the absolute top rents for new developments.
            It would take a couple of years for new buildings to make a difference in supply, but the advantage is that we’d have lots of new apartments and lower prices for all, and people who are sick of their current units could move easily.
            Under your proposal, development would virtually cease, people would be locked in, and new arrivals to NYC would find it basically impossible to get housing. Companies would not locate new jobs here, and property tax revenues would go down.

          • From ground breaking to topping out topping out, new high rises will take 18 months at least. Until they’re at 90% occupancy, 3 years from ground breaking. Plus you have financing, land acquisition and design — 2 or 3 years or more, in the best case scenario. So yeah, eliminate zoning — which, never mind the fact that the rich white people will never let happen in their precious historically preserved neighborhoods — would maybe reduce housing costs 5 or 10 years in the future. But in the real world that leaves a lot of people screwed out of housing until more housing is completed.

          • The current system leaves everyone screwed perpetually — benefits are tied to the unit, so you can never leave.

            It really wouldn’t take much building (or the prospect thereof) to affect the level of perceived scarcity — a 1-2% rise in the vacancy rate (i.e. 10-20k empty apartments) would produce a roughly 15-20% drop in rents.
            You don’t even need to do massive rezoning — altering the rules to eliminate never-used second stairways, allowing slightly below-grade living areas, and allowing for new-style SROs/studios with some shared appliances (there are some nice hotel rooms with 200sf/pp), that could lower the cost of housing and make it much more flexible and attractive for younger people.

          • No second stairway? You mean the stairwells that are required to provide emergency egress? Where were you on 9/11? Ohio? Basement cave apartments? Hotel rooms? You’re an insane person if you think these are viable living conditions.

          • Not talking about offices, where you can saturate one stairway.
            But newer apartment buildings are fully sprinklered and have lots of elevators and have roofs that can double as evacuation points; the incidence of fires is much lower, as people smoke less, cook less, and don’t use as many incandescent bulbs, and as furniture is less flammable, we don’t use coal for heat, etc… The requirement for a second stairway dates to the 20s, and should be re-examined, as it eats 100+sf per floor.

          • So your solution is very tiny fire traps without kitchens below grade… or we could just legislate limits on rent increases and people could live like human beings at an affordable price.

          • Our solution permanently fixes the problem. We aim to create cheap and plentiful housing that is safe and uses appropriate technology and layouts for modern living. Your ‘solution’ will simply lock people into their current deals, and will make it far tougher for the next generation of NYers.

          • Go back to Ohio.

          • Can’t. We’re natives whose parents didn’t win the magic apartment lottery in NYC.